Document:

_

ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the “Agreement”) made as of June 30, 2009 between Elecsys International Corporation, a Kansas corporation (the “Buyer”), and MBBS, S.A. (“MBBS” or the “Seller”), a company incorporated under the laws of Switzerland.

RECITALS

WHEREAS, MBBS desires to sell, assign, transfer, convey and deliver to Buyer and Buyer desires to purchase from MBBS the Assets (as defined below) of MBBS, subject to the terms and conditions of this Agreement;

WHEREAS, MBBS desires to assign, transfer, convey and deliver to Buyer and Buyer desires to assume (i) the MBBS Assets (as defined below) and (ii) all of MBBS’s rights and obligations related to the Assumed Liabilities (as defined below), subject to the terms and conditions of this Agreement;

WHEREAS, BSN Systems, Inc. (“BSN”), a Delaware corporation, owns the majority of the outstanding shares of MBBS;

WHEREAS, Buyer is a wholly-owned subsidiary of Elecsys Corporation (“Elecsys”), a Kansas corporation;

WHEREAS, BSN and Elecsys had previously entered into a Stock Purchase Agreement, dated March 19, 2009, whereby BSN had agreed to transfer to Elecsys, and Elecsys had agreed to acquire from BSN, 100% of the outstanding MBBS shares in exchange for Elecsys Common Stock; and

WHEREAS, the Closing of the transaction contemplated by the aforementioned Stock Purchase Agreement was not completed prior to the termination of that agreement which was automatically triggered 90 days after its execution.

NOW THEREFORE, the parties, intending to be legally bound, and in reliance upon the representations, warranties and other terms set forth herein, hereby agree as follows:

1.

Definitions.  Unless the context otherwise requires, the terms defined in this Section will have the meanings herein specified for all purposes of this Agreement:

(a)

“Accredited Investor” has the meaning set forth in Regulation D under the Securities Act and set forth in
Exhibit 1(a).
(b)

“Agreement” means this Asset Purchase Agreement, including all Schedules and Exhibits hereto, as this Agreement may be from time to time amended, modified or supplemented.

(c)

“SEC” means the U.S. Securities and Exchange Commission or any other U.S. federal agency then administering the Securities Act.

 

(d)

“Exchange Act” means the U.S. Securities Exchange Act of 1934 or any similar U.S. federal statute, and the rules and regulations of the SEC thereunder, all as the same will then be in effect.

(e)

“Governmental Authority” means any federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, commission, court, tribunal, official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.

(f)

“Indebtedness” means any obligation, contingent or otherwise.  Any obligation secured by a Lien on, or payable out of the proceeds of, property of the relevant party will be deemed to be Indebtedness.

(g)

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the controlling law of any jurisdiction in which any of the Assets are located and including any lien or charge arising by Law.

(h)

“Elecsys Common Stock” means Elecsys common shares, US $0.01 par value per share.

(i)

“Person” means all natural persons, corporations, business trusts, associations, companies, partnerships, limited liability companies, joint ventures and other entities, governments, agencies and political subdivisions.

(j)

“Securities Act” means the U.S. Securities Act of 1933, as amended, or any similar U.S. federal statute, and the rules and regulations of the SEC thereunder, all as the same will be in effect at the time.

(k)

“Transaction” means the transaction contemplated by this Agreement.

(l)

“Transaction Documents” means, collectively, all agreements, instruments and other documents to be executed and delivered in connection with the transactions contemplated by this Agreement, including any document deemed necessary or appropriate by Buyer to complete the Transaction and implement the objectives stated herein.

(m)

“U.S. Dollars” or “US $” means the currency of the United States of America.

(n)

“U.S.” means the United States of America.

2.

Assets Purchased and Sold.  Subject to the terms and conditions contained in this Agreement, Seller shall sell, assign, transfer, convey and deliver to Buyer all of Seller’s right, title and interest in and to the following assets (collectively, the “Assets”) on the Closing Date (as defined in Section 9 below):

2

(a)

All inventories of raw material, work-in-progress and finished goods of MBBS existing on the Closing Date;

(b)

All fixed assets that are either:  (i) reflected or included on MBBS’ financial statements or general ledger as “Property and Equipment”, or (ii) any equipment, tools, fixtures, or furniture necessary to the operation of MBBS’ business;

(c)

All intellectual property of MBBS, including, but not limited to, all patents, patent applications, designs, process knowledge, trade names, trademarks, service names, service marks, software, business processes, engineering drawings, art work, customer lists, vendor lists, the MBBS Internet URL, names, and phone number, all marketing and collateral material, and any other intellectual property of MBBS;

(d)

All purchase orders from, or contracts with, existing customers;

(e)

All deposits paid by MBBS;

(f)

All accounts receivable of MBBS;

(g)

All records and files necessary or appropriate to own or operate the Assets or perform the obligations explicitly assumed by Buyer; and

(h)

Any other assets of MBBS used in the operation of the MBBS business.

3.

Assignment and Assumption of the Liabilities.  Subject to the terms and conditions contained in this Agreement, on the Closing Date, Seller shall assign, transfer, convey and deliver to Buyer, and Buyer shall assume and pay, all of Seller’s right, title and interest in and to (i) all of  MBBS’ accounts payable existing on the Closing Date, provided that such payables are listed on (and only to the extent of the amount reflected on) Schedule 3 attached hereto, and (ii) all of MBBS’ purchase orders (except those that are not related to operating the business) with vendors, customers and distributors existing on the Closing Date and set forth on Schedule 3.  The items referred to in clauses (i) and (ii) above are collectively referred to as the “Assumed Liabilities”.  On the Closing Date, Buyer shall assume sole responsibility to perform, satisfy and discharge all duties, obligations, terms, conditions and covenants arising after the Closing Date that the Seller is otherwise bound to perform, discharge or otherwise satisfy, to the extent, and only to the extent, such responsibilities, duties, obligations, terms, conditions and covenants are explicitly included in the Assumed Liabilities.  Except as set forth above, Buyer shall not assume, or be liable or responsible for, any liabilities, accounts payable, debts, loans, orders, contracts, agreements, leases, or other obligations of the Seller.

4.

Lease of Premises.  Buyer shall not assume any obligations pursuant to the lease for the premises currently occupied by MBBS (the “Premises”) but shall be granted the right by Seller upon Closing to occupy the Premises on the temporary basis described below.  Buyer will pay Seller a fee each month, equal to the prevailing monthly lease payment for the Premises at the Closing Date, for the right to occupy the Premises for each respective monthly period.  Buyer or Seller may terminate this temporary occupancy arrangement for the Premises at any time upon 30 days’ notice to the other Party.  Buyer shall have no other obligation related to the Premises, and Seller agrees to indemnify and hold Buyer harmless against any and all claims by any third 

3

party related to the Premises; provided, however, Buyer shall not be held harmless from any claims caused by acts or negligence of Buyer or its employees or agents.

5.

Employees of MBBS.  Buyer agrees to offer employment, either as a direct employee or as an independent contractor, to all persons who are full-time employees of MBBS at the time of Closing at a comparable rate of compensation as was being received from MBBS.  This obligation specifically excludes any MBBS employees given notice of termination by MBBS prior to the Closing Date.  If Buyer subsequently terminates any hired MBBS employee, whether they are a direct Buyer employee or an independent contractor, that person shall receive the same notice and severance benefits from Buyer that they would have received had they been terminated by MBBS prior to the Closing Date.

6.

Purchase Price.  In consideration of Seller’s sale of the Assets to Buyer, Buyer unconditionally agrees, in addition to assumption of the Assumed Liabilities, to pay to MBBS at Closing a total of 175,000 Shares of Elecsys Common Stock (hereinafter called the “Purchase Price”).

7.

Contingent Payments.  In addition to the Purchase Price to be paid at Closing, upon satisfaction of the conditions set forth in this Section 7, Buyer may make payments (“Contingent Payments”) to MBBS, or entities designated by MBBS, provided those entities are Accredited Investors, in the form of additional issued shares of Elecsys Common Stock (or U.S. Dollars of equivalent value, as discussed below) upon completion of each of the five (5) Elecsys fiscal years following Closing, as follows:

(a)

At the conclusion of each of Elecsys’ subsequent 5 fiscal years (the Elecsys fiscal year in which this Transaction closes shall be the first such year), the percentage of gross revenue contributed to Elecsys by MBBS RFID technology (“MBBS Related Revenue”) relative to Elecsys’ overall gross revenue (the “Revenue Ratio”) shall be calculated.  The calculation of MBBS Related Revenue shall be as follows:

(i)

MBBS Related Revenue is defined as fifty-percent (50%) of the gross revenue from any order for products or services shipped or provided by Elecsys that contains or uses RFID technology that was developed, or was in development, by MBBS at the time of this Agreement (the “MBBS RFID Technology”).  This excludes any RFID technology acquired by Buyer independently of this Transaction, and any RFID technology wholly developed by Buyer after the date of this Agreement.  The parties agree that all MBBS RFID Technology is accurately described on
Exhibit 7(a)(i)of this Agreement.  No technology will be deemed to be MBBS RFID Technology if it is not listed on
Exhibit 7(a)(i).
(ii)

New RFID technology resulting from a material modification of MBBS RFID Technology will be deemed to be wholly developed after the date of this Agreement.

(b)

At the end of each of Elecsys’ subsequent 5 fiscal years, if the Revenue Ratio, calculated under Section 7(a), is greater than the percentage of the total cumulative 

4

outstanding Elecsys Common Stock issued to MBBS, or its designated entities, Buyer shall issue additional Elecsys Common Stock to MBBS, or its designated entities, in an amount that causes the Revenue Ratio and the percentage of the outstanding Elecsys Common Stock cumulatively issued to MBBS, or its designated entities, to be equal.  Provided however, that in no event shall the total number of shares of Elecsys Common Stock issued by Buyer under this Agreement exceed 800,000 shares (including the 175,000 shares issued at Closing and including any number of shares as to which cash is issued as a substitute pursuant to Section 8).

(c)

At the end of each of Elecsys’ subsequent 5 fiscal years, if the Revenue Ratio is less than or equal to the percentage of Elecsys Common Stock cumulatively issued to MBBS, or its designated entities, then no additional Elecsys Common Stock shall then be issued.

8.

Option to Provide Consideration in U.S. Dollars.  If the total number of shares of Elecsys Common Stock issued pursuant to this Agreement exceeds 659,000, notwithstanding the provisions of Section 7 above, Buyer may, at its sole discretion, elect to pay the additional consideration in U.S. Dollars instead of Elecsys Common Stock.  If Buyer so elects, the amount to be paid will be calculated by multiplying the number of shares of Elecsys Common Stock that would otherwise be issued under Section 7 above by the trailing 365-day average closing price for the preceding Elecsys fiscal year.

9.

Closing.  The closing (“Closing”) shall take place at the offices of MBBS, S.A. in Cortaillod, Neuchatel, Switzerland on June 30, 2009 (the “Closing Date”).  The Closing shall be effective as of 11:59 p.m. (23h59) local time on the Closing Date.

10.

Representations and Warranties of MBBS.  MBBS hereby represents and warrants to Buyer as to each of the following:

(a)

Authority.  Seller has the right, power, authority and capacity to execute and deliver this Agreement and to perform its obligations under this Agreement.

(b)

No Conflict.  Neither the execution nor delivery by the Seller of this Agreement nor the performance by the Seller of the transactions contemplated hereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the bylaws, articles of incorporation, or similar charter document of MBBS; (b) contravene, conflict with, constitute a default (or an event or condition that, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the imposition or creation of any Lien under, any agreement or instrument to which the Seller is a party or by which the Assets are bound; or (c) contravene, conflict with, or result in a violation of, any laws to which the Seller, or the Assets may be subject.

(c)

Ownership.  Seller is the sole owner of all Assets and all Assets will be assigned, transferred, conveyed and delivered to Buyer free and clear of any and all Liens.

5

(d)

Enforceability.  MBBS is a corporation duly organized, validly existing and in good standing under the laws of Switzerland.  MBBS has the full power and authority to perform hereunder, and to consummate the transactions contemplated hereby, without the necessity of any act, approval, or consent of any other person, entity, or governmental authority.  This Agreement, when executed, will constitute the valid and binding obligation of MBBS, enforceable against it according to its terms.

(e)

Compliance.  MBBS is not, and performance of its obligations hereunder will not cause it to be, in violation of any law, rule, regulation or court order, local state or federal, pertaining to the operation or conduct of its business.  There are no judgments, suits, actions, investigations or proceedings pending or threatened in any court or by any governmental authority or private arbitration tribunal against MBBS or the completion of the transaction contemplated herein, nor is there any basis for any of the foregoing.

(f)

Taxes.  MBBS has filed in true and correct form all federal, state, provincial, and local tax returns and other reports required to be filed, and has paid all taxes and assessments which have become due and payable, whether or not so shown on any such return or report.  MBBS has received no notice of, nor does MBBS have any knowledge of, any notice of deficiency or assessment or proposed deficiency or assessment from any taxing governmental authority. There are no audits pending with respect to MBBS and there are no outstanding agreements or waivers by or with respect to MBBS that extend the statutory period of limitations applicable to any federal, state, provincial, local or foreign tax returns or taxes for any period.  There are no determined tax deficiencies or proposed tax assessments against MBBS.

(g)

Creditors.  MBBS has paid all bills, invoices and other obligations due to all creditors of MBBS as of the Closing Date, and will promptly pay all bills, invoices and other obligations to all creditors of MBBS that may arise after the Closing Date.

(h)

Consents.  MBBS has obtained in writing all consents of third persons and governmental agencies necessary to permit the valid and effective sale, assignment, transfer and conveyance of the Assets to the Buyer.

(i)

Adverse Action.  There is no litigation, action, claim, proceeding or governmental investigation pending or threatened against MBBS which may have an adverse effect upon the Assets, the business conducted by MBBS, the transactions contemplated by this Agreement or the ability of the parties hereto to perform their respective obligations hereunder or under the agreements or instruments contemplated by this Agreement, nor is there any basis known for any such litigation, action, claim proceeding or governmental investigation, nor has MBBS been a party to any litigation, action, claim, proceeding or governmental investigation during the two (2) years prior to the Closing Date.

(j)

Asset Condition.  All of the tangible Assets are in good order, repair and operating condition subject, however, to the effect of ordinary wear and tear and depreciation arising from lapse of time or use with appropriate maintenance.

6

(k)

Investment Representations.

(i)

Acknowledgment.  MBBS understands and agrees that the Elecsys Common Stock to be issued pursuant to this Agreement has not been registered under the Securities Act or the securities laws of any state of the U.S. or any foreign jurisdiction and that the issuance of Elecsys Common Stock is being effected in reliance upon an exemption from registration afforded under Regulation D of the Securities Act for transactions by an issuer not involving a public offering.

(ii)

Status.  By its execution of this Agreement, MBBS represents and warrants to Buyer that it is an Accredited Investor.

(iii)

Reliance.  MBBS understands that the shares of Elecsys Common Stock are being offered and sold in reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of MBBS set forth in this Agreement, in order that Buyer and Elecsys may determine the applicability and availability of the exemptions from registration of Elecsys Common Stock on which Elecsys is relying.

(iv)

Additional Representations and Warranties of Accredited Investors.  MBBS makes the representations and warranties to Buyer and Elecsys set forth on
Exhibit 10(c)(iv).

11.

Representations and Warranties of Buyer.  Buyer hereby represents and warrants to Seller as follows:

(a)

Organization and Qualification.  Buyer is duly organized, validly existing and in good standing under the laws of the State of Kansas, has all requisite authority to carry on its business as presently conducted, and to own, hold, and operate its properties and assets as now owned.

(b)

Authorization.  Buyer has all requisite authority and power to enter into this Agreement.  The execution, delivery and performance by Buyer of this Agreement have been duly authorized by all necessary corporate action and do not require from the Buyer Board or the stockholders of Buyer any consent or approval that has not been validly and lawfully obtained.

(c)

No Violation.  Neither the execution by Buyer of this Agreement nor the performance by Buyer of the transactions contemplated hereby will directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the Articles of Incorporation or Bylaws of Buyer; (b) contravene, conflict with, constitute a default (or an event or condition that, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the imposition or creation of any Lien under, any agreement or instrument to which Buyer is a party or by which the properties or assets of Buyer are bound; (c) contravene, conflict with, or result in a violation of, any law or order to which Buyer, or any of the properties or assets 

7

owned or used by Buyer, may be subject; or (d) contravene, conflict with, or result in a violation of, the terms or requirements of, or give any governmental authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any licenses, permits, authorizations, approvals, franchises or other rights held by Buyer or that otherwise relate to the business of, or any of the properties or assets owned or used by, Buyer, except for any such contraventions, conflicts, violations, or other occurrences as would not have a material adverse effect on Buyer.

12.

Conditions to Obligation to Close.  Each and every obligation of Buyer and Seller to be performed in connection with the Closing on the Closing Date shall be subject to the satisfaction of the following conditions:

(a)

A Bill of Sale executed by Seller in the form attached hereto as
Exhibit 12(a)selling, assigning and transferring to Buyer all right, title and interest in and to any and all property comprising Assets;

(b)

Seller shall provide written consents of any third parties necessary to permit the valid and effective sale, assignment, transfer and conveyance of the Assets in a form acceptable to Buyer;

(c)

The appropriate assignments necessary to transfer record ownership to Buyer of all of the intellectual property of MBBS, in a form acceptable to Buyer.

13.

Post Closing Agreements and Obligations.
(a)

At any time and from time to time after the Closing, at the Buyer’s request and without further consideration, the Seller promptly shall execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take such other action, as the Buyer may reasonably request to more effectively transfer, convey and assign to the Buyer, and to confirm the Buyer’s title to, the Assets, to put the Buyer in actual possession and operating control of the Assets, to assist the Buyer in exercising all rights with respect thereto and to carry out the purpose and intent of this Agreement.

(b)

MBBS hereby agrees with Buyer that the certificates evidencing Elecsys Common Stock to be issued hereunder to MBBS and any certificate issued in transfer thereof, will bear the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO 

8

THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

(c)

MBBS will not transfer any Elecsys Common Stock absent an effective registration statement under the Securities Act and applicable securities laws of any other jurisdiction applicable covering the disposition of such Elecsys Common Stock without first providing Elecsys with an opinion of counsel (which counsel and opinion are reasonably satisfactory to Elecsys) to the effect that such transfer will be exempt from the registration and prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable securities laws of any other jurisdiction.

(d)

MBBS understands and acknowledges that Elecsys may decline to permit the transfer of Elecsys Common Stock, unless MBBS complies with Section 13(c) and any other restrictions on transferability under applicable law.  MBBS consents to Elecsys making a notation on its records or giving instructions to any transfer agent of Elecsys’ Common Stock in order to implement the restrictions on transfer of Elecsys Common Stock.

14.

Indemnification and Resolution of Disputes.

(a)

Seller’s Indemnification.  MBBS agrees to defend, indemnify and hold harmless Buyer against, and in respect of, any and all loss, liability and expense resulting from: (i) the inaccuracy of any representation or breach of warranty or non-fulfillment of any obligation by MBBS under this Agreement; (ii) any liabilities, accounts payable or other obligations relating to its use of the Assets or its conduct of the ongoing business other than the Assumed Liabilities; and (iii) any and all actions, suits, proceedings, claims, demands, assessments, tax deficiencies, judgments, costs and expenses (including attorneys’ fees) incident to any of the foregoing provisions.

(b)

Buyer’s Indemnification.  Buyer agrees to defend, indemnify and hold harmless MBBS against, and in respect of, any and all loss, liability and expense resulting from (i) the inaccuracy of any representation or breach of warranty or non-fulfillment of any obligation by Buyer under this Agreement, and (ii) any act or negligence of Buyer, its officers, employees, and agents occurring subsequent to the Closing and directly related to its use of the Assets or its conduct of the ongoing business.

(c)

Claims Procedure.  Promptly after receipt by a party of written notice of a claim or the assertion or commencement of any litigation with respect to any matter referred to in paragraphs (a) or (b) above, that party shall give written notice of such claim to the other party and thereafter shall keep the other party reasonably informed with respect to that claim; provided, however, that failure of a party to give notice as provided in this section shall not relieve the other party of its obligations hereunder unless such failure prejudices or adversely effects the other party’s obligations hereunder.  If any 

9

litigation is brought against a party, the other party shall be entitled to participate in such litigation, at its own expense.  If a party assumes the defense of any litigation, it shall not settle the litigation unless the settlement shall include, as an unconditional term thereof, the giving by the claimant or plaintiff of a release of the other party, satisfactory to the other party, from all liability with respect to such litigation.

15.

Expenses and Fees.  Each party to this Agreement shall pay its own expenses incidental to the negotiation, preparation, execution and performance of this Agreement and the transaction contemplated hereby, including, but not limited to, the fees and expenses of their respective legal counsel, brokers and accountants.  MBBS shall pay any sales, use or transfer taxes or fees in connection with the transaction contemplated hereby.  In any action brought by a party hereto to enforce the obligations of any other party hereto, the prevailing party shall be entitled to collect from the opposing party to such action such party’s reasonable litigation costs and attorneys fees and expenses (including court costs, reasonable fees of accountants and experts, and other expenses incidental to the litigation).

16.

Voting Elecsys Stock.  MBBS agrees that, for so long as it is a stockholder of Elecsys Common Stock acquired pursuant to this Agreement, at every meeting at which a vote of the holders of Elecsys Common Stock occurs, to vote the Elecsys Common Stock to be issued under this Agreement in the same percentage as the overall vote cast by other Elecsys stockholders.  MBBS hereby grants to Elecsys an irrevocable proxy, deemed to be coupled with an interest, that authorizes the Board of Directors of Elecsys to appoint a proxy to vote the Elecsys Common Shares issued hereunder in accordance with this provision.

17.

Public Announcements.  Prior to the Closing Date, MBBS and Buyer shall consult with each other in issuing any other press releases or otherwise making public statements or filings and other communications with the SEC or any regulatory agency or stock market or trading facility with respect to the transactions contemplated hereby.

18.

Entire Agreement.  This Agreement constitutes the entire agreement among the parties and supersedes any and all other agreements, either oral or written, among the parties with respect to the subject matter hereof.

19.

Counterparts.  This Agreement may be executed in multiple counterparts.  Each shall be deemed an original and together the counterparts shall constitute but a single agreement.

20.

Governing Law.  This Agreement shall be considered in accordance with and be governed by the laws of the State of Kansas.

21.

Choice of Forum.  The Parties to this Agreement agree that any dispute arising among them under the terms of this Agreement, or out of the duties to be performed by the Parties to this Agreement, shall be resolved in the courts of the State of Kansas.  Those courts shall apply the whole law of the State of Kansas, without regard to conflicts of laws principles.

22.

Survival.  The provisions of this Agreement shall survive the Closing Date in accordance with the following provisions:

10

(a)

The warranties and representations made by each party in this Agreement shall survive for a period of thirty-six (36) months.

(b)

All agreements, covenants, and obligations on the part of each party to be performed or observed hereunder shall survive for a period specified by the applicable statute or period of limitations.

[Signature Page to Follow]

11

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written, intending to be legally bound.

MBBS, S.A.

Elecsys International Corporation

By:
/s/ Andreas Schweitzer
By:
/s/ Karl B. Gemperli

Name: Andreas Schweitzer

Name: Karl B. Gemperli

Title: Director

Title: President & Chief Executive Officer

12

Exhibit 1(a)

Definition of “Accredited Investor”
The term “accredited investor” means:

(1)

A bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”) or a business development company as defined in Section 2(a)(48) of the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of US $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of US $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

(2)

A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

(3)

An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US $5,000,000.

(4)

A director or executive officer of Elecsys.

(5)

A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his or her purchase exceeds US $1,000,000.

(6)

A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

(7)

A trust, with total assets in excess of US $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) (i.e., a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment).

 

(8)

An entity in which all of the equity owners are accredited investors.

 

Exhibit 7(a)(i)

Schedule of “MBBS RFID Technology”

					
	
Patent Title
	
Patent or Application or Publication #
	
Priority
	
Status
	
Protection

	Low power passive transponder
	US 6891475 

EP 1301898
	
07/2000
	
Granted in EU, USA

 
	
Chip P4057

	High sensitivity 

reader 
	
US 7014111 
EP 1132032
	07/2000
	Granted in EU, USA

 
	
Reader

	Transponder and reader system

 
	
US 7240838
	
12/2005
	
Granted in USA
	System

	Transponder and tool for reading and or writing data in said transponder

 
	
EP 1552471  
US 10/531599
	10/2002
	Granted in EU, Applied in USA
	Detachable Antenna

	Compact Passive Transponder
	EP 06763635.7  

WO 2006/134082
	06/2005
	Applied in EU
	Medical TAG process

 

	Medical instrument

and its identification Process
	EP 05109502.4

EP 1774 917
	10/2005
	Applied in EU
	Medical Instr. process

 
 

	Watch case base and method for making same

 
	
EP 1470453  
US 10/527817
	12/2001
	Granted in EU, Applied in USA
	Application  for watches

	Stock management method and adapted devices

 
	
CH 694873
	
09/2000
	
Granted in Switzerland
	Application for watches

	Part of clothing containing an RFID element

 
	
CH 695637
	
06/2002
	
Granted in Switzerland
	Application for clothing

	Electronic label for identification of containers, and container and nozzle top comprising one such label
	EP 1604330  

US 7423531
	
03/2003
	
Applied in EU, Granted in USA
	Application for perfumes

 

TAGs
MediTAGTM plastic 5.6 105 0051

MediTAGTM metal 7.4 103 0037
MediTAGTM 1/2 metal 6.6 103 0054

MediTAGTM container 50x39 (for Wagner containers) 103 0056

MediTAGTM container 88x42 (for Wagner containers) 103 0059

MediTAGTM container 50x18 (for Aesculap type containers) 103 0055

MediTAGTM container 50x39 (for Martin containers) 105 0050

MediTAGTM clip 40x35 (for trays) 103 0057

MediTAGTM tray 70x40 (for trays) 105 0059

Sticker TAG 34 RO 100 0001
Sticker TAG 34 RW2k 100 0004

Half metal TAG 7.4 RW2k 103 0038
Half metal TAG 42 RW512 103 0044

Half metal TAG 42 RW2k 103 0025
Plastic tie-wrap TAG RW512 105 0064

Plastic tie-wrap TAG RW2k 105 0077
Plastic TAG 5.6 RW512 105 0063

Plastic TAG 5.6 RW2k 105 0055
Plastic TAG 14 RW512 105 0075

Plastic TAG 14 RW2k 105 0076
Plastic TAG 9 RW512 105 0078

Plastic TAG 9 RW2k 105 0079
Aesculap Active MW Tag

Readers
Set L10-Zigbee-Wireless Reader 205 0031

L5-CF-WAP reader 205 0023
L5-CF-PDA reader 205 0017

L10-USB-Pen reader 205 0014
L10-USB-Tray reader 200 0016

L10-100PIN-WAP reader 205 0026
L10-100PIN-Pen-WAP reader 205 0028

L10-USB-ID-Pen-WAP reader 205 0037

Demo kits
Medical demo kit (consisting of # 109.0005, 109.0006, 105.0059, 103.0037, 205.0014, reconstitution kit demo software).

 

Exhibit 10(c)(iv)

ACCREDITED INVESTOR REPRESENTATIONS
MBBS further represents and warrants to Elecsys, as to itself and to all persons who own any of the equity of MBBS, as follows:

1.

Such Person qualifies as an Accredited Investor.

2.

Such Person has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such Person’s interests in connection with the transactions contemplated by this Agreement.

3.

Such Person has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in Elecsys Common Stock.

4.

Such Person understands the various risks of an investment in Elecsys Common Stock and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in Elecsys Common Stock.

5.

Such Person has had access to Elecsys’s publicly filed reports with the SEC.

6.

Such Person has been furnished during the course of the transactions contemplated by this Agreement with all information regarding Elecsys that such Person has requested and all such information is considered by such Person to be sufficient for such Person to evaluate the risks of investing in Elecsys Common Stock.

7.

Such Person has been afforded the opportunity to ask questions of and receive answers concerning Elecsys and the terms and conditions of the issuance of Elecsys Common Stock.

8.

Such Person is not relying on any representations and warranties concerning Elecsys made by Elecsys or any officer, employee or agent of Elecsys, other than those contained in this Agreement.

9.

Such Person is acquiring Elecsys Common Stock for such Person’s own account, for investment and not for distribution or resale to others.

10.

Such Person will not sell or otherwise transfer Elecsys Common Stock, unless either (a) the transfer of such securities is registered under the Securities Act or (b) an exemption from registration of such securities is available.

11.

Such Person understands and acknowledges that Elecsys is under no obligation to register Elecsys Common Stock for sale under the Securities Act.

12.

Such Person consents to the placement of a legend on any certificate or other document evidencing Elecsys Common Stock substantially in the form set forth in Section 4.2.5.

 

13.

Such Person represents that the address furnished by such Person in Exhibit A is such Person’s principal residence if he is an individual or its principal business address if it is a corporation or other entity.

14.

Such Person understands and acknowledges that the purchase of shares of Elecsys Common Stock has not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning Elecsys that has been supplied to such Person and that any representation to the contrary is a criminal offense.

15.

Such Person acknowledges that the representations, warranties and agreements made by such Person herein shall survive the execution and delivery of this Agreement and the purchase of Elecsys Common Stock.

KCP-1699151-2

Exhibit 12(a)

Bill of Sale, Assignment, and Assumption Agreement
This Agreement is made as of June 30, 2009, between Elecsys International Corporation, a Kansas corporation (the “Buyer”), and MBBS, S.A. (“MBBS”), a company incorporated under the laws of Switzerland (collectively the “Seller”).  Unless otherwise indicated, capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms in the Asset Purchase Agreement (as defined below).

WHEREAS, MBBS and Buyer have entered into that certain Asset Purchase Agreement, dated June 30, 2009 (the “
Asset Purchase Agreement”), pursuant to which, among other things, MBBS agreed to sell to Buyer and Buyer agreed to purchase from MBBS the Assets, and Buyer agreed to assume the sole responsibility to perform, satisfy and discharge all duties, obligations, terms, conditions and covenants regarding or in connection with the Assumed Liabilities.

NOW, THEREFORE, pursuant and subject to terms of the Asset Purchase Agreement and in consideration of the mutual covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:

1.

MBBS hereby sells, assigns, conveys, transfers, and delivers to Buyer all of MBBS’ right, title, and interest in, to, and under the Assets and any goodwill associated with those Assets, and Buyer hereby purchases and accepts from MBBS, as of the date hereof, all right, title, and interest of MBBS in, to, and under the Assets and any goodwill associated with those Assets.

2.

Buyer hereby assumes responsibility to perform, satisfy and discharge all duties, obligations, terms, conditions and covenants arising after the Closing Date that MBBS is otherwise bound to perform, discharge or otherwise satisfy, to the extent and only to the extent such responsibilities, duties, obligations, terms, conditions and covenants are explicitly included in the Assumed Liabilities.

3.

From time to time, at the request of Buyer, MBBS will do, execute, acknowledge, and deliver, or will cause to be done, executed, acknowledged, and delivered, all such further acts, documents, and instruments that may reasonably be requested by Buyer to give full effect to the intent of this Agreement.

4.

This Agreement is being delivered pursuant to the Asset Purchase Agreement and will be construed consistently therewith.  This Agreement is not intended to, and does not, in any manner enhance, diminish, or otherwise modify the rights and obligations of the parties under the Asset Purchase Agreement.  To the extent that any provision of this Agreement conflicts or is inconsistent with the terms of the Asset Purchase Agreement, the terms of the Asset Purchase Agreement will govern.

5.

This Agreement may be executed in multiple counterparts (each of which will be deemed an original, but all of which together will constitute one and the same instrument), and may be delivered by electronic mail or facsimile transmission, with originals to follow.

 

6.

This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

7.

Notwithstanding anything in this Agreement or the Asset Purchase Agreement to the contrary, any and all obligations and liabilities of MBBS arising prior to June 30, 2009, whether accrued or contingent or due or not due, that are not specifically assumed herein and therein, shall be and remain the sole obligations and liabilities of MBBS, to pay and discharge, and Buyer shall not be obligated in any respect therefor.

8.

This Agreement in all respects shall be interpreted, construed and governed by and in accordance with the laws of the State of Kansas.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective duly authorized officers as of the date first above written.

MBBS, S.A.

Elecsys International Corporation

By:
/s/ Andreas Schweitzer
By:
/s/ Karl B. Gemperli

Name: Andreas Schweitzer

Name: Karl B. Gemperli

Title: Director

Title: President & Chief Executive Officeremployeeagreement.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EMPLOYMENT
AGREEMENT

     

    THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is executed and effective on June 30,
2009, by and between Pinnacle Energy Corp., a Nevada corporation (the “Company”)
and David Walters, a resident of Laguna Niguel, California, (the
“Executive”).

     

    Recitals

     

    A. The
Company and Executive desire to enter into an agreement pursuant to which
Executive will be employed as the Chairman of the Board and Chief Executive
Officer of the Company on the terms and conditions set forth in this
Agreement.

    

    B. Certain
definitions are set forth in Section 4 of this
Agreement.

     

    Agreement

     

    The
parties hereto agree as follows:

     

    1. Employment.  The Company hereby
engages Executive to serve as the Chairman of the Board and Chief Executive
Officer of the Company, and Executive agrees to serve the Company, during the
Service Term (as defined in Section 1(f) hereof)
in such capacities, subject to the terms and conditions set forth in this
Agreement.

    

    (a) Services.  During the Service
Term, Executive, as Chairman of the Baord and Chief Executive Officer of the
Company, shall have all the duties and responsibilities customarily rendered by
the Chairman of the Board and Chief Executive Officer of companies of similar
size and nature and as may be reasonably assigned from time to time by the
Board.  Executive will report directly to the Board. 

    

    (b)  Salary, Bonus and
Benefits.

    

    i. Salary
and Bonus. 
During the Service Term, the Company will pay Executive an annual base salary
(the “Annual Base Salary”) of One Hundred Eighty
Thousand Dollars ($180,000); provided, however, that the
Annual Base Salary shall be subject to review annually (at the end of each of
fiscal year of the Company) by the Board for upward increases thereon.  The
Company will pay Executive an initial bonus (the “Initial Bonus”) of 500,000 shares of the
Company’s restricted common stock and Executive will be eligible to receive an
annual bonus at the discretion of the Board of Directors.

    

    ii. Benefits.  During the Service
Term, Executive shall be entitled to:  (A)  participate in
and shall receive all benefits under pension benefit plans provided by the
Company (including without limitation participation in any Company incentive,
savings and retirement plans, practices, policies and programs) to the extent
applicable generally to other peer executives of the Company.  In addition,
during the Service Term, the Executive and/or the Executive’s family shall be
entitled to participate and shall receive all benefits under welfare plans
provided by the Company (including without limitation medical prescriptions,
dental, disability, employee life, group life, accidental life and travel
accident insurance plans and plans) to the extent and on the same basis
applicable generally to other peer executives of the Company; (B) be reimbursed
for customary travel and other expenses, subject to standard and reasonable
documentation requirements; and (C) receive four weeks paid vacation per
annum.  Any unused vacation time during each fiscal year shall be
rolled-over to the following fiscal year to the extent permitted by the
Company’s policies for other senior executives of the Company.

    

    (c) Termination.

    

    i. Events of
Termination.  Executive’s employment
with the Company shall cease upon:

    (A) Executive’s
death;

    

    (B) Executive’s
voluntary retirement;

    

    (C) Executive’s
permanent disability, which means his incapacity due to physical or mental
illness such that he is unable to perform the essential functions of his
previously assigned duties for a period of thirty (30) days in any twelve (12)
month period and such permanent incapacity has been determined to exist by
either (x) the Company’s disability insurance carrier or (y) by the Board in
good faith based on competent medical advice in the event that the Company does
not maintain disability insurance on Executive;

    

    (D) Termination
by the Company by the delivery to Executive of a written notice from the Board
that Executive has been terminated (“Notice of Termination”) with or without
Cause.  “Cause” shall mean:

    

    (1) Executive’s
(a) conviction of a felony; (b) Executive’s commission of any other material act
or omission involving dishonesty or fraud with respect to the Company or any of
its Affiliates or any of the customers, vendors or suppliers of the Company or
its Subsidiaries; (c) Executive’s misappropriation of material funds or assets
of the Company for personal use; or (d) Executive’s engagement in unlawful
harassment or other discrimination with respect to the employees of the Company
or its Subsidiaries;

    (2) Executive’s
continued substantial and repeated neglect of his duties, after written notice
thereof from the Board, and such neglect has not been cured within thirty (30)
days after Executive receives notice thereof from the Board;

    (3) Executive’s
willful misconduct in the performance of his duties hereunder that is materially
injurious to the Company;

    
      	
               
      

            	
               

            

    

    (4) Executive’s
engaging in conduct constituting a breach of Sections 2 or 3 hereof that is not
cured in full within fifteen (15) days after  notice of default thereof,
from the Company; or

    
      	
               
      

            	
               

            

    

      

    (E) Executive’s
voluntary resignation by the delivery to the Company and the Board of at least
thirty (30) days written notice from Executive that Executive has resigned with
or without Good Reason.  “Good Reason” shall mean Executive’s resignation
from employment with the Company within 30 days after the occurrence of any one
of the following:

    (1) the
failure of the Company to pay an amount owing to Executive hereunder after
Executive has provided the Company and the Board with written notice of such
failure and such payment has not thereafter been made within fifteen (15) days
of the delivery of such written notice;

    

    (2) the
relocation of Executive from the corporate headquarters metropolitan area
(as  of the date of this agreement) without his consent.

    
      	
               
      

            	
               

            

    

    
      	
               
      

            	
               

            

    

    ii. Date of
Termination.  Date of Termination means (i) if the employment is
terminated for Cause, or by Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii) if the
employment is terminated other than for Cause or Disability, the Date of
Termination shall be the date on which the Employer notifies the Employee of
such termination and (iii) if the Employee’s employment is terminated by reason
of death or disability, the date of Termination shall be the date of death or
the disability effective date, as the case may be.

    
      	
               
      

            	
               

            

    

    iii. Rights on
Termination.

    

    (A) In the
event that termination is by the Company without Cause or by Executive with Good
Reason, the Company will continue, for a period of six (6) months commencing on
the effective date of the termination (the “Severance Period”), to pay Executive a monthly
or bi-weekly portion of the Annual Base Salary on regular salary payment
dates.  The payments of Annual Base Salary in accordance with this Section 1(c)(iii)(A)
are referred to as “Severance Payments.” This Section 1(c)(iii)(A)
shall not apply unless the Company and Executive have executed a contingent
mutual release in a form mutually acceptable to both the Company and Executive
and is subject to paragraph (e)
below.  In addition, the Company will pay to Executive in a lump sum any
accrued but unused vacation time.

     

    (B) If the
Company terminates Executive’s employment for Cause, or if Executive resigns
without Good Reason (including by operation of the last paragraph of Section 1(c)(i)(E)),
or if Executive’s employment is terminated by the expiration of this Agreement,
the Company’s obligations to pay any compensation or benefits under this
Agreement (other than accrued but unused vacation time which shall be paid to
Executive in a lump sum payment) and all vesting under all stock options held by
Executive will cease effective as of the date of termination.  Executive’s
right to receive any other health or other benefits, if any, will be determined
under the provisions of applicable plans, programs or other
coverages.

    
      	
               
      

            	
               

            

    

    (C) If
Executive’s employment terminates because of  Executive’s death or
permanent disability, then Executive or his estate shall be entitled to any
disability income or life insurance payments from any insurance policies (other
than any  key man life insurance policy) paid for by the Company.  In
addition, if such death or disability occurs while Executive is employed
hereunder, for a period of six (6) months commencing on the date of such death
or such disability is established, Executive or his estate shall be entitled to
payment of his monthly or bi-weekly portion of the Annual Base Salary on regular
salary payment dates.

    
      	
               
      

            	
               

            

    

    Notwithstanding
the foregoing, the Company’s obligation to Executive for severance pay or other
rights under either subparagraphs (A) or
(B) above (the
“Severance Pay”) shall
cease if Executive is found by a court of law to be in material violation of the
provisions of Sections
2 or 3 hereof.  Until such time as Executive has received all of his
Severance Payments, he will be entitled to continue to receive any health, life,
accident and disability insurance benefits provided by the Company to Executive
under this Agreement.

    

     

    (d) Mitigation. The Company’s obligation to
continue to provide Executive with the Severance Payments pursuant to Section 1(c)(iii)(A)
above and the benefits pursuant to the second sentence of Section 1(c)(iii)(C)
above shall cease if Executive becomes employed as a senior executive by a third
party.

     

    (e) Liquidated
Damages. The
parties acknowledge and agree that damages which will result to Executive for
termination by the Company without Cause shall be extremely difficult or
impossible to establish or prove, and agree that the Severance Payments shall
constitute liquidated damages for any breach of this Agreement by the Company
through the Date of Termination.  Executive agrees that, except for such
other payments and benefits to which Executive may be entitled as expressly
provided by the terms of this Agreement or any applicable Benefit Plan, such
liquidated damages shall be in lieu of all other claims that Executive may make
by reason of termination of his employment or any such breach of this Agreement
and that, as a condition to receiving the Severance Payments, Executive will
execute a contingent mutual release of claims in a form reasonably satisfactory
to both the Company and Executive.

     

    (f) Term of
Employment. 
Unless Executive’s employment under this Agreement is sooner terminated as a
result of Executive’s termination in accordance with the provisions of Section 1(c) above,
Executive’s employment under this Agreement shall commence on June 30, 2009, and
shall terminate on June 29, 2010 (the “Service Term”).

    

    

    2. Confidential Information;
Proprietary Information, etc.

    

    (a) Obligation
to Maintain Confidentiality. Executive acknowledges that any Proprietary
Information disclosed or made available to Executive or obtained, observed or
known by Executive as a direct or indirect consequence of his employment with or
performance of services for the Company or any of its Affiliates during the
course of his performance of services for, or employment with, any of the
foregoing Persons (whether or not compensated for such services) and during the
period in which Executive is receiving Severance Payments, are the property of
the Company and its Affiliates.  Therefore, Executive agrees that he will
not at any time (whether during or after Executive’s term of employment)
disclose or permit to be disclosed to any Person or, directly or indirectly,
utilize for his own account or permit to be utilized by any Person any
Proprietary Information or Records for any reason whatsoever without the Boards
consent, unless and to the extent that (except as otherwise provided in the
definition of Proprietary Information) the aforementioned matters become
generally known to and available for use by the public other than as a direct or
indirect result of Executive’s acts or omissions to act. Executive agrees to
deliver to the Company at the termination of his employment, as a condition to
receipt of the next or final payment of compensation, or at any other time the
Company may request in writing (whether during or after Executive’s term of
employment), all Records which he may then possess or have under his control.
Executive further agrees that any property situated on the Company’s or its
Affiliates premises and owned by the Company or its Affiliates, including disks
and other storage media, filing cabinets or other work areas, is subject to
inspection by Company or its Affiliates and their personnel at any time with or
without notice.  Nothing in this Section 2(a) shall be
construed to prevent Executive from using his general knowledge and experience
in future employment so long as Executive complies with this Section 2(a) and the
other restrictions contained in this Agreement.

    

    (b) Ownership
of Property.
Executive acknowledges that all inventions, innovations, improvements,
developments, methods, processes, programs, designs, analyses, drawings, reports
and all similar or related information  (whether or not patentable) that
relate to the Company’s or any of its Affiliates actual or anticipated business,
research and development, or existing or future products or services and that
are conceived, developed, contributed to, made, or reduced to practice by
Executive (either solely or jointly with others) while employed by the Company
or any of its Affiliates (including any of the foregoing that constitutes any
Proprietary Information or Records) (“Work Product”) belong to the Company or
such Affiliate and Executive hereby assigns, and agrees to assign, all of the
above Work Product to the Company or such Affiliate.  Any copyrightable
work prepared in whole or in part by Executive in the course of his work for any
of the foregoing entities shall be deemed a work made for hire under the
copyright laws, and the Company or such Affiliate shall own all rights therein.
To the extent that any such copyrightable work is not a work made for hire,
Executive hereby assigns and agrees to assign to Company or such Affiliate all
right, title and interest, including without  limitation, copyright in and
to such copyrightable work.  Executive shall promptly disclose such Work
Product and copyrightable work to the Board and perform all actions reasonably
requested by the Board (whether during or after Executive’s term of employment)
to establish and confirm the Company’s or its Affiliates ownership (including,
without limitation, execution of assignments, consents, powers of attorney and
other instruments).  Notwithstanding anything contained in this Section 2(b) to the
contrary, the Company’s ownership of Work Product does not apply to any
invention that Executive develops entirely on his own time without using the
equipment, supplies or facilities of the Company or its Affiliates or
Subsidiaries or any Proprietary Information (including trade secrets), except
that the Company’s ownership of Work Product does include those inventions
that:  (a) relate to the business of the Company or its Affiliates or
Subsidiaries or to the actual or demonstrably anticipated research or
development relating to the Company’s business; or (b) result from any work that
Executive performs for the Company or its Affiliates or
Subsidiaries.

    

    (c) Third
Party Information.
Executive understands that the Company and its Affiliates will receive
from third parties confidential or proprietary information (“Third Party
Information”) subject to a duty on the Company’s and its Affiliates part to
maintain the confidentiality of such information and to use it only for certain
limited purposes.  During the term of Executive’s employment and
thereafter, and without in any way limiting the provisions of Sections 2(a) and
2(b) above,
Executive shall hold Third Party Information in the strictest confidence and
shall not disclose to anyone (other than personnel of the Company or its
Affiliates who need to know such information in connection with their work for
the Company or its Affiliates) or use, except in connection with his work for
the Company or its Affiliates, Third Party Information unless expressly
authorized by a member of the Board in writing.

    

    (d) Use of
Information of Prior Employers, etc. Executive will abide by
any enforceable obligations contained in any agreements that Executive has
entered into with his prior employers or other parties to whom Executive has an
obligation of confidentiality.

     

    (e) Compelled
Disclosure. If
Executive is required by law or governmental regulation or by subpoena or other
valid legal process to disclose any Proprietary Information or Third Party
Information to any Person, Executive will immediately provide the Company with
written notice of the applicable law, regulation or process so that the Company
may seek a protective order or other appropriate remedy.  Executive will
cooperate fully with the Company and the Company’s Representatives in any
attempt by the Company to obtain any such protective order or other
remedy.  If the Company elects not to seek, or is unsuccessful in
obtaining, any such protective order or other remedy in connection with any
requirement that Executive disclose Proprietary Information or Third Party
Information, and if Executive furnishes the Company with a written opinion of
reputable legal counsel acceptable to the Company confirming that the disclosure
of such Proprietary Information or Third Party Information is legally required,
then Executive may disclose such Proprietary Information or Third Party
Information to the extent legally required; provided, however, that
Executive will use his reasonable best efforts to ensure that such Proprietary
Information is treated confidentially by each Person to whom it is
disclosed.

    

    3. Nonsolicitation.

    

    (a) Nonsolicitation.  As long as
Executive is an employee of the Company or any Affiliate thereof, and for twelve
(12) months thereafter, Executive shall not directly or indirectly through
another entity: (i) induce or attempt to induce any employee of the Company or
any Affiliate to leave the employ of the Company or such Affiliate, or in any
way interfere with the relationship between the Company or any Affiliate and any
employee thereof; (ii) hire or employ any person who was an employee of the
Company or any Affiliate at any time during the nine (9) month period
immediately preceding the date of such Executive’s termination, (iii) solicit,
divert, or endeavor to entice away from the Company or any entity controlled by
the Company, or otherwise engage in any activity intended to terminate, disrupt,
or interfere with, the Company's or any of its affiliates’ business
relationships or opportunities or otherwise adversely affect the Company's or
any of its affiliates' business relationships or opportunities, or (iv) publish
or make any statement critical of the Company or any shareholder or affiliate of
the Company or in any way adversely affect or otherwise malign the business or
reputation of any of the foregoing persons.

     

    (b) Acknowledgment. Executive acknowledges that
in the course of his employment with the Company and its Affiliates, he has and
will become familiar with the trade secrets and other Proprietary Information of
the Company and its Affiliates. It is specifically recognized by Executive that
his services to the Company and its Subsidiaries are special, unique and of
extraordinary value, that the Company has a protectable interest in prohibiting
Executive as provided in this Section 3, that
money damages are insufficient to protect such interests, that there is adequate
consideration being provided to Executive hereunder, that such prohibitions are
necessary and appropriate without regard to payments being made to Executive
hereunder and that the Company would not enter this Agreement with Executive
without the restriction of this Section 3. Executive
further acknowledges that the restrictions contained in this Section 3 do not
impose an undue hardship on him and, since he has general business skills which
may be used in industries other than that in which the Company and its
Subsidiaries conduct their business, do not deprive Executive of his
livelihood.  Executive further acknowledges that the provisions of this
Section 3 are
separate and independent of the other sections of this Agreement.

    

    (c) Enforcement,
etc.  If, at
the time of enforcement of Section 2 or 3 of this Agreement,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum duration,
scope or geographical area reasonable under such circumstances as determined by
the court shall be substituted for the stated period, scope or area. 
Because Executive’s services are unique, because Executive has access to
Proprietary Information and for the other reasons set forth herein, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement.  Therefore, without limiting the generality of Section 7(g), in the
event of a breach or threatened breach of this Agreement, the Company or its
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions hereof.

    

    (d) Submission
to Jurisdiction.  The parties hereby:
(i) submit to the jurisdiction of any state or federal court sitting in
California in any action or proceeding arising out of or relating to Section 2 and/or
3 of this
Agreement; (ii) agree that all claims in respect of such action or proceeding
may be heard or determined in any such court; and (iii) agree not to bring any
action or proceeding arising out of or relating to Section 2 and/or
3 of this
Agreement in any other court.  The parties hereby waive any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety or other security that might be required of any other
party with respect thereto. The parties hereby agree that a final judgment in
any action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law.

    

    

    GENERAL
PROVISIONS

     

    4.  Definitions.

     

    “Affiliate”
of any Person means any other Person which directly or indirectly controls, is
controlled by or is under common control with such Person.

     

    “Board”
means the Company’s board of directors or the board of directors or similar
management body of any successor of the Company.

     

                          “Proprietary Information”
means any and all data and information concerning the business affairs of the
Company or any of its Affiliates and not generally known in the industry in
which the Company or any of its Affiliates is or may become engaged, and any
other information concerning any matters affecting or relating to the Company’s
or its Affiliates businesses, but in any event Proprietary Information shall
include, any of the Company’s and its Affiliates past, present or prospective
business opportunities, including information concerning acquisition
opportunities in or reasonably related to the Company’s or its Affiliates
businesses or industries, customers, customer lists, clients, client lists, the
prices the Company and its Affiliates obtain or have obtained from the sale of,
or at which they sell or have sold, their products, unit volume of sales to past
or present customers and clients, or any other information concerning the
business of the Company and its Affiliates, their manner of operation, their
plans, processes, figures, sales figures, projections, estimates, tax records,
personnel history, accounting procedures, promotions, supply sources, contracts,
know-how, trade secrets, information relating to research, development,
inventions, technology, manufacture, purchasing, engineering, marketing,
merchandising or selling, or other data without regard to whether all of the
foregoing matters will be deemed confidential, material or important. 
Proprietary Information does not include any information which Executive has
obtained from a Person other than an employee of the Company, which was
disclosed to him without a breach of a duty of confidentiality.

      

                          “Records” means (i) any and
all procedure manuals, books, records and accounts; (ii) all property of the
Company and its Affiliates, including papers, note books, tapes and similar
repositories containing Proprietary Information; (iii) all invoices and
commission reports; (iv) customer lists partial and/or complete; (v) data
layouts, magnetic tape layouts, diskette layouts, etc.; (vi) samples; (vii)
promotional letters, brochures and advertising materials; (viii) displays and
display materials; (ix) correspondence and old or current proposals to any
former, present or prospective customer of the Company and its Affiliates; (x)
information concerning revenues and profitability and any other financial
conditions of the Company and its Affiliates; (xi) information concerning the
Company and its Affiliates which was input by Executive or at his direction,
under his supervision or with his knowledge, including on any floppy disk,
diskette, cassette or similar device used in, or in connection with, any
computer, recording devices or typewriter; (xii) data, account information or
other matters furnished by customers of the Company and its Affiliates; and
(xiii) all copies of any of the foregoing data, documents or devices whether in
the form of carbon copies, photo copies, copies of floppy disks, diskettes,
tapes or in any other manner whatsoever.

     

                          “Person” means an individual,
a partnership, a limited liability company, a corporation, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political subdivision
thereof.

     

    “Subsidiary”
means any corporation of which the Company owns securities having a majority of
the ordinary voting power in electing the board of directors directly or through
one or more subsidiaries.

     

    5. Notices. Any notice provided for in
this Agreement must be in writing and must be either personally delivered,
mailed by first class United States mail (postage prepaid, return receipt
requested) or sent by reputable overnight courier service (charges prepaid) or
by facsimile to the recipient at the address below indicated:

    

    If to Executive:

    

    David Walters

    

    

    

    

    If to the Company:

    

    Pinnacle Energy Corp.

    ________________________

    ________________________

    ________________________

    

     

    or such
other address or to the attention of such other person as the recipient party
shall have specified by prior written notice to the sending party.

     

    6. Executive’s
Representations and Warranties.  Executive represents
and warrants that he has full and authority to enter into this Agreement and
fully to perform his obligations hereunder, that he is not subject to any
non-competition agreement, and that his past, present and anticipated future
activities have not and will not infringe on the proprietary rights of others,
including, but not limited to, proprietary information rights or interfere with
any agreements he has with any prior employee.  Executive further
represents and warrants that he is not obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, which
would conflict with or result in a breach of this Agreement or which would in
any manner interfere with the performance of his duties for the
Company.

    

    7. General
Provisions.

    

    (a) Expenses. Each party shall bear his or
its own expenses in connection with the negotiation and execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement.

    

    (b) Severability.  Whenever possible,
each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision had never been contained
herein.

    

    (c) Complete
Agreement. This
Agreement, those documents expressly referred to herein and other documents of
even date herewith embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.

    

    (d) Counterparts;
Facsimile Transmission. This Agreement may be
executed in separate counterparts, each of which is deemed to be an original and
all of which taken together constitute one and the same agreement. Each party to
this Agreement agrees that it will be bound by its own telecopied signature and
that it accepts the telecopied signature of each other party to this
Agreement.

    

    (e) Successors
and Assigns; Merger or Sale of Assets. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company and their respective successors and assigns; provided that the rights and
obligations of Executive under this Agreement shall not be assignable and, provided further that, the
rights and obligations of the Company may be assigned to any Affiliate of the
Company. In the event of a merger or the sale of all or substantially all of the
assets of the Company, the acquiring company shall be bound by the terms of this
Agreement.

     

    (f) Choice of
Law; Jurisdiction. All questions concerning the
construction, validity and interpretation of this Agreement and the exhibits
hereto will be governed by and construed in accordance with the internal laws of
the State of California, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of California.  The parties hereby: (i) submit to the
jurisdiction of any state or federal court sitting in California in any action
or proceeding arising out of or relating to Agreement; (ii) agree that all
claims in respect of such action or proceeding may be heard or determined in any
such court; and (iii) agree not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Executive hereby waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be required of
any other party with respect thereto. The parties hereby agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by
law.

     

    (g) Remedies. Each of the parties to this
Agreement will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorneys fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.

     

    (h) Amendment
and Waiver. The
provisions of this Agreement may be amended or and waived only with the prior
written consent of the Company and the Executive.

    

     

    (i) Business
Days. If any time
period for giving notice or taking action hereunder expires on a day which is a
Saturday, Sunday or holiday in the state in which the Company’s chief executive
office is located, the time period shall be automatically extended to the
business day immediately following, such Saturday, Sunday or
holiday.

     

    (j) Termination. Sections 2 and 3 of this
Agreement shall survive the termination of Executive’s employment with the
Company and shall remain in full force and effect after such
termination.

      

    (k) No
Waiver. A waiver
by any party hereto of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which such party would
otherwise have on any future occasion.  No failure to exercise nor any
delay in exercising on the part of any party hereto, any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies
herein provided are cumulative and may be exercised singly or concurrently, and
are not exclusive of any rights or remedies provided by law.

    

    (l) Insurance.  The Company, at its
discretion, may apply for and procure in its own name for its own benefit life
and/or disability insurance on Executive in any amount or amounts considered
available. Executive agrees to cooperate in any medical or other examination,
supply any information, and to execute and deliver any applications or other
instruments in writing as may be reasonably necessary to obtain and constitute
such insurance. Executive hereby represents that he has no reason to believe
that his life is not insurable at rates now prevailing for healthy men of his
age.

    

    (m) Offset.  Whenever the Company
or any of its Subsidiaries is obligated to pay any sum to Executive or any
Affiliate or related person thereof pursuant to this Agreement, any bona fide
debts that Executive or such Affiliate or related person owes to the Company or
any of its Subsidiaries may be deducted from that sum before
payment.

    

    (n) Indemnification
and Reimbursement of Payments on Behalf of Executive.  The Company and its
Subsidiaries shall be entitled to deduct or withhold from any amounts owing from
the Company or any of its Subsidiaries to Executive any federal, state,
provincial, local or foreign withholding taxes, excise taxes, or employment
taxes (“Taxes”) imposed with respect to Executive’s compensation or other
payments from the Company or any of its Subsidiaries or Executive’s ownership
interest in the Company, including, but not limited to, wages, bonuses,
dividends, the receipt or exercise of stock options and/or the receipt or
vesting of restricted stock.

    

    (o) Insurance
and Indemnification.  For the period from the date of this Agreement
through at least the third anniversary of the Employees termination of
employment from the Employer, the Employer shall maintain the Employee as an
insured party on all directors and officers insurance maintained by the Employer
for the benefit of its directors and officers on at least the same basis as all
other covered individuals and provide the Employee with at least the same
corporate indemnification as it provides to the peer executives of the
Employer.   The Company’s obligations under this Section 7(o)
shall terminate upon termination of Executive’s employment for Cause, or if
Executive resigns without Good Reason.

     

     

    

    SIGNATURES
ON THE FOLLOWING PAGE

    

    

    

    

    IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date first written
above.

     

    

    Executive:

    

    /s/ DAVID
WALTERS                                

                                    David Walters    

    

    Company:

    

    Pinnacle Energy Corp.

    

    By:/s/ W. SCOTT
LAWLER

    Its:
CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}]]