EXHIBIT 10.171
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made this 1st day of May 1998,
by and between NuOasis International Inc., a corporation organized under the
laws of the Commonwealth of the Bahamas (the "Company") and Flexweight Corp., a
Kansas corporation ("Flex").
WHEREAS, Flex owns or has the right to acquire a hotel and casino project
in Oasis, Nevada and intends to pursue the business of owning, developing and
operating hotel and casino properties; it is a publicly-held corporation whose
shares are traded in the U.S. on the NASDAQ Electronic Bulletin Board; and
WHEREAS, the Company is an international company engaged in owning,
developing and operating hotel and casino properties through investments in
equities of operational and development stage hotel and casino companies; and
WHEREAS, the Company owns certain shares of common stock of NuOasis Resorts
Inc., a Nevada corporation ("Resorts"); and
WHEREAS, the Company and Flex wish to diversify their respective investment
portfolios by exchanging shares of Resorts owned by the Company for shares of
Flex to be issued by Flex; and
WHEREAS, this Agreement is executed in reliance upon the transaction
exemption afforded by Section 4(2) of the Securities Act of 1933, as amended
("'33 Act") and Regulations S and D as promulgated by the Securities and
Exchange Commission ("SEC") under the '33 Act.
IN CONSIDERATION of the mutual promises contained herein, the benefits to
be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby expressly acknowledged, the
Company and Flex agree as follows:
1. Exchange
On the basis of the representations and warranties herein contained,
subject to the terms and conditions set forth herein, Flex agrees to issue
and exchange 1,000,000 shares of its common stock, representing
approximately 19.5% of Flex's total outstanding shares (the "Flex Shares")
and to grant the Company the option to purchase shares of Flex common stock
in the future so as to maintain the greater of a 19.5% equity interest in
Flex or $2.5 million in Market Value of Flex Shares, as more fully
described in the Option Agreement attached hereto as Exhibit "A" (the
"Option"). In exchange for the Flex Shares and the Option the Company shall
transfer to Flex Three Million Two Hundred Fifty Thousand (3,250,000)
shares of Resorts (the "Resorts Shares").
2. Closing
A. Method of Exchange. Within ten (10) business days following execution
hereof, the Company shall deliver the Resorts Shares and Flex shall
issue and deliver the Flex Shares to the escrow agent identified in
the Joint Escrow Instructions attached hereto as Exhibit "B" (the
"Escrowholder"), in one or more share certificates, in accordance with
this Agreement and the Joint Escrow Instructions attached hereto. By
signing this Agreement, the Company and Flex each agree to all of the
terms and conditions of, and becomes a party to the Joint
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Escrow Instructions, all of the provisions of which are incorporated
herein by this reference as if set forth herein in full.
B. Closing Date. The closing of the exchange contemplated by this
Agreement (the "Closing") shall occur upon such date that the parties
have satisfied their respective obligations and covenants contained
herein, but shall not be later than June 30, 1998. At the Closing, the
Company shall assign and deliver the Resorts Shares to Flex and Flex
shall issue and deliver the Flex Shares to the Company.
Notwithstanding the date of Closing, the Effective Date shall be May
30, 1998.
3. Flex Shares
A. Description. The Flex Shares shall be equal in voting power,
preferences, liquidation rights and relative, participating optional
or any other special rights of Flex's common stock as presently
constituted.
B. Status of Flex Shares. The Flex Shares when issued, will be validly
issued for consideration which Flex hereby acknowledges and agrees is
fair and reasonable. Further, as an inducement to the Company to enter
into this Agreement, Flex agrees that it will not for any reason place
a "stop transfer" order or assert any claim which would serve to
restrict the transfer or exchange of the Flex Shares. Flex represents
that it has not created any option, security interest, preemptive
right or encumbrance which could affect the Flex Shares, otherwise
would give rise to any claims by third parties or create a conflict
with or preclude the exchange as contemplated herein.
4. Flex Business Plan
Flex's working capital, including the proceeds from loans against, or the
sale of the Resorts Shares, will be used for the development of its Flex
Project, as more fully described in Exhibit "C" attached hereto and
incorporated herein by reference.
5. Representations and Warranties of Flex
Flex hereby represents and warrants to the Company that:
A. Organization. Flex is a corporation validly existing and in good
standing under the laws of Kansas, with the power and authority to
carry on its business as now being conducted. The execution and
delivery of this Agreement and the consummation of the transaction
contemplated in this Agreement have been, or will be prior to Closing,
duly authorized by all requisite corporate action on the part of Flex.
This Agreement has been duly executed and delivered by Flex and
constitutes a binding, and enforceable obligation of Flex.
B. Capitalization. As of the date of execution of this Agreement, the
capitalization of Flex is comprised of 25,000,000 authorized shares of
$.10 par value common stock of which 5,418,588 are issued and
outstanding. All of the issued and outstanding shares are duly
authorized, validly issued, fully paid, and nonassessable and have
been offered. issued, sold, and delivered by Flex in compliance with
all applicable securities laws; with the exception of shares issued or
reserved for issuance as disclosed herein, there are no other
outstanding
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shares, options, warrants, preemptive, conversion, or other rights
issued by or binding on Flex to purchase or acquire any shares of its
capital stock.
C. Third Party Consent No authorization, consent, or approval of, or
registration or filing with, any governmental authority or any other
person is required to be obtained or made by Flex in connection with
the execution, delivery, or performance of this Agreement, or if
required, Flex has or will obtain same prior to Closing.
D. Litigation. Neither Flex nor any of its officers and directors are
defendants or plaintiffs against whom a counterclaim has been made or
reduced to judgement, in any litigation or proceedings before any
local, state or U.S. government, or any department, board, body or
agency thereof, which could result in a judgment or claim against the
Flex Project or otherwise impede or delay the development of the Flex
Project, or result in a claim against the Flex Shares; and,
E. Authority. This Agreement has been duly executed by Flex, and the
execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in any agreement,
instrument, judgement, order or decree to which Flex is a party or to
which Flex is subject; and,
F. Disclosure Documents. Flex is a publicly-held company and is subject
to the reporting requirements of Sections 12, 13(a), 14(a), and 15(d)
of the Securities and Exchange Act of 1934, as amended (the "'34
Act"), including but not limited to Annual Reports on Form 10- K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and proxy
statements (the "Disclosure Documents"). Flex agrees to furnish the
Company with a description of any material changes in Flex's financial
condition up to and including the date of Closing that may not be
disclosed in the Disclosure Documents.
G. Tax Matters. Flex has filed or will file prior to Closing all federal,
state, and local income, excise, property, and other tax returns,
forms, or reports, which are due or required to be filed by it and has
paid, or made adequate provision for payment prior to Closing of all
taxes, interest, penalty fees, assessments, or deficiencies shown to
be due or claimed to be due or which have or may become due on or in
respect to such returns or reports.
H. Directors and Officers. The Flex Disclosure Documents accurately set
forth the names and titles of the persons serving as its directors and
officers and their beneficial interest in the capital of Flex.
I. Full Disclosure. The information concerning Flex, set forth in this
Agreement and in the Disclosure Documents is, to the best of Flex's
knowledge and belief, complete and accurate in all material respects
and does not contain any untrue statement of a material fact or omit
to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading.
6. Conditions Precedent to Obligations of the Company and Flex
All obligations of the Company under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
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A. Transfer and Delivery of the Consideration. The Company shall have
delivered the Resorts Shares to Escrowholder pursuant to this
Agreement.
B. Transfer and Delivery of the Flex Shares. Flex shall have taken all
action necessary to issue and deliver the Flex Shares to Escrowholder.
C. Acceptance of Documents. All instruments and documents delivered to
the Company and Flex pursuant to the provisions of this Agreement
shall be satisfactory to the Company and Flex and their legal counsel.
D. Valuation. The Company, in its sole satisfaction, shall have the right
to determine that the value of the Flex Project, and the Flex Shares
to be acquired shall not have declined in value from the date hereof
through the date of Closing. If there is any adverse change in Flex's
financial condition or change in its management, or if the value of
the Flex Project or the Flex Shares declines prior to Closing, the
Company shall have the option to terminate this Agreement without
penalty. Alternatively, the Company may elect, in its sole discretion,
to proceed with Closing in reliance upon a warranty of title, guaranty
of value, adjustment to the consideration, or other mutually
acceptable form of assurance to be made by Flex.
E. Flex Board of Directors. Flex shall, simultaneously with Closing, add
one member to its Board of Directors submitted by the Company.
Approval of such new director shall not be unreasonably withheld by
Flex.
F. Acceptance of Documents. All instruments and documents delivered to
the parties pursuant to the provisions of this Agreement shall be
satisfactory to the parties and their legal counsel. The Company and
Flex shall each provide to the other prior to Closing evidence
satisfactory the other that the representations made herein and the
rights to the subject shares are legally created and duly enforceable.
7. Availability of Information
The Company and Flex each represent that, by virtue of their respective
business activities and economic bargaining power or otherwise, they have
been able to conduct their own due diligence and have had access to or have
been furnished with, prior to or concurrently with the execution hereof,
the information which they consider to be adequate to make a decision to
exchange the Flex Shares for the Resorts Shares.
8. Private Transaction
A. Private Offering. Flex and the Company understand each that the
exchange contemplated herein constitutes a private, arms-length
transaction between a willing seller and a willing buyer without the
use or reliance upon a distribution or securities underwriter.
B. Purchase for Own Account. Neither Flex nor the Company are
underwriters of, or dealers in, the respective securities to be
exchanged hereunder, and neither party is acting as such or
participating, pursuant to a contractual agreement, in the
distribution of such securities.
C. Investment Risk. Because of their financial position and other
factors, but subject to paragraphs 3 and 6 above, the exchange
contemplated by this Agreement may involve a
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high degree of financial risk, including the risk that one or both
parties may lose its entire investment, and the parties hereto agree
to execute and deliver to each other at Closing an investment letter
in the form attached hereto as Exhibit "D" (the "Investment Letter").
D. Access to Information. Flex and the Company and their advisors have
been afforded the opportunity to discuss the transaction with legal
and accounting professionals and to examine and evaluate the financial
impact of the exchange contemplated herein.
9. Termination
Flex and the Company may terminate this Agreement prior to the date of
Closing upon written notice with mutual consent. Failing to have mutual
consent, without prejudice to any other remedy to which the terminating
party may be entitled, if any, either party may terminate this Agreement
upon written notice on the occurrence of any one of the following events:
A. By the Company
(I) If Flex breaches this Agreement or fails to issue and deliver
the Flex Shares or provide information required hereunder; or
(II) If Flex has a receiver appointed for its assets or property, or
otherwise becomes insolvent or unable to timely satisfy its
obligations in the ordinary course of business; or
(III) If Flex institutes, makes a general assignment for the benefit
of creditors, has instituted against it any bankruptcy
proceeding for reorganization for rearrangement of its financial
affairs, files a petition in a court of bankruptcy, or is
adjudicated a bankrupt; or
(IV) If any of the disclosures made herein or subsequent hereto by
Flex to the Company are determined to be materially false or
misleading.
B. By Flex
(I) If during the term of this Agreement, the Company, or its
assignee, is unable to provide the Resorts Shares as set forth
herein; or
(II) If the Company willfully breaches or neglects the duties
required to be performed hereunder; or
(III) If the Company has a receiver appointed for its assets or
property, or otherwise becomes insolvent or unable to timely
satisfy its obligations in the ordinary course of business; or
(IV) If the Company institutes, makes a general assignment for the
benefit of creditors, has instituted against it any bankruptcy
proceeding for reorganization for rearrangement of its financial
affairs, files a petition in a court of bankruptcy, or is
adjudicated a bankrupt; or
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(V) If any of the disclosures made herein or subsequent hereto by
the Company to Flex are determined to be materially false or
misleading; or
In the event a party elects to terminate this Agreement prior to Closing
without mutual consent or cause, as set forth above, such terminating party
shall be responsible to pay the non-terminating party for such
non-terminating partys costs and expenses not to exceed $25,000.
10. Damages and Limit of Liability
Subsequent to Closing the Company and Flex shall be liable to each other
for any breach of the representations, warranties and covenants contained
herein which results in any loss or expense to the other party, or in a
failure to perform any obligations under this Agreement; provided however
that, the remedy in connection with such breach or failure to perform under
this Agreement, shall be limited to (a) the return of the respective
securities originally transferred by the parties hereto pursuant to this
Agreement and, (b) actual costs and expenses, including legal fees, not to
exceed $25,000.
11. Limitation on Sale of Shares
Flex and the Company mutually agree that, until the first anniversary
hereof, they will sell not more than Two Hundred Thousand (200,000) of the
respective shares in any five (5) consecutive business days.
12. Option to Repurchase
In the event NuOasis or the Company are deemed by reason of their
respective ownership of each other's shares to be subject to review by the
Gaming Control Board of Nevada or other jurisdiction and the respective
party does not wish to submit the necessary applications or pay the
attendant fees, or for any reason is deemed unsuitable for licensing in a
jurisdiction where one of the parties has or intends to submit to the
applicable gaming rules and regulations, then in such event, the party not
wishing to subject to the respective rules and regulations or pay the
attendant fees may be allowed to assign and dispose of its interest in the
shares of the party submitting itself to the licensing procedure. Such
disposal shall be accomplished either by (a) a sale of the shares of the
licensee to a buyer mutually acceptable to both parties at a price not less
than fair market value, or (b) the transfer of the subject shares of the
licensee by the other party into a "blend trust" or other type of trust
which satisfies the requirements of the subject gaming regulatory body.
13. Miscellaneous
A. Authority. The officers of the Company and Flex executing this
Agreement are duly authorized to do so and each party has taken all
action required by law or otherwise to properly and legally execute
this Agreement.
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B. Notices. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail, postage
prepaid, addressed as follows:
To Flex: Flexweight Corp.
0000 Xxxxxxx Xxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The Company: NuOasis International Inc.
00 Xxxxxxxxx Xxxxxx, Xxx XX-00000
Xxxxxx, Bahamas
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With Copy to: NuOasis International Inc.
0000 XxxXxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to any other address which may hereafter be designated by either
party by notice given in such manner. All notices shall be deemed to
have been given as of the date of receipt.
C. Entire Agreement. This Agreement sets forth the entire understanding
between the parties hereto and no other prior written or oral
statement or agreement shall be recognized or enforced.
D. Severability. If a court of competent jurisdiction determines that any
clause or provision of this Agreement is invalid, illegal or
unenforceable, the other clauses and provisions of the Agreement shall
remain in full force and effect and the clauses and provision which
are determined to be void, illegal or unenforceable shall be limited
so that they shall remain in effect to the extent permissible by law.
E. Assignment. The parties hereto acknowledge that the Flex Shares are to
be acquired by the Company as Replacement Property, as such term is
defined in the Agreement of Exchange dated the 30th of September, 1996
between the Company and C/A/K Trustkantoor N.V. ("C/A/K") and that
this Agreement will be assigned to C/A/K who shall deliver the Resorts
Shares, and such assignment shall be binding on and inure to the
benefit of such successor or, in the event of death or incapacity, on
the parties hereto, their heirs, executors, administrators and
successors.
F. Applicable Law. This Agreement has been negotiated and is being
contracted for in the Commonwealth of the Bahamas, it shall be
governed by the laws of the Bahamas, notwithstanding any
conflict-of-law provision to the contrary.
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G. Attorney's Fees. If any legal action or other preceding
(non-exclusively including arbitration) is brought for the enforcement
of or to declare any right or obligation under this Agreement or as a
result of a breach, default or misrepresentation in connection with
any of the provisions of this Agreement, or otherwise because of a
dispute among the parties hereto, the prevailing party will be
entitled to recover actual attorney's fees (including for appeals and
collection) and other expenses incurred in such action or proceeding,
in addition to any other relief to which such party may be entitled.
H. No Third Party Beneficiary. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties
hereto and their successors, any rights or remedies under or by reason
of this Agreement, unless this Agreement specifically states such
intent.
I. Counterparts. It is understood and agreed that this Agreement may be
executed in any number of identical counterparts, each of which may be
deemed an original for all purposes.
J. Further Assurances. At any time, and from time to time after the
Closing, each party hereto will execute such additional instruments
and take such action as may be reasonably requested by the other party
to confirm or perfect title to the Warrants to be transferred
hereunder, or otherwise to carry out the intent and purposes of this
Agreement.
K. Broker's or Finder's Fee; Expenses. Flex and the Company each warrant
that they have not incurred any liability, contingent or otherwise,
for brokers' or finders' fees or commissions relating to this
Agreement for which the other party shall have responsibility. Except
as otherwise provided herein, or mutually agreed between the parties
in writing prior to closing, all fees, costs and expenses incurred by
either party relating to this Agreement shall be paid by the party
incurring same.
L. Confidentiality. Except as may be required by Flex under applicable
United States federal or state securities rules and regulations,
neither party shall disclose the contents of this Agreement to any
person or entity, including, but not limited to the public or the
media; provided, however: (I) that the Company may make such
disclosures of this Agreement to persons whose third party consents
are necessary for purposes of closing this transaction, and (ii) that
the Flex may make such disclosures of this Agreement to any federal,
state or local agency which Flex, in its sole discretion, deems
necessary to know of any or all of the terms of this Agreement and to
any persons whose third party consents are necessary for purposes of
closing this transaction.
M. Amendment or Waiver. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently
herewith, and no waiver by any party of the performance of any
obligation by the other shall be construed as a waiver of the same or
any other default then, theretofore, or thereafter occurring or
existing. At any time prior to Closing, this Agreement may be amended
by a writing signed by all parties hereto.
N. Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
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O. Facsimile. A facsimile, telecopy or other reproduction of this
instrument may be executed by one or more parties hereto and such
executed copy may be delivered by facsimile or similar instantaneous
electronic transmission device pursuant to which the signature of or
on behalf of such party can be seen, and such execution and delivery
shall be considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties agree to execute an
original of this instrument as well as any facsimile, telecopy or
other reproduction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
The "Company"
NuOasis International Inc.
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: President
"Flex"
Flexweight Corp.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
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