EXHIBIT 10.2
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT, made this 12th day of May, 1998 by and between Xx. Xxxx X.
Xxxxx, an individual and Xxxxx X. Xxxx, an individual being the sole
shareholders of World Wide Video, Inc., a Virginia corporation having its
principal offices at 00000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxx on the one hand
(hereinafter collectively referred to as the "Sellers"), and World Wide Video,
Inc. a Colorado corporation, having it's principal offices at 00000 Xxxxx Xxxx,
Xxxxxxxx, Xxxxxxxx (hereinafter the "Buyer"),on the other hand. The Sellers and
Buyer are sometimes herein referred to as "Parties" and/or "Party."
R E C I T A L S
WHEREAS, Sellers are the owners and holders of all the issued and outstanding
capital stock of World Wide Video, Inc. a Virginia corporation (the "Company");
and
WHEREAS, Sellers are willing to sell, and Buyer is willing to buy, all of the
Sellers' shares in the Company for shares in the Buyer corporation;
IT, IS, THEREFORE, MUTUALLY AGREED, in consideration of the covenants and
representations herein contained:
Section 1. Agreement to Effect Tax-Free Merger.
Sellers and Buyer will adopt a plan of reorganization pursuant to the provisions
of the Internal Revenue Code, Section 368(a)(1)(B), and will take all necessary
steps to effectuate such a plan as soon as possible.
Section 2. Sellers' Agreement to Transfer Stock.
Sellers will transfer to the Buyer Two Hundred (200) shares of the Company's
Common Stock, said shares represent all of the issued and outstanding shares of
the Company.
Section 3. Buyer's Agreement to Deliver Stock.
For each share of stock of the Company so transferred, Buyer will issue and
deliver to each Seller individually fifty thousand (50,000) shares of fully paid
and nonassessable common stock in Buyer, evidenced by certificates of stock in
full compliance with all applicable laws, rules and regulations (including the
requirements of transfer agents, registrars, and the Stock Exchange on which the
shares of the Buyer will be listed for trading).
Section 4. Warranties of Sellers.
Sellers hereby represent and warrant jointly and severally that:
a. The Company is duly organized and in good standing under the laws of
the State of Virginia; has the corporate powers to carry on its business as now
conducted; is duly qualified as a foreign corporation in good standing in each
state where such qualification is necessary; and has no subsidiaries nor any
interest in any firm, partnership or other corporation.
b. Copies of the Articles of Incorporation of the Company all
amendments thereto, the Company's Bylaws and all its minutes are contained in
its minute books as provided in Schedule "A" annexed hereto are correct.
c. The shares of the Company to be transferred hereunder constitute all
of its outstanding shares and it has issued and will issue no other shares.
There are no open options, contracts, calls, commitments or demands of any kind
relating to authorized but unissued stock of the Company. The shares of the
Company to be transferred hereunder are fully paid and nonassessable, free and
clear of all encumbrances, liens, claims, equities and liabilities of every
nature and Sellers will convey clear and unencumbered title thereto to the
Buyer.
d. The financial statements in Schedule "B" annexed hereto (and made
part hereof) all other financial statements prepared by the Company audits books
of account and records are true and correct. They have been prepared in
conformity with generally accepted accounting principles, correctly reflect
valid transactions and values and present a true and correct statement as of
their respective dates of the Company's financial condition. The Company has no
liabilities or obligations except those disclosed on the financial statements in
Schedule "B" those incurred in the normal and regular conduct of its business
since the date of said financial statements and those set forth in the written
contracts listed in Schedule "C" annexed hereto, the originals of which have
been exhibited to Buyer and initialed by both sides. There is no power of
attorney for any purpose now in force given by the Company to any person or
organization.
e. All assets set forth on the books of the Company are in existence,
in possession of the Company and are located at 00000 Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx. The Company has clear and unencumbered title to all of its property
including, without limitation, the property listed in Schedule "D" annexed
hereto, except for the encumbrances set forth after the description of each item
of property in said Schedule. All said assets are in good operating condition
and repair and in compliance with all zoning and building laws and all state and
local ordinances; and there are no violations pending with respect thereto. All
accounts receivable and notes receivable of the Company are current and
collectible except to the extent that a reserve for bad debts has been
established on its books for such accounts and notes. The Company's patents,
patent applications, copyrights, trademarks and trade names are valid and in
good standing both in the United States and abroad.
f. All the parties with whom the Company has contractual arrangements
are complying therewith and none of them are in default; nor is the Company in
default under any contract or obligation. The Company has no purchase
commitments or contracts to be performed by it except as made in the ordinary
course of business and as disclosed to Buyer and except those set forth in
Schedule "C". No such commitments are in excess of the normal, ordinary and
usual requirements of the business of the Company or at a price in excess of
current market. No contract imposes a liability on the Company in excess of One
Hundred Thousand Dollars ($100,000.00 ) except those listed in Schedule "C". The
Company has no collective bargaining agreement with its employees except as set
forth in Schedule "C." The Company has no deferred compensation, bonus, profit
sharing, pension or retirement arrangement of any kind; nor is it now paying any
pension, deferred compensation or retirement allowance except as set forth in
Schedule "Ell annexed hereto. The Company has no contracts for the sale,
merchandising or distribution of its products except such as it may cancel on
notice of Thirty (30) days to the other contracting party.
g. Since the date of the balance sheet set forth in Schedule "B" there
has not been:
(i) Any event, condition or change materially and adversely
affecting the Company's business, including its relations with
its employees or any labor union;
(ii) Any loss, damage or destruction of the Company's property
except items covered by insurance for which claims are pending
as described in Schedule F annexed hereto;
(iii) Any declaration or payment of dividend or other
distribution with respect to the Company's stock nor has it
made any payment for redemption, purchase or acquisition of
its stock or agreed to do so; or
(iv) Any general increase in compensation or any declaration
or payment of any bonus to the Company's directors officers,
employees or agents, or any increase to any individual
employee exceeding Ten Thousand Dollars ($10,000) per year.
h. The only directors and officers of the Company are:
Director and President: Xxxx X. Xxxxx
Director, Vice-President
and Secretary-Treasurer: Xxxxx X. Xxxx
The Company has no officer or other employee to whom it has paid more than ten
thousand Dollars ($10,000.00) during the year preceding the date of this
Agreement.
i. All income and other taxes of the Company have been paid or adequate
reserves therefor have been set up on the books of the Company. The
Federal income tax returns of all years to and including the calendar
year 1998 and the results of such audits are properly reflected in the
financial statements set forth in schedule "B". No litigation,
governmental investigation or proceeding is pending, threatened or in
prospect against the Company or with respect to any of the shares to be
transferred hereunder; and Sellers have no knowledge of any action
pending or threatened to change the zoning or building ordinances
affecting the Company's real property or any threatened or pending
condemnation of such property. The Company has taken all corporate
actions and filed all reports and returns required of it by law; and
has complied with all applicable state, Federal and local laws,
ordinances and regulations.
x. Xxxxxxx, the Company, its directors, officers, agents and employees
will disclose to Buyer all information known to them with respect to
the operations and finances of the Company, including, without
limitation, all information required to determine the tax basis of the
Company's property or necessary in any way to any tax liability of the
Company; and to that end Buyer may inspect, copy and reproduce any of
the Company's tax returns, accounting and other records. The statements
made and information given to Buyer relating to the transaction covered
by this Agreement are true and accurate and no material fact has been
withheld from Buyer; and Sellers have no knowledge of any development
or threatened developments that would have a materially adverse effect
on the Company's business.
Section 5. Restrictive Covenant.
For a period of three (3) years from date of closing the Seller will, without
the consent of Buyer, enter the employ of any person, firm or corporation
engaged in a business in the State of Colorado in competition with the present
business of the Company; nor will any of them engage or assist any one else to
engage, directly or indirectly, as principal, agent, employee, shareholder,
officer or otherwise in any such business. For a breach of this covenant, Buyer
shall have the right to an injunction and damages.
Section 6. Stock Transfer Restriction on Shares Acquired by Sellers.
For a period of three (3) years from date of closing the Seller will not sell,
assign, or transfer or otherwise dispose of the shares of the Buyer corporation
which he will acquire hereunder except to trusts for the benefit of or as gifts
to members of the immediate family of any of the Sellers, or as security for a
loan, provided that the transferee or pledgee of such shares agrees by prior
written agreement to be bound by the provisions of this Section 6. Such
agreement must be examined and approved by Buyer or its counsel. As liquidated
damages for breach of this Section 6, sellers will pay Buyer fifty cents ($0,50)
per share for every share actually sold within said three (3) year period.
Section 7. Buyer's Right to Deliver Converted Stock.
If between the date hereof and the closing, there is a change in the condition,
capital or capital structure of the Buyer by virtue of which its common stock is
converted into other shares of its own or of another corporation, delivery of
such converted shares equivalent to the number of shares of common stock due to
the Sellers hereunder, shall be good delivery and due performance by Buyer under
this Agreement.
Section 8. Cooperation.
Sellers will deliver to Buyer, at and after closing, all orders, checks,
communications and information received by them or the Company relating to or
belonging to the Company. Sellers will execute upon request and deliver all
instruments, papers or documents and do all other acts that may be necessary or
desirable in the opinion of Buyer's counsel to perfect or record any right,
title or interest relating to the property of the Company or to the shares to be
transferred to the Buyer hereunder; or to aid in any legal proceeding relating
to any such matter. Unless the need therefor is due to any default of Sellers,
the expense involved shall be borne by Buyer.
Section 9. Warranties to Survive Closing.
The terms, conditions, warranties and representations of this Agreement shall
survive the closing. Buyer, however, shall be under a duty to make prompt
investigations; and, except for breaches of the restrictions set forth above in
Sections 5 and 6, all claims which are not made within two (2) years of closing
shall be deemed waived.
Section 10. Buyer's Right to Rescind.
If any warranty or representation made herein by Sellers is breached, is untrue,
or if full information has not been disclosed by them to Buyer about the
Company, Buyer may rescind this Agreement in addition to any other legal
remedies that it may have. Notice of rescission shall be given to sellers in
writing. Within ten (10) days after receipt of such notice, Sellers shall return
to Buyer all consideration received by them under this Agreement and promptly
thereafter, Buyer will return to them the shares of stock in the Company
transferred to Buyer.
Section 11. Notices.
All notices shall be in writing and shall be served by registered or certified
mail directed to the addresses of the parties as herein above set forth. By due
notice any party may designate a different address.
Section 12. Entire Agreement.
This Agreement constitutes the entire contract of the parties concerning the
subject matter hereof and supersedes all previous negotiations, understandings
and agreements of the parties with reference hereto. Any change, termination or
attempted waiver of any of the provisions hereof shall be binding only if made
in writing and as regards the Buyer only if signed by an officer thereof.
Section 13. Counterparts.
Separate counterparts of this Agreement may be signed and together they shall
constitute one agreement.
Section 14. Broker and Broker's Commission.
Sellers represent and warrant that no Broker, finder, agent or similar
intermediary has acted for or on behalf of the Seller in connection with this
Agreement or the transactions contemplated hereby, and no broker, finder, agent
or similar intermediary is entitled to any broker's, finder's or similar fee or
other commission in connection therewith based on any agreement, arrangement or
understanding with the Seller or any action taken by the Seller.
Section 15. Interim Provisions.
During the period between the execution of this Agreement and the closing:
a. Sellers will see to it that the Company will continue business in its normal
manner and among other things keep its insurance in effect, comply with all laws
and use its best efforts to retain the services and goodwill of its personnel
and good relations with its suppliers, dealers and customers.
x. Xxxxxxx will obtain such clearances as may be required from the Department of
Justice, Federal Trade Commission, Internal Revenue Service and other
governmental agencies as may be necessary; and will have the Buyer added as an
insured to the Company's existing insurance policies.
x. Xxxxxxx shall be obligated to prevent the Company from taking any
extraordinary action. Specifically, and without limitation, no increases or
bonuses shall be given to executives; no long-term contracts shall be entered
into; no declarations or dividends, amendments to the articles of incorporation
of bylaws, dispositions of property, creation of mortgages, liens or debts,
large capital outlays, redemption's of stock, mergers or consolidations, shall
be made.
d. Buyer shall have the option to terminate this contract if any of the
provisions of paragraph (b) or (c) immediately preceding are not complied with;
or if any injunction is issued against the transaction herein set forth; or if
any substantially adverse change occurs in the Company's business, in labor or
legislative matters affecting the Company, or in general business conditions; or
if there is substantial destruction, damage or loss of the Company's property.
Section 16. Closing.
The closing of this transaction shall take place at 10:00 AM on May 15th, 1998
or at such earlier date as the parties stipulate in writing.
At the closing Sellers shall deliver to Buyer:
Certificates for the stock described in Section 2 hereof, indorsed in blank with
all necessary documentary transfer tax stamps affixed and with signatures
guaranteed by a bank or trust company.
b. Resignations of directors and officers of the Company.
c. General releases by the Sellers of all claims that they may have to the date
of closing against the Company or the Buyer or the directors, officers, agents
and employees of either of them.
d. Certified copies of consent of the shareholders of the Company to this
Agreement and of the resolution of its board of directors in favor of the
Agreement, if such consent or resolution is required by law or by the Company's
articles of incorporation or its bylaws.
e. The complete and correct corporate minute books, articles of incorporation,
bylaws and stock transfer books of the Company and its books of account,
records, correspondence, files, documents and all other papers necessary to
manage and operate the affairs of the Company.
f. All deeds, bills of sale, insurance policies, contracts, mortgages, leases,
assignments and all other documents pertaining to any property owned by the
Company or used in its operations; and assignments to the Company duly executed
by Sellers of all inventions, patents, patent applications, copyrights,
formulas, manufacturing methods, trade secrets and trademarks owned by the
Sellers or in which they may have any interest, relating to any product or
process used by the Company in its business.
g. Copies of resolutions of the board of directors of the Company certified by
its Secretary in the form specified by the banks or trust companies with which
the Company does business, revoking all prior authorizations and authorizing
only the following persons to sign checks, to deal with the bank accounts and to
have access to the safe deposit box of the Company.
h. Copies of the minutes of the board of directors of the company (and office
shareholders, if necessary), certified by its Secretary, electing officers and
directors of the company and appointing the following as its officers:
President, Xxxx X. Xxxxx
Vice-President,
Secretary-Treasurer; Xxxxx X. Xxxx
i. Agreements in writing by each of the present and previous officers and
directors of the Company that he or she will disclose to Buyer all trade secrets
relating to the products of, or processes used by, the Company; that he or she
will not by himself or herself or with others, use such trade secrets directly
or indirectly; and that he or she will transfer and assign to the Company all
inventions, patents, copyrights and patent applications in which he or she has
any right, title or interest relating to any product of, or process used by, the
Company or relating to its business.
j. The written opinion of counsel for the Company that:
i. The company is duly organized and existing as a corporation in good
standing under the laws of the State of Virginia and duly qualified as
a foreign corporation in good standing in each state where such
qualification is necessary.
ii. All corporate and other proceedings required of the company have
been duly and properly taken; all reports and returns required to be
filed by it have been duly filed; and it has complied with all
applicable state, federal and local laws, to the best of counsel's
knowledge.
iii. Counsel has no knowledge of any claim against the Company or of
any litigation pending or threatened or in prospect against it; or of
any defects or limitations of the Company's title to any of its
property.
iv. The shares of the Company are validly issued to the Sellers, fully
paid and nonassessable, and the certificates held by them (to be
delivered to Buyer) represent all the issued and outstanding shares of
the Company; and that there are no restrictions by statute, in the
Company's articles of incorporation or amendments thereto, in its
bylaws, minutes, stock certificates or in any shareholders' agreement
that may limit the right or power of the Buyer with respect to said
shares or that may constitute a lien, claim or encumbrance or equity
therein.
v. Counsel has no knowledge of facts that may adversely affect the
prospective title of Buyer to said shares or of any claim against them.
k. With respect to real estate owned by the Company: policies of title insurance
running to the Company for each parcel for the fair market value of said
property as described in Schedule D a survey showing all improvements and
showing title to be marketable as described in said policies. The policies shall
be in standard form issued by a company duly qualified in the state where the
particular parcel is located. Estoppel certificates from each institution or
lender to whom the Company is indebted and from each holder of a lien on its
property.
Section 17. Successors Bound.
This Agreement shall be binding and inure to the benefit of the respective
successors and assigns of the parties hereto. Any change or division of interest
of the Seller, caused in any manner, shall be reported to the Buyer by due
notice, stating the nature of the change or division and designating a specific
person and address for transmittal of notices and deliveries.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
XXXX X. XXXXX, an individual Seller
-----------------------------------
Xxxx X. Xxxxx, an individual
XXXXX X. XXXX, an individual Seller
Xxxxx X. Xxxx, an individual
Schedule A "Company Organizational Documents"
Schedule "A "defines and discloses the Company's Organizational Documents. These
documents are attached and include: Articles of Incorporation of the Company
It's Bylaws It's Minutes
Schedule B "Financial Statements"
Schedule "B" defines and discloses the Company's financial statements.
Balance Sheet
Income Statement
Schedule C "Written Contracts"
Schedule "C" defines and discloses the Company's written contracts. These
include:
Schedule D "Property"
Schedule D defines and discloses the Property owned by Company
Schedule E Retirement Plans
None, the Company has no retirement Plans.
