AGREEMENT FOR PURCHASE AND SALE OF STOCK
This Agreement for Purchase and Sale of Stock is made as of April 30,
2004, at Torrance, California, among and between Digital Learning Management
Corporation ("Buyer"), a Nevada Corporation, having its principal office in
Torrance, California; ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇ ("Shareholders"), residing in
the County Of Orange, California; and Global Computer Systems, Inc.("GLOBAL"), a
California Corporation, with its principal office at ▇▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. In this Agreement, Shareholders and GLOBAL, are also
collectively referred to as "Selling Parties."
Shareholders have represented they owns 100% of all the outstanding and
issued stock of GLOBAL and Buyer desires to purchase all such stock from
Shareholders, and Shareholders desire to sell all his stock to Buyer, and GLOBAL
desires that this transaction to be consummated, therefore, and in consideration
of the mutual covenants, agreements, representations, and warranties contained
in this Agreement, the parties agree as follows:
1. Shareholders and Buyer adopt this Agreement as a plan of reorganization
under Internal Revenue Code Section 368(a)(1)(B).
2. The transaction shall be closed when Shareholders transfer and convey
the Shares to Buyer, and Buyer, acting for itself or through its attorney in
fact, actually cause the registration of such shares as beneficial owner on the
books of GLOBAL.
3. Buyer agrees to pay for such shares and Shareholders agree to accept as
payment in full for such shares in the following manner:
a. By issue to Shareholders a total of 100,000 Common Shares of
Buyer's stock. Such stock shall be issued in the name of Shareholders or their
nominees as the Shareholders may in writing direct. Shareholders hereby
acknowledge that Buyer's shares will be subject to the restriction that no sale
and or transfer of such stock may be made for a period of one year after the
date of closing.
b. A further payment of $200,000 (two hundred thousand dollars)
sixteen months after closing of this transaction providing GLOBAL achieves
minimum revenues of $1.7 million, with a 20% gross margin on such revenues
(hereafter "Target Figures") in the first fifteen months of operations after
closing. In the event that Target Figures are not achieved in said fifteen
months of operations, then Shareholders shall be entitled to be paid a portion
of said $200,000 (two hundred thousand dollars). Such portion shall be in a
direct proportion to the revenues achieved in relation to the stated Target
Figures. Thus, if the revenues in the first fifteen months amount to $1.0
million with 20% gross profit margin then Shareholders will receive 1/1.7 of the
$200,000 (two hundred thousand dollars) or $117,647 (one hundred seventeen
thousand six hundred and forty seven dollars). It is understood that no
proportion of the $200,000 (two hundred thousand dollars) shall be due or
payable under this paragraph unless GLOBAL achieves minimum revenues of $500,000
( five hundred thousand dollars) in the first fifteen months of operations after
closing of this transaction. All determinations of the quantum of revenues and
gross profits achieved under this paragraph shall be made in accordance with the
standards in place at the time of the required determination by Generally
Accepted Accounting Principles ("GAAP").
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4. In addition to the foregoing payments, the Shareholders acknowledges
that he is entitled to the payment of ten dollars ($10.00) for the
non-competition covenant as more fully provided in paragraph 34.
5. Selling Parties, jointly and severally, warrant that, except as set
forth in the disclosure schedule attached as Exhibit A, Exhibit B.1, Exhibit B.2
that:
a. GLOBAL is duly organized, validly existing, and in good standing
under the laws of California and has all necessary corporate powers to own its
properties and operate its business as now owned and operated by it. Neither the
ownership of its properties nor the nature of its business requires GLOBAL to be
qualified in any jurisdiction other than the state of its incorporation.
b. The authorized capital stock of GLOBAL consists of 25,000 shares
of common stock, without par value, of which 25,000 shares (the Shares) are
issued and outstanding. All the Shares are validly issued, fully paid, and
nonassessable, and such shares have been so issued in full compliance with all
federal and state securities laws. There are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements or
commitments obligating GLOBAL to issue or to transfer from treasury any
additional shares of its capital stock of any class.
c. Shareholders are the owners, beneficially and of record, of all
the Shares free and clear of all liens, encumbrances, security agreements,
equities, options, claims, charges, and restrictions. Shareholders have full
power to transfer the Shares to Buyer without obtaining the consent or approval
of any other person or governmental authority.
d. GLOBAL does not own, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, business,
trust, or other entity.
e. Exhibit B.1 to this Agreement sets forth balance sheets of GLOBAL
for the twelve month period ending December 31, 2003 and for the four month
period ending April 30, 2004 together with related statements of income and
retained earnings for the period on those dates, prepared and reviewed by Khan &
Associates, CPA, GLOBAL's independent public accountant whose opinions with
respect to those financial statements appear in said Exhibit B.1.
f. Exhibit B.2 to this agreement is a certificate by the President
of GLOBAL; a) confirming the accuracy of the financial condition of GLOBAL as
reflected in Exhibit B.1 for those periods and as accurately reflecting the
results of its operations for the respective periods indicated and; b) all
statements in Exhibits B1 have been prepared in accordance with Generally
Accepted accounting Principles which have been consistently followed by GLOBAL
throughout the periods indicated, and.
g. Since December 31, 2003, there has been no:
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(i) Transaction by GLOBAL except in the ordinary course of
business; date;
(ii) Capital expenditure by GLOBAL exceeding $5,000.00;
(iii) Material adverse change in the financial condition,
liabilities, assets, business, or prospects of GLOBAL;
(iv) Destruction, damage to, or loss of any asset of GLOBAL
(whether insured or uninsured) that materially and adversely affects the
financial condition, business, or prospects of GLOBAL;
(v) Change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) by GLOBAL;
(vi) Revaluation by GLOBAL of any of its assets;
(vii) Declaration, setting aside, or payment of a dividend or
other distribution in respect to the capital stock of GLOBAL, or any direct or
indirect redemption, purchase, or other acquisition by GLOBAL of any of its
shares of capital stock;
(viii) Increase in the salary or other compensation payable or
to become payable by GLOBAL to any of its officers, directors, or employees or
declaration, payment, or commitment or obligation of any kind for the payment,
by GLOBAL or Subsidiary, of a bonus or other additional salary or compensation
to any such person;
(ix) Sale or transfer of any asset of GLOBAL, except in the
ordinary course of business;
(x) Amendment or termination of any contract, agreement, or
license to which GLOBAL is a party, except in the ordinary course of business;
(xi) Loan by GLOBAL to any person or entity, or guaranty by
GLOBAL of any loan;
(xii) Mortgage, pledge, or other encumbrance of any asset of
GLOBAL;
(xiii) Waiver or release of any right or claim of GLOBAL
except in the ordinary course of business;
(xiv) Commencement, notice, or threat of commencement of any
civil litigation or governmental proceeding against GLOBAL or investigation of
its affairs except a claim by Press Enterprise for less than $5,000 for
advertising;
(xv) Labor trouble or claim of wrongful discharge or other
unlawful labor practice or action;
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(xvi) Issuance or sale by GLOBAL of any shares of its capital
stock of any class or of any other of its securities except 100,000 common
shares to Shareholders;
(xvii) Agreement by GLOBAL to do any of the things described
in the preceding clauses (i) through (xvi); or
(xviii) Other event or condition of any character that has or
might reasonably have a material and adverse effect on the financial condition,
business, assets, liabilities, or prospects of GLOBAL.
h. GLOBAL has no debt, liability, or obligation of any nature,
whether accrued, absolute, contingent, or otherwise, and whether due or to
become due, that is not reflected or reserved against in GLOBAL's balance sheet
as of April 30, 2004, included in the financial statements or set forth in
Exhibit B.3 to this Agreement, except for (1) those that may have been incurred
after the date of the balance sheet, (2) those that are not required by
Generally Accepted Accounting Principles to be included in a balance sheet, (3)
those that are the subject of year-end adjustments, and (4) those ordinarily
included in footnotes. All debts, liabilities, and obligations incurred after
that date were incurred in the ordinary course of business and are usual and
normal in amount both individually and in the aggregate.
i. The provisions for taxes reflected in GLOBAL's balance sheet as
of April 30, 2004 are adequate and correctly reflect liability for all income,
payroll, and other taxes payable to federal, state, county, and local taxes for
the period ending on the date of that balance sheet and for all prior periods,
whether disputed or undisputed. There are no present disputes about taxes of any
nature payable by GLOBAL.
j. The books and records of GLOBAL contain a complete and accurate
description and specify the location of all vehicles, equipment, furniture,
supplies, and all other tangible personal property owned by, in the possession
of, or used by GLOBAL in connection with its business. Exhibit C.2 is a complete
list of personal property owned and used by GLOBAL and except as noted on this
exhibit no personal property owned or used by GLOBAL in connection with its
business is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, or is located other
than in the possession and under the control of GLOBAL. The tangible personal
property reflected in those books and records constitutes all such tangible
personal property necessary for the conduct by GLOBAL business as now conducted.
k. All accounts receivable of GLOBAL shown on the balance sheet of
GLOBAL as of April 30, 2004, arose from valid sales in the ordinary course of
business. All accounts receivables shall not be below the figure shown on said
date and are collectible within forty five days of April 30, 2004. A variance of
$10,000 will be allowed to cover any bad debts.
l. Techconsults. Net is the trade name and service ▇▇▇▇ of GLOBAL.
GLOBAL also has unregistered copyrights related to all courses it gives. Selling
Parties have no knowledge of any infringement or alleged infringement by others
of any GLOBAL trade name, trademark, service ▇▇▇▇, or copyright. Selling Parties
have no indication that GLOBAL has infringed or is now infringing on any trade
name, trademark, service ▇▇▇▇, or copyright belonging to any other person or
firm. GLOBAL has the right to sell or assign to Buyer all owned trademarks,
trade names, service marks, copyrights, and all such licenses and other rights.
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m. GLOBAL has good and marketable title to all its assets, whether
real, personal, mixed, tangible, or intangible assets that are used in the
businesses of GLOBAL. All these assets are free and clear of restrictions on or
conditions to transfer or assignment and free and clear of mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights of way,
covenants, conditions, or restrictions, except for (1) those disclosed in
GLOBAL's balance sheet as of April 30, 2004, or in Exhibits B.1 to this
Agreement; (2) the lien of current taxes not yet due and payable; and (3)
possible minor matters that, in the aggregate, are not substantial in amount and
do not materially detract from or interfere with the present or intended use of
any of these assets or materially impair business operations. The GLOBAL is not
in default or in arrears in any material respect under any lease. All tangible
personal property of GLOBAL that is necessary to the operation of its businesses
is in good operating condition and repair, ordinary wear and tear excepted.
GLOBAL is in possession of all premises leased to them from others. No
Shareholders; nor any officer, director, or employee of GLOBAL or any spouse,
child, or other relative of any of these persons owns, or has any interest,
directly or indirectly, in any of the real or personal property owned by or
leased to GLOBAL or any copyrights, patents, trademarks, trade names, or trade
secrets licensed by GLOBAL.
n. Exhibit F.1 to this Agreement is a correct and current list of
all customers of GLOBAL together with a complete details of the courses being
taken, fees collected and fees due but uncollected as to each customer.
o. Exhibit B.4 to this Agreement is a description of all insurance
policies held by GLOBAL concerning its businesses and properties. All these
policies are in the respective principal amounts set forth in Exhibit B.4.
GLOBAL has maintained and now maintains (1) insurance on all its assets and
businesses of a type customarily insured, covering property damage and loss of
income by fire or other casualty, and (2) adequate insurance protection against
all liabilities, claims, and risks against which it is customary to insure.
GLOBAL is not in default with respect to payment of premiums on any such policy.
p. GLOBAL has received no notice of any violation of any applicable
federal, state, or local statute, law, or regulation (including any applicable
building, zoning, environmental protection), or other law, ordinance, or
regulation affecting their properties or the operation of their business; and to
the best of the knowledge of Shareholders and GLOBAL, there are no such
violations.
q. GLOBAL has received no notice of any violation of any applicable
federal, state, or local statute, law, or regulation, and represents that:
(i) GLOBAL has complied in all material respects with all
federal, state, and local environmental protection laws and regulations and has
not been cited for any violation of any such law or regulation.
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(ii) GLOBAL has complied with all requirements of the
Occupational Safety and Health Act and its California equivalents and
regulations promulgated under any such legislation.
r. Except as set forth in Exhibit G.1, there is no pending, or, to
the best knowledge of Shareholders, any threatened, suit, action, arbitration,
or legal, administrative, or other proceeding, or governmental investigation
against or affecting GLOBAL or any of its businesses, assets, or financial
conditions. The matters set forth in Exhibit G.1, if decided adversely to
GLOBAL, will not result in a material adverse change of more than $5,000 in the
business, assets, or financial condition of GLOBAL. Selling Parties have
furnished or made available to Buyer copies of all relevant court papers and
other documents relating to the matters set forth in Exhibit G.1. GLOBAL is not
in default with respect to any order, writ, injunction, or decree of any
federal, state, local, or foreign court, department, agency, or instrumentality.
Except as set forth in Exhibit G.1, neither GLOBAL nor Shareholders are
presently engaged in any legal action to recover money owed to any of them or
damages sustained by any of them.
s. The consummation of the transactions contemplated by this
Agreement will not result in or constitute any of the following: (1) a breach of
any term or provision of this Agreement; (2) a default or an event that, with
notice, lapse of time, or both, would be a default, breach, or violation of the
articles of incorporation or bylaws of GLOBAL or any lease, license, promissory
note, conditional sales contract, or other agreement, instrument, or arrangement
to which Shareholders or GLOBAL are a party or by which any of them or the
property of any of them is bound; (3) an event that would permit any party to
terminate any agreement or to accelerate the maturity of any indebtedness or
other obligation of GLOBAL, (4) the creation or imposition of any lien, charge,
or encumbrance on any of the properties of GLOBAL, (5) or the loss of GLOBAL's
eligibility or approval from participating in programs under the California
Bureau of Private Post Secondary Education.
t. Selling Parties have the right, power, legal capacity, and
authority to enter into and perform their respective obligations under this
Agreement; and no approvals or consents of any persons other than Selling
Parties are necessary in connection with it, other than; the approval of the
California Bureau of Private Post Secondary Vocational Education ("BPPVE"), to
the change of control to carry on the business of the GLOBAL as now being
conducted. In this regard Selling Parties shall immediately on signing of this
agreement make their best efforts to facilitate all approvals from the BPPVE for
the proposed change of control of GLOBAL as envisaged by this agreement in order
to permit GLOBAL to carry on its business as now carried on and all parties to
this agreement acknowledge that without approval of such change of control by
the regulatory authorities, this transaction can not be consummated and Buyer
shall be entitled to withdraw from this agreement without incurring any
obligation or liability. It is, however, agreed between the parties that in
consideration of monies to be advanced by DLMC to GLOBAL for continuing
operations during the approval process Shareholders shall, at closing, cause
nominees of DLMC to be appointed Officers and Directors in place of the present
Officers and Directors of GLOBAL and to provide GLOBAL or its nominee a power of
attorney to transfer and register the Shareholder's shares on GLOBAL'S books and
records at any time after the execution of this Agreement. In the event that
this transaction, for what ever reason, and only after GLOBAL has refunded to
DLMC all monies advanced to GLOBAL pending closing under this paragraph, fails
to close then DLMC agrees that it will cause its nominees to resign as Officers
and Directors of GLOBAL and to surrender the Power of Attorney given under this
paragraph.
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u. No Shareholders, officer, director, or employee of the GLOBAL or
any spouse or child of any of them has any direct or indirect interest in any
competitor, supplier, or customer of GLOBAL or in any person from whom or with
whom GLOBAL is doing business except the Irvine College of Medical Sciences,
Inc.
v. On signing of this Agreement Selling Parties will furnish to
Buyer, for its examination (1) copies of the articles of incorporation and
bylaws of GLOBAL; (2) the minute books of GLOBAL containing all records required
to be set forth of all proceedings, consents, actions, and meetings of the
Shareholders and boards of directors of GLOBAL; (3) copies of all documents
evidencing licenses and approvals from the California Bureau of Private Post
Secondary Education ; and (4) The stock transfer books of GLOBAL setting forth
all transfers of any capital stock.
w. Exhibit B.5 is a list of the names and addresses of all officers,
directors, employees, and agents of GLOBAL, stating the rates of compensation
payable to each.
x. All of GLOBAL's employment agreements are oral and to the best of
Selling Parties' knowledge, GLOBAL is not in default under any of these
agreements.
y. None of the warranties made by Shareholders or GLOBAL, or made in
any certificate or memorandum furnished or to be furnished by any of them or on
their behalf, taken as a whole contains or will contain any untrue statement of
a material fact, or omits to state any material fact necessary to make the
statements made true.
6. Buyer represents and warrants that:
a. Buyer is publicly traded Over the Counter Bulletin Board
Corporation under the symbol DGTL and is organized, existing, and in good
standing under the laws of Nevada. The execution and delivery of this Agreement
and the consummation of this transaction by Buyer have been duly authorized, and
no further corporate authorization is necessary on the part of Buyer.
b. Buyer need not make nor obtain any consent, approval, or
authorization of, or declaration, filing, or registration with, any federal or
state governmental or regulatory authority in connection with the execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement except that the consummation of this
agreement is dependant upon the Buyer successfully obtaining any Governmental or
Trade Organization approvals necessary to carry on the GLOBAL's business as now
carried on after the change of control contemplated by this transaction.
7. Selling Parties covenant that from the date of this Agreement until the
closing:
a. Buyer and its counsel, accountants, and other representatives
will have full access during normal business hours to all properties, books,
accounts, records, contracts, and documents of or relating to GLOBAL. Selling
Parties will furnish or cause to be furnished to Buyer and its representatives
all data and information concerning the business, finances, and properties,
including necessary authorizations directed to its accountants, who have
prepared its financial statements, to permit DLMC to examine, copy and utilize
for the purpose of conducting a financial audit, prior to closing, of all their
working papers and statements that Buyer may reasonably request. Buyer agrees to
give Selling Parties twenty-four hours notice before visiting Buyer's place of
business.
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b. Nothing in this Agreement will obligate Selling Parties to
disclose any classified information or provide any access to representatives of
Buyer prohibited or not authorized by applicable governmental authority.
8. GLOBAL will carry on its businesses and activities diligently and in
substantially the same manner as previously carried out and will not institute
any unusual or novel methods of purchase, sale, lease, management, accounting,
or operation that vary materially from those methods used by GLOBAL as of the
date of this Agreement.
9. GLOBAL will use reasonable efforts, without making any commitments on
behalf of Buyer, to preserve its business organization intact and to retain its
present employees and to preserve its present relationships with customers and
others having business relationships with it.
10. GLOBAL will not (1) amend its articles of incorporation or bylaws; (2)
issue any shares of its capital stock; (3) issue or create any warrants,
obligations, subscriptions, options, convertible securities, or other
commitments under which any additional shares of its capital stock of any class
might be directly or indirectly authorized, issued, or transferred from
treasury; or (4) agree to do any of the acts listed above.
11. GLOBAL will continue to carry its existing insurance, subject to
variations in amounts required by the ordinary operations of their businesses.
At the request of Buyer and at Buyer's sole expense, the amount of insurance
against fire and other casualties that, at the date of this Agreement, GLOBAL on
any of its properties or in respect of its operations will be increased by the
amount or amounts Buyer will specify. The representations in this section are
made subject to the insurers' agreement to renew existing policies.
12. GLOBAL will not do or agree to do, without Buyer's consent, any of the
following:
a. Enter into any contract, commitment, or transaction not in the
usual and ordinary course of its business,
b. Enter into any contract, commitment, or transaction in the usual
and ordinary course of business involving an amount exceeding $10,000.00,
c. Make any capital expenditures in excess of $5,000.00 for any
single item or $10,000.00 in the aggregate, or enter into any leases of capital
equipment or property under which the annual lease charge is in excess of
$5,000.00; or
d. Sell or dispose of any capital assets with a net book value
exceeding $1,000.00, individually, or $5,000.00 in the aggregate.
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13. GLOBAL will not:
a. Declare, set aside, or pay any dividend or make any distribution
in respect of its capital stock,
b. Directly or indirectly purchase, redeem, or otherwise acquire any
shares of its capital stock; or
c. Enter into any agreement obligating it to do any of the foregoing
prohibited acts.
d. Agree to: (i) pay any obligation or liability, fixed or
contingent, other than current liabilities; (ii) waive or compromise any right
or claim; or (iii) cancel, without full payment, any note, loan, or other
obligation owed to GLOBAL.
e. Agree to, modify, amend, cancel, or terminate any of its existing
contracts or agreements.
14. Buyer will exercise its best efforts, and promptly execute and deliver
any documents and instruments that may be reasonably required, to assist Selling
Parties in obtaining any consents or approvals to consummate this transaction.
Provided, however, that Buyer will not be obligated under this paragraph to
execute any guaranty, assumption of liability or other document or instrument
requiring it to assume obligations except as may be required for the assumption
of the existing loan as of April 30, 2004 with the Union Bank of California in
the amount of $90,960.54.
15. At the written request of Buyer, GLOBAL will within five days document
and describe any of its trade secrets, processes, or business procedures
specified by Buyer, in form and content satisfactory to Buyer.
16. All warranties of Selling Parties set forth in this Agreement will
also be true on the date as if made on that date, except to the extent that any
of them may become untrue because of events beyond the control of Selling
Parties, who are unable to make them true as of the date despite their best
efforts to do so.
17. Whether or not the closing takes place, Selling Parties waive any
cause of action, right, or claim arising out of the access of Buyer or its
representatives to any trade secrets or other confidential business information
of GLOBAL from the date of this Agreement until the date of closing, except for
the intentional competitive misuse by Buyer or its representatives of such trade
secrets or other confidential business information if the closing does not take
place.
18. Buyer agrees that, unless and until the transactions contemplated by
this Agreement have been consummated, Buyer its officers, directors, and other
representatives will hold in strict confidence, and will not use to the
detriment of Shareholders or GLOBAL all data and information about the business
of GLOBAL obtained in connection with this transaction or agreement, except as
far as the data and information may be required by law to be included in any
federal or state filings and/or disclosures required to be made in connection
with its obligations as a publicly traded entity. If the transactions
contemplated by this Agreement are not consummated, Buyer will return to Selling
Parties all that data and information that Selling Parties may reasonably
request, including worksheets, test reports, manuals, lists, memoranda, and
other documents prepared by or made available to Buyer in connection with this
transaction.
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19. The obligations of Buyer to purchase the Shares under this Agreement
are subject to the satisfaction, at or before the, of the following conditions;
a. Buyer obtaining all licenses, permits, approvals and consents
regulatory authorities to carry on the business of GLOBAL in substantially the
same manner as carried on by the Selling Parties.
b. Buyer completing, to the satisfaction of its financial and legal
advisers, a due diligence of the affairs of GLOBAL.
c. Buyer may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
will constitute a waiver by Buyer of any of its other rights or remedies, at law
or in equity, if Shareholders, or GLOBAL are in default of any of their
representations, warranties, or covenants under this Agreement.
20. Except as otherwise permitted by this Agreement, all warranties by
each of the Selling Parties in this Agreement, or in any written statement that
will be delivered to Buyer by any of them under this Agreement, must be true in
all material respects on the date as though made at that time.
21. During the period from April 30, 2004 to the date of closing, there
will not have been any material adverse change in the financial condition or the
results of operations of GLOBAL and GLOBAL will not have sustained any insured
or uninsured loss or damage to its assets that materially and adversely affects
its ability to conduct a material part of its business.
22. Buyer will receive a certificate, dated the date, signed and verified
by GLOBAL's President and Chief Executive Officer in such detail as Buyer and
its counsel may reasonably request, that to the best of his knowledge the
conditions specified in paragraphs, 21 have been fulfilled, and;
a. No action, suit, or proceeding before any court or any
governmental body or authority, pertaining to the transaction contemplated by
this Agreement or to its consummation, will have been instituted or threatened
on or before the date of closing.
b. That on the basis of a limited review (not an audit) of the
latest available accounting records of GLOBAL, consultations with other
responsible officers of GLOBAL and with Shareholders, and other pertinent
inquiries that he deemed necessary, he has no knowledge or reason to suspect
that during the period from April 30, 2004 to the date of closing, there was any
change in the financial condition or results of operations of GLOBAL except
changes incurred in the ordinary and usual course of its respective business
during that period that in the aggregate are not materially adverse, and any
other changes or transactions contemplated by this Agreement.
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c. That as of the time of closing of the transaction herein the
GLOBAL bank balance, after reconciliation, shall contain a credit balance of not
less than $7, 400.00.
23. Buyer will receive satisfactory evidence showing that as of a date not
more than 15 days before the closing date that total taxes, interest and
penalties, including Social Security and other payroll taxes have been fully
paid and no monies are owed for Federal, State, County and local authorities.
24. Buyer will have received a Certificate of Release from the California
Employment Development Department stating that, as of a date not more than 15
days before the date, no contributions, interest, or penalties are due to the
Employment Development Department from GLOBAL.
25. All necessary agreements and consents of any parties to the
consummation of the transactions contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, will have been obtained by Selling
Parties and delivered to Buyer on the date of the closing of this transaction,
including, all necessary approval documents to permit continuance of operations
of GLOBAL in its present manner after the change of control under the California
Bureau of Private Post Secondary Education.
26. The form and substance of all certificates, instruments and other
documents delivered to Buyer under this Agreement will be satisfactory in all
reasonable respects to Buyer and its counsel.
27. Selling Parties will have delivered to Buyer, except as otherwise
requested by Buyer, the written resignations of all the officers and directors
of GLOBAL, and will cause any other action to be taken with respect to these
resignations that Buyer may reasonably request, including pre-closing actions as
set out in paragraph 5.t of this Agreement.
28. The closing will take place at the offices of Buyer at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and shall take place at 5:00 p.m. on the day
following receipt of the approval to the change of control from BPPVE but not
more than sixty days after the signing of this agreement, except Buyer shall
have the right, by written notice to the Selling Parties, to extend the date not
to exceed one period of thirty days beyond the initial sixty days and to
unilaterally close the transaction at any time under the terms provided for in
this Agreement by delivering the consideration due to Shareholders as set out in
paragraph 3.a of this Agreement and by making a written good faith offer to
comply with all obligations assumed by it under the terms of this Agreement.
29. At the closing, Shareholders must deliver to Buyer the following
instruments, in form and substance satisfactory to Buyer and its counsel,
against delivery of the items specified in paragraph 2:
a. A certificate or certificates representing the Shares, registered
in the name of Shareholders, duly endorsed by Shareholders for transfer, or
accompanied by an assignment of the Shares duly executed by Shareholders.
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b. All GLOBAL records relating to stock issues, redemptions,
transfers and shall include the stock ledgers, minute books, and GLOBAL seal.
c. The GLOBAL's independent public accountants' reviewed financial
statements and accompanying report as of March 31, 2004 as provided for in
paragraph 5.e. of this agreement.
d. Except as otherwise specified by Buyer, the written resignations
of all the officers and directors of GLOBAL..
e. A certificate executed by the President and Chief Executive
Officer of GLOBAL certifying that all representations and warranties in this
Agreement are true.
f. A general and special release in the form set forth in Exhibit
F.2, in favor of GLOBAL executed by Shareholders and creditors, and dated April
30, 2004.
g. Shareholders written commitment to indemnify, defend, and hold
harmless Buyer against and in respect of claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties, and reasonable attorney fees that it or GLOBAL
may incur or suffer that arise, result from, or relate to any breach of, or
failure by Shareholders to perform, any of their representations, warranties,
covenants, or agreements in this Agreement or in any schedule, certificate,
exhibit, or other instrument furnished or to be furnished by Selling Parties
under this Agreement. Shareholders's liability under this paragraph will not,
however, exceed the aggregate amount of $50,000.00. Despite any other provision
of this Agreement, Shareholders will not be liable to Buyer on any warranty,
representation, or covenant made by Selling Parties in this Agreement, or under
any of their indemnities in this Agreement, regarding any single claim, loss,
expense, obligation, or other liability that does not exceed $5,000.00;
provided, however, that when the aggregate amount of all such claims, losses,
expenses, obligations, and liabilities exceeds $25,000.00, Shareholders will,
subject to the above limitation on their maximum aggregate liability, be liable
in full for all his or her breaches and indemnities and all those claims,
losses, expenses, obligations, and liabilities.
30. At the closing, Buyer shall deliver to Shareholders
a. Buyer's Stock certificate for 100,000 common shares of Stock as
provided for in paragraph 3; and
b. Buyer's undertaking to hold Shareholders harmless from any
personal liability arising from the personal guaranties provided by Shareholders
to Union Bank of California on behalf of GLOBAL. .
31. In consideration for the payment by Buyer of $10.00 to Shareholders,
to be made on the date of closing, Shareholders agrees that they will not, at
any time within the two-year period immediately following the date of closing,
directly or indirectly engage in, or have any interest in any person, firm,
corporation or business (whether as an employee, officer, director, agent,
security holder, creditor, consultant, or otherwise), that engages in any
activity in Orange, Riverside, San Bernardino, Ventura and ▇▇▇▇ Counties,
California, that is the same as, similar to, or competitive with any activity
now engaged in by GLOBAL or any successor in such geographic area.
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The parties intend the covenant contained in the preceding portion of this
section to be construed as a series of separate covenants, one for each county
specified. Except for geographic coverage, each separate covenant will be
considered identical in terms to the covenant contained in the preceding
paragraph. If, in any judicial proceeding, a court refuses to enforce any of the
separate covenants included in this paragraph, this unenforceable covenant will
be considered eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
Shareholders further agrees not to divulge, communicate, use to the
detriment of Buyer or for the benefit of any other person or persons, or misuse
in any way, any confidential information or trade secrets of GLOBAL, including
personnel information, secret know-how, customer lists, programs, educational
courses or other technical data. Shareholders acknowledge and agree that any
information or data they have acquired on any of these matters or items was
received in confidence and as a fiduciary of GLOBAL.
32. Buyer acknowledges that Selling Parties have advised Buyer of GLOBAL's
employee benefits, including the medical insurance, annual vacations, and annual
discretionary bonuses.
33. Buyer will indemnify and hold harmless Shareholders against, and in
respect of, claims, losses, expenses, costs, obligations, and liabilities it may
incur by reason of Buyer's breach of or failure to perform any of its
warranties, guaranties, commitments, or covenants in this Agreement, or by
reason of any act or omission of Buyer, or any of its successors or assigns,
after the date of closing, that constitutes a breach or default under, or a
failure to perform, any obligation, duty, or liability of any of GLOBAL under
any loan agreement, lease, contract, order, or other agreement to which it is a
party or by which it is bound at the date, but only to the extent to which Buyer
expressly assumes these obligations, duties, and liabilities under this
Agreement.
34. All notices to third parties and all other publicity concerning the
transactions contemplated by this Agreement will be jointly planned and
coordinated by and between Buyer and Selling Parties. No party will act
unilaterally in this regard without the prior written approval of the others;
however, this approval will not be unreasonably withheld.
35. Each party represents and warrants that it has dealt with no broker or
finder in connection with any transaction contemplated by this Agreement, and,
as far as it knows, no broker or other person is entitled to any commission or
finders fee in connection with any of these transactions.
36. Each party will pay all costs and expenses incurred or to be incurred
by it in negotiating and preparing this Agreement and in and carrying out the
transactions contemplated by this Agreement.
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37. The subject headings of the paragraphs and subparagraphs of this
Agreement are included for convenience only and will not affect the construction
or interpretation of any of its provisions.
Unless the context clearly requires otherwise:
a. Plural and singular numbers will each be considered to include
the other;
b. The masculine, feminine, and neuter genders will each be
considered to include the others;
c. The words `shall' `will' `agree' and `covenants' are each
mandatory;
d. The word `may' is permissive;
e. The word `or' is not exclusive; and
f. The words `includes' and `including' are not limiting.
38. This Agreement the entire agreement between the parties pertaining to
the subject matter contained in this Agreement and supersedes all prior and
contemporaneous agreements, representations, and understandings of the parties.
No supplement, modification, or amendment of this Agreement will be binding
unless executed in writing by all the parties. Except as specifically provided
for in this Agreement no waiver of any of the provisions of this Agreement will
constitute a waiver of any other provision, whether or not similar, nor will any
waiver constitute a continuing waiver. No waiver will be binding unless executed
in writing by the party making the waiver.
39. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be considered an original, but all of which
together will constitute one and the same instrument.
40. Nothing in this Agreement, whether express or implied, is intended to
confer any rights or remedies under or by reason of this Agreement on any
persons other than the parties to it and their respective successors and
assigns. Nothing in this Agreement is intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement. No
provision gives any third persons any right of subrogation or action against any
party to this Agreement.
41. Except as provided for in paragraph 42 below, any controversy or claim
arising out of, or relating to, this Agreement, or the making, performance, or
interpretation of it, will be settled by binding arbitration by a single
arbitrator appointed under the commercial arbitration rules of the American
Arbitration Association then existing, and judgment on the arbitration award may
be entered in any court having jurisdiction over the subject matter of the
controversy. The venue of any such arbitration shall be Orange County,
California.
42. Each party's obligation under this Agreement is unique. If any party
should default in its obligations under this Agreement, both parties acknowledge
that it would be extremely impracticable to measure the resulting damages;
accordingly, the non-defaulting party or parties, in addition to any other
available rights or remedies, may ▇▇▇ in a court of law for specific performance
or injunctive relief, and the parties each expressly waive the defense that a
remedy in damages will be adequate.
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43. If any legal action or any arbitration or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties will be entitled to
recover reasonable attorney fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
44. Subject to the provisions of paragraph 28, relating to the time of
closing of this transaction, any party may on the date of closing or earlier
terminate this Agreement, without liability to any other party except as
specifically provided for in this Agreement:
a. If any bona fide action or proceeding will be pending against any
party on the date of closing that could result in an unfavorable judgment,
decree, or order that would prevent or make unlawful the performance of this
Agreement; or if any agency of the federal or of any state government has
objected at or before the date closing to this acquisition or to any other
action required by or in connection with this Agreement;
b. If the legality and sufficiency of all steps taken and to be
taken by the parties, their Shareholders and Board of Directors in carrying out
this Agreement has not been taken to the satisfaction of counsel of any party;
or
c. If Buyer does not receive within sixty days of the date of this
agreement the approval to the transfer of license under the California Bureau of
Private Post Secondary Education to change of control of GLOBAL in order it
operate the business of GLOBAL in substantially the same manner and offer the
same services that are now being offered by GLOBAL. Buyer retains the right to
extend the time and or waive this provision as provided for in paragraphs 19.c
and 28.
45. If either Buyer or Selling Parties materially default in the due and
timely performance of any of their warranties or agreements under this
Agreement, the non-defaulting party or parties may on the date of closing give
notice of termination of this Agreement, in the manner provided hereafter. The
notice will specify with particularity the default or defaults on which the
notice is based. The termination will be effective five days after the giving of
such notice, unless the specified default or defaults have been cured on or
before this effective date for termination.
46. All representations, warranties, covenants, and agreements of the
parties contained in this Agreement, or in any instrument, certificate, opinion,
or other writing provided for in it, will survive the closing.
47. There are no representations or warranties made by any party except as
are specifically set forth in this Agreement, or in an instrument, certificate,
opinion, or other writing provided for in this Agreement. All statements
contained in any of these instruments, certificates, opinions, or other writings
will be considered to be representations and warranties under this Agreement.
The representations, warranties, and indemnities made by the parties in this
Agreement or in instruments, certificates, opinions, or other writings provided
for in the agreement to be performed or complied with by the respective parties
under it before the date of closing, will be continuing and will survive the
closing, but will expire on the second anniversary date following the date of
closing, unless a specific claim in writing with respect to these matters has
been made, or an action at law or in equity or arbitration has been commenced or
filed, before that date. Nothing in this paragraph will affect the obligations
and indemnities of the parties with respect to covenants and agreements
contained in this Agreement that are permitted to be performed, in whole or in
part, after the date of closing.
15
All notices, requests, demands, and other communications under this
Agreement must be in writing and will be considered to have been duly given on
the date of service if served personally on the party to whom notice is to be
given, or on the fifth day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
and properly addressed as follows:
To Selling Parties at ▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Aslam Ali
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To Buyer at: Digital Learning Management Corporation.
Att. President
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any party may change its address for purposes of this paragraph by giving
the other parties written notice of the new address in the manner set forth
above.
This Agreement will be construed in accordance with, and governed by, the
laws of the State of California as applied to contracts that are executed and
performed entirely in California.
If any provision of this Agreement is held invalid or unenforceable by any
court of final jurisdiction, it is the intent of the parties that all other
provisions of this Agreement be construed to remain fully valid, enforceable,
and binding on the parties.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
the day and year first above written.
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Digital Learning Management Corporation.
-----------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
-----------------------------------------
Global Computer Systems, Inc,
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Shareholder
-------------------------
Aslam Ali, Shareholder
17
GENERAL DESCRIPTION OF SCHEDULE OF EXHIBITS
Exhibit A: Exception in paragraph. 5.a-d
Exhibit B.1: Financial Statements per paragraph. 5.e
Exhibit B.2: Certificate of CEO per paragraph. 5.e
Exhibit B.3: Schedule of debts not on Financial Statements per
paragraph 5.h
Exhibit B.4: List of Insurance Policies, paragraph. 5. r
Exhibit B.5: List of Officers and directors paragraph 5.z
Exhibit B.6: List of Employment Contracts paragraph 5.aa
Exhibit C.1: List of Real Property leased
Exhibit C.2: List of Personal Property subject to liens or security
agreements per paragraph 5.j
Exhibit D.1: List of Trade names etc. per paragraph 5.m
Exhibit D.2: List of Patents and Licenses per paragraph 5.n
Exhibit D.3: Exceptions to undisputed ownership of patents per
paragraph 5.n
Exhibit D.4: List of ownership or license rights per paragraph 5.n
Exhibit E.1: List of trade secrets etc. per paragraph 5.o
Exhibit E.2: Exception to ownership rights of trade secrets etc. per
paragraph 5.0
Exhibit F.1: List of enrolled students with course and fee details per
▇▇▇▇▇▇▇▇▇ ▇.▇
Exhibit F.2: General Release per paragraph 30.f
Exhibit F.3: Consent of Directors and Shareholders of global
Exhibit G.1: List of threatened or actual claims per paragraph 5.u
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