Exhibit 6.1
SHARE EXCHANGE AGREEMENT
by and among
BOULDER CAPITAL OPPORTUNITIES III, INC.
a Colorado corporation
and
SONIC JET PERFORMANCE, LLC
a California Limited Liability Company
dated: June 15, 1998
SHARE EXCHANGE AGREEMENT
BOULDER CAPITAL OPPORTUNITIES III, INC.
and
SONIC JET PERFORMANCE, LLC
This Share Exchange Agreement ("Agreement"), dated as of June 15, 1998,
among BOULDER CAPITAL OPPORTUNITIES III, INC. ("BCOIII"), a Colorado
Corporation, SONIC JET PERFORMANCE, LLC ("SJP") , a California Limited
Liability Company.
W I T N E S S E T H:
A. WHEREAS, BCOIII is a corporation duly organized under the laws of
the State of Colorado, and SJP is a Limited Liability Company organized in
California.
B. Plan of Exchange. It is the intention that the assets of SJP shall
be acquired by BCOIII and all liabilities and other obligations of SJP shall be
assumed in exchange solely for voting stock of BCOIII. For federal income
tax purposes it is intended that this exchange shall be treated under Sec.
351 of the Internal Revenue Code as may be applicable.
C. Exchange of Shares. SJP agrees that all of the assets of SJP shall
be exchanged with BCOIII for 5,000,000 common shares of BCOIII issued to SJP
fully paid and nonassessable, and that BCOIII shall assume all liabilities and
other obligations of SJP.
D. WHEREAS, the parties hereto wish to enter into this Agreement,
pursuant to the provisions of the Colorado Revised Statutes.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
The Consideration
1.1 Subject to the conditions set forth herein on the "Closing Date"
(as herein defined), SJP shall convey all of its assets by assignment or Xxxx of
Sale and BCOIII shall assume all liabilities of SJP by way of an assumption
agreement as such assets and liabilities are specified in the unaudited balance
sheet of SJP, dated as of May 31, 1998, attached hereto, and made a part hereof
by this reference, for 5,000,000 common shares of BCOIII common stock. The
transactions contemplated by this Agreement shall be completed at a closing
("Closing") on a closing date ("Closing Date") on or before June 5, 1998.
On the Closing Date, all of the documents to be furnished to BCOIII and
SJP, including the documents to be furnished pursuant to Article VII of this
Agreement, shall be delivered to M.A. Xxxxxxx, to be held in escrow until all
closing conditions hereunder have been met or the date of termination of this
Agreement, but no longer than 10 days after closing date, whichever first
occurs, and thereafter shall be promptly distributed to the parties as their
interests may appear.
1.2 Concurrent with the execution hereof, SJP shall deposit or cause to
be deposited to BCOIII $9,000 as a non-refundable consideration for this
agreement which will be used to pay accrued legal fees to Xx Xxxxxxx and audit
costs for 1997 10-K.
1.3 For accounting purposes, the Agreement shall be effective as of
12:01 a.m., on the last day of the month preceding the Closing Date.
ARTICLE II
Issuance and Exchange of Shares
2.1 The shares of $.0001 par value common stock of BCOIII shall be
issued by it to SJP at closing.
2.2 BCOIII represents that no outstanding options or warrants for its
unissued shares exist, except as may be contained in an Encore Capital
Subscription Agreement now in negotiation.
2.3 No fractional shares of BCOIII stock shall be issued as a result of
the Agreement. Shares shall be rounded to nearest whole share.
ARTICLE III
Representations, Warranties
and Covenants of SONIC JET PERFORMANCE, LLC
No representations or warranties are made by any director, officer,
employee or shareholder of SJP as individuals, except as and to the extent
stated in this Agreement or in a separate written statement (the "SJP
Disclosure Statement"), if any. SJP hereby represents, warrants and
covenants to BCOIII except as stated in the SJP Disclosure Statement, as
follows:
3.1 SJP is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of California, and has
the power and authority to carry on its business as it is now being
conducted. The Articles of Organization and Operating Agreement of SJP are
complete and accurate, and the minute books of SJP contain a record, which is
complete and accurate in all material respects, of all meetings, and all
actions of the members and managers of SJP.
3.2 SJP has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
3.3 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions
contemplated herein by SJP will conflict with or result in a breach or
violation of the Articles of Organization or Operating Agreement of SJP.
3.4 The execution, delivery and performance of this Agreement has been
duly authorized and approved by SJP's sole manager, Xxxxxx Xxxxxxxxx, a
"MAJORITY OF MEMBERS" (as such term is defined in the operating agreement
for SJP).
3.5 Within 5 days SJP will deliver to BCOIII consolidated audited
financial statements of SJP, as of December 31, 1997 and an unaudited
balance sheet of SJP at May 31, 1998. All such statements, herein
sometimes called "SJP Financial Statements", are complete and correct in
all material respects and, together with the notes to these financial
statements, present fairly the financial position and results of operations
of SJP for the periods included. The statements will have been prepared in
accordance with generally accepted accounting principles.
3.6 Since the dates of the SJP Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise of SJP.
3.7 There are no legal proceedings or regulatory proceedings involving
material claims pending, or to the knowledge of SJP, threatened against SJP or
affecting any of its assets or properties, and SJP is not in any material
breach or violation of or default under any contract or instrument to which
SJP is a party, and no event has occurred which with the lapse of time or
action by a third party could result in a material breach or violation of or
default by SJP under any contract or other instrument to which SJP is a party
or by which it or any of its properties may be bound or affected, or under
its respective Articles of Organization or Operating Agreement, nor is there
any court or regulatory order pending, applicable to SJP.
3.8 All liability of SJP has been properly provided for and is adequate
to comply with all regulatory requirements regarding same.
3.9 The representations and warranties of SJP shall be true and correct
as of the date hereof and as of the Closing Date.
3.10 SJP will deliver to BCOIII a copy of each of the federal income tax
returns of SJP for the year ending December 31, 1997, and for any additional
open years. All returns and information reports required or requested by
federal, state, county, and local tax authorities have been filed or supplied
in a timely fashion, and all such information is true and correct in all
material respects. Provision has been made for the payment of all taxes due
to date by SJP, including taxes for the current year ending December 31,
1997. No federal income tax return of SJP is currently under audit.
3.11 SJP has no employee benefit plan, including non-qualified stock
awards, options, and consulting fees for independent contractors, other than
as disclosed in the books and records and disclosure statement.
3.12 No representation or warranty by SJP in this Agreement, the SJP
Disclosure Statement or any certificate delivered pursuant hereto contains
any untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
ARTICLE IV
Representations, Warranties and Covenants of BCOII INC.
No representations or warranties are made by any director, officer,
employee or shareholder of BCOIIIas individuals, except as and to the extent
stated in this Agreement or in a separate written statement.
BCOIII hereby represents, warrants and covenants to SJP, except as stated
in the BCOIII Disclosure Statement, as follows:
4.1 BCOIII is a corporation duly organized, validly existing and in good
standing under the lawsof the State of Colorado, and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted.The Articles of Incorporation and Bylaws of BCOIII,
copies of which have been delivered to SJP, are complete and accurate, and
the minute books of BCOIII contain a record, which is complete and accurate in
all material respects, of all meetings, and all corporate actions of the
shareholders and Board of Directors of BCOIII.
4.2 The aggregate number of shares which BCOIII is authorized to issue
is 100,000,000 shares of common stock with a par value of $.001 per share, of
which approximately 1,010,000 shares of such common stock will be issued and
outstanding, fully paid and non-assessable, prior to closing under this
agreement. BCOIII has no outstanding options, warrants or other rights to
purchase, or subscribe to, or securities convertible into or exchangeable for
any shares of capital stock.
4.3 BCOIII has complete and unrestricted power to enter into and, upon
the appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
4.4 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions contemplated
herein by BCOIII will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of BCOIII.
4.5 The execution of this Agreement has been duly authorized and
approved by the BCOIII's Board of Directors.
4.6 BCOIII has delivered to SJP financial statements of BCOIII dated
December 31, 1997. All such statements, herein sometimes called "BCOIII
Financial Statements" are (and will be) complete and correct in all material
respects and, together with the notes to these financial statements, present
fairly the financial position and results of operations of BCOIII of the
periods indicated. All statements of BCOIII will have been prepared in
accordance with generally accepted accounting principles.
4.7 Since the dates of the BCOIII Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise, of BCOIII. BCOIII does not have any material liabilities or
obligations, secured or unsecured except as shown on updated financials
(whether accrued, absolute, contingent or otherwise).
4.8 BCOIII has delivered to SJP a list and description of all pending
legal proceedings involving BCOIII, none of which will materially adversely
affect them, and, except for these proceedings, there are no legal proceedings
or regulatory proceedings involving material claims pending, or, to the
knowledge of the officers ofBCOIII, threatened against BCOIII or affecting
any of its assets or properties, and BCOIII is not in any material breach or
violation of or default under any contract or instrument to which BCOIII is a
party, and no event has occurred which with the lapse of time or action by a
third party could result in a material breach or violation of or default by
BCOIII under any contract or other instrument to which BCOIII is a party or
by which they or any of their respective properties may be bound or affected,
or under their respective Articles of Incorporation or Bylaws, nor is there
any court or regulatory order pending, applicable to BCOIII.
4.9 BCOIII shall not enter into or consummate any transactions prior to
the Closing Date other than in the ordinary course of business and will pay no
dividend, or increase the compensation of officers and will not enter into
any agreement or transaction which would adversely affect its financial
condition.
4.10 BCOIII is not a party to any contract performable in the future.
4.11 The representations and warranties of BCOIII shall be true and
correct as of the date hereof and as of the Closing Date.
4.12 BCOIII has delivered to SJP, all of its corporate books and
records for review, true and correct copies of BCOIII's tax return since
1996, if any. BCOIII will also deliver to SJP on or before the Closing Date
any reports relating to the financial and business condition of BCOIII which
occur after the date of this Agreement and any other reports sent generally
to its shareholders after the date of this Agreement.
4.13 BCOIII has no employee benefit plan in effect at this time.
4.14 No representation or warranty by BCOIII in this Agreement, the
BCOIII Disclosure Statement or any certificate delivered pursuant hereto
contains any untrue statement of a material fact or omits to state any
material fact necessary to make such representation or warranty not misleading.
4.15 BCOIII agrees that all rights to indemnification now existing in
favor of the employees, agents, directors or officers of SJP and its
subsidiaries, as provided in the Articles of Incorporation or Bylaws or
otherwise in effect on the date hereof shall survive the transactions
contemplated hereby in accordance with their terms, and BCOIII expressly
assumes such indemnification obligations of SJP.
4.16 BCOIII has delivered, to SJP true and correct copies of the BCOIII
10-K and each of its other reports to shareholders and filing with the
Securities and Exchange Commission ("SEC") for the current year. BCOIII will
also deliver to SJP on or before the Closing Date any reports relating to the
financial and business condition of BCOIII which are filed with the SEC after
the date of this Agreement and any other reports sent generally to its
shareholders after the date of this Agreement.
4.17 BCOIII has duly filed all reports required to be filed by it under
the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended,(the "Federal Securities Laws"). No such reports, or
any reports sent to the shareholders of BCOIII generally, contained any
untrue statement of material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements in such
report, in light of the circumstances under which they were made, not
misleading.
4.18 BCOIII hereby covenants that during the contract period, prior to
closing, it will not take any board action without Xxxxxxxxx'x approval in
writing, pending selection of new officers and directors at closing.
ARTICLE V
Obligations of the Parties Pending the Closing Date
5.1 This Agreement shall be duly submitted to the members of SJP for
the purpose of considering and acting upon this Agreement in the manner
required by law at a meeting of members on a date selected by SJP, such date
to be the earliest practicable date or by majority written consent. The
manager of SJP, subject to its fiduciary obligations to members, shall use
its best efforts to obtain the requisite majority approval of SJP members of
this Agreement and the transactions contemplated herein. SJP and BCOIII
shall take all reasonable and necessary steps and actions to comply with and
to secure SJP member approval of this Agreement.
5.2 At all times prior to the Closing Date during regular business
hours, each party will permit the other to examine its books and records and
the books and records of its subsidiaries and will furnish copies thereof on
request. It is recognized that, during the performance of this Agreement,
each party may provide the other parties with information which is confidential
or proprietary information. During the term of this Agreement, and for four
years following the termination of this Agreement, the recipient of such
information shall protect such information from disclosure to persons, other
than members of its own or affiliated organizations and its professional
advisers, in the same manner as it protects its own confidential or proprietary
information from unauthorized disclosure, and not use such information to the
competitive detriment of the disclosing party. In addition, if this Agreement
is terminated for any reason, each party shall promptly return or cause to be
returned all documents or other written records of such confidential or
proprietary information, together with all copies of such writings and, in
addition, shall either furnish or cause to be furnished, or shall destroy, or
shall maintain with such standard of care as is exercised with respect to its
own confidential or proprietary information, all copies of all documents or
other written records developed or prepared by such party on the basis
of such confidential or proprietary information. No information shall be
considered confidential or proprietary if it is (a) information already in
the possession of the party to whom disclosure is made, (b) information
acquired by the party to whom the disclosure is made from other sources,
or (c) information in the public domain or generally available to interested
persons or which at a later date passes into the public domain or becomes
available to the party to whom disclosure is made without any wrongdoing by
the party to whom the disclosure is made.
5.3 BCOIII and SJP shall promptly provide each other with information
as to any significant developments in the performance of this Agreement, and
shall promptly notify the other if it discovers that any of its
representations, warranties and covenants contained in this Agreement or in
any document delivered in connection with this Agreement was not true and
correct in all material respects or became untrue or incorrect in any material
respect.
5.4 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in
order to consummate the transactions contemplated hereby as promptly as
practicable.
ARTICLE VI
Procedure for Exchange
6.1 At the Closing Date, the exchange shall be effected as set forth
in Colorado Revised Statutes with common stock certificates of BCOIII being
exchanged for SJP assets and the assumption by BCOIII of the liabilities and
other obligations of SJP, all as delineated above, together with delivery of
Assignments and Bills of Sale for the assets transferred by SJP to BCOIII,
and an Assumption Agreement for the liabilities and other obligations assumed
by BCOIII.
ARTICLE VII
Conditions Precedent to the
Consummation of the Exchange
The following are conditions precedent to the consummation of the
Agreement on or before the Closing Date:
7.1 SJP shall have performed and complied with all of its respective
obligations hereunder which are to be complied with or performed on or before
the Closing Date and BCOIII and SJP shall provide one another at the Closing
with a certificate to the effect that such party has performed each of the acts
and undertakings required to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement.
7.2 This Agreement, the transactions contemplated herein shall have been
duly and validly authorized, approved and adopted by the manager of SJP in
accordance with the applicable laws.
7.3 No action, suit or proceeding shall have been instituted or shall
have been threatened before any court or other governmental body or by any
public authority to restrain, enjoin or prohibit the transactions
contemplated herein, or which might subject any of the parties hereto or their
directors or officers to any material liability, fine, forfeiture or penalty
on the grounds that the transactions contemplated hereby, the parties hereto
or their directors or officers, have violated any applicable law or regulation
or have otherwise acted improperly in connection with the transactions
contemplated hereby, and the parties hereto have been advised by counsel
that, in the opinion of such counsel, such action, suit or proceeding raises
substantial questions of law or fact which could reasonably be decided
adversely to any party hereto or its directors or officers.
7.4 All actions, proceedings, instruments and documents required to
carry out this Agreement and the transactions contemplated hereby and the
form and substance of all legal proceedings and related matters shall have
been approved by counsel for SJP and BCOIII.
7.5 The representations and warranties made by SJP and BCOIII in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date, except to the extent that such
representations and warranties may be untrue on and as of the Closing Date
because of (1) changes caused by transactions suggested or approved in
writing by SJP or (2) events or changes (which shall not, in the aggregate,
have materially and adversely affected the business, assets, or financial
condition of BCOIII or SJP during or arising after the date of this Agreement.)
7.6 SJP shall have furnished BCOIII with:
(1) a certified copy of a resolution or resolutions duly adopted by a
"MAJORITY OF MEMBERS", as such term is defined in the operating
agreement for SJP, approving this Agreement and the transactions
contemplated by it;
(2) an opinion of its counsel dated as of the Closing Date in
accordance with 7.5 hereof;
(3) an agreement from each member "affiliate" of SJP as defined in the
rules adopted under the Securities Act of 1933, as amended, to the
effect that (a) the affiliate is familiar with SEC Rules 144
and 145; (b) none of the shares of BCOIII common stock will be
transferred by or through the affiliate in violation of the
Federal Securities Laws; (c) the affiliate will not sell or in any
way reduce his risk relative to any BCOIII common stock received
pursuant to this Agreement until such time as financial results
covering at least 30 days of post-closing date combined operations
shall have been published by BCOIII on SEC Form 10-Q or otherwise; and
(d) the affiliate acknowledges that BCOIII is under no obligation
to register the sale, transfer, or the disposition of BCOIII common
stock by the affiliate or to take any action necessary in order to
make an exemption from registration available to the affiliate, but
understands that BCOIII will satisfy the public information
requirements of Rules 144 and 145 during the three-year period
following the Closing Date.
7.7 BCOIII shall furnish SJP with a certified copy of a resolution or
resolutions duly adopted by the Board of Directors of BCOIII, approving this
Agreement and the transactions contemplated by it.
7.8 All outstanding liabilities of BCOIII shall have been paid and
released prior to closing.
7.9 Encore Capital shall have delivered a fully executed Stock
Subscription Agreement between BCOIII and Encore Capital for a $1,500,000
investment in Preferred Convertible Stock.
7.10 BCOIII shall appoint, at closing, Xxxxxx Xxxxxxxxx as President of
BCOIII and, subject to filing a Form 14f with the SEC and mailing to
shareholders required thereby, shall appoint Mardikian as a director and such
other persons as Xxxxxxxxx may direct.
ARTICLE VIII
Termination and Abandonment
8.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to the
Closing Date:
(a) By mutual consent of SJP and BCOIII;
(b) By SJP or BCOIII, if any condition set forth in Article VII
relating to the other party has not been met or has not been waived;
(c) By SJP or BCOIII, if any suit, action or other proceeding shall be
pending or threatened by the federal or a state government before
any court or governmental agency, in which it is sought to restrain,
prohibit or otherwise affect the consummation of the transactions
contemplated hereby;
(d) By any party, if there is discovered any material error,
misstatement or omission in the representations and warranties of
another party;
(e) By any party if the Agreement Closing Date is not within 30 days
from the date hereof; or
8.2 Any of the terms or conditions of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, by action
taken by its Board of Directors or Manager provided; however, that such
action shall be taken only if, in the judgment of the Board of Directors or
Manager taking the action, such waiver will not have a materially adverse
effect on the benefits intended under this Agreement to the party waiving
such term or condition.
ARTICLE IX
Termination of Representation and
Warranties and Certain Agreements
9.1 The respective representations and warranties of the parties hereto
shall expire with, and be terminated and extinguished by consummation of the
Agreement; provided, however, that the covenants and agreements of the
parties hereto shall survive in accordance with their terms.
ARTICLE X
Miscellaneous
10.1 This Agreement embodies the entire agreement between the parties,
and there have been and are no agreements, representations or warranties
among the parties other than those set forth herein or those provided for
herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts together shall
constitute but one instrument. Counterparts shall include the execution of
the Exchange Agreement and Representations by all shareholders.
10.3 All parties to this Agreement agree that if it becomes necessary
or desirable to execute further instruments or to make such other assurances
as are deemed necessary, the party requested to do so will use its best
efforts to provide such executed instruments or do all things necessary or
proper to carry out the purpose of this Agreement.
10.4 This Agreement may be amended upon approval of the Board of
Directors of each party provided that the shares issuable hereunder shall not
be amended without approval of SJP.
10.5 Any notices, requests, or other communications required or
permitted hereunder shall be delivered personally or sent by overnight courier
service, fees prepaid, addressed as follows:
To BCOIII, Inc.:
Xxxxxx Xxxxxxxx
0000 Xxxxxxx Xxxxxxx Xxxxx, #00
Xxxxxxxxx, XX 00000
copy to: Xxxxxxx X. Xxxxxxx
Attorney at Law
00000 X. 00xx Xxx., #000
#000 Xxxxx Xxxxx, XX 00000
To Sonic Jet Performance, LLC
00000 Xxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000
copy to: Law Offices of Xxxxxxxx X. Xxxxxxx
Attn: Xxxxxxxxxxx X. Xxxxxx, X.X.
0000 Xxxx 00xx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000-0000
or such other addresses as shall be furnished in writing by any party, and
any such notice or communication shall be deemed to have been given as of the
date received.
10.6 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of SJP and
BCOIII. However, either SJP or BCOIII may issue at any time any press release
or other public statement it believes on the advice of its counsel it is
obligated to issue to avoid liability under the law relating to disclosures,
but the party issuing such press release or public statement shall make a
reasonable effort to give the other party prior notice of and opportunity to
participate in such release or statement.
IN WITNESS WHEREOF, the parties have set their hands and seals this 15th
day of June, 1998.
BOULDER CAPITAL OPPORTUNITIES III, INC.
By:__________________________
President
Attest:________________________
Secretary
SONIC JET PERFORMANCE, LLC
By:___________________________
Manager
