ANZA CAPITAL, INC.
A NEVADA CORPORATION
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement (the "Agreement") is entered into effective
this 28th day of February, 2003 by and between Anza Capital, Inc., a Nevada
corporation ("Anza" or the "Company") and Keyway Investments, Ltd. (the
"Shareholder"). Each of the Company and the Shareholder shall be referred to as
a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Company has undertaken a recapitalization of its corporate
structure, which will include (but not be limited to) the voluntary exchange of
certain preferred stock for newly created preferred stock, the exchange of debt
and warrants for stock, and a reverse stock split (the "Recapitalization");
WHEREAS, the Shareholder is the record and beneficial owner of 4,006 shares
of Series C Convertible Preferred Stock (the "Surrendered Shares");
WHEREAS, in connection with the Recapitalization, the Company has offered
for the Shareholder to convert the Surrendered Shares into 8,181,491 shares of
Company common stock (the "Conversion Common Shares"), 2003 shares of newly
created Series D Convertible Preferred Stock (the "Preferred Exchange Shares"),
and warrants to acquire 183,168 shares of Company common stock (the "Exchange
Warrants"), in accordance with the terms and conditions hereof, and the
Shareholder desires to accept the offer and consummate the exchange.
NOW, THEREFORE, for good and adequate consideration, the receipt of which
is hereby acknowledged, the Parties covenant, promise and agree as follows:
AGREEMENT
1. TERMS OF THE EXCHANGE: The Exchange shall be consummated on the
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following terms and conditions:
(a) Within three (3) business days of the execution of this Agreement,
the Shareholder shall surrender to the Company the Surrendered Shares, duly
endorsed for transfer to the Company.
(b) Effective as of the date of this Agreement, the Shareholder shall
convert 2003 of the Surrendered Shares into the Conversion Common Shares. The
Conversion Common Shares shall be validly issued, fully paid, and non
assessable, shall be restricted in accordance with Rule 144 promulgated under
the Securities Act of 1933, and shall be subject to a 20-for-1 reverse stock
split currently contemplated as part of the Recapitalization.
(c) Effective as of the Exchange Date (as hereinafter defined), the
remaining number of Surrendered Shares not exchanged for Conversion Common
Shares shall automatically be exchanged for the Preferred Exchange Shares and
the Exchange Warrants. The Preferred Exchange Shares shall be validly issued,
fully paid, and non assessable, and shall be restricted in accordance with Rule
144 promulgated under the Securities Act of 1933.
(d) The rights, privileges, and preferences of the Preferred Exchange
Shares shall be as set forth in the Certificate of Designation of the Rights,
Preferences, Privileges and Restrictions of the Series D Convertible Preferred
Stock of Anza Capital, Inc., a copy of which is attached hereto as Exhibit "A"
(the "Certificate of Designation").
(e) The Exchange Warrants shall be exercisable for a period of five (5)
years from the Exchange Date, and shall have an exercise price as follows: (i)
61,056 shares at $0.50 per share, (ii) 61,056 shares at $0.75 per share, and
(iii) 61,056 shares at $0.95 per share. The warrant agreements have been
attached hereto as Exhibits "B-D."
(f) The Exchange Date shall be the date on which the Certificate of
Designation is filed with the Nevada Secretary of State, which date is
anticipated to be within three (3) business days of the completion of the
Company's Annual Shareholders Meeting.
(g) The Company's Annual Shareholders Meeting is currently scheduled
for the middle of April, 2003. If the Company's Annual Shareholders Meeting
does not take place on or before June 30, 2003 (the "Termination Date"), then
this Agreement and the exchange of the remaining Surrendered Shares for
Preferred Exchange Shares shall automatically be cancelled. In such an event,
the exchange of Surrendered Shares for Conversion Common Shares shall remain
effective as of the date of this Agreement.
(h) Between the date of this Agreement and the Termination Date, the
Shareholder shall remain the record and beneficial owner of the Surrendered
Shares not exchanged for Conversion Common Shares, and shall have all voting
power associated therewith; however, the Shareholder hereby waives and suspends
its rights to dividends, its conversion rights, redemption rights, and all other
rights set forth in the Certificate of Designations, Preferences and Rights of
Series C Convertible Preferred Stock of E-Net Xxxxxxxxx.xxx Corporation dated
April 7, 2000 until the earlier to occur of the Exchange Date or the Termination
Date. In the event this Agreement is terminated on the Termination Date, then
all rights waived and suspended by this subsection shall be reinstated effective
as of the date of this Agreement.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY SHAREHOLDER: The
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Shareholder hereby represents, warrants and agrees as follows:
(a) Shareholder shall transfer title in and to the Surrendered Shares
to the Company free and clear of all liens, security interests, pledges,
encumbrances, charges, restrictions, demands and claims, of any kind or nature
whatsoever, whether direct or indirect or contingent. This Agreement has been
duly executed and delivered by the Shareholder. This Agreement constitutes, and
upon execution and delivery thereof by the Shareholder, will constitute, a valid
and binding agreement of the Shareholder enforceable against the Shareholder in
accordance with its respective terms.
(b) The Shareholder is not a party to any partnership, management,
shareholders' or joint venture or similar agreement which would affect the
Shareholder's performance of this Agreement or the Shareholder's representation
and warranties in this Agreement.
(c) No form of general solicitation or general advertising was used by
the Shareholder or the Company or, to the best of its actual knowledge, any
other person acting on behalf of the Shareholder or the Company, in connection
with the exchange. Neither the Shareholder, nor, to its knowledge, any person
acting on behalf of the Shareholder, has, either directly or indirectly, sold or
offered for sale to any person (other than the Company) any of the Surrendered
Shares, and the Shareholder represents that neither itself nor any person
authorized to act on its behalf (except that the Shareholder makes no
representation as to the Company) will sell or offer for sale any such security
to, or solicit any offers to buy any such security from, or otherwise approach
or negotiate in respect thereof with, any person or persons so as thereby to
cause the issuance or sale of any of the Surrendered Shares to be in violation
of any of the provisions of Section 5 of the Securities Act of 1933 or any other
provision of law.
(d) None of the Surrendered Shares are or will be subject to any
voting trust or agreement. No person holds or has the right to receive any proxy
or similar instrument with respect to the Surrendered Shares. Except as provided
in this Agreement, the Shareholder is not a party to any agreement which offers
or grants to any person the right to purchase or acquire any of the Surrendered
Shares. There is no applicable local, state or federal law, rule, regulation, or
decree which would, as a result of the sale contemplated by this Agreement,
impair, restrict or delay any voting rights with respect to the Surrendered
Shares.
(e) The representations and warranties herein by the Shareholder will
be true and correct in all material respects on and as of the date hereof and
will, except as provided herein, survive the Exchange Date.
(f) The Shareholder acknowledges that the Shareholder has been furnished
with such financial and other information concerning the Company, the directors
and officers of the Company, the business of the Company, and the proposed
Recapitalization of the Company as the Shareholder considers necessary in
connection with the Shareholder's exchange of the Surrendered Shares. As a
result, the Shareholder is familiar with the business, operations, properties,
financial condition, and recapitalization plan of the Company and has discussed
with officers or legal counsel of the Company any questions the Shareholder
may have had with respect thereto. The Shareholder has consulted with the
Shareholder's own legal, accounting, tax, investment and other advisers with
respect to the tax treatment, merits, and risks of the transactions contemplated
hereby.
(g) The Shareholder hereby agrees to indemnify and defend the Company
and its directors and officers and hold them harmless from and against any and
all liability, damage, cost or expense incurred on account of or arising out of:
(i) Any breach of or inaccuracy in the Shareholder's representations,
warranties or agreements herein;
(ii) Any disposition of any Surrendered Shares contrary to any of the
Shareholder's representations, warranties or agreements herein;
(iii) Any action, suit or proceeding based on a claim that any of said
representations, warranties or agreements were inaccurate or misleading or
otherwise cause for obtaining damages or redress from the Company or any
director or officer of the Company.
(h) The representations, warranties and agreements contained in this
Agreement shall be binding on the Shareholder's successors, assigns, heirs and
legal representatives and shall inure to the benefit of the respective
successors and assigns of the Company and its directors and officers.
(i) Shareholder shall deliver, along with a signed copy of this
Agreement, all stock certificates representing the Surrendered Shares, fully
endorsed to the Company or accompanied by an Irrevocable Stock Power
transferring the Surrendered Shares to the Company.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY THE COMPANY: The
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Company hereby represents, warrants and agrees as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of Nevada, with full power and authority to own,
lease, use, and operate its properties and to carry on its business as and where
now owned, leased, used, operated and conducted. The Company has all requisite
corporate power and authority to enter into and perform this Agreement and to
consummate the transactions contemplated hereby and to effect the exchange of
the shares in accordance with the terms hereof.
(b) The information heretofore furnished by the Company to the Share-
holder for purposes of or in connection with this Agreement or any transaction
contemplated hereby does not, and all such information hereafter furnished by
the Company to the Shareholder will not (in each case taken together and on the
date as of which such information is furnished), contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they
are made, not misleading.
(c) The representations and warranties herein by the Company will be
true and correct in all material respects on and as of the date hereof and will,
except as provided herein, survive the Exchange Date.
4. CONFIDENTIALITY. Each Party hereto will hold and will cause its
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agents, officers, directors, attorneys, employees, consultants and advisors to
hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other requirements
of law, all documents and information concerning any other Party furnished it by
such other Party or its representatives in connection with the subject matter
hereof (except to the extent that such information can be shown to have been (i)
previously known by the Party to which it was furnished, (ii) in the public
domain through no fault of such Party, or (iii) later lawfully acquired from
other sources by the Party to which it was furnished), and each Party will not
release or disclose such information to any other person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors in
connection with this Agreement. Each Party shall be deemed to have satisfied
its obligation to hold confidential information concerning or supplied by
the other Party if it exercises the same care as it takes to preserve
confidentiality for its own similar information. Notwithstanding the foregoing,
the Parties acknowledge that this Agreement shall be discussed in, and will be
filed as an exhibit to, the Company's filings with the Securities and Exchange
Commission.
5. This Agreement may not be amended, canceled, revoked or otherwise
modified except by written agreement subscribed by all of the Parties to be
charged with such modification.
6. This Agreement shall be binding upon and shall inure to the benefit
of the Parties hereto and their respective partners, employees, agents,
servants, heirs, administrators, executors, successors, representatives and
assigns.
7. All Parties hereto agree to pay their own costs and attorneys' fees
except as follows:
(a) In the event of any action, suit or other proceeding instituted
to remedy, prevent or obtain relief from a breach of this Agreement, arising out
of a breach of this Agreement, involving claims within the scope of the releases
contained in this Agreement, or pertaining to a declaration of rights under this
Agreement, the prevailing Party shall recover all of such Party's attorneys'
fees and costs incurred in each and every such action, suit or other proceeding,
including any and all appeals or petitions therefrom.
(b) As used herein, attorneys' fees shall be deemed to mean the full
and actual costs of any legal services actually performed in connection with the
matters involved, calculated on the basis of the usual fee charged by the
attorneys performing such services.
8. This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of California
including all matters of construction, validity, performance, and enforcement
and without giving effect to the principles of conflict of laws. Venue for any
action brought under this Agreement shall be in the appropriate court in Orange
County, California.
9. The Parties agree and stipulate that each and every term and
condition contained in this Agreement is material, and that each and every term
and condition may be reasonably accomplished within the time limitations, and in
the manner set forth in this Agreement.
10. The Parties agree and stipulate that time is of the essence with
respect to compliance with each and every item set forth in this Agreement.
11. This Agreement, along with the exhibits hereto, sets forth the
entire agreement and understanding of the Parties hereto and supersedes any and
all prior agreements, arrangements and understandings related to the subject
matter hereof. No understanding, promise, inducement, statement of intention,
representation, warranty, covenant or condition, written or oral, express or
implied, whether by statute or otherwise, has been made by any party hereto
which is not embodied in this Agreement or the written statements, certificates,
or other documents delivered pursuant hereto or in connection with the
transactions contemplated hereby, and no Party hereto shall be bound by
or liable for any alleged understanding, promise, inducement, statement,
representation, warranty, covenant or condition not so set forth.
12. This Agreement may be executed in one or more counterparts, each of
which when executed and delivered shall be an original, and all of which when
executed shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto, agreeing to be bound hereby,
execute this Agreement upon the date first set forth above.
"Shareholder" "Company"
Keyway Investments, Ltd. Anza Capital, Inc.
/s/ Xxxx Xxxxx /s/ Xxxxxxx Xxxxxxxx
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By: Xxxx Xxxxx By: Xxxxxxx Xxxxxxxx
Its: Director Its: President
