SHARE EXCHANGE AGREEMENT
BY AND AMONG
CORPORATE DEVELOPMENT AND INNOVATION INC.,
THE MILLENNIUM BUSINESS GROUP USA, INC.
AND
THE INDIVIDUAL SHAREHOLDERS OF THE MILLENNIUM BUSINESS GROUP USA , INC.
This Agreement is entered into as of the day of March 2003 by and
among Corporate Development and Innovation Inc., a Washington
corporation ("CDI"), The Millennium Business Group USA, Inc., a
Nevada corporation ("MBG") and the individual shareholders of MBG
(the "Shareholders"). CDI, MBG and the Shareholders are referred to
collectively herein as the "Parties";
WHEREAS, MBG is a company duly incorporated in the State of Nevada,
and is in good standing;
WHEREAS, CDI is a company duly incorporated in the State of
Washington, is in good standing and is a fully reporting company
under the Securities Exchange Act of 1934;
WHEREAS, MBG and the Shareholders have agreed to a share exchange
with CDI whereby the Shareholders will receive shares of CDI in
exchange for their shares of MBG (the "Exchange") and MBG will
become a wholly owned subsidiary of CDI, all according to the terms
of the Letter Agreement dated as March 8, 2003 between CDI and MBG
and Schedule A and the Exhibits attached thereto (collectively the
"Letter Agreement");
NOW, THEREFORE, in consideration of the mutual promises made herein,
and in consideration of the representations, warranties, and
covenants herein, the Parties agree as follows:
1.Definitions.
"Accredited Investor" has the meaning set forth in Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as
amended ("Securities Act") as follows:
An individual having a net worth or a combined net
worth with a spouse at the time of purchase in excess of
$1,000,000.
An individual whose net income was in excess of
$200,000 in each of the two most recent years, or whose
joint income with a spouse was in excess of $300,000 in
each of those years, and who reasonably expects his net
income to reach such level in the current year.
A corporation, partnership, Massachusetts or similar
business trust, or organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended
(tax
exempt organization), not formed for the specific purpose of
acquiring the Securities, having total assets in excess of $5,000,000.
A bank, savings and loan association or other similar
institution (as defined in Sections 3(a)(2) and 3(a)(5)(A)
of the 1933 Act).
An insurance company (as defined in Section 213 of
the 1933 Act).
An investment company registered under the Investment
Company Act of 1940 (the "Investment Company Act").
A business development company (as defined in Section
2(a) (48) of the Investment Company Act) or a private
business development company (as defined in Section 202(a)
(22) of the Investment Advisers Act of 1940)
A Small Business Investment Company licensed by the
U.S. Small Business Administration under Sections 301(c)
or (d) of the Small Business Investment Act of 1958.
A broker or dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934, as amended.
A plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality
of a state or its political subdivisions for the benefit
of its employees, which plan has total assets in excess of
$5,000,000.
An employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 ("ERISA"),
if the investment decision is made by a "plan fiduciary"
as defined in section 3 (21) of ERISA, which is either a
bank, savings and loan association, insurance company or
registered investment adviser.
An employee benefit plan within the meaning of ERISA
having total assets in excess of $5,000,000.
A self-directed employee benefit plan within the
meaning of ERISA, with investment decisions made solely by
persons who are accredited investors as defined in Rule
501(a) of Regulation D.
A trust with total assets in excess of $5,000,000 not
formed for the specific purpose of acquiring the
Securities offered hereby, whose purchase is directed by a
sophisticated person (i.e., a person who has such
knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of
an investment in the Securities).
Any entity in which all of the equity owners are
accredited investors.
"CDI Common Stock" means the common stock of CDI to be issued to be
issued pursuant to this Agreement,
"MBG A Shares" means the Common A shares of MBG
"MBG B Shares" means the Common B shares of MBG
"SEC" means the U.S. Securities and Exchange Commission.
"Voting Preferred Stock" means the Voting Preferred Stock of CDI
to be issued to certain Shareholders pursuant to this Agreement.
This stock shall have super voting rights equal to 20 votes per
share. This stock shall also be convertible into 2 shares of CDI
common stock at any time up to five years after issuance.
"Warrant" means the warrants to be issued to certain Shareholders
pursuant to this Agreement. The warrants shall be exercisable one
year after issuance and shall have an exercise price of $0.05 per
share.
16.Basic Transaction.
The Exchange.
Subject to the terms and conditions of this Agreement and the Letter
Agreement, the terms of which are hereby incorporated herein by
reference, the Shareholders will exchange their MBG shares for CDI
Common Stock (the "Exchange") as follows: The holders of the
2,080,000 MBG A Shares will be receive 2,080,000 shares of CDI
Common Stock (on a one for one basis) and 500,000 shares of CDI
Voting Preferred Stock (on a pro-rata basis). The holders of the
1,938,000 MBG B Shares will receive 1,938,000 shares of CDI Common
Stock (on a one for one basis) and 1,938,000 Warrants (on a one for
one basis). As a result, MBG shall become a wholly owned subsidiary
of CDI. However, until Xxxxx Xxx receives US$85,000 from certain MBG
A Shareholders, all MBG A Shareholders hereby grant to Xxxxx Xxx a
voting proxy over their Voting Preferred Stock. Upon receipt of the
US$85,000, Xxxxx Xxx shall revoke said voting proxies.
The Closing.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place on such date as the Parties may mutually
determine (the "Closing Date").
Actions at the Closing.
At the Closing, (i) the Shareholders will deliver to CDI the
certificates for the MBG A Shares and the MBG B Shares, (ii) CDI
will deliver to Shareholders the CDI Common Stock, the Voting
Preferred Stock and Warrants called for by the Letter Agreement and
(iii) the Shareholders of the MBG A Shares will deliver to Xxxxx Xxx
a voting trust agreement granting to Xxxxx Xxx a voting proxy over
their Voting Preferred Stock which shall remain in full force and
effect until such time as Xxxxx Xxx receives US $85,000.
17.Representations and Warranties of MBG and the Shareholders. MBG
and its Shareholders represent and warrant to CDI that the
statements contained in this Section3 are correct and complete as of
the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this
Section3).
(a)Organization, Qualification, and Corporate Power. MBG is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada. MBG is duly authorized to
conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. MBG has full
corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it.
(b)Capitalization. The entire authorized issued and outstanding
capital stock of MBG consists of 2,080,000 shares of Common A Shares
and 1,938,000 shares of Common B Shares. All of the issued and
outstanding MBG Shares have been duly authorized and are validly
issued, fully paid, and nonassessable. Other than the 10:1 super
voting rights that the MBG Common A Shares have, there are no
outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require MBG to issue, sell, or
otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to MBG.
(c)Authorization of Transaction. MBG 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 MBG and the Shareholders, enforceable in accordance with its
terms and conditions. The Shareholders have full power and authority
to execute and complete the transaction contemplated by this
Agreement and own the A Shares and B Shares free and clear without
encombrance.
(d)Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to
which MBG or the Shareholders are subject or any provision of the
charter or bylaws of MBG or (ii) 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 MBG or the
Shareholders is a party or by which they are bound or to which any
of their assets are subject (or result in the imposition of any
Security Interest upon any of its assets). Neither MBG nor the
Shareholders is required to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e)Undisclosed Liabilities. MBG has no 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, except for (i) liabilities set forth on the
face of the balance sheet dated as of the most recent fiscal quarter
end (rather than in any notes thereto) and (ii) liabilities which
have arisen after the most recent fiscal quarter end in the ordinary
course of business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law).
(f)Brokers' Fees. Neither MBG nor the Shareholders 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.
(j)Non-resident of the United States or Accredited Investor Status.
All of the Shareholders are either non-residents of the United
States or an affiliate of CDI who is therefore an Accredited Investor.
(k)Liens and Litigation. MBG has no liens or encumbrances against
MBG or MBG's shares nor does MBG know of any current or intended
legal claims against MBG.
18.Representations and Warranties of CDI. CDI represents and
warrants to MBG that the statements contained in this Section4 are
correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this
Agreement throughout this Section4).
(a)Organization. CDI is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Washington.
(b)Capitalization. The entire authorized capital stock of CDI
consists of 100,000,000 shares of common stock and 20,000,000 shares
of preferred stock of which 8,511,000 shares of common stock were
duly issued and outstanding as of March 8, 2003. In anticipation of
the Exchange, the Board of Directors of CDI has approved a
resolution authorizing the issuance of 500,000 shares of CDI Voting
Preferred Stock to the Shareholders of the MBG A Shares (on a
pro-rata basis) in addition to the CDI Common Stock issuances which
also form part of this Agreement.
(c)Authorization of Transaction. CDI 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 CDI, enforceable in accordance with its terms and conditions.
(d)Noncontravention. To the knowledge of any director or officer of
CDI, neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which CDI is subject or
any provision of the charter or bylaws of CDI or (ii) 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 CDI is a party or by which it is bound or to which any of
its assets is subject except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, or
failure to give notice would not have a material adverse effect on
the ability of the Parties to consummate the transactions
contemplated by this Agreement. To the knowledge of any director or
officer of CDI, and other than in connection with the provisions of
Washington law, CDI does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement, except
where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material
adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(e)Brokers' Fees. CDI does not 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
MBG or the Shareholders could become liable or obligated.
(f)Liens and Litigation. CDI has no liens or encumbrances against
it or its shares nor does CDI know of any current or intended legal
claims against CDI.
19.Covenants. The Parties agree as follows with respect to the
period from and after the execution of this Agreement.
(a)General. Each of the Parties will use its best efforts to take
all action and to do all things necessary, proper, or advisable in
order to consummate and make effective the transactions contemplated
by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section6 below).
(b)Notices and Consents. The parties will give any notices to third
parties, and will use their best efforts to obtain any third party
consents, that the other Party reasonably may request.
(c)Regulatory Matters and Approvals. Each of the Parties will give
any notices to, make any filings with, and use its reasonable best
efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies required.
6.Conditions to Obligation to Close.
Conditions to Obligation of CDI. The obligation of CDI to
consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i)this Agreement shall have been approved and executed by
each of the Shareholders;
(ii)MBG and the Shareholders shall have procured all of
the third party consents specified in Section5(b) above,
if any;
(iii)the representations and warranties set forth in
Section3 above shall be true and correct in all material
respects at and as of the Closing Date;
(iv)MBG and the Shareholders shall have performed and
complied with all of their covenants hereunder in all
material respects through the Closing;
(v)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 CDI to own the former assets, or operate the
MBG businesses, or (D) affect adversely the right of CDI
to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(vi)The Shareholders shall have delivered to CDI stock
certificates representing all of the outstanding shares of
MBG; and
(vii)all actions to be taken by MBG and the Shareholders
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 CDI.
CDI may waive any condition specified in this Section6(a) if it
executes a writing so stating at or prior to the Closing.
(b)Conditions to Obligation of MBG and the Shareholders. The
obligation of MBG and the Shareholders to consummate the
transactions to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:
(i)this Agreement and the Letter Agreement shall have been
approved by the Board of Directors of CDI;
(ii)the representations and warranties set forth in
Section4 above shall be true and correct in all material
respects at and as of the Closing Date;
(iii)CDI shall have performed and complied with all of its
covenants hereunder in all material respects through the
Closing;
(iv)all actions to be taken by CDI 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 satisfactory in form and
substance to MBG.
MBG or the Shareholders may waive any condition specified in this
Section6(b) if it executes a writing so stating at or prior to the
Closing.
7.Miscellaneous.
(a) .Survival. None of the representations, warranties,
and covenants of the Parties (other than the provisions in
Section2 above concerning issuance of CDI's Shares) will
survive the Effective Date.
(b) (b) Entire Agreement. This Agreement
(including the documents referred to herein) constitutes
the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations
by or between the Parties, written or oral, to the extent
they related in any way to the subject matter hereof.
(a)Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign
either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the
other Party.
(b)Counterparts. This Agreement may be executed 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.
(c)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.
(d)Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Other than payments,
any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given if (and then three business days after)
it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient
at the below listed address:
If to XXX0000 Xxxxx Xxxxx, Xxxxxxxx, XX
Xxxxxx, X0X 0X0
E: Xxxxxxxx@xxxx.xx
If to MBGc/o Xx. Xxxxxx Xxxxxxxxxx
The Millennium Business Group USA, Inc.
CDN Marketing Offices: 0000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, XX Xxxxxx X0X 0X0
E: xxxxxxxxxxxxx@xxxx.xx
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the above
address given to the other party 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 Party notice in
the manner herein set forth.
(g)Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Washington
without giving effect to any choice or conflict of law provision or
rule (whether of the State of Washington or any other jurisdiction)
that would cause the application of the laws of any jurisdiction
other than the State of Washington.
(h)Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Date
with the prior authorization of their respective boards of
directors; provided, however, that any amendment effected subsequent
to stockholder approval will be subject to the restrictions
contained in the laws of the State of Washington. No amendment of
any provision of this Agreement shall be valid unless the same shall
be in writing and signed by both of the Parties. 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
(i)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.
(j) (j) Expenses. MBG will bear the own costs and
expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions
contemplated hereby.
(k) 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 otherwise requires.
(l)Recitals. All recitals shall be construed as part of this
Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the date first written above.
CORPORATE DEVELOPMENT AND INNOVATION INC.
/s/Xxxxx Xxx
By: Xxxxx Xxx
Its: President
THE MILLENNIUM BUSINESS GROUP USA, INC.
/s/Xxxxxx Xxxxxxxxxx
By: Xxxxxx Xxxxxxxxxx
Its: President
SHAREHOLDER
SHAREHOLDER IS: check appropriate line
Non-resident of the United
States, or
Accredited Investor
