EXHIBIT 10.18
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is dated as of October 21,
2005, by and among XXXXX XXXX and XXXXX XXXX, individuals who are husband and
wife and residing in Nashville, Tennessee (jointly, the "Wises"), XXXX X. XXXXX,
an individual residing in Nashville, Tennessee ("Xxxxx"; Xxxxx, together with
the Wises, the "Subscribers," and each individually, a "Subscriber"), and
WESTERN EXPRESS HOLDINGS, INC., a Nevada corporation (the "Company"). The
Subscribers and the Company are individually each referred to herein as a
"Party" and are collectively referred to herein as the "Parties."
RECITALS
WHEREAS, Xxxxx Xxxx owns 45 (forty-five) shares of common stock, no par
value (the "Express Common Stock"), of Western Express, Inc., a Tennessee
corporation ("Express"), which constitutes forty-five percent (45%) of the
issued and outstanding capital stock of Express;
WHEREAS, Xxxxx Xxxx owns 45 (forty-five) shares of Express Common Stock,
which constitutes forty-five percent (45%) of the issued and outstanding capital
stock of Express;
WHEREAS, Xxxxx owns 10 (ten) shares of Express Common Stock, which
constitutes ten percent (10%) of the issued and outstanding capital stock of
Express;
WHEREAS, the Company is a newly formed corporation, without any
stockholders at the date hereof, the Articles of Incorporation for which were
filed with the Nevada Secretary of State on September 16, 2005, and the Amended
and Restated Articles of Incorporation for which were filed with the Nevada
Secretary of State on October 6, 2005;
WHEREAS, the Subscribers together own all of the issued and outstanding
capital stock of Express; and
WHEREAS, the Subscribers desire to exchange each share of their Express
Common Stock for one share of common stock, par value $0.001 per share, of the
Company (the "Company Common Stock"), thereby resulting in the Subscribers
becoming the one hundred percent (100%) owners of the Company immediately prior
to the Company IPO (as hereinafter defined), and the Company desires that
Express become a wholly-owned subsidiary of the Company, all in a transfer
intended to qualify as a tax-free transaction under Section 351 of the Internal
Revenue Code, as amended.
NOW, THEREFORE, in consideration of the foregoing premises and certain
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
1. Exchange. Subject to Section 2 below, the Parties hereby
irrevocably agree to the exchange described herein. The Company shall issue
5,000,000 (five million) shares of Company Common Stock to the Subscribers as
follows:
(a) The Company shall issue 2,250,000 (two million two
hundred fifty thousand) shares of Company Common Stock to Xxxxx Xxxx in
exchange for all of his shares of Express Common Stock;
(b) The Company shall issue 2,250,000 (two million two
hundred fifty thousand) shares of Company Common Stock to Xxxxx Xxxx in
exchange for all of her shares of Express Common Stock; and
(c) The Company shall issue 500,000 (five hundred thousand)
shares of Company Common Stock to Xxxxx in exchange for all of his
shares of Express Common Stock.
2. Conditions Precedent. The obligations of the Parties to
consummate the exchange agreed to in Section 1 above shall be subject to the
following conditions precedent:
(a) The Company shall have entered into an underwriting
agreement with one or more underwriters selected by the Company with
respect to the initial public offering of shares of Company Common Stock
pursuant to a registration statement on Form S-1 filed under the
Securities Act of 1933, as amended (the "Act") (such initial public
offering is referred to herein as the "Company IPO"); and
(b) The Company IPO shall be scheduled to close subsequent
to the exchange agreed to in Section 1 above.
In the event that the foregoing conditions precedent have not been satisfied by
March 31, 2006, this Agreement shall be terminated and of no further force or
effect, unless the Parties agree in writing to extend such date.
3. Stock Records. In furtherance of the exchange agreed to in
Section 1 above, following the satisfaction of conditions precedent set forth in
Section 2, the Parties shall take the following actions:
(a) The Subscribers shall deliver to the Company or its
designee, as transfer agent, any and all stock certificates representing
the shares of Express Common Stock to be exchanged hereunder; and
(b) Thereafter, the Company shall deliver stock certificates
representing the shares of Company Common Stock to be issued hereunder
to the Subscribers entitled to receive the same.
The Parties agree, after the exchange contemplated hereby has been consummated,
that the Subscribers shall be registered as, and treated as, holders of their
shares of Company Common Stock.
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4. Legend. It is understood by the Parties hereto that the
certificates evidencing the shares of Company Common Stock issuable hereunder
may bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR THE SECURITIES ACT OF
ANY STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, TRANSFERRED FOR VALUE, PLEDGED, HYPOTHECATED, OR OTHERWISE
ENCUMBERED IN THE ABSENCE OF EITHER (1) AN EFFECTIVE REGISTRATION OF
THEM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS, OR (2) AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT OR ACTS.
5. Further Documentation. The exchange described herein shall be
evidenced by such other documents as may be necessary or advisable to accomplish
the transaction contemplated hereby.
6. Representations of the Subscribers. Each Subscriber, by signing
this Agreement, represents, warrants, and guarantees the following:
(a) The Subscriber is the registered and beneficial owner of
all shares of Express Common Stock transferred by him or her hereunder,
free and clear of all encumbrances whatsoever, and that upon issuance of
the shares of Company Common Stock, the Company will have good and valid
title to such transferred shares of Express Common Stock, free and clear
of any adverse claims whatsoever.
(b) The execution of this Agreement by the Subscriber and
the performance of his or her obligations hereunder will not violate any
contract, loan, or similar agreement to which he or she is a party (or
waivers or consents will be obtained).
(c) This Agreement is made with the Subscriber in reliance
upon the Subscriber's representation to the Company, which by his or her
execution of this Agreement the Subscriber hereby confirms, that the
shares of Company Common Stock to be received by the Subscriber will be
acquired for investment for the Subscriber's own account and not as a
nominee or agent.
(d) The Subscriber has received all of the information it
considers necessary or appropriate for deciding whether to acquire the
shares of Company Common Stock pursuant to this Agreement. The
Subscriber further represents that he or she has reviewed this Agreement
and has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of this Agreement and the
business, properties, prospects, and financial condition of the Company.
The foregoing, however, does not limit
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or modify the representations and warranties of the Company in Section 7
below or the right of the Subscriber to rely thereon.
(e) The Subscriber acknowledges that he or she is able to
fend for himself or herself, can bear the economic risk of his or her
investment, and has such knowledge and experience in financial or
business matters that he or she is capable of evaluating the merits and
risks of the investment in the shares of Company Common Stock.
(f) The Subscriber is an "accredited investor" within the
meaning of Securities and Exchange Commission ("SEC") Rule 501(a) of
Regulation D, as presently in effect.
(g) The Subscriber understands that the shares of Company
Common Stock will be characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering, and that under
such laws and applicable regulations such shares may be resold without
registration under the Act only in certain limited circumstances. In
this connection, the Subscriber represents that he or she is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
(h) Without in any way limiting the representations set
forth above, the Subscriber further agrees not to make any disposition
of all or any shares of Company Common Stock unless and until:
(i) There is then in effect a registration statement
under the Act covering such proposed disposition, and such
disposition is made in accordance with such registration
statement; or
(ii) The Subscriber has notified the Company of the
proposed disposition and has furnished the Company with a
detailed statement of the circumstances surrounding the proposed
disposition, and, if reasonably requested by the Company, the
Subscriber has furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition
will not require registration of such shares under the Act.
7. Representations of the Company. The Company represents,
warrants, and guarantees the following:
(a) The Company is a duly organized, validly existing
corporation in good standing under the laws of the State of Nevada, with full
power and authority to enter into this Agreement by and through the officer
executing his name hereto and to issue and deliver the shares of Company Common
Stock and carry out the other provisions of this Agreement.
(b) This Agreement and the transactions contemplated hereby
have been duly authorized by all requisite corporate action of the Company, and
the execution of this Agreement by the Company and the performance of its
obligations hereunder will not violate any contract, loan, or similar agreement
to which the Company is a party.
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(c) This Agreement constitutes the legal, valid, and binding
agreement of the Company, enforceable in accordance with its terms.
(d) All shares of Company Common Stock issued pursuant to
this Agreement, when issued and delivered in accordance with the terms of this
Agreement for the consideration expressed in this Agreement, shall be duly and
validly issued and fully paid and nonassessable.
8. Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the Party to
whom notice is to be given, or on the second day after mailing if mailed to the
Party to whom notice is to be given by first class mail, registered or
certified, return receipt requested, postage prepaid and properly addressed as
follows:
To the Company:
c/o Western Express, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
To the Wises:
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxx
To Xxxxx:
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
9. Miscellaneous. 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. 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 Parties.
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. 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. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada. Each of the Parties will bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
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10. Specific Performance. The Parties shall be entitled to specific
performance of the provisions hereof.
11. Covenants of Further Assurances. The Parties agree to execute
such other documents and perform such other acts as may be necessary or
desirable to effectuate the intent of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed by the Parties as
of the day and year first above written.
WESTERN EXPRESS HOLDINGS, INC.
a Nevada corporation
By: /s/ Xxxxx Xxxx
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Name: Xxxxx Xxxx
Title: Chief Executive Office and President
XXXXX XXXX
/s/ Xxxxx Xxxx
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XXXXX XXXX
/s/ Xxxxx Xxxx
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XXXX X. XXXXX
/s/ Xxxx X. Xxxxx
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