Document:

ex1038.htm

    Exhibit
10.38

     

    Form of Lease, By and Between Amber
Alert Safety Centers, Inc. and Emerald Holdings Group L.L.C.

     

     

    This Lease, dated
the ______________________ day of __________________ 2007.

     

    Parties

     

    Between
Emerald Holdings Group L.L.C. 101 Roundhill
Drive, Rockaway, NJ 07866 hereinafter referred to as the Landlord, and
Amber Alert hereinafter referred to as
the Tenant.

     

    WITNESSETH:
That the Landlord hereby demises and leases unto the Tenant, and the Tenant
hereby hires and takes from the Landlord for the term and upon the rentals
hereinafter specified, the premises described as follows, situated in the
Township of Rockaway, County of Morris and State of New Jersey.

     

    Premises

     

    A portion
of 101 Roundhill Drive, Rockaway, NJ (second floor) measuring approximately
4,734 S.F.

     

    Term

     

    The term
of this demise shall be for Five (5) years and Two (2) Months beginning November
1, 2007 and ending January 31, 2013.

     

    The rent
for the demised term shall be Three Hundred Seventy-Three Thousand, One Hundred
Ninety-Seven Dollars ($373,197.00).

     

    Rent

     

    The said
rent is to be payable monthly in advance on the first day of each calendar month
for the term hereof (62 Months), in installments as follows:

     

    Payment of Rent

     

    YEAR I:
$5,917.50 per Month Starting on November 1, 2007 for period ending October 31,
2008. 

    YEAR 2:
$5,917.50 per Month Starting on November 1, 2008 for period ending October 31,
2009. 

    YEAR 3:
$6,016.12 per Month Starting on November 1,
2009 for period ending October 31, 2010. 

    YEAR 4:
$6,114.75 per Month Starting on November 1, 2010 for period ending October 31,
2011. 

    YEAR 5:
$6,114.75 per Month Starting on November 1, 2011 for period ending January 31,
2013.

     

    at the
office of Emerald Holdings Group L.L.C. or as may be otherwise directed by the
Landlord in writing.

     

    THE
ABOVE LETTING IS UPON THE FOLLOWING CONDITIONS:

     

    First - The Landlord covenants that the
Tenant, on paying the said rental and performing the covenants and conditions in
this Lease contained, shall and may peaceably and quietly have, hold and enjoy
the demised premises for the term aforesaid.

     

    Purpose and Usage

     

    Second
- The Tenant covenants and agrees
to use the demised premises as office space and
agrees not to use or permit the premises to be used for any other purpose
without the prior written consent of the Landlord endorsed hereon, which consent
shall not be unreasonably withheld, conditioned or delayed. There will be no
additional charges for Tenant to operate a small 24/7 call center.

     

    Default in Payment of
Rent

    Abandonment of
Premises

    Re-entry and
reletting by Landlord

    Tenant Liable for
Deficiency

    Lien of Landlord
to Secure

    Performance
Attorney's Fees

     

    Third.-
The Tenant shall, without any
previous demand therefore, pay to the Landlord, or its agent, the said rent at
the times and in the manner above provided. In the event of the non-payment of
said rent, or any installment thereof, at the times and in the manner provided,
and if the same shall remain in default for ten days after becoming due, or if
the Tenant shall be dispossessed for non-payment of rent, or if the leased
premises shall be deserted or vacated, the Landlord or its agents shall have the
right upon presenting the Tenant with a seven day notice and opportunity to
cure, may enter the said premises as the agent of the Tenant, either by force or
otherwise, without being liable for any prosecution or damages therefor, and may
relet the premises as the agent of the Tenant, and receive the rent therefore,
upon such teens as shall be satisfactory to the Landlord, and all rights of the
Tenant to repossess the premises under this lease shall be forfeited. Such
re-entry by the Landlord shall not operate to release the Tenant from any rent
to be paid or covenants to be performed hereunder during the full term of this
lease. For the purpose of reletting, the Landlord shall be authorized to make
such repairs or alterations in or to the leased premises as may be necessary to
place the same in good order and condition. The Tenant shall be liable to the
Landlord for the cost of such repairs or alterations, and all expenses of such
reletting. If the sum realized or to be realized front the reletting is
insufficient to satisfy the monthly or term rent provided in this lease, the
Landlord, at its option, may require the Tenant to pay such deficiency month by
month, or may hold the Tenant in advance for the entire deficiency to be
realized during the term of the reletting. The Tenant shall not be entitled to
any surplus accruing as a result of the reletting. The Landlord is hereby
authorized to exercise its rights as to any statutory lien or right of distrait'
that may exist, on all personal property of the Tenant in or upon the demised
premises, to secure payment of the rent and performance of the covenants and
conditions of this lease. The Landlord shall have the right, as agent of the
Tenant, to peaceably take possession of any furniture, fixtures or other
personal property of the Tenant found in or about the premises, and sell the
same at public or private sale and to apply the proceeds thereof to the payment
of any monies becoming due under this lease, the Tenant hereby waiving the
benefit of all laws exempting property from execution, levy and sale on distress
or judgment. The Tenant agrees to pay, as additional rent, all reasonable
attomey's fees and other expenses incurred by the Landlord in enforcing any of
the obligations under this lease.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Sub-letting and Assignment

       

    

    Fourth
- Tenant shall have the right at
any time to assign the lease or to sublease all or any portion of Tenant's
Premises for all or a portion of the remaining Lease Term, to any unrelated
entities with Landlord's prior written consent, which shall not be unreasonably
withheld, conditioned or delayed. Tenant to have the right to assign the lease
or sublease for all or part of the Premises to a related or affiliated company
without the Landlord's right of approval provided that the assignee is of
greater or equal financial worth.

     

    Condition of Premises,
Repairs

    ACM

    Alterations and
Improvements

    Sanitation,
Inflammable Materials

     

    Fifth - The Tenant has examined the demised
premises, and accepts them in their present condition (except as otherwise
expressly provided herein) and without any representations on the part of the
Landlord or its agents as to the present or future condition of the said
premises. To the best of Landlord's knowledge and without further investigation,
there are no hazardous materials on the property inclusive of Asbestos
Containing Materials. The Tenant shall keep the demised premises in good
condition, and shall redecorate, paint and renovate the said premises as may be
necessary to keep them in
repair and good appearance. The Tenant shall quit and surrender the
premises at the end of the demised term in as good condition as the reasonable
use thereof will permit, reasonable wear and tear expected. The Tenant shall not
make any alterations, additions, or improvements to said premises without the
prior written consent of the Landlord. All erections, alterations, additions and
improvements, whether temporary or permanent in character, which may be made
upon the premises either by the Landlord or the Tenant, except furniture or
moveable trade fixtures installed at the expense of the Tenant, shall be the
property of the Landlord and shall remain upon and be surrendered with the
premises as a part thereof at the termination of this Lease, without
compensation to the Tenant. The Tenant further agrees to keep said premises and
all parts thereof in a clean and sanitary condition and free from trash,
inflammable material or other objectionable matter. The Landlord will maintain
and repair at the Landlord's expense the existing HVAC, electrical, and plumbing
systems, and if necessary, make structural repairs to the building to maintain
the premises in condition that is fit for occupancy.

     

    Mechanics' Liens

     

    Sixth
- In the event that any
mechanics' lien is filed against the premises as a result of alterations,
additions, or improvements made by the Tenant, the Landlord, at its option,
after providing the Tenant with thirty days' written notice and an opportunity
to cure, may terminate this lease and may pay the said lien, without inquiring
into the validity thereof, and the Tenant shall forthwith reimburse the Landlord
the total expense incurred by the Landlord in discharging the said lien, as
additional rent hereunder. In the event that the lien is contested, the Tenant
will be given the opportunity to post the sum sought by virtue of the lien with
its attorney.

     

    Glass

     

    Seventh.-
Tenant agrees to replace at the Tenant's expense any and all glass which
may become broken in and on the demised premises.

     

    Liability of Landlord

     

    Eighth
- Other than as a result of the
Landlord's gross negligence or willful conduct, the Landlord shall not be
responsible for the loss of or damage to property, or injury to persons,
occurring in or about the demised premises, by reason of any existing or future
condition, defect, matter or thing in said demised premises or the property of
which the premises are a part, or for the acts, omissions or negligence of other
persons or tenants in and about the said property. The Tenant agrees to
indemnify and save the Landlord harmless from all claims and liability for
losses of or damage to property, or injuries to persons occurring in or about
the demises premises.

     

    Services and
Utilities/Electric

     

    Ninth - Tax and Operating; In calendar year
2006, Real Estate Taxes were $2.47 /
RSF and Operating Expenses were $5.76 /
RPF. Electric; Electric is not included in the above Operating Expense.
There is one (1) meter for the entire building and the Tenant is responsible for
its pro-rata share of electric.

     

    Rent Abatement

     

    Rent
Abatement; Two (2) months of gross rental rate. During this period, Tenant shall
he responsible for electric.

     

    Tax &
Operating

     

    Utilities
and services furnished to the demised premises for the benefit of the Tenant
shall be provided and paid for as follows: water by the Landlord; electricity by
Tenant; real estate taxes by the Landlord; hot water by the Landlord; janitorial
for the common area by the landlord; and rubbish disposal by the Landlord;
domestic sewerage charges by the Landlord; normal buildings systems maintenance
by the Landlord; light bulb and ballast replacement by Tenant. The Landlord
shall not be liable for any interruption or delay on any of the above services
for any reason.

     

    Right to Inspect and
Exhibit

     

    Tenth
- Upon reasonable notice to
Tenant which in no event shall be less than 24 hours, the Landlord, or its
agents, shall have the right to enter the demised premises at reasonable hours
in the day or night to examine the same, or to run telephone or other wires, or
to make such repairs, additions or alterations as it shall deem necessary for
the safety, preservation or restoration of the improvements, or for the safety
or convenience of the occupants or users thereof (there being no obligation,
however, on the part of the Landlord to make any such repairs, additions, or
alterations), or to exhibit the same to prospective purchasers and put upon the
premises a suitable "For Sale" sign. For three months prior to the expiration of
the demised term, the Landlord, or its agents, may similarly exhibit the
premises to prospective tenants, and may place the usual "To Let" signs
thereon.

     

    Damage by fire, Explosion, The
elements or otherwise

     

    Eleventh.-
In the event of the destruction
of the demised premises or the building containing the said premises by fire,
explosion, the elements or otherwise during the term hereby created, or previous
thereto, or such partial destruction thereof as to render the premises wholly
untenantable or unfit for occupancy, or should the demised premises be so badly
injured that the same cannot be repaired within ninety days from the happening
of such injury, then and in such case the term hereby created shall, at the
option of the Landlord, cease and become null and void from the date of such
damage or destruction, and the Tenant shall immediately surrender said premises
and all the Tenant's interest therein to the Landlord, and shall pay rent only
to the time of such
surrender, in which event the Landlord may re-enter and re-possess the premises
thus discharged from this lease and may remove all parties therefrom. Should the
demised premises be rendered untenantable and unfit for occupancy, but yet be
repairable within ninety days from the happening of said injury, the Landlord
may enter and repair the same with reasonable speed, and the rent shall not
accrue after said injury or while repairs are being made, but shall recommence
immediately after said repairs shall be completed. But if the premises shall be
so slightly injured as not to be rendered untenantable and unfit for occupancy,
then the Landlord agrees to repair the same with reasonable promptness and in
that case the rent accrued and accruing shall not cease or determine. The
Tenant shall immediately notify the Landlord in case of fire or other damage to
the premises.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Observation of Laws, Ordinances, Rules and
Regulations

     

    Twelfth.-
The Tenant agrees to observe and
comply with all laws, ordinances, rules and regulations of the
Federal, State, County, and Municipal authorities applicable to the business to
be conducted by the Tenant in the demised premises. The Tenant agrees not to do
or permit anything to be done in said premises, or keep anything therein, which
will increase the rate of fire insurance premiums on the improvements or any
part thereof, or on the property kept therein, or which will obstruct or
interfere with the rights of other tenants, or conflict with the regulations of
the Fire Department or with any insurance policy upon said improvements or any
part thereof. In the event of any increase in insurance premiums resulting from
the Tenant's occupancy of the premises, or from any act or omission on the part
of the Tenant, the Tenant agrees to pay said increase in insurance premiums on
the improvements or contents thereof as additional rent. Landlord shall be
responsible for compliance with all applicable local, state and federal statutes
and codes including the Americans with Disabilities Act.

     

    Signs

     

    Thirteenth.-
No sign, advertisement or notice
shall be affixed to or placed upon the exterior part of t re demised premises by
the Tenant, except in such manner, and of such size, design and color as shall
be approved in advance in writing by the Landlord. Landlord will provide for
Tenant's directory listing in Lobby as well as directional signage on floor,
Tenant may place signage at entrance to suite subject to Landlord's approval,
which approval shall not be unreasonably withheld, conditioned or
delayed.

     

    Subordination to Mortgages and Deeds of
Trust

     

    Fourteenth.-
This lease is subject and is
hereby subordinated to all present and future mortgages, deeds of trust and
other encumbrances affecting the demised premises or the property of which said
premises are a part. The Tenant agrees to execute, at no expense to the
Landlord, any instrument which may be deemed necessary or desirable by the
Landlord to further effect the subordination of this lease to any such mortgage,
deed of trust or encumbrance.

     

    Parking

     

    Fifteenth.-
Parking is at a ratio of 4 / 1,000 square feet of leased space, and there
will be no additional charge for parking.

     

    Rules and Regulations of Landlord

     

    Sixteen
- The rules and regulations
regarding the demised premises, affixed to this lease, if any, as well as any
other further reasonable codes and regulations which shall be made by the
Landlord, shall be observed by the Tenant and by the Tenant's employees, agents
and customers. The Landlord reserves the right to rescind any presently existing
rules applicable to the demised premises, and to make such other and further
reasonable rules and regulations as, in its judgment, may from time to time be
desirable for the safety, care and cleanliness of the premises, and for the
preservation of good order therein, which rules, when so made and notice thereof
given to the Tenant, shall have the same force and effect as if originally made
part of this lease, Such other and further rules shall not, however, be
inconsistent with the proper and rightful enjoyment by the Tenant of the demised
premises.

     

    Violations of Covenants, Forfeiture of Lease, Re-entry
by Landlord

    Non-waiver of Breach

     

    Seventeenth.-
In case of violation by the
Tenant of any of the covenants, agreements and conditions of this lease, or of
the rules and regulations now and hereafter to be reasonably established by the
Landlord, and upon failure to discontinue such violation within ten days after
written notice thereof given to the Tenant, and a ten day period in which Tenant
may cure suds violations, this lease shall thenceforth, at the options of the
Landlord, become null and void, and the Landlord may re-enter without further
notice or demand. The rent in such case shall become due, be apportioned and
paid on and up to the day of such re-entry, and the Tenant shall be liable for
all loss and damage resulting from such violation as aforesaid. No waiver by the
Landlord of any violation or breach of condition by the Tenant shall constitute
or be construed as a waiver of any other violation or breach of condition, nor
shall lapse of time after breach of condition by the Tenant before Landlord
shall exercise its option under this paragraphs operate to defeat the right of
the Landlord to declare this lease null and void and to re-enter upon the
demised premises after the said breach or violation.

     

    Notices

     

    Eighteenth.-
All notices and demands, legal or
otherwise, incidental to this lease, or the occupation of the demised premises,
shall be in writing. If the Landlord or its agent desires to give or serve upon
the Tenant any notice or demand, it shall be sufficient to send a copy thereof
by registered mail, addressed to the Tenant at the demised premises, or to leave
a copy thereof with a person of suitable age found on the premises. Notices from
the Tenant to the Landlord shall be sent registered by mail or delivered to the
Landlord at the place hereinbefore designated for the payment of rent, or to
such party or place as the Landlord may from time to time designate in
writing.

     

    Bankruptcy, Insolvency, Assignment of Benefit of
Creditors

     

    Nineteenth.-
It is further agreed that if at
any time during the term of this lease the Tenant shall make any assignment for
the benefit of creditors, or be decreed insolvent or bankrupt according to law,
or if a receiver shall be appointed for the Tenant, then the Landlord may, at
its option, terminate this lease, exercise of such option to be evidenced by
notice to that effect served upon the assignee, receiver, trustee, or other
person in charge of the liquidation of the property of the Tenant or the
Tenant's estate, but such termination shall not release or discharge any payment
of rent payable hereunder and then accrued, or any liability then accrued by
reason of any agreement or covenant herein contained on the part of the Tenant,
or the Tenant's legal representatives.

    
      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Holding
Over by Tenant

     

    Twentieth
- In the event that the Tenant
shall remain in the demised premises after the expiration of he term of this
lease without having executed a new written lease with the Landlord, such
holding over shall not constitute a renewal or extension of this lease. The
Landlord may, at its option, elect to treat the Tenant as one who has not removed at the end
of his term, and thereupon be entitled to all the remedies against the Tenant
provided by law in that situation, or the Landlord may elect, at its option, to
construe such holding over as a tenancy from month to month, subject to all the
terms and conditions of this lease, except as to duration thereof, and in that
event the Tenant shall pay monthly rent in advance at the rate provided herein
as effective during the last month of the demised Term plus 20% per month
($7,337.70)

     

    Eminent Domain,
Condemnation

     

    Twenty-first
- If the property or any part
thereof wherein the demised premises are located shalt be taken by public or
quasi-public authority under any power of eminent domain or condemnation, this
lease, at the option of the Landlord, shall forthwith terminate and the Tenant
shall have no claim or interest in or to any award of damages for such
taking.

     

    Security Deposit

     

    Twenty-second
- The Tenant has this day
deposited with the Landlord the suns of $23,670.00 as
security for the full and faithful performance by the Tenant of all the terms,
covenants and conditions of this lease upon the Tenant's part to be performed,
which said suns shall be returned to the Tenant within 60 days after the time
fixed as the expiration of the term herein or earlier termination of this lease,
provided the Tenant has fully and faithfully carried out all of said
terms, covenants and conditions on Tenant's part to be performed. In the
event of a bona fide sale, subject to this lease, the Landlord shall have the
right upon written notice to Tenant, to transfer the security to the vendee for
the benefit of the Tenant and the Landlord shall be considered released by the
Tenant from all liability for the return of such security; and the Tenant agrees
to look- to the new Landlord solely for
the return of said security, and it is agreed that this shall apply to
every transfer or assignment made of the security to a new Landlord. The
security deposited under this lease shall not be mortgaged, assigned or
encumbered by the Tenant without written consent of the Landlord. (Subject to
Landlord's review of Tenant's financials)

     

    Arbitration

     

    Twenty-third
- Any dispute arising under this
lease shall be settled by arbitration conducted by the American Arbitration
Association. Then Landlord and Tenant shall each choose an arbitrator, and the
two arbitrators thus chosen shall select a third arbitrator. The findings and
award of the three arbitrators thus chosen shall be final and binding on the
parties hereto.

     

    Delivery of Lease / Terms and Conditions

     

    Twenty-fourth -
No rights are to be conferred
upon the Tenant until this lease has been signed by the Landlord,
and an executed copy of the lease has been delivered to the Tenant. The terms
and conditions contained
herein and any other terms and conditions whether written or oral, expressed or
implied, are not binding on either party unless and until a lease agreement is
fully executed and exchanged by the parties thereto and do note create any
obligation by either party to continue negotiations or refrain front negotiating
with other parties. The Landlord reserves the right to modify or withdraw these
teems at any time.

     

    
      Lease
Provisions Not Exclusive

       

    

    Twenty-fifth.-
The foregoing rights and remedies
are not intended to be exclusive but as additional to all rights, and remedies
the Landlord would otherwise have by law.

    
       

      Lease
Binding on Heirs, Successors,
Etc.

       

    

    Twenty-sixth
- All of the terms, covenants and
conditions of this lease shall inure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and assigns of the
parties hereto. However, in the event of the death of the Tenant, if an
individual, the Landlord may, at its option, terminate this lease by notifying
the executor
or administrator of the Tenant at the demised premises.

     

    Twenty-seventh
- This lease and the obligation
of Tenant to pay rent hereunder and perform all of the other covenants and
agreements hereunder on part of Tenant to be performed shall in nowise be
affected, impaired or excused because Landlord is unable to supply or is delayed
in supplying any service expressly or impliedly to be supplied or is unable to
make, or is delayed in making any repairs, additions, alterations or decorations
or is unable to supply or is delayed its supplying any equipment or fixtures if
Landlord is prevented or delayed from so doing by reason of governmental
preemption in connection with the National Emergency declared by the President
of the United States or in
connection with any rule, order or regulation of any department or
subdivision thereof of any governmental agency or by reason of the conditions of
supply and demand which have been or are affected by the war.

     

    
      Building
Security/Access

    

     

    Twenty-eighth
- Building business hours
Monday-Friday 8:00 a.m. to 6:00 p.m.; Saturday 8:00 a.m. to 1:00 p.m.; Sunday
Closed. Tenant shall be granted access to Premises 24 hours a day, 7 days
a week.

     

    
      Insurance

    

     

    Twenty-ninth - Insurance: During the term of
this Lease, the Tenant shall maintain public liability
insurance insuring the
interests of the Tenant and the Landlord as an additional party insured with
respect to claims in or about the Leased Premises and property in amounts of not
less than Two Million and 00/100 ($2,000,000.00) Dollars
combined single limit Bodily Injury and
Property Damage If the public liability insurance carrier
shall for any reason cancel any contract of insurance covering property, the
Tenant will immediately notify the Landlord
of such effect. Tenant shall furnish to Landlord a certificate of such
liability insurance and renewal certificates at written request of Landlord. It
is expressly understood and agreed that all policies of insurance shall contain
a clause that the same shall not be cancelled except on ten (10) days written
notice to any and all parties in interest, if such an endorsement is available.
In the event the rate of fire insurance carried by the Landlord shall be
increased because of any change ire occupancy or use of Leased Premises
by the Tenant then such increase in cost of fire insurance shall be paid by
Tenant to Landlord after notice and demand in writing within ten (10) days of
such notice. The Landlord shall maintain insurance coverage on the
structure.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      I.S.R.A.

    

     

    Thirtieth - I.S.R.A.: Tenant hereby represents and
warrants that above referenced lease area is to be used as general office space.
I.S.R.A. classification does not apply.

     

    

      Escalation
of Operating Expenses

    

     

    Thirty-first -
Tenant shall receive a base year
of 2008, Tenant shall be responsible for its proportionate share of escalations
in operating expenses and real estate taxes that exceed the base year amount.
Tenant shall NOT be responsible for any escalations during the first (1st)
twelve (12) months of occupancy. Any escalations shall contemplate a fully
assessed building with operating expenses adjusted to reflect 95% occupancy.
Tenant will be responsible for its pro rata share of increases in the Operating
Expenses and Real Estate Taxes above a 2008 Base Year.

     

    
      Expansion

       

    

    Thirty-second. -
Tenant shall have the Right of
First Offer on contiguous space currently and that becomes available in the
Building during the Lease Term.

     

    
      Late
Fees

       

    

    Thirty-third.-
LATE CHARGE: Anything in this
Lease to the contrary notwithstanding, at Landlord's option, Tenant shall pay a
"late charge" of five (5%) percent of any installment of rent or additional rent
paid more than ten (10) days after the due date thereof, to cover the extra
expense involved in handling delinquent payments.

     

    Lease Renewal Option

     

    Thirty-fourth.-
Provided that the Tenant is not
then in default, the Tenant shall have the right under the same terms and
conditions to renew, at Fair Market Value, all the space under lease for One (1)
consecutive Five (5) year term with nine (9) months prior written notification.
 All other terms and conditions of the Lease shall remain
unchanged.

     

    Delivery of Space

     

    Thirty-fifth. -
Space shall be delivered vacuumed and debris free and in "As-Is"
condition.

     

    Tenant Improvements

     

    Thirty-sixth. -
Landlord will extend a Tenant Improvement allowance of 88.00 / RSF. The
following qualifications apply: (a) Computer cabling; cable splicing, outlets,
connectors and attachments to be performed by Tenant (b) Furniture and
furnishings not included (c) Telephone and communication equipment installation
t be performed by Tenant.

     

    
      Brokerage

       

    

    Thirty-seventh. -
Tenant represents that it has dealt solely with UGL Equise regarding this
leasing of 101 Roundhilt, Rockaway NJ. UGL Equis shall be recognized as the only
brokerage company involved with this transaction, and shall be paid a market
rate commission by the Landlord pursuant to the terms of a separate written
contract.

     

    IN
WITNESS WHEREOF, the said Parties have hereunto set
their hands and seals the day and year first above written.

     

    
      
        	
                Witness:

                 

                 

              	 	 	
                Emerald
      Holdings Group, LLC

                Landlord 

              	 
	
              	 	 By: 
      	
              	 
	
                 

              	 	 	
                Amber
      Alert

                Tenant

              	 
	
                 

              	 	 	
              	 
	 	 	 By:surge_8k-ex1089.htm

 

    
      

    

    Exhibit 10.89

     

    
       

    

     

    SETTLEMENT
AGREEMENT

     

    This
agreement (the "Settlement Agreement") is dated and made effective

    as of the
2nd day of February, 2010 (the "Effective Date"),

     

    BETWEEN:

     

    SURGE
GLOBAL ENERGY, INC.

     

    ("Surge")

     

    - and
-

     

    1350826 ALBERTA
LTD. (formerly known

    as
Surge Global Energy (Canada) Ltd. and Signet Energy Inc.)

     

    ("1350826")

     

    - and
-

     

    ANDORA
ENERGY CORPORATION

     

    ("Andora")

     

    WHEREAS:

     

    
      
        	
                A.

              	
                Pursuant
      to a release and indemnification agreement dated November 15, 2005
      between Surge
      and 1350826 (then known as Surge Global Energy (Canada) Ltd.), (the
      "Indemnification Agreement"), Surge
      agreed
      to indemnify and save 1350826 (then known
      as Surge Global Energy (Canada) Ltd.) harmless of and from any
      Damages (as defined
      in the Indemnification Agreement) incurred in respect of, among
      other things, claims by Dynamo Energy
  Corporation;

              

      

    

     

    
      
        	
                B.

              	
                As security
      for the
      indemnification obligations of Surge pursuant to the Indemnification
      Agreement, Surge and
      1350826 (then known as Surge Global Energy (Canada) Ltd.) entered into an escrow agreement (the "Escrow Agreement") with Valiant Trust
      Company
      dated November 15, 2005 pursuant to which Surge deposited 6,300,000
      common shares of
      Surge Global Energy (Canada) Ltd. into escrow to satisfy the amount
      of any Claim
      (as
      defined in the escrow agreement) that 1350826 (then known as Surge Global Energy (Canada) Ltd.)
      became entitled to recover from Surge pursuant to the Escrow
      Agreement;

              

      

    

     

    
      
        	
                C.

              	
                On
      November 16, 2005, Surge Global Energy (Canada) Ltd. changed its
      name to Signet Energy Inc.

              

      

       

    

    
      	
              D.

            	
              Pursuant
      to
      an arrangement agreement dated August 15,
      2007 among Pan Orient Energy Corp., Andora, Signer Energy Inc., 1337686
      Alberta Ltd. and Valiant Trust Company and a plan of arrangement
      (the "Plan of Arrangement") in
      respect thereof approved by the shareholders of Signet Energy Inc. and the
      Court of Queen's Bench (Alberta) (the "Arrangement"), Signet Energy Inc. and
      1337686 Alberta Ltd. were amalgamated to form 1350826 and all of the
      outstanding common shares of Signet Energy inc. were exchanged for common
      shares of Andora on the basis of approximately 0.296895 common shares of
      Andora for each common share of Signet Energy
  Inc.;

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     

    
      
        	
                E.

              	
                Pursuant
      to the Arrangement, 1,500,000 of the common shares of Andora (the "2007 Escrowed Shares") issued in exchange
      for common shares of Signet Energy Inc. were placed into escrow with
      Valiant Trust Company to be held in accordance with the terms and
      conditions of the Plan of
Arrangement;

              

      

    

     

    
      
        	
                F.

              	
                In
      connection with the Arrangement, the 6,300,000 common shares of Surge
      Global Energy (Canada) Ltd. held in escrow pursuant to the Escrow
      Agreement were exchanged for 1,870,439 common shares of Andora (the "2005 Escrowed Shares"), which shares
      remained subject to the terms and conditions of the Escrow
      Agreement;

              

      

    

     

    
      
        	
                G.

              	
                Dynamo
      Energy Corporation filed a claim (the "California Claim") against Surge, Signet
      Energy Inc. and others in the Superior Court of California, County of San
      Diego, however, it was subsequently determined that the
      California court did not have
jurisdiction;

              

      

    

     

    
      
        	
                H.

              	
                Following
      the decision of the California court, Dynamo Energy Corporation filed a
      claim (the "Alberta Claim" and,
      together with the California Claim, the "Dynamo Claims") against Surge, Signet
      Energy Inc., Andora, 1237686 Alberta Ltd., 1350826, David Perez and C.W.
      Leigh Cassidy in the Court of Queen's Bench (Alberta), which claim now
      stands dismissed as a result of the failure of Dynamo Energy Corporation
      to pay security for costs pursuant to an order of the Court of Queen's
      Bench (Alberta) dated June 29,
2009;

              

      

    

     

    
      
        	
                I.

              	
                1350826
      and Andora have incurred certain legal expenses (the "Indemnified Expenses") to the date of
      this settlement Agreement in connection with the Dynamo Claim for which
      Surge is obligated to indemnify and save harmless 1350826 and Andora
      pursuant to the Indemnification
Agreement;

              

      

    

     

    
      
        	
                J.

              	
                Surge,
      1350826 and Andora have agreed to settle the Indemnified Expenses (the
      "Settlement") and wish to formally
      set out herein the terms of the Settlement and such further terms as may
      be necessary in order to give effect
thereto:

              

      

    

     

    NOW THEREFORE, for good and valuable
consideration, the receipt and existence of which is hereby acknowledged, Surge,
1350826 and Andora covenant and agree with each either as follows:

     

    
      	
              1.

            	
              SETTLEMENT

            

    

     

    
      	
              1.1

            	
              Surge,
      1350826 and Andora hereby acknowledge and agree that the. amount of the
      Indemnified Expenses shall be CDN
$600,000.

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     

    
      	
              1.2

            	
              The
      Indemnified Expenses shall be settled in full by the release from escrow
      and delivery of 375,000 of the 2005 Escrowed Shares to Andora for
      cancellation.

            

    

     

    
      	
              1.3

            	
              Following
      the release from escrow and delivery of 375,000 of the 2005 Escrowed
      Shares to Andora,the
      remaining 2005 Escrowed Shares shall be released from escrow and delivered
      to, or to the direction of, Surge and the Escrow Agreement shall be
      terminated in accordance with its
terms.

            

    

     

    
      	
              1.4

            	
              Each of Surge, 1350826 and Andora
      shall execute and deliver to Valiant Trust Company a release notice, substantially
      in the form of the release notice attached as Schedule A hereto, authorizing and directing
      Valiant Trust Company to release the 2005 Escrowed Shares as described in
      paragraphs 1.2 and 1.3 of
      this Settlement Agreement.

            

    

     

    
      	
              1.5

            	
              Following
      the release and delivery of the 2005 Escrowed Shares to Andora pursuant to
      paragraph 1.2 of this Settlement Agreement, Surge shall have no further liability
      to 1350826 or Andora for
      the Indemnified Expenses; provided however that
      Surge shall indemnify and save
      harmless 1350826 and Andora and each of their respective shareholders,
      current and former directors, officers, employees, agents and
      representatives (collectively, the "Indemnified Persons") from and against
      any loss, liability, claim, damage or expense (including legal expenses)
      suffered by, imposed upon or asserted against any of the Indemnified
      Persons after the Effective Date as a result of, in respect of, connected
      with, or arising our of under, or pursuant to the Dynamo Claim. The indemnity contained in
      this paragraph 1.5 shall survive the Settlement and continue in
      full force and effect until August 29,
2011.

            

    

     

    
      	
              1.6

            	
              Following
      the release and delivery of the 2005 Escrowed Shares to Andora pursuant to
      paragraph 1.2 of this Settlement Agreement, Andora shall
      deliver a release
      notice to Valiant Trust Company in accordance with the terms and
      conditions of the
      Plan of Arrangement
      instructing Valiant Trust Company to release the 2007 Escrowed
      Shares to the registered holders thereof in accordance with the terms and
      conditions of the Plan
      of Arrangement.

            

    

     

    
      	
              1.7

            	
              This
      Settlement Agreement shall not prejudice Surge's rights to tax the legal
      fees of Macleod Dixon LLP in connection with their defense of the Dynamo
      Claim; provided however that neither 1350826 nor Andora shall have any
      obligation to
      participate in, assist with or otherwise cooperate with Surge in
      respect of such taxation.

            

    

     

    
      	
              2.

            	
              GENERAL

            

    

     

    
      	
              2.1

            	
              The recitals to this Settlement
      Agreement are hereby incorporated and form part of the agreement between the parties,
      with the same force and effect as if contained in the body of the Settlement
      Agreement

            

    

     

    
      	
              2.2

            	
              This Settlement Agreement
      shall entire to the benefit of and be binding upon the
      respective
      successors and assigns of the parties
  hereto.

            

    

     

    
      	
              2.3 

            	
              Each
      of the parties hereto agrees to execute and deliver, from time to time,
      without further consideration, such further or other deeds or documents
      and to do such other acts and things as may reasonably be required to give
      full force and effect to the terms of this Settlement
      Agreement.

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     

    

    
      	
              2.4

            	
              This
      Settlement Agreement shall be governed in accordance with the laws of the
      Province of Alberta and the parties do hereby irrevocably submit and
      attorn to the jurisdiction of the Courts of the Province of
      Alberta for all matters related to this Settlement Agreement,
      including its validity and
interpretation.

            

    

     

    
      	
              2.5

            	
              Time
      shall be and remain of the essence of this Settlement
      Agreement.

            

    

     

    
      	
              2.6

            	
              This
      Settlement Agreement may be executed
      in any number of counterparts, each of which shall be deemed to be an
      original, and all of which taken together shall be deemed to constitute
      one and the same instrument, and it shall not be necessary in making proof
      of this Settlement Agreement to produce or account for
      more than one full set of
counterparts.

            

    

     

    
      	
              2.7

            	
              Transmittal of a party's originally executed
      execution page of This Settlement Agreement to the other party may be
      by facsimile or PDF, in
      which case such execution shall be deemed to be the same as if an original
      thereof were delivered in
lieu.

            

    

     

    
      	
              2.8

            	
              This
      Settlement Agreement constitutes the entire agreement between the parties
      related to its subject matter and, except as herein stated and in any
      of the instruments
      and documents that may be executed and delivered pursuant hereto,
      contains all of the representations, undertakings, and agreements of the
      respective parties concerning the subject matter hereof.
      There are no verbal representations, undertaking or
      agreements between the parties of any kind related to the subject
      matter hereof except those contained
herein.

            

    

     

     

     

     

     

     

     

     

     

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     

    IN
WITNESS WHEREOF the parties have properly executed this Settlement Agreement
with full authority on behalf of the signatories to do so.

     

    
 

    
      	
              SURGE
      GLOBAL ENERGY, INC.

               

              Per: 
        /s/ E. Jamie
      Schloss                            
      

              CEO

            	
              1350826
      ALBERTA LTD.

               

              Per:  /s/ Greg
      Cave                                  
      

               

               

               

              ANDORA
      ENERGY CORPORATION

               

              Per:  /s/ Greg
      Cave                                   
      

            

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	 
      

    

     

    SCHEDULE
A 

     

    Release
Notice

     

    
      	
              To: 

            	
              Valiant
      Trust Company

            

    

     

    Reference
is made to the escrow agreement (the "Escrow
Agreement") dated November 15, 2005 among Valiant Trust Company (the "Escrow Agent"), 1350826 Alberta Ltd.
(then known as Surge Global Energy (Canada), Ltd.) and Surge Global Energy Inc.
In accordance with the terms of the Escrow Agreement, each of the undersigned hereby
irrevocably authorize and direct the Escrow Agent to release the Escrowed
Shares, consisting of an aggregate of 1,870,439 common shares of Andora Energy
Corporation, as set forth below:

     

    
      	
              1.

            	
              release
      and deliver 375,000
      of the Escrowed Shares to Andora Energy Corporation for
      cancellation; and

            

    

     

    
      	
              2. 

            	
              release
      and deliver the remainder of the Escrowed Shares to Surge Global Energy
      Inc.

            

    

     

    Upon
release and delivery of the Escrowed Shares as aforesaid, the Escrow Agreement
will terminate in accordance with its terms.

     

    All
capitalized terms used, but not otherwise defined, herein shall have the
respective meanings ascribed thereto in the Escrow Agreement.

     

    This
Release Notice may be executed in counterpart, each of which when so executed
shall be deemed to be an
original, and such counterparts shall constitute one and the
same instrument and, notwithstanding their date of execution, shall be
deemed to bear date as of the date of this Release Notice. This Release Notice
shall be considered properly executed by a party if executed by that party and
transmitted by facsimile or transmitted electronically in either Tagged Image
Format Files (TIFF) or
Portable Document Format (PDF).

     

     

    DATED as
of the day of February, 2010.

     

     

     

    
      
        	
                1350826
      ALBERTA LTD.

                
                   

                  Per:  /s/ Greg
      Cave                                  
      

                   

                   

                   

                  ANDORA
      ENERGY CORPORATION

                   

                  Per:  /s/ Greg
      Cave                                   
      

                

                 

                 

                 

              	
                 

                
                  SURGE
      GLOBAL ENERGY, INC.

                   

                  Per: 
        /s/ E. Jamie
      Schloss                            
      

                  CEO

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