INVENTORY TRANSFER AGREEMENT, GENERAL RELEASE AND COVENANT NOT TO SUE
GENERAL
RELEASE AND COVENANT NOT TO XXX
This
Agreement (this “Agreement”)
is
made as of the 13th day of September, 2006, by and among GVI Security Solutions,
Inc., a Delaware corporation (“GVI”),
E&S International Enterprises, Inc., a California corporation (“E&S”),
SSC,
Inc., a Delaware corporation (“SSC”),
and
Xxxxx Xxxxx, an individual (“Xxxxx”
and
together with E&S and SSC, the “ESI
Parties”).
WITNESSETH
WHEREAS,
GVI, SSC and E&S are parties to that certain Alliance Agreement, dated as of
May 5, 2005 (the “Alliance
Agreement”),
pursuant to which, among other things, GVI formed an alliance with SSC under
which SSC was to be responsible for the retail sale and distribution of consumer
security products licensed by the GVI, distributed by or on behalf of GVI,
or
manufactured on behalf of the GVI;
WHEREAS,
pursuant to the Alliance Agreement, GVI entered into Subscription Agreements
with each of ESI and Xxxxx (collectively, the “Subscription
Agreements”),
pursuant to which, among other things, ESI and Xxxxx were entitled to be issued
up to an aggregate of 3,000,000 shares of the common stock of GVI (“Common
Stock”)
upon
the occurrence of certain events;
WHEREAS,
prior to the date hereof, ESI and Xxxxx have been issued an aggregate of 750,000
shares of Common Stock pursuant to the terms of the Subscription Agreements;
WHEREAS,
GVI on the one hand, and the ESI Parties on the other hand, dispute the amounts
due to SSC under the Alliance Agreement (including without limitation, disputes
pertaining to the responsibility for freight costs pertaining to goods purchased
by SSC, and adjustments to the markup on purchases that GVI had been receiving
from SSC), and the respective obligations of each of the parties
thereunder;
WHEREAS,
the parties desire to terminate the Alliance Agreement and resolve any
controversy between them upon the terms set forth in this Agreement;
and
WHEREAS,
capitalized terms used but not defined herein shall have the meanings set forth
in the Alliance Agreement.
NOW,
THEREFORE, in consideration of the foregoing, of the mutual promises, releases,
representations, covenants and obligations hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as
follows:
1. Inventory
Transfer.
(i) GVI
hereby agrees to transfer all of its right, title and interest in and to the
inventory identified on Schedule 1 hereto (the “Inventory”)
to SSC
as provided below. GVI
shall
make the Inventory available to SSC for inspection (the “Inspection”)
by a
representative of SSC during normal business hours at its warehouse located
at
0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx (the “GVI
Warehouse”)
until
the close of business on September 13, 2006. Upon its completion of the
Inspection, SSC shall promptly, and in no event later than the close of business
on September 14, 2006, notify GVI
in
writing of any material inconsistency between Schedule I hereto and the
Inventory located at the GVI Warehouse (any such inconsistency shall consist
solely of missing or visibly damaged items, a “Deficiency”),
which
shall be the sole purpose of the Inspection. In the event that SSC provides
GVI
with any such written notice of Deficiency, SSC shall have no obligation to
cause the Inventory to be shipped at GVI’s expense to the SSC Warehouse (as
defined below) until such Deficiency has been cured by GVI. In the event SSC
has
not caused the Inspection to be conducted by the close of business on September
13, 2006, SSC shall be deemed to have waived its rights of inspection hereunder,
and GVI shall thereafter, at GVI’s own expense, be entitled to
ship
the Inventory to a “Top Gun” warehouse designated by SSC located in the State of
California (the
“SSC
Warehouse”).
In
the event that SSC conducts the Inspection and does not provide GVI with any
notice of Deficiency as set forth in this Section 1(i), SSC shall cause the
Inventory to be shipped to the SSC Warehouse at
GVI’s
expense by a carrier selected by SSC, which shall be reasonably acceptable
to
GVI, no later than the close of business on September 15, 2006; in the event
that SSC fails to cause the Inventory to be removed from the GVI Warehouse
by
such time, GVI shall thereafter, at GVI’s own expense, be entitled to ship the
Inventory to the SSC Warehouse. SSC shall take title to the Inventory (and
risk
of loss shall pass to SSC) only upon the removal of the Inventory from the
GVI
Warehouse for delivery to the SSC Warehouse by SSC’s carrier or GVI’s carrier,
as applicable.
(ii) SUBJECT
TO THE PRECEDING PARAGRAPH, THE ESI PARTIES REPRESENT THAT THEY HAVE HAD THE
OPPORTUNITY TO INSPECT AND ARE FULLY FAMILIAR WITH THE INVENTORY AND HEREBY
COVENANT AND AGREE THAT THEY ACCEPT THE CONDITION OF THE INVENTORY “AS
IS”
AND
“WHERE
IS”.
EXCEPT
AS SET FORTH IN THIS AGREEMENT, GVI HAS NOT MADE, AND IS NOT WILLING TO MAKE,
ANY REPRESENTATIONS OR WARRANTIES AS TO THE PHYSICAL CONDITION OR WORKING ORDER
OF THE INVENTORY OR THE INCOME POTENTIALLY TO BE DERIVED FROM THE SALE OF THE
INVENTORY. GVI
EXPRESSLY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE
INVENTORY.
NEITHER
GVI NOR ANY OF ITS SUBSIDIARIES ARE, NOR WILL ANY OF THEM BE, LIABLE OR BOUND
IN
ANY MANNER BY EXPRESS OR IMPLIED WARRANTIES, GUARANTEES, STATEMENTS, PROMISES,
REPRESENTATIONS OR INFORMATION PERTAINING TO THE INVENTORY, MADE OR FURNISHED
BY
ANY AGENT, EMPLOYEE OR OTHER PERSON REPRESENTING OR PURPORTING TO REPRESENT
GVI,
UNLESS SUCH ARE EXPRESSLY AND SPECIFICALLY SET FORTH HEREIN.
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2. Termination
of Alliance Agreement.
Each of
the parties hereto hereby agrees that the Alliance Agreement and the respective
obligations of the parties thereto thereunder are hereby terminated, and that
following the execution of this Agreement, the Alliance Agreement shall be
of no
further force or effect. Without limiting the generality of the preceding
sentence, the parties agree and acknowledge that following the execution of
this
Agreement neither GVI nor any of its subsidiaries shall have any obligation
to
accept returns of any Products (including GVI Products) distributed or sold
by
the ESI Parties under the Alliance Agreement or otherwise. The parties further
acknowledge and agree that neither ESI nor Xxxxx shall be entitled to be issued
any additional shares of Common Stock under the Subscription Agreements, which
shall otherwise remain in effect to the extent provided therein, and that the
Warrant to purchase GVI common stock issued to ESI under the Alliance Agreement
shall continue to be enforceable in accordance with its terms.
3. Releases
and Covenants Not to Xxx by the Parties.
(a) Release
and Covenant Not to Xxx by the ESI Parties.
As of
the Release Effective Time (defined below), each of the ESI Parties on their
behalf and on behalf of any and all entities controlled by them, voluntarily
releases and forever discharges GVI and each of its subsidiaries and their
respective affiliates, directors, officers, employees, shareholders, agents
and
representatives, and each of their successors and assigns (the “GVI
Releasees”)
from,
and covenants not to xxx or proceed against (or to encourage or induce any
other
person or entity to xxx or proceed against) any of the GVI Releasees on the
basis of, any and all claims, contentions, rights, debts, liabilities, demands,
accounts, reckonings, obligations, duties, promises, costs, expenses (including,
but not limited to, attorneys’ fees), liens, damages, losses, actions, and
causes of action, of any kind whatsoever (hereinafter referred to as
“Claims”)
whether due or owing in the past, asserted or not, present or future and whether
based upon contract, tort, statute or any other legal or equitable theory of
recovery, and whether known or unknown, suspected or unsuspected, fixed or
contingent, matured or unmatured, with respect to, pertaining to, or arising
from any matters, acts, omissions, events, conduct or occurrences at any time
prior to the date of this Agreement, including, without limiting the generality
of the foregoing provisions, any and all causes of action or Claims which were
asserted or could have been asserted under or in connection with the Alliance
Agreement; but excluding any Claims arising out of or related to any breach
of
this Agreement. Each of the ESI Parties represents and warrants to each of
the
GVI Releasees that none of the ESI Parties has transferred or assigned any
such
Claims to any other person or entity, and each of the ESI Parties covenants
and
agrees that as of the Release Effective Time none of the ESI Parties shall
have
transferred or assigned any such Claims to any other person or entity.
(b) Release
and Covenant Not to Xxx by GVI.
As of
the Release Effective Time, GVI, on its own behalf and on behalf of any and
all
entities controlled by GVI, voluntarily releases and forever discharges each
of
the ESI Parties and their respective subsidiaries, affiliates, directors,
officers, employees, shareholders, agents and representatives, and each of
their
successors and assigns (the “ESI
Releasees”)
from,
and covenants not to xxx or proceed against (or to encourage or induce any
other
person or entity to xxx or proceed against) any of the ESI Releasees on the
basis of, any and all Claims, whether due or owing in the past, asserted or
not,
present or future and whether based upon contract, tort, statute or any other
legal or equitable theory of recovery, and whether known or unknown, suspected
or unsuspected, fixed or contingent, matured or unmatured, with respect to,
pertaining to, or arising from any matters, acts, omissions, events, conduct
or
occurrences at any time prior to the date of this Agreement, including, without
limiting the generality of the foregoing provisions, any and all causes of
action or Claims which were asserted or could have been asserted in connection
with the Alliance Agreement; but excluding any Claims arising out of or related
to any breach of this Agreement. GVI represents and warrants to each of the
ESI
Releasees that GVI has not transferred or assigned any such Claims to any other
person or entity, and GVI covenants and agrees that as of the Release Effective
Time GVI shall not have transferred or assigned any such Claims to any other
person or entity.
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(c) Each
of
the ESI Parties, on the one hand, and GVI, on the other hand, understands and
acknowledges that: (a) its respective release and voluntary discharge
(“Release”)
on the
Release Effective Time
pursuant
to this Section 3 will constitute a knowing and voluntary waiver of any and
all
applicable Claims; (b) each of the undersigned parties will have waived the
applicable Claims pursuant to this Release in exchange for consideration, the
sufficiency of which is hereby acknowledged, and that such Release shall be
effective as a full and final accord and satisfactory release of each and every
matter herein specifically or generally referred to herein; and (c) each of
the
undersigned parties is hereby advised that it may consult and hereby
acknowledges that it has in fact consulted with an attorney of its choosing
concerning this Agreement (and the Release contained herein) prior to executing
it. With respect to its Release, each undersigned party hereby warrants,
represents and agrees that it is fully aware of the provisions of California
Civil Code Section 1542, which provides as follows:
“A
general release does not extend to claims which the creditor does not know
or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the
debtor.”
With
regard to its Release, each undersigned party knowingly and voluntarily waives
and relinquishes any rights and benefits which it has or may have under
California Civil Code Section 1542 to the full extent that it may lawfully
waive
all such rights and benefits, and any other statutes or common law principle
of
similar effect, as to any and all applicable Claims (which do not include the
obligations set forth in this Agreement), and further agrees that this waiver
is
a material aspect of the consideration for entering into this Agreement. With
regard to its Release, each undersigned party acknowledges that it is aware
that
it may later discover facts in addition to or different from those which it
now
knows or believes to be true with respect to the subject matter of its
applicable Release, but it is the undersigned party’s intention to settle fully,
finally and forever and release any and all matters, disputes and differences,
known and unknown, suspected and unsuspected, which now exist, may later exist
or may previously have existed, and that in furtherance of this intention,
the
releases given in its applicable Release shall be and remain in effect as full
and complete general releases notwithstanding discovery or existence of any
such
additional or different facts.
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(d) Release
Effective Time.
The
“Release Effective Time”
shall
be date and time upon which the Inventory is removed from the GVI Warehouse
by a
carrier for delivery to the SSC Warehouse in accordance with Section 1 of this
Agreement.
4. Confidentiality
of Agreement.
Except
as may be required by law (including in any securities filings by GVI), the
terms and conditions of this Agreement are and shall be deemed confidential
and
shall not be disclosed by any of the parties hereto to any other person or
entity, except to the accountants and legal advisors of each of the respective
parties.
5. Non-disparagement.
Each of
the parties hereto agrees not to publish or communicate to any person or entity
any Disparaging (as defined below) remarks, comments or statements concerning
the other parties and/or their present and former respective members, managers,
partners, director, shareholders, officers, employees, agents, attorneys,
successors and assigns. “Disparaging” remarks, comments or statements are
those
that
impugn the character, honesty, integrity or morality or business acumen or
abilities of the individual or entity being disparaged.
6. Miscellaneous.
(a) Entire
Agreement; Amendment.
This
Agreement, together with any schedules and exhibits attached hereto, sets forth
the entire agreement among the parties with respect to the subject matter
hereof, and supersedes all prior oral and written agreements between the parties
and their affiliates with respect to the subject matter hereof. This Agreement
sets forth the entire agreement among the parties with respect to the subject
matter hereof. No agreement shall be effective to change, modify, waive,
release, amend, terminate, discharge or effect an abandonment of this Agreement,
in whole or in part, unless such agreement is in writing, refers expressly
to
this Agreement and is signed by the party against whom enforcement of the
change, modification, waiver, release, amendment, termination, discharge or
effectuation of the abandonment is sought.
(b) Counterparts.
This
Agreement may be executed in one or more counterparts, each of which together
shall constitute one and the same agreement. This Agreement shall be binding
on
the parties hereto notwithstanding that the parties are not all signatories
to
the same counterpart so long as each party shall have executed and delivered
a
counterpart of this Agreement. The transmission of a signed counterpart of
this
Agreement by telecopier shall constitute sufficient delivery hereof.
(c) Governing
Law.
This
Agreement is made under and shall be governed by and construed in accordance
with the internal laws of the State of New York without regard to the conflict
of laws principles thereof.
(d) Successors
and Assigns; Assignment.
This
Agreement and the provisions hereof shall be binding upon, and inure to the
benefit of, and be enforceable by, the parties hereto and their respective
successors, heirs, beneficiaries, personal representatives, executors,
successors and permitted assigns. This Agreement and the rights and obligations
hereunder shall not be assigned by any party hereto without the prior written
consent of the other parties hereto.
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(e) Further
Assurances.
Each
party shall, at any time and from time to time after the date hereof, do,
execute, acknowledge and deliver, or cause to be done, executed, acknowledged
and delivered, all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney, receipts, acknowledgments, acceptances and
assurances as may be reasonably required to procure for any party, and his,
her
or its successors and assigns, the benefits intended to be conferred upon such
party under this Agreement.
(f) Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by reason of any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
or agreements of the parties contemplated hereby are not affected in any manner
materially adverse to any party.
(g) Notices.
Any and
all notices, requests, demands, consents and other communications required
or
permitted under this Agreement shall be in writing, signed by or on behalf
of
the party by which given, and shall be considered to have been duly given when
(i) delivered by hand, (ii) sent by telecopier (with receipt confirmed),
provided
that a
copy is mailed (on the same date) by first class mail, postage prepaid, or
(iii)
delivered to the addressee, if sent by Express Mail, Federal Express or other
reputable express delivery service (receipt requested), or by first class
certified or registered mail, return receipt requested, postage prepaid, in
each
case to the appropriate addresses and telecopier numbers set forth as
follows:
If
to
GVI:
GVI
Security Solutions, Inc.
0000
Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
Xxxxx 00000
Fax:
(000) 000-0000
Attn:
Xxxxxx Xxxxxxx
with
a
copy to:
Kronish
Xxxx Xxxxxx & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax:
(000) 000-0000
Attn:
Xxxxxx Xxxxxx, Esq.
If
to any
of the ESI Parties other than Xxxxx:
0000
Xxxxxx Xxxxxx
Xxxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Telecopier
No.: (000) 000-0000
Attention:
Xxxxxx Xxxxxxxx
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with
a
copy to:
Xxxxxxx
Xxxxxxx Xxxxxx LLP
0000
Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Telecopier
No.: (000) 000-0000
Attention:
Xxxx X. Xxxxx, Esq.
If
to
Xxxxx:
Xxxxx
Xxxxx
00000
Xxxxxx Xxxx
Xxxxxxx,
XX 00000
or
to
such other addresses and telecopier numbers as a party may from time to time
designate as to itself by notice similarly given to the other parties in
accordance herewith. A notice of change of address shall not be deemed given
until delivered to the addressee.
(h) Expenses.
Except
as provided herein, each party will be liable for its own costs and expenses
incurred in connection with the negotiation, preparation, execution or
performance of this Agreement and with the transactions contemplated hereby
including, without limitation, all fees of legal counsel.
(i) Headings.
The
headings of sections in this Agreement are for reference only and shall not
limit or control the meaning thereof.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
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GVI
SECURITY SOLUTIONS, INC.
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By:____________________________
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Name:
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Title:
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E&S
INTERNATIONAL ENTERPRISES, INC.
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By:____________________________
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Name:
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Title:
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SSC,
INC.
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By:____________________________
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Name:
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Title:
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________________________________
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Xxxxx
Xxxxx
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8
SCHEDULE
1
INVENTORY
9
