Item
1.01
|
Entry
Into a Material Definitive Agreement.
|
On February 7, 2019, LandStar,
Inc. (the “
Company
”) entered into an Exclusive License and Management Agreement (the “
License Agreement
”)
with WALA, INC., which conducts business under the name ArcMail Technology (“
ArcMail”
). Under the License Agreement
the Company was granted the exclusive right and license to receive all benefits from the marketing, selling and licensing, of
the ArcMail business products, including, without limitation, the good will of the business. Rory Welch, the CEO of ArcMail
(“
Welch
”), shall continue to serve as ArcMail’s CEO. The term of the License Agreement is twenty-seven
(27) months, with the following payments to be made by the Company to ArcMail: (i) $200,000 upon signing the License Agreement;
(ii) monthly payments starting 30-days after the execution of the License Agreement in the amount of $25,000 per month during
months 1-6; (iii) monthly payments in the amount of $30,000 per month during months 7-17; and, (iv) on month 18, final payment
in the amount of $765,000.
In
connection with the execution of the License Agreement, two other agreements were also executed:
(a)
Stock
Purchase Rights Agreement
: On February 7, 2019, the Company and Welch entered into a Stock Purchase Rights Agreement
(the “
Stock Rights Agreement
”) under which the Company has the right, though not the obligation, to
acquire 100% of the issued and outstanding shares of stock of ArcMail. The right can be exercised over a period of 27-months
in accordance with the following schedule:
Date of Purchase Right
|
|
Cash Due
|
|
|
Cash Value of
Company
Shares
|
|
|
Percentage of
100% Share
Interest
Acquired
|
|
Closing
|
|
|
-0-
|
|
|
$
|
95,000
|
|
|
|
12.50
|
%
|
3-month anniversary
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
|
6.25
|
%
|
6-month anniversary
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
|
6.25
|
%
|
9-month anniversary
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
|
6.25
|
%
|
12-month anniversary
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
|
6.25
|
%
|
15-month anniversary
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
|
6.25
|
%
|
18-month anniversary
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
|
6.25
|
%
|
21-month anniversary
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
|
12.50
|
%
|
24-month anniversary
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
|
12.50
|
%
|
27-month anniversary
|
|
$
|
50,000
|
|
|
$
|
85,000
|
|
|
|
Remainder
|
|
The
value of the Company Shares shall be equal to the average closing price for shares of the Company’s common stock for the
ten (10) trading days immediately preceding each respective date. If the Company fails to exercise any purchase right the remainder
of the purchase rights shall terminate and Welch shall have the right to repurchase from the Company (at the same price paid by
the Company) all of ArcMail shares acquired by the Company (the “
Repurchase Right
”).
(b)
Business
Covenants Agreement
: On February 7, 2019, the Company, ArcMail, and Welch entered into a Business Covenants Agreement
(the “
Covenants Agreement
”) under which ArcMail and Welch agreed to not compete with the Company’s
use of the ArcMail business under the License for a period of twenty four (24) months from the later of (i) February 7, 2019;
(ii) the date on which the Company acquires the 100% of the stock of ArcMail; or, (iii) the last date on which Welch renders
services to the Company or any of its subsidiaries.
The
term of the restrictions will immediately and irrevocably terminate upon the exercise of the Repurchase Right by Welch. Further,
thereafter, the Company will not, for a period of twenty-four (24) months, (i) engage in the business of E-Mail archiving; (iii)
solicit any customer of ArcMail; or, (iii) solicit any ArcMail employees.
There
are no material relationships between the Company, ArcMail, Welch, or any of the parties to the above described three agreements,
other than in respect of such agreements themselves.
The
foregoing descriptions of the License Agreement, Stock Rights Agreement, and Covenants Agreement, respectively, does not purport
to be complete and is qualified in its entirety by reference to the full text of the License Agreement, Stock Rights Agreement,
and Covenants Agreement, a copy of which is filed herewith as Exhibit 10.1; 10.2; and, 10.3 respectively, to this report and is
incorporated by reference herein.