Exhibit 10.1
Share Exchange Agreement
Share Exchange Agreement entered into as of February 25, 2005 (this
"Agreement"), among Knowledge Transfer Systems Inc., a Nevada corporation (the
"Buyer"), Xxxxx Xxxx ("Ball"), Xxxxx Xxxxxx ("Xxxxxx"), Xx Xxxxxxx ("Xxxxxxx"),
Xxxxxx Xxxxxxx ("Xxxxxxx"), and Xxxxxx Xxxxx ("Villa", and together with Ball,
Miller, Mercado, and Routely, collectively, the "Sellers," and individually, a
"Seller") and Global General Technologies Inc., a California corporation (the
"Company").
WHEREAS, the Sellers own the following shares of common stock of the
Company, which collectively constitute all of the issued and outstanding shares
of the Company's common stock:
Name Shares
Ball 13,100,000
Xxxxxx 600,000
Xxxxxxx 400,000
Xxxxxxx 300,000
Villa 600,000
WHEREAS, the Sellers desire to sell, and the Buyer desires to purchase,
all of the outstanding capital stock of the Company on the terms and conditions
contained in this Agreement; and
WHEREAS, the Board of Directors of the Buyer has determined that it is
in the best interests of the Buyer and its stockholders for the Buyer to
purchase the Company upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and other good and valuable consideration, the receipt and
sufficiency of which is herein consideration of the representations, warranties,
and covenants herein contained, the parties agree as follows.
1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer Indemnified Party" has the meaning set forth in ss.8(a) below.
"Closing" has the meaning set forth in ss.2(b) below.
"Closing Date" has the meaning set forth in ss.2(b) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" shall mean all contracts, agreements, commitments, notes,
bonds, deeds of trust, indentures, leases, mortgages, arrangements, instruments,
documents of any nature or description that the Company is party to or obligated
by.
"Damages" has the meaning set forth in ss.8(a) below.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as
now or hereafter in effect.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any security interest, pledge, mortgage,
lien, charge, encumbrance, license, easement, right-of-way, cloud on title,
adverse claim, preferential arrangement or restriction of any kind, including,
but not limited to, any restriction on the use, voting, transfer, receipt of
income or other exercise of any attributes of ownership.
"Seller" has the meaning set forth in the preface above.
"Seller Indemnified Party" has the meaning set forth in ss.8(b) below.
"Seller Share" means all issued and outstanding shares of the common
stock, no par value, of the Company, owned by the Sellers.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
2. Exchange of Shares.
(a) Exchange. Subject to the terms and conditions stated herein, at the
Closing:
(1) the Sellers shall assign, transfer, convey, and deliver to
the Buyer the Seller Shares and any and all rights in such shares to which they
are entitled, and by doing so will be deemed to have assigned all of their
respective right, title and interest in and to all such Seller Shares to the
Buyer; and
(2) in exchange for the Seller Shares, the Buyer shall issue
to each Seller, and each Seller shall accept and acquire from the Buyer, shares
of the common stock of the Buyer (the "Consideration Shares"), so that each
Seller Share is converted into one (1) Consideration Share. For avoidance of
doubt, Buyer will not be required to consummate this transaction unless all, and
not less than all, of the Seller Shares are transferred and assigned pursuant to
the foregoing.
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxx Xxxxx &
Associates, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 EST on the second
business day following the satisfaction or waiver of all conditions to the
obligations of the parties provided below, or such other date as the Buyer and
the Sellers may mutually determine (the "Closing Date").
(c) Deliveries at the Closing. At the Closing, (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7(a) below, (ii) the Buyer will deliver to the Sellers
the various certificates, instruments, and documents referred to in Section 7(b)
below, (iii) the Sellers will deliver to the Buyer stock certificates
representing the Seller Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to the Sellers
stock certificates representing the Consideration Shares.
3. Representations and Warranties of the Seller.
The Sellers, jointly and severally, represent and warrant to the Buyer
that the statements contained in this Section 3 are true, correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date.
(i) Organization of the Company. The Company is duly organized,
validly existing, and in good standing under the laws of the State of
California. The Company has all requisite corporate or other power to
own, operate and lease its assets and carry on its business as the same
is now being conducted. The minute books (containing the records of
meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate books, and
the stock record books of the Company are correct and complete. The
Company does not and has never maintained any stock, partnership, joint
venture or any other security or ownership interest in any other
entity.
(ii) Authorization of Transaction. Each of the Sellers has full
power and authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of the Sellers, enforceable against them
in accordance with its terms and conditions. No Seller needs to give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any person, including without limitation, any
government or governmental agency in order to execute and deliver this
Agreement and consummate the transactions contemplated herein.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
either the Company or the Sellers are subject or, any provision of the
Articles of Incorporation or Bylaws of the Company or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement
to which either the Company or the Seller is a party or by which it or
he is bound or to which any of its or his assets is subject.
(iv) Brokers' Fees. Neither the Company nor any of the Sellers
have any Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated
by this Agreement for which the Buyer could become liable or obligated.
(v) Investment. Each of the Sellers (A) understands that the
Consideration Shares have not been, and will not be, registered under
the Securities Act, or under any state securities laws, and are being
offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (B) are acquiring the
Consideration Shares solely for their own account for investment
purposes, and not with a view to the distribution thereof, (C) are
sophisticated investors with knowledge and experience in business and
financial matters, (D) have received certain information concerning the
Buyer and have had the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks inherent in
holding the Consideration Shares, (E) are able to bear the economic
risk and lack of liquidity inherent in holding the Consideration
Shares, and (F) are accredited investors, as such term is defined under
Regulation D of the Securities Act.
(vi) Capitalization; Seller Shares. The Sellers hold of record and own
beneficially the Seller Shares, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. All of the issued and outstanding
shares of capital stock of the Company have been duly authorized and are validly
issued, fully paid, and nonassessable. Except as set forth on Schedule 3(vi),
there are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Company or the Sellers to sell, transfer, or
otherwise dispose of any capital stock of the Company or that could require the
Company or the Sellers to issue, sell, or otherwise cause to become outstanding
any of its own capital stock. There are no outstanding stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of any capital stock of the Company.
The Company does not control directly or indirectly or have any direct or
indirect equity participation in any corporation, partnership, trust, or other
business association.
(vii) Title to Assets. Attached as Schedule 3(vii) is a list of
all assets and real property used or leased by the Company. The Company has good
and marketable title to, or a valid leasehold interest in, all of said assets,
free and clear of all Security Interests.
(viii) Liabilities. Neither the Sellers nor the Company have any
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability), except for Liabilities set forth on
Schedule 3(viii).
(ix) Legal Compliance. Each of the Sellers and the Company has
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof),
including without limitation, all Environmental, Health, and Safety
Requirements, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply.
(x) Tax Matters.
(a) Each of the Sellers and the Company has filed all Tax Returns
that he or it was required to file. All such Tax Returns were correct
and complete in all respects. All Taxes owed by the Company and the
Sellers have been paid. Neither the Company nor the Sellers is the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where any of the Company or the Sellers does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of the Company or the Sellers
that arose in connection with any failure (or alleged failure) to pay
any Tax.
(b) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(c) There is no Basis for any governmental authority to assess
any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of the
Company either (A) claimed or raised by any authority in writing or (B)
as to which the Sellers have knowledge. Schedule 3(x) lists all
federal, state, local, and foreign income Tax Returns filed with
respect to the Company. The Sellers have delivered to the Buyer correct
and complete copies of all federal income Tax Returns.
(d) None of the Sellers nor the Company has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(e) None of the Sellers nor the Company has filed a consent under
Code ss.341(f) concerning collapsible corporations. None of the Sellers
nor the Company has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code ss.280G. None of the Sellers nor the Company has
been a United States real property holding corporation within the
meaning of Code ss.897(c)(2) during the applicable period specified in
Code ss.897(c)(1)(A)(ii). None of the Sellers nor the Company is a
party to any Tax allocation or sharing agreement. None of the Sellers
or the Company (A) has been a member of an Affiliated Group filing a
consolidated federal income Tax Return (other than a group the common
parent of which was the Seller) or (B) has any Liability for the Taxes
of any Person under Reg. ss.1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(xi) Real Property. The Company does not own or lease any real property
except as set forth on Schedule 3(xi).
(xii) Intellectual Property.
(a) The Company owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the business of the
Company. Each item of Intellectual Property owned or used by the
Company will be owned or available for use to the Company on identical
terms and conditions immediately subsequent to the Closing hereunder.
The Company has taken all necessary and desirable action to maintain
and protect each item of Intellectual Property that it owns or uses.
(b) None of the Sellers nor the Company has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties, and none of the
Sellers nor the Company has ever received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation. No third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of the Company.
(c) Schedule 3(xii) identifies each patent or registration which
has been issued to the Company with respect to its Intellectual
Property, identifies each pending patent application or application for
registration which the Company has made with respect to any of its
Intellectual Property, and identifies each license, agreement, or other
permission which the Company has granted to any third party with
respect to any of its Intellectual Property (together with any
exceptions). The Sellers have delivered to the Buyer correct and
complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date). Schedule
3(xii) also identifies each trade name or unregistered trademark used
by the Company. With respect to each item of Intellectual Property so
listed:
(A) the Company possess all right, title, and interest in
and to the item, free and clear of any Security Interest,
license, or other restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or threatened
which challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) neither the Company nor the Sellers have ever agreed
to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to
the item.
(d) Schedule 3(xii) identifies each item of Intellectual Property
that any third party owns and that any of the Company or the Sellers
uses pursuant to license, sublicense, agreement, or permission. The
Sellers have delivered to the Buyer correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to
date). With respect to each item of Intellectual Property owned or
licensed by the Company:
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in
full force and effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of
the transactions contemplated hereby;
(C) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or
default or permit termination, modification, or acceleration
thereunder;
(D) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(E) with respect to each sublicense, the representations
and warranties set forth in subsections (A) through (D) above are
true and correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or threatened
which challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property; and
(H) none of the Sellers nor the Company has granted any
sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
(e) The Buyer will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the consummation of the
transactions contemplated herein.
(f) None of the Sellers nor the Company has any knowledge of any
new products, inventions, procedures, or methods of manufacturing or
processing that any competitors or other third parties have developed
which reasonably could be expected to supersede or make obsolete any
product or process of the Company.
(xiii) Contracts.
(a) Schedule 3(xiii) contains a true, complete and accurate
list of all Contracts, whether written or oral, to which the Company is
a party or by which any of its assets are bound. The Company is not
obligated under any loan agreement, promissory note or other evidence
of indebtedness as a signatory, guarantor or otherwise and has not
otherwise guaranteed the performance by any Person of the obligations
of such Person under any Contract, other than as set forth on Schedule
3(xiii).
(b) No consent of any party to any Contract is required in
connection with the execution, delivery and performance of this
Agreement.
(c) The Company is not in default under any Contract, nor has
any event occurred, which through the passage of time or the giving of
notice, or both, would constitute a default by the Company, would cause
the acceleration of any of the Company's obligations thereunder, would
result in the creation of any Security Interest. No third party is in
default under any Contract, nor has any event occurred that, through
the passage of time or the giving of notice, or both, would constitute
a default thereunder.
(d) Neither the Company nor the Sellers are a party to or
bound by any Contract which (i) limits the Sellers or the Company from
competing in any line of business or with any Person or in any
geographic area or during any time period or (ii) grants any Person any
preferential right to purchase from the Sellers or the Company, any
properties or assets of the Sellers or the Company, including without
limitation, the Intellectual Property.
(xiv) Litigation. Neither the Company nor the Sellers (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator.
(xv) Employees. The Company is not (a) a party to any union, collective
bargaining or similar agreement; (b) providing or obligated to provide any
profit sharing, deferred compensation, bonus, savings, stock option, stock
purchase, pension, consulting, retirement, welfare or other incentive plan or
agreement; (c) providing or obligated to provide "fringe benefits" or any
employee perquisites to employees, including, without limitation, vacation, sick
leave, medical, hospitalization, insurance and related benefits; or (d) a party
to any employment or consulting agreement. No present or former employee of the
Company has any claim on account of or for bonuses, vacation, time off earned or
otherwise. On or before the Closing Date all accrued wages, salary, bonus,
commissions, vacation and sick pay and Taxes relating thereto shall be paid by
the Company.
(xvi) Guaranties. Neither the Sellers nor the Company is a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.
(xvii) Disclosure. All representations, warranties and certifications
contained in this Agreement, including any schedules delivered herewith, and all
the other documents delivered in connection with this Agreement delivered
directly or indirectly by the Sellers or the Company are true, correct and
complete, do not contain any statement which is false or misleading with respect
to a material fact and do not omit to state a material fact necessary in order
to make the statements herein and therein not false or misleading.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Sellers that the statements contained in this Section are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date.
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Nevada.
(ii) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Buyer is subject or any provision of its charter or bylaws or (B)
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to
which any of its assets is subject.
(iv) Brokers' Fees. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
the Seller could become liable or obligated.
(v) Investment. The Buyer is not acquiring the Seller Shares with
a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
5. Pre-Closing Covenants. The parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
(a) Between the date of this Agreement and the Closing, the Sellers and
the Company shall give the Buyer and its authorized representatives and agents
full and complete access to all properties, personnel, facilities and offices of
the Company and the Sellers and to all the books and records thereof (and permit
the Buyer to make copies thereof), and cause the officers and employees of, and
consultants to, the Sellers to furnish the Buyer with all financial information
and operating data and other information with respect to the business and
properties of the Company and to discuss with the Buyer and its authorized
representatives the affairs of the Company.
(b) Each of the parties shall use reasonable efforts to cause their
respective Affiliates, officers, directors, employees, auditors, attorneys,
consultants, advisors and agents, to treat as confidential and hold in strict
confidence, unless compelled to disclose by judicial or administrative process
or, in the opinion of its counsel, by other requirements of applicable law, and
after prior written notice to the other party, of the Sellers, the Company, or
the Buyer, as the case may be, furnished to the Buyer by the Sellers or the
Company or to the Sellers or the Company by the Buyer, as the case may be, or
any of their respective representatives in connection with the transactions
contemplated herein and will not release or disclose such confidential
information to any other Person, except their respective auditors, attorneys,
financial advisors and other consultants, agents and advisors in connection with
the consummation of the contemplated transactions. If the transaction
contemplated by this Agreement does not occur (i) such confidence shall be
maintained by the parties and each party shall use reasonable efforts to cause
its officers, directors, Affiliates and such other Persons to maintain such
confidence, except to the extent such information comes into the public domain
(other than as a result of an action by such party, its officers, directors or
such other Persons in contravention of this Agreement), and (ii) upon the
request of any party, the other party shall promptly return to the requesting
party any written materials remaining in its possession, which materials it has
received from the requesting party or its representatives, together with any
analyses or other written materials based upon the materials provided.
(c) Publicity. Neither the Sellers nor the Company shall, and none of
them shall permit any Person to, issue any press release or make any other
statement or disclosure with respect to this Agreement or the transactions
contemplated without the prior written approval of the Buyer.
(d) Conduct of Business. Except as expressly consented to in writing by
the Buyer, between the date of this Agreement and until the earlier of the
termination of this Agreement in accordance with the terms hereof or the
Closing, the Company shall conduct its business diligently, in good faith and
only in the ordinary course of business consistent with past practice and use
all its reasonable efforts to preserve intact its present business organization
and employees and to preserve the goodwill of Persons having business relations
with it. Without limiting the generality of the foregoing, the Company shall
not, directly or indirectly, and the Sellers shall not cause the Company,
directly or indirectly, to:
(i) amend its articles of incorporation or bylaws;
(ii) acquire any capital stock or other equity securities of any Person
or any equity or ownership interest in any business;
(iii) incur or guarantee any Liabilities of any kind or make any loans
of any kind;
(iv) (i) split, combine or reclassify its outstanding capital stock or
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise, (ii) spin-off any assets or businesses, sell any assets
or businesses or effect any extraordinary corporate transaction, (iii) engage in
any transaction for the purpose of effecting a recapitalization, or (iv) engage
in any transaction or series of related transactions which has a similar effect
to any of the foregoing;
(v) issue or sell, transfer, pledge or otherwise dispose of, or agree
to issue, sell, pledge or otherwise dispose of, any additional shares of, or any
options, warrants or rights of any kind to acquire any shares of its capital
stock of any class, or any debt or equity securities convertible into or
exchangeable for such capital stock;
(vi) redeem, purchase, acquire or offer to purchase or acquire any
shares of its capital stock;
(vii) enter into any Contract (written or oral) or transaction;
(viii) modify the terms of, terminate or fail in any respect to comply
with the terms of any Contract;
(ix) enter into or amend any employment, consulting, severance or
similar Contract;
(x) fail to promptly advise the Buyer in writing of any condition or
event which may have a material adverse effect on the Company or the Sellers; or
(xi) agree or otherwise commit, whether in writing or otherwise, to do,
or take any action or omit to take any action that would result in, any of the
foregoing.
(e) Amending Schedules. From time to time prior to the Closing, the
parties shall promptly provide, supplement and/or amend the Schedules hereto
with respect to any matter arising after the date of this Agreement which, if
existing or occurring at the date of this Agreement, would have been required to
have been set forth on the Schedules to this Agreement. Such supplement or
amendment shall have the effect of curing any related misrepresentation or
breach of warranty made in connection with the transactions contemplated by this
Agreement; provided, however, that if such misrepresentation or breach is
material, each party shall have a commercially reasonable period of time
following receipt of any supplemented or amended Schedules to elect (i) to
terminate this Agreement without any further liability to the parties or (ii) in
such non-amending party's sole discretion, to waive such breach and consummate
the transactions contemplated by this Agreement.
(f) Remedies. In addition to any and all other remedies available at
law or equity, in the event any of the Sellers or the Company shall breach or
threaten to breach any of the provisions of this Agreement, each of the Sellers
and the Company agree and acknowledge that damages would be difficult to
ascertain, the Buyer and its Affiliates will suffer immediate, irreparable harm,
and the Buyer and its Affiliates shall be entitled, in addition to any and all
other remedies, to an injunction issued by a court of competent jurisdiction
restraining the aforesaid violations of the Sellers and/or the Company, without
the necessity of posting a bond. Nothing contained in this Section 5(f) is
intended to limit in any way any of the rights or remedies of any party to this
Agreement in respect of any breach or threatened breach of this or any other
provision of this Agreement. The Sellers and the Company acknowledge and agree
that there is no adequate remedy at law for any such breach or threatened breach
and, in the event that any action or proceeding is brought seeking injunctive
relief, said party shall not use as a defense thereto that there is an adequate
remedy at law. Furthermore, the Buyer shall be entitled to a right of specific
performance upon a breach of this Agreement by any of the Sellers and/or the
Company.
(g) Exclusivity. None of the Company nor any of the Sellers will (i)
solicit, initiate, or encourage the submission of any proposal or offer from any
Person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets, of the Company (including
any acquisition structured as a merger, consolidation, or share exchange) or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Sellers and the Company will notify the Buyer immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
6. [Intentionally omitted]
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3 above
shall be true and correct in all respects at and as of the Closing
Date;
(ii) the Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) the Sellers shall have procured all of the third party
consents specified in Schedule 7(a)(iii) and any other documents,
instruments or agreements requested by the Buyer;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Buyer to own the
Seller Shares and to control the Company, or (D) affect adversely the
right of the Company to own its assets and to operate its businesses
(and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(v) the Sellers shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified above is satisfied
in all respects;
(vi) the relevant parties shall have entered into side agreements
in form and substance as set forth in Exhibits ___ attached hereto and
the same shall be in full force and effect;
(vii) all actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this ss.7(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.4 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(iv) the Buyer shall have delivered to the Sellers a certificate
to the effect that each of the conditions specified above in ss.7(b) is
satisfied in all respects;
(v) the relevant parties shall have entered into side agreements
in form and substance as set forth in Exhibits __ and the same shall be
in full force and effect;
(vi) the Board of Directors of Buyer shall have appointed Ball as
the President and Chief Executive Officer of the Buyer and Ball and
Xxxxxx as directors of the Buyer; and
(vii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
The Sellers may waive any condition specified in this ss.7(b) if they execute a
writing so stating at or prior to the Closing.
8. Indemnification.
(a) Indemnification by the Seller. The Sellers and their Affiliates,
jointly and severally, shall indemnify and hold harmless the Buyer and its
Affiliates, officers, directors, stockholders, employees and agents and the
successors and assigns of all of them (the "Buyer Indemnified Parties"), and
shall reimburse the Buyer Indemnified Parties for, any loss, liability, claim,
damage, expense (including, but not limited to, costs of investigation and
defense and attorneys' fees) (collectively, "Damages"), arising from or in
connection with (a) any inaccuracy or breach of any of the representations and
warranties, of the Sellers or the Company in this Agreement or in any
certificate or document delivered by the Sellers or the Company pursuant to this
Agreement, or any actions, omissions or statements of fact inconsistent with in
any respect any such representation or warranty, (b) any failure by the Sellers
or the Company to perform or comply with any agreement, covenant or obligation
in this Agreement or in any certificate or document delivered by the Sellers or
the Company pursuant to this Agreement to be performed by or complied with by
the Seller or the Company, (c) any claims made by a third Person against the
Buyer or its Affiliates based upon a Contractual obligation of the Sellers or
the Company prior to the Closing Date, (d) Taxes attributable to the Company or
the Sellers prior to the Closing, (e) any claims on account of the failure of
the Sellers to comply with any laws, rules or regulations, (f) any claims for
severance or any other compensation made by the Company's current or former
employees or agents, (g) any claim made at any time by any governmental body in
respect of the business of the Company for all periods prior to the Closing
Date, (h) any Liability or obligation of the Sellers or the Company arising
prior to the Closing Date or (i) any litigation, action, claim, proceeding or
investigation by any third party relating to or arising out of the business or
operations of the Seller or the Company.
(b) Indemnification by the Buyer. The Buyer shall indemnify and hold
harmless the Sellers and their Affiliates, employees, agents and the successors
and assigns of all of them (the "Seller Indemnified Parties"), and shall
reimburse the Seller Indemnified Parties for, any Damages arising from or in
connection with (a) any material inaccuracy or breach of any of the
representations and warranties of the Buyer in this Agreement or in any
certificate or document delivered by the Buyer to the Sellers pursuant to this
Agreement, or (b) any failure by the Buyer to perform or comply with, in any
material respect, any agreement, covenant or obligation in this Agreement or in
any certificate or document delivered by the Buyer pursuant to this Agreement to
be performed by or complied with by the Buyer.
(c) Survival. All representations, warranties, covenants and agreements
of the parties contained herein or in any other certificate or document
delivered pursuant hereto shall survive the Closing for three years from the
Closing Date, except the representations and warranties set forth in Section
3(iv) and (x) which shall survive until the expiration of the applicable statute
of limitations.
9. Termination.
(a) Termination Procedures. This Agreement may be terminated as
follows:
(i) by mutual written agreement of all of the parties at any
time;
(ii) by the Buyer, by notice to the Company and the Sellers,
if any of the Company or the Sellers has breached this Agreement in any material
respect and such breach is not cured within ten (10) days after written notice
from the Buyer to the Company and the Sellers;
(iii) by the Company, by notice to the Buyer, if the Buyer has
breached this Agreement in any material respect and such breach is not cured
within ten (10) days after written notice from the Company to the Buyer; or
(iv) by the Buyer, by notice to the Company and the Sellers,
if its due diligence investigation indicates that any of the information
provided for in this Agreement, including without limitation, the Schedules, is
inaccurate, incomplete or untrue in a material way.
(b) Effect of Termination. If any party terminates this Agreement
pursuant to this Section 9, all rights and obligations of the parties hereunder
shall terminate without any liability of any party to any other party, except
for the obligations of the parties under Section 5(b), provided, however, that
none of the parties shall be released from liability for any intentional
misrepresentation or fraud.
10. Miscellaneous.
(a) Public Announcements. Neither the Company, the Sellers, nor any of
their Affiliates shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of the Buyer.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the schedules and
documents referred to herein) constitutes the entire agreement among the parties
and supersedes any prior understandings, agreements, or representations by or
among the parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. No party may assign either this Agreement or any of his or
its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Seller.
(e) Counterparts. This Agreement may be executed in facsimile and in
one or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Company of any of the Sellers:
Global General Technologies Inc.
Xxxxx 000
0000 Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Dr. Xxxxx Xxxx
Copy to:
If to the Buyer:
Knowledge Transfer Systems, Inc.
===========================
Copy to:
===========================
---------------------------
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Nevada without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Nevada or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Nevada.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Sellers. No waiver by any party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the parties, the Company, the Sellers, and the
Buyer will bear his or its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
(l) Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Further Assurances. In case at any time after the Closing, any
further action or the execution and delivery of any additional documents or
instruments shall be necessary or desirable to carry out the purposes of this
Agreement and render effective the consummation of the transactions contemplated
herein, the parties shall take such actions and execute such additional
documents and instruments as may be reasonably requested by the requesting
party.
(n) Independent Representation. Each of the parties hereto further
acknowledges and agrees that he or it, as the case may be, has been advised by
counsel during the course of negotiations leading up to the execution and
delivery of this Agreement and had significant input in the development of this
Agreement. This Agreement shall not, therefore, be construed more strictly
against any party responsible for its drafting regardless of any presumption or
rule requiring construction against the party whose attorney drafted this
Agreement. Each of the Sellers and the Company expressly agree and acknowledge
that Xxxxx Xxxxx & Associates has acted as counsel to the Buyer in connection
with this Agreement and the transactions contemplated herein, and shall continue
to act as counsel to the Buyer subsequent to the Closing.
IN WITNESS WHEREOF, the parties hereto have executed this Share
Exchange Agreement as of the date first above written.
KNOWLEDGE TRANSFER SYSTEMS INC.
By: /s/ Xxxxxx Xxxxxxxxx
Title: President
GLOBAL GENERAL TECHNOLOGIES INC.
By: /s/ Xxxxx Xxxx
Title: /s/ President and
Chief Executive Officer
/s/ Xxxxx Xxxx
Dr. Xxxxx Xxxx
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
/s/ Xx Xxxxxxx
Xx Xxxxxxx
/s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
DISCLOSURE SCHEDULE
This Disclosure Schedule is made and given pursuant to the Share
Exchange Agreement, dated as of February 23, 2005, among Knowledge Transfer
Systems Inc., a Nevada corporation (the "Buyer"), Xxxxx Xxxx ("Ball"), Xxxxx
Xxxxxx ("Xxxxxx"), Xx Xxxxxxx ("Xxxxxxx"), Xxxxxx Xxxxxxx ("Xxxxxxx"), and
Xxxxxx Xxxxx ("Villa", and together with Ball, Miller, Mercado, and Routely,
collectively, the "Sellers," and individually, a "Seller") and Global General
Technologies Inc., a California corporation (the "Company").
Unless the context otherwise requires, all capitalized terms used in the
Disclosure Schedule shall have the respective meanings ascribed to such terms in
said Agreement.
This Disclosure Schedule and the information, descriptions and
disclosures included herein are intended to qualify and limit the
representations, warranties and covenants of the Company contained in the
Agreement. The information, descriptions and disclosures contained in a
particular part of the Disclosure Schedule will be deemed to be automatically
disclosed in another part of the Disclosure Schedule if a cross reference to
such other part of a schedule is made or any other part of the Disclosure
Schedule where relevance of such disclosure to another numbered or lettered part
would be reasonably apparent from such disclosure.
SCHEDULE 3(VI).
Capitalization
NONE
SCHEDULE 3(VII)
Title to Assets
1. Promissory note, in the amount of $50,000 2. Multimedia Transfer Unit
SCHEDULE 3(VIII)
Liabilities
NONE
SCHEDULE 3(X)
Taxes
SCHEDULE 3(XI)
Real Property
NONE
SCHEDULE 3(XII)
Intellectual Property
Multimedia Transfer Unit
SCHEDULE 3(XIII)
Contracts
1. Agreement with Ecopetrol (Colombia) for a homeland security project to be
performed 2. Agreement with SSL for a satellite program jointly being pursued by
GGT and SSL 3. Agreement with Loral and its Space Systems Loral (SSL) Division
in connection with a satellite program 4. A letter of intent for $3 Million for
work to be performed in Dubai 5. A current contract for work to be performed in
Colombia for $2 Million
SCHEDULE 7(A)(III)
Consents
NONE
