STOCK EXCHANGE AGREEMENT
THIS
STOCK EXCHANGE AGREEMENT (the "Agreement") is made as of this 7th day of August,
2008, by and between Forterus, Inc, a Nevada corporation ("FTER"), and the
persons whose signatures appear as "Shareholders" on the signature pages of this
Agreement (collectively, the "Shareholders" and each may be referred to
hereinafter as a "Shareholder").
RECITALS:
WHEREAS,
each of the Shareholders is the record and beneficial owner of the number of
shares of Common Stock of ABTTC, Inc. (ABTTC) set forth opposite their name on
EXHIBIT A attached hereto, and collectively all of such 10,000 shares held by
all Shareholders of ABTTC represent and constitute all of the issued and
outstanding shares of capital stock of ABTTC (the "ABTTC Shares");
WHEREAS,
in consideration of the exchange of shares described in this Agreement, FTER
desires to issue to each Shareholder ten (10) shares of Forterus' Series B
Preferred Stock for each share of ABTTC Shares held by such Shareholder, 79.375
shares of Forterus' Series B Preferred Stock for each share of ABTTC Shares held
by such Shareholder, and in exchange the Shareholders desire to transfer the
ABTTC Shares to FTER;
WHEREAS,
the Shareholders have been issued $1,750,000 in FTER common stock.
NOW,
THEREFORE, in consideration of the mutual promises and covenants herein
contained, the undertakings described in the above Recitals and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1.
PURCHASE PRICE, EXCHANGE OF STOCK.
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(a)
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The
purchase price shall be 2.85x the Annual Gross Revenue of ABTTC, Inc.
Annual Gross Revenue shall be defined as total revenue for the preceding
12 months. The purchase price shall be calculated from the Gross Revenue
from August 2007 through July 2008. The unaudited financials have been
attached as Exhibit C. The price shall be based on the audited
financials. The estimated revenue of $4,500,000 shall be used
for the purpose of issuance of shares at the close of the transaction,
and, if necessary, shall be adjusted upon completion of the audit of the
ABTTC, Inc financials.
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(b)
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The
purchase price shall be paid as follows: $1,750,000 paid in
Common Stock of FTER, $1,000,000 paid in Series B Preferred Stock and the
remaining amount paid in Series C Preferred Stock. At the close
of the transaction, the ABTTC Shareholders shall receive 10,075,000 shares
of Series C Preferred Stock representing $10,075,000 of the estimated
purchase price. Upon the filing of the ABTTC’s audited
financials with the Securities and Exchange Commission, the number of
Series C Preferred Stock shall be adjusted to the final purchase
price. The rights of the preferred stock are explained
below.
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(c)
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FTER
Shares. Subject to the terms and conditions set forth in this Agreement,
FTER hereby issues, transfers, assigns and delivers to each of the
Shareholders, and each of the Shareholders hereby accepts the FTER Shares
issued under this Agreement, free and clear of all liens, pledges,
encumbrances, security interests, claims and equities of every
kind.
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(d)
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ABTTC
Shares. Subject to the terms and conditions set forth in this Agreement,
each of the Shareholders hereby exchanges, transfers, assigns and delivers
to FTER, and FTER hereby accepts, all of the ABTTC Shares held by each
respective Shareholder, free and clear of all liens, pledges,
encumbrances, security interests, claims and equities of every
kind.
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2.
FTER REPRESENTATIONS AND WARRANTIES. FTER represents and warrants to the
Shareholders that the following statements are true and correct upon execution
of this Agreement and at all times through the Closing (defined in Section 4,
below):
(a) Due
Organization and Qualification. FTER is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is
qualified in every jurisdiction where the nature of the business requires it to
be so qualified and where failure to so qualify would materially and adversely
affect its business or assets. FTER has all corporate power and authority
necessary to execute, perform and carry out this Agreement and all of the
transactions contemplated hereunder and all of the other documents contemplated
hereunder to be executed by FTER. This Agreement has been duly authorized,
executed and delivered by FTER and is a valid and binding obligation of FTER
enforceable against FTER in accordance with its terms subject to bankruptcy
proceedings and the imposition of legal and equitable remedies.
(b) Agreement
Will Not Breach Any Contract. The execution and delivery of this Agreement and
the performance of the obligations imposed hereunder will not conflict with, or
result in a breach by FTER of any of the terms or provisions of, or constitute a
default under its Certificate of Incorporation, By-Laws or any indenture,
mortgage, deed of trust, or any other material agreement or instrument to which
FTER is a party, or by which FTER or any of FTER' properties are bound, or
result in a violation of any order, decree or judgment of any court or
governmental agency having jurisdiction over FTER or FTER' properties, will not
conflict with, constitute a default under, or result in a breach of, any
contract, agreement, or other instrument to which FTER is a party or is
otherwise bound and no consent or authorization by any party is required in
connection with the execution and delivery of this Agreement and any related
agreements or the performance by FTER of any of its obligations
hereunder.
(c) Shares
Validly Issued. The FTER Shares when issued to each Shareholder, will be duly
authorized, validly issued, fully-paid and non-assessable.
(d) Reliance.
FTER acknowledges that this Agreement is executed without reliance on any
statement or representation of the Shareholders, or any person(s) acting on
their behalf, except as stated in this Agreement.
3.
SHAREHOLDERS REPRESENTATIONS AND WARRANTIES. Each Shareholder represents and
warrants to FTER that the following statements are true and correct upon
execution of this Agreement and at all times through Closing:
(a) Title
to Shares. Each Shareholder is the record and beneficial owner of their
respective ABTTC Shares, free and clear of any liens, encumbrances security
agreements, equities, options, voting agreements, claims, charges and
restrictions, including any third party legal or beneficial interest of any
kind. Each Shareholder has no judgment outstanding against him with
respect to his respective ABTTC Shares.
(b) No
Other Contracts for Sale of ABTTC Shares. There are no existing contracts,
options or agreements for the sale of the ABTTC Shares or any portion
thereof to anyone other than FTER.
(c) Agreement
Will Not Breach Any Contract. Each Shareholder represents and warrants to FTER
that the execution and delivery of this Agreement and the performance of the
obligations imposed hereunder will not conflict with, or result in a breach by
such Shareholder of any of the terms or provisions of, or constitute a default
under any indenture, mortgage, deed of trust, or any other material agreement or
instrument to which such Shareholder is a party, or by which such Shareholder or
any of such Shareholder's properties are bound, or result in a violation of any
order, decree or judgment of any court or governmental agency having
jurisdiction over such Shareholder or such Shareholder's properties, will not
conflict with, constitute a default under, or result in a breach of, any
contract, agreement, or other instrument to which such Shareholder is a party or
is otherwise bound and no consent or authorization by any party is required in
connection with the execution and delivery of this Agreement and any related
agreements or the performance by such Shareholder of any of its obligations
hereunder, except for the Option Agreements and Restriction
Agreements.
(d) Legal
Counsel. Each Shareholder represents and warrants to FTER that:
(i) Such
Shareholder has read and understands this Agreement.
(ii) Such
Shareholder has been given adequate time to consider the consequences of this
Agreement.
(iii)
Such Shareholder has had full disclosure of the business operations of ABTTC and
FTER.
(iv) Such
Shareholder has been encouraged and had the opportunity to consult with legal
counsel of their own choosing regarding this Agreement and the transactions
contemplated herein.
(e) Reliance.
Each Shareholder acknowledges that this Agreement is executed without reliance
on any statement or representation of FTER, or any person(s) acting on its
behalf, except as stated in this Agreement.
4.
CLOSING. The closing of the exchange of shares shall take place at ABTTC'
offices, at 4:30 p.m. on August 8th, 2008, or at such other date, time and
location as the parties hereto may mutually agree (the "Closing").
5.
CLOSING DELIVERIES. The parties hereto shall not be obligated hereunder in any
manner until the deliveries and conditions described in this Section 5 have been
satisfied:
(a) FTER
Deliveries. FTER shall deliver to the Shareholders the following
documents:
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(i)
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At
the Closing, a copy of the resolutions of the Board of Directors of FTER
approving this Agreement and authorizing its execution, delivery and
performance, certified by the Secretary of
FTER.
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(ii)
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After
a Shareholder delivers its stock certificates under paragraph (b), below,
and within a reasonable time after the Closing, FTER shall issue and
deliver new certificates representing the FTER Shares, to such
Shareholder, or shall cause its transfer agent to do
same.
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(b) Shareholders
Deliveries. At the Closing, each Shareholder shall deliver to FTER stock
certificates which represent all of the ABTTC Shares held by them, duly
endorsed, free and clear of any and all liens, encumbrances, security
agreements, equities, options, voting agreements, claims, charges and
restrictions, including any third-party legal or beneficial interest of any kind
(except for those under the Option Agreements and Restriction Agreements),
together with duly executed stock powers and/or any other instruments or
documents necessary to effectuate the transfer
of the
shares described in this Section 5(b).
6.
CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATION TO CLOSE. The obligations
of the Shareholders under this Agreement are subject to the fulfillment prior to
or at the Closing of each of the following conditions precedent:
(a) Representations
and Warranties True at Time of Exchange. As to the Shareholders' obligation to
exchange shares as contemplated by this Agreement, FTER' representations and
warranties contained in this Agreement shall be true at the time of Closing as
though such representations and warranties were made at such time.
(b) Litigation,
Material Adverse Change. There shall not be pending or threatened any action or
proceeding by or before any court or other governmental body which shall seek to
restrain, prohibit or invalidate the exchange and delivery of the ABTTC Shares
to FTER in exchange for the FTER Shares or any other transaction contemplated
hereby, or which might affect the right of FTER to own the ABTTC Shares or the
Shareholders to own the Shares as contemplated and which, in the judgment of the
Shareholders, makes it inadvisable to proceed with the transactions contemplated
hereby.
(c) Performance.
FTER shall have performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by FTER prior to or
at the Closing.
7.
CONDITIONS PRECEDENT TO FTER' OBLIGATION TO CLOSE. The obligations of FTER under
this Agreement are subject to the fulfillment prior to or at the Closing of each
of the following conditions precedent:
(a) Representations
and Warranties True at Exchange. As to FTER' obligation to exchange shares as
contemplated by this Agreement, the Shareholders' representations and warranties
contained in this Agreement shall be true at the time of Closing as though such
representations and warranties were made at such time.
(b) Litigation,
Material Adverse Change. There shall not be pending or threatened any action or
proceeding by or before any court or other governmental body which shall seek to
restrain, prohibit or invalidate the exchange and delivery of the FTER Shares to
the Shareholders in exchange for the ABTTC Shares or any other transaction
contemplated hereby, or which might affect the right of FTER to own the ABTTC
Shares or the Shareholders to own the FTER Shares as contemplated and which, in
the judgment of FTER, makes it inadvisable to proceed with the transactions
contemplated hereby.
(c) Performance.
The Shareholders shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by the
Shareholders prior to or at the Closing.
8.
BROKERAGE. All parties respectively represent and warrant to each other that no
person employed a broker relative to this Agreement or the transactions
contemplated hereby, and that the Shareholders, on the one hand, and FTER on the
other hand, shall indemnify and hold harmless the other from and against any and
all commissions, fees or claims of any person employed or retained or claiming
to be employed or retained by the other party to bring about, or to represent to
such party in, the transactions contemplated hereby.
9.
SURVIVAL. All representations, warranties, covenants and agreements made by
either party in this Agreement, except as otherwise expressly stated, shall
survive Closing.
10.
NOTICES. All notices and other communications hereunder shall be in writing and
shall be deemed given if sent by hand, by telegram, successful facsimile
transmission or registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by notice given in accordance with this Section 10) upon such
hand delivery, upon actual receipt of telegrams, upon such successful facsimile
transmission or three business days after so mailing:
If
to Shareholders, addressed to:
If
to FTER, addressed to:
11.
PREFERRED STOCK.
Series B
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(a)
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Shareholders
shall receive Series B Preferred Stock of FTER at a ratio of ten (10)
shares of Forterus' Series B Preferred Stock for each share of ABTTC
Shares held by such Shareholder for a total of 1,000,000 Series B
preferred Stock
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(b)
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Each
share of Series B Preferred Stock shall be entitled to voting rights of
100 per share. These voting rights shall be affected by any
reverses or splits of the Company’s Common Stock. The Series B Preferred
Stock will vote together with the Common Stock and not as a separate
class, except as otherwise required by
law.
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Series C
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(a)
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Shareholders
shall receive Series C Convertible stock of FTER at a ratio of 79.375
shares of Forterus' Series C Preferred Stock for each share of ABTTC
Shares held by such Shareholder for a total of 7,937,500 Series C
preferred Stock
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(b)
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The
Series C Preferred Stock shall be paid a dividend equal to 6%
annually. The dividend shall be paid monthly, in arrears, on
the 5th
of each month. Such dividends may be payable in Cash or Common
Stock at the Company’s election. If paid in Common Stock, then
the conversion price shall be equal to the market price on the last
trading day of the month from such dividend period. For
example, if the closing price on June 30, 2009 was $.01 then the dividend
payment for June 2009 would be converted at a rate of $.01 per share and
paid on July 5, 2009.
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(c)
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At
the election of the Company, the dividend payments may be
deferred. If the payments are deferred, then the amount
deferred may be issued in cash or stock at a later date. If the
amount is paid in stock then the conversion price shall be equal to the
conversion price if such amount was not deferred. If the
deferred is not paid or converted within thirty (30) calendar days, then
the deferred amount shall accrue interest at the rate of 6% per annum
until paid.
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(d)
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Redeemable.
FTER shall redeem the Series C Preferred from the Shareholders no later
than August 31, 2018. FTER may redeem all or part of the Series
C Preferred Stock prior to August 31,
2018.
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(e)
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The
assets of ABBTC and the shares of ABTTC shall be collateral against the
redeemable amount of the Preferred Stock. The holders of the
Series C Preferred Stock shall have the right to filing UCC against such
assets as they deem necessary.
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(f)
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The
Series C Preferred Stock shall have no voting rights unless required by
law.
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(g)
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The
holders may convert all or part of the outstanding Series C Preferred
Stock into Common Stock at any time. The conversion price shall
be equal to the previous trading day’s closing price of the Common
Stock.
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12.
DEFAULT. Each of the following events shall be an Event of Default for purposes
of this Agreement:
(i) if
any representation or warranty made by or on behalf of the Company in or
pursuant to this Agreement shall prove untrue or incorrect in any material
respect as of the date made; provided, however, that an Event of Default shall
not be deemed to have occurred (a) in the fact or circumstances causing such
representation or warranty to be untrue or incorrect do not adversely affect the
business or financial condition of the Company or the value of any of the Series
B Preferred, and (b) only with respect to such facts and circumstances that are
susceptible of correction by the Company without materially and adversely
affecting the business or financial condition of the Company or the value of
Series B Preferred, if such facts or circumstance are corrected within thirty
(30) calendar days after written demand for correction to the Company by holder
of any series Preferred,
(ii) if
the Company defaults in the due and punctual performance of observance of any
covenant or agreement contained in the Agreement and such default continues for
a period of fifteen (15) business days after written notice thereof to the
Company by the holder of Series B Preferred; provided, however, that
an Event of Default shall not deemed to have occurred if, at the end of such
15-day period, the Company advises each holder of Series b Preferred Stock in
writing that (a) the Company is diligently attempting to cure such default, (b)
the existence of such default is not materially the business or financial
condition of the Company and (c) such default is cured within the next 15
calendar days,
(iii) If
the Company defaults in the due or punctual performance of observance of any
material covenant or agreement in any material note, bond, indenture, loan
agreement, mortgage, security agreement or other instrument evidencing or
relating to an indebtedness, and such default continues for a period of fifteen
(15) business days after written notice thereof to the Company or any other
grace or notice period, if any, specified in the agreement.
(iv) if
the Company shall dissolve or become insolvent, a voluntary or involuntary
petition in bankruptcy or other action concerning creditors rights shall be
filed or the Company shall make an assignment for the benefit of
creditors.
(v) Company
fails to redeem the Series C Preferred Stock in accordance with this Agreement.
If such should occur, then the holders of the Series C Preferred Stock shall be
entitled to redeem such shares in exchange for the shares of ABTTC.
13.
Remedies. Upon the occurrence of an Event of Default, unless such Event of
Default shall have been waived or cured, the Company and the holder of the
Series C Preferred may engage in good faith negotiations for a period of fifteen
(15) business days to either resolve the default or agree upon a price
adjustment for the Series C Preferred and the Conversion of shares in order to
equitably reflect the Investors damages, or any other appropriate remedy and, if
an agreement is not reached within such time the Holders may demand and the
Company shall immediately exchange the shares of ABTTC for the then outstanding
Series C Preferred Shares in the same ratio that they were received by the
Holders of Series C Preferred Stock. In addition, the holders shall have all
remedies to which they are legally entitled.
14.
UNDERSTANDINGS.
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(a)
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ABTTC
currently uses vans to transport clients to the ABTTC office for services,
the Company agrees that it will pay off the vans within six (6) months of
the closing of this Agreement,
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(b)
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ABTTC
also rents houses that are in the name of the some of the
Shareholders. The Company agrees that it will enter into 5 year
leases for these premises at a rate acceptable between the owner of record
and the Company. Additionally, after the term of the lease the
Company may purchase the house at the then current market price or the
owner of record shall be able to sale the house and any deficit between
the original purchase price and the sales shall be borne by the Company,
as long as such sale was transacted in good faith and at then current
market price of the house.
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(c)
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Xxxx
Xxxxx and Xxxx Xxxxxxx shall convert into common stock any and all accrued
salaries owed by FTER upon closing of this transaction. The
conversion price shall be equal to the closing price on the closing
date.
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(d)
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Xxxx
Xxxxx shall resign as CEO and as an officer of FTER. Xxxx Xxxxx
shall remain as a director of the company and act as its legal
counsel.
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(e)
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Xxxx
Xxxxxxx shall be appointed as CEO to replace Xxxx
Xxxxx.
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(f)
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Xxxxxx
Xxxx shall be appointed as Exec. Vice-President and be nominated for the
position on the Board of Directors as soon as practicable after the close
of this transaction.
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(g)
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FTER
shall issue options to the employees if ABTTC, Inc. to be issued according
to Exhibit B to this Agreement.
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(h)
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This
transaction shall close prior to the completion of the Audit of ABTTC,
Inc. if the audited financials differ from the unaudited financials in
Gross Revenue then the parties agree that such difference shall either
increase or decrease the Series C Preferred
Shares.
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(i)
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FTER
may, at its election, pay for half of the audit fees of ABTTC, of which
ABBTC shall reimburse FTER.
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(j)
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The
parties understand and agree that the Series A Preferred Stock shall be
modified to reset the conversion ratio to .40 (10 Preferred Share shall
equal 4 shares of common stock) and voting rights shall be one vote per
preferred share.
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15.
BENEFIT. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and assigns.
16.
COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original. Signatures transmitted by facsimile shall be considered authentic and
legally binding.
17.
SEVERABILITY. Should any term, provision or section hereof be held to be
invalid, such invalidity shall not affect any other provisions or sections
hereof or thereof which can be given effect without such invalid provision or
section, all of which shall remain in full force and effect.
18.
VARIATIONS IN PRONOUNS. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the identity of the person
or persons may require.
19.
DESCRIPTIVE HEADINGS. The descriptive headings of the several sections of this
Agreement are inserted for convenience only and do not constitute part of this
Agreement.
20.
ENTIRE AGREEMENT. This Agreement (including all exhibits and schedules attached
hereto) and the collateral agreements and other documents executed in connection
with the consummation of the transactions contemplated herein represent the
entire agreement and understanding of the parties hereto and supersede all prior
and concurrent agreements, understandings, representations and warranties in
regard to the subject matter hereof and are hereby incorporated by reference
herein, regardless of whether expressly so incorporated elsewhere in this
Agreement.
21.
GOVERNING LAW, JURISDICTION, REMEDIES. This Agreement shall be interpreted and
enforced according to the laws of the State of Nevada without regard to
so-called conflict of law provisions. The parties agree that except for
injunctive relief which FTER may seek in another jurisdiction that all disputes
concerning this Agreement and the transactions contemplated herein shall lay
within the exclusive jurisdiction and venue of the state and federal courts
sitting in the County of Xxxxx, Nevada.
22.
AMENDMENTS AND MODIFICATIONS. No amendments, waivers or modifications hereof
shall be made or deemed to have been made unless in writing executed by the
party to be bound thereby.
23.
FURTHER ACTS. It is hereby acknowledged that this Agreement is a contract
legally binding upon the parties hereto. Each party to this Agreement agrees to
do, execute, acknowledge and deliver all such further acts, assignments,
transfers, assurances, instruments and resolutions that may be reasonably
necessary or appropriate to fully effectuate the transactions contemplated in
this Agreement.
IN
WITNESS WHEREOF, the parties hereto have duly executed this
Agreement
the day
and year first written above.
a Nevada
corporation
By:/s/
Xxxx Xxxxx
--------------------------------------
ABTTC,
Inc. shareholders
X /s/
Xxxx Xxxxxxx
Xxxx
Xxxxxxx (3,000 ABTTC Shares)
X /s/
Xxxxxxx Xxxxxxxx
Xxxxxxx
Xxxxxxxx (3,000 ABTTC Shares)
X /s/
Xxxxxx Xxxx
Xxxxxx
Xxxx (3,000 ABTTC Shares)
X/s/
Xxxxx Xxxx
Xxxxx
Xxxx (1,000 ABTTC Shares)
EXHIBIT
A
Shareholders ABTCC
Shares
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Xxxx
Xxxxxxx 3,000
Xxxxxxx
Xxxxxxxx 3,000
Xxxxxx
Xxxx 3,000
Xxxxx
Xxxx 1,000
