AGREEMENT FOR THE EXCHANGE OF COMMON STOCK
THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE “1933 ACT”) NOR REGISTERED UNDER ANY STATE
SECURITIES LAWS AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE
144, UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
1933
ACT THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
Agreement
made this 20th day of August, 2007, by and among SportsQuest, Inc. (formerly
Air
Brook Airport Express, Inc.), a Delaware corporation, OTCBB ARBK (the “Issuer”),
and Xxxxxx-Xxxxxx Entertainment, LLC, a California limited liability company
(“Company”), which will be converted to Xxxxxx-Xxxxxx Entertainment, Inc., a
California corporation (the “Corporation”), and ZCE, Inc., a California
corporation (“ZCE”), and Q-C Entertainment, LLC, a Washington limited liability
company (“Q-C” and together with ZCE, the “Members”).
In
consideration of the mutual promises, covenants, and representations contained
herein, and other good and valuable consideration,
THE
PARTIES HERETO AGREE AS FOLLOWS:
1. TERMS.
Subject
to the terms and conditions of this Agreement, the Issuer agrees:
i.
that
the total issued and outstanding shares of common stock, $.0001 par value per
share, of the Issuer at Closing shall be 9,077,922
shares.
ii.
that
the Issuer at Closing shall transfer to the Members, shares of common stock
of
Issuer, $.0001 par value, in exchange for 100% of the issued and outstanding
shares of Company, such that Company shall become a wholly owned subsidiary
of
the Issuer. The number of shares to be issued to the Members shall be computed
by dividing the prior to closing average 5 day closing price of the common
stock
of Issuer into the sum of $500,000. In addition to the shares to be issued
hereunder, Issuer shall pay ZCE the sum of One Hundred and Fifty Thousand
Dollars ($150,000) in cash at closing.
In
addition to the consideration as set forth above, Members will receive warrants
to purchase common stock of Issuer according to the following schedule: 100,000
shares at a strike price of $.50 per share expiring 12-31-07, 100,000 shares
at
a strike price of $1.00 per share expiring 12-31-08, and 200,000 shares at
a
strike price of $1.50 per share expiring 12-31-09.
Furthermore,
Xxxxx Xxxxx and Xxxx Xxxxxxxx, the sole members of Q-C, will receive, at no
cost, a Bronze Level sponsorship position (or its equivalent) at all ZCE events
through 2009.
iii.
that
the Issuer requires the Company to
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a)
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Agree
to the announcement of the transaction with the SEC on form 8K within
4
days of the execution of this agreement, and
closing
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b)
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Execute
any and all documentation to reflect the intent of the parties that
Company become a wholly owned subsidiary of Subsidiary.
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iv.
that
this transaction is subject to delivery by the Issuer of all required documents
pre and post closing to effectuate the transaction
v.
that
Issuer shall take all necessary corporate actions so that at closing,
all
actions required of Issuer will be in accordance with the Bylaws of Issuer.
2.
REPRESENTATIONS OF ISSUER Issuer
is
in good standing under the laws of Delaware, and has all necessary corporate
powers to own properties and carry on a business, and is duly qualified to
do
business and is in good standing in Delaware. All actions taken by the
incorporators, directors and shareholders of Issuer have been valid and in
accordance with the laws of the State of Delaware.
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i.
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Capital.
The authorized capital stock of Issuer consists of 1,200,000 shares
of
Class A preferred stock, $.0001 par value, none of which shares are
issued
and outstanding, and 98,800,000 shares of common stock, $.0001 par
value,
of which 9,077,922
shares
are issued and outstanding. All outstanding shares are fully paid
and
non-assessable, free of pre-emptive rights. At the Closing, there
will be
no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating Issuer
to issue
or to transfer from treasury any additional shares of its capital
stock
except as disclosed by Issuer. The
Issuer has issued $1.5 million and $3.9 million of convertible notes
to
AJW Master Fund, Ltd., AJW Partners, LLC and New Millennium Capital
Partners II, LLC (the “Private Investors”) which are convertible into
common shares of the Issuer at discounted rates making the number
of
shares subject to conversion impossible to calculate with precision.
The
Private Investors were also issued warrants to purchase 10,000,000
shares
of common stock of the Issuer.
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ii.
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SEC
Reports.
Issuer has filed all required forms, reports, statements, schedules
and
other documents with the Securities and Exchange Commission (“SEC”) since
June 30, 2005 (collectively, the “Issuer SEC Reports”). The financial
statements, including all related notes and schedules, contained
in the
Issuer SEC Reports (or incorporated by reference therein) fairly
present
the consolidated financial position of Issuer as at the respective
dates
thereof and the consolidated results of operations and cash flows
of
Issuer for the periods indicated in accordance with generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout
the periods involved (except for changes in accounting principles
disclosed in the notes thereto) and subject in the case of interim
financial statements to normal year-end adjustments and the absence
of
notes. For purposes of this Agreement, the balance sheet of Issuer
as of
last filing date, is referred to as the “Issuer Balance Sheet” and the
date thereof is referred to as the “Issuer Balance Sheet
Date”.
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iii.
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Absence
of Changes.
Since the Issuer Balance Sheet Date, there has not been any change
in the
financial condition or operations of Issuer, except changes in the
ordinary course of business, which changes have not in the aggregate
been
materially adverse to Issuer.
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iv.
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Liabilities.
Issuer does not have any debt, liability, or obligation of any nature,
whether accrued, absolute, contingent, or otherwise, and whether
due or to
become due, that is not reflected on the Issuers Balance Sheet. Issuer
is
not aware of any pending, threatened, or asserted claims, lawsuits
or
contingencies involving Issuer or its common stock. There is no material
dispute of any kind between Issuer and any third party, and no such
dispute will exist at Closing not fully disclosed to Company.
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v.
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Ability
to Carry Out Obligations. Issuer
has the right, power, and authority to enter into and perform its
obligations under this Agreement. The execution and delivery of this
Agreement by Issuer and the performance by Issuer of its obligations
hereunder will not cause, constitute, or conflict with or result
in (a)
any breach or violation or any of the provisions of or constitute
a
default under any license, indenture, mortgage, charter, instrument,
articles of incorporation, bylaw, or other agreement or instrument
to
which Issuer is a party, or by which it may be bound, nor will any
consents or authorizations of any party other than those hereto be
required, (b) an event that would cause Issuer to be liable to any
party,
or (c) an event that would result in the creation or imposition of
any
lien, charge, encumbrance on any asset of
Issuer.
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vi.
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Full
Disclosure.
None of the representations and warranties made by the Issuer in
this
Agreement, contains any untrue statement of a material fact, or omit
any
material fact the omission of which would be
misleading.
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vii.
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Contract
and Leases.
Issuer is currently carrying on its business and is not a party to
contracts, agreements, or lease other than those items disclosed
on the
Issuer Balance Sheet. No person holds a power of attorney from
Issuer.
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viii.
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Compliance
with Laws.
To
the best of its knowledge, Issuer has complied with all federal,
state,
and local statutes, laws, and regulations pertaining to Issuer. To
the
best of its knowledge, Issuer has complied with all federal and state
securities laws in connection with the issuance, sale, and distribution
of
its securities.
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ix.
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Litigation.
Issuer is not (and has not been), except as disclosed in the Issuers
SEC
filings, a party to any suit, action, arbitration, or legal,
administrative, or other proceeding, or pending governmental
investigation. To the best knowledge of the Issuer, there is no basis
for
any such action or proceeding and no such action or proceeding is
threatened against Issuer, and Issuer is not subject to or in default
with
respect to any order, writ, injunction, or decree of any federal,
state,
local, or foreign court, department, agency, or instrumentality.
Issuer
represents and warrants that there are no
outstanding
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-3-
judgments,
lawsuits or material claims against the Issuer as of the date of this
agreement.
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x.
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Conduct
of Business.
From the Issuer Balance Sheet Date to the Closing, Issuer has conducted
its business in the normal course, and has not (1) sold, pledged,
or
assigned any assets, other than in the ordinary course of business;
(2)
amended its Certificate of Incorporation or ByLaws; (3) declared
dividends; (4) redeemed or sold stock or other securities; (5) incurred
any liabilities, other than in the ordinary course of business; (6)
acquired or disposed of any assets, other than in the ordinary course
of
business; (7) entered into any contract, other than in the ordinary
course
of business; (8) guaranteed obligations of any third party; or (9)
entered
into any other transaction, other than in the ordinary course of
business.
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xi.
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Documents.
All minutes, consents, or other documents pertaining to Issuer to
be
delivered at Closing shall be valid and in accordance with the laws
of the
State of Delaware.
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xii.
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Title.
At
the Closing all shares issued to Members shall be non-assessable;
and (ii)
free and clear of all liens, security interests, pledges, charges,
claims,
encumbrances and restrictions of any kind, except as otherwise created
by
Company and except as pursuant to the Pledge Agreement. There is
no
applicable local, state, or federal law, rule, regulation, or decree
which
would, as a result of the issuance of the Shares to Members, impair,
restrict, or delay Members voting rights with respect to the Issuer
Shares.
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xiii.
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Brokers.
Issuer has not retained any Broker or finder to which compensation
would
be due in connection with this transaction.
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xiv.
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Name
Change Issuer
has filed an amendment to its articles of incorporation to change
its
corporate name to SportsQuest, Inc. and it is understood and agreed
that
Issuer’s corporate name will be SportsQuest, Inc. prior to or at the date
of closing.
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3. REPRESENTATIONS
AND WARRANTIES OF COMPANY.
Company
represents and warrants to Issuer the following:
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i.
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Organization.
The Company is a limited liability company duly organized, validly
existing, and in good standing under the laws of California, and
it has
all necessary Company powers to own properties and carry on a business,
and is duly qualified to do business and is in good standing in the
jurisdictions where qualification is required. All actions taken
by the
organizer and members of the Company have been valid and in accordance
with the laws of the State of California. The Company and its members
will
immediately and diligently take such action and file such documents
as are
necessary and required to convert the Company from a limited liability
company to a California corporation upon execution of this
Agreement.
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-4-
| ii. |
Capital.
The authorized membership interest of Company consists of (____)
membership interest (the “Shares”). The Members are the sole record and
beneficial owners of the Shares and have sole management and dispositive
power over the Shares. The Shares were validly issued and are fully
paid,
non-assessable and free of pre-emptive rights. At Closing, there
will be
no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating the Company
to
issue or to transfer from treasury any additional shares of its capital
stock.
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iii.
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Financial
Statements. As
of the Closing, Company shall provide compiled and reviewed financial
statements acceptable to Issuer and represents and warrants that
its books
and records are in auditable form for the required audit for inclusion
in
the Issuer annual report on 10K.
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iv.
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Absence
of Changes.
Since June 30, 2007, there has not been any change in the financial
condition or operations of Company, except changes in the ordinary
course
of business.
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v.
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Liabilities.
Company will not have any debt, liability, or obligation of any nature,
whether accrued, absolute, contingent, or otherwise, and whether
due or to
become due. Company is not aware of any pending, threatened, or asserted
claims, lawsuits or contingencies involving its capital stock.
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vi.
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Ability
to Carry Out Obligations.
Company has the right, power, and authority to enter into and perform
its
obligations under this Agreement. The execution and delivery of this
Agreement by Company and the performance by Company of its obligations
hereunder will not cause, constitute, or conflict with or result
in (a)
any breach of violation or any of the provisions of or constitute
a
default under any license, indenture, mortgage, charter, instrument,
articles of incorporation, bylaw, or other agreement or instrument
to
which Company is a party, or by which either of them may be bound,
nor
will any consents or authorizations of any party other than those
hereto
be required; (b) an event that would cause Company to be liable to
any
party; or (c) an event that would result in the creation or imposition
of
any lien, charge, encumbrance on any asset of
Company.
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vii.
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Full
Disclosure.
None of the representations and warranties made by Company herein
contains
any untrue statement of a material fact, or omits any material fact
the
omission of which would be
misleading.
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viii.
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Compliance
with Laws.
Company has complied with, and is not in violation of any federal,
state,
or local statute, law, and/or regulation pertaining to them. Company
has
complied with all federal and state securities laws in connection
with the
issuance, sale, and distribution of its
securities.
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-5-
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ix.
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Litigation.
Company is not (and has never been except as has been disclosed
by Company),
a
party to any suit, action, arbitration, or legal, administrative,
or other proceeding, or pending governmental investigation. To the
best
knowledge of Company, there is no basis for any such action or proceeding
and no such action or proceeding is threatened against Company, and
Company is not subject to or in default with respect to any order,
wit,
injunction, or decree of any federal, state, local, or foreign court,
department, agency, or
instrumentality.
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x.
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Conduct
of Business.
From June 30, 2007, to the Closing Date, Company has conducted its
business in the normal course, and has not (1) sold, pledged, or
assigned
any assets other than in the ordinary course of business; (2) amended
its
Certificate of Incorporation or Bylaws; (3) declared dividends; (4)
redeemed or sold stock or other securities except in the ordinary
course
of business; (5) incurred any liabilities not in the ordinary course
of
business; (6) acquired or disposed of any assets other than in the
ordinary course of business; (7) entered into any contract other
than in
the ordinary course of business; (8) guaranteed obligations of any
third
party; or (9) entered into any other transactions other than in the
ordinary course of business.
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xi.
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Documents.
All minutes, consents, or other documents pertaining to Company and
to be
delivered by Company to Issuer, are true, complete, and correct,
and are
valid and in accordance with applicable
law.
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xii.
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Title.
The Shares to be delivered to Issuer will be, at closing, free and
clear
of all liens, security interests, pledges, charges, claims, encumbrances
and restrictions of any kind. None of the Shares are subject to any
voting
trust or agreement. No person holds or has the right to receive any
proxy
or similar instrument with respect to the Shares, except as provided
in
this Agreement. Company is not a party to any agreement that offers
or
grants to any person the right to purchase or acquire any of the
Shares.
There is no applicable local, state, or federal law, rule, regulation,
or
decree which would, as a result of the transfer of the Shares to
Issuer,
impair, restrict, or delay Issuer’s voting rights with respect to the
Shares.
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xiii.
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Counsel.
Company and Shareholders represent and warrant that prior to Closing,
that
they are represented by independent counsel or have had the opportunity
to
retain independent counsel to represent them in this transaction
and that
prior to Closing, Counsel for the Company and Members have not represented
either the Issuer or Issuer’s stockholders in any manner whatsoever known
to the Company.
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xiv.
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Brokers.
Company and/or Members have not retained any broker for which fees
would
become due as a result of this
transaction.
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xv.
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Conflicts
of Interests of Issuer
Company and Shareholder have reviewed and understand the conflicts
of
interests, if any, between the Issuer and its officers and directors
as
disclosed in the Issuers filings with the SEC or as disclosed by
Issuer to
Company.
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-6-
4. INVESTMENT
INTENT.
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i.
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Restricted
Shares.
Members understand that (A) the Issuer Shares Members are receiving
from
Issuer under this Agreement have not been registered under the Securities
Act of 1933, as amended (“the Act”) or the securities laws of any state,
based upon an exemption from such registration requirements pursuant
to
Section 4(2) of the Act; (B) the Issuer Shares are and will be “restricted
securities”, as said term is defined in Rule 144 of the Rules and
Regulations promulgated under the Act; and (C) the Issuer Shares
may not
be sold or otherwise transferred unless exemptions from such registration
provisions are available with respect to said resale or transfer
or the
shares have been registered under the
Act.
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ii.
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Transferability.
Shareholder will not sell or otherwise transfer any of the Issuer
Shares,
any interest therein except as pursuant to the Pledge Agreement,
unless
and until (A) the Issuer Shares shall have first been registered
under the
Act and/or all applicable state securities laws; or (B) Shareholder
shall
have first delivered to Issuer a written opinion of counsel, which
counsel
and opinion (in form and substance) shall be reasonably satisfactory
to
Issuer, to the extent that the proposed sale or transfer is exempt
from
the registration provisions of the Act and all applicable state securities
laws.
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iii.
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Investment
Intent.
Shareholder is acquiring the Issuer Shares for Investment purposes
only,
without a view for resale or distribution
thereof.
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iv.
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Legend.
Shareholder understands that the certificates representing the Issuer
Shares will bear the following
legend:
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The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be sold, transferred, further
pledged, hypothecated or otherwise disposed of in absence of (i) an effective
registration statement for such securities under said Act or (ii) an opinion
of
company counsel that such registration is not required.
| v. |
Closing.
The Closing of the share exchange and the transactions contemplated
by
this Agreement (the “Closing”) shall be upon the completion of the Company
conversion from an limited liability company to a California corporation
satisfactory to Issuer counsel, and the completion of due diligence
by
Issuer in its sole discretion.
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-7-
5. Documents
to be Delivered at Closing.
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i.
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By
Issuer:
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(1)
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Resolution
of the Board of Directors authorizing the issuance of certificates
for the
number of shares to be delivered to Members pursuant to Schedule
6(i)(1).
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(2)
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Schedule
for the number of Issuer shares registered in the name of Members
pursuant
to schedule 6(i)(1).
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(3)
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Certificates
for the number of Issuer shares registered in the name of Issuer
pursuant
to Schedule 6(i)(1).
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(4)
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Such
other resolutions of Issuer’s stockholders and/or directors as may
reasonably be required by Company and
Shareholders.
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(5)
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Such
other agreements relating to the transaction as may reasonably be
required
by the Company or Shareholders.
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(6)
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Certificate
of Good Standing from the State of
Delaware.
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(7)
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Copy
of the draft 8K to be filed with the
SEC.
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(8)
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Copy
of a draft press release for review and
approval.
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(9)
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Employment
agreements between Company and Xxxxxx and Xxxxxx, upon terms and
conditions acceptable to the Company and Xxxxxx and
Xxxxxx.
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ii.
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By
Company and Members:
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(1)
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Delivery
to the Issuer, certificates evidencing the Shares, and such stock
powers
as are required in order to transfer to Issuer good and marketable
title
to the Shares.
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(2)
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Resolution
by the Board of Directors approving the
transaction.
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(3)
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Copies
of the basic corporate records, Company shall retain all other records
at
its current principal address.
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(4)
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A
certificate of good standing from the State of
California.
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(5)
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Such
other resolutions of Company and Members and/or directors as may
reasonably be required by Issuer.
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(6)
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Such
other agreements relating to the transaction as may reasonably be
required
by the Issuer.
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-8-
7. ARBITRATION.
Any
controversy or claim arising out of, or relating to, this Agreement, or the
making, performance, or interpretation thereof, shall be settled by arbitration
in Orlando, Florida in accordance with the Commercial Rules of the American
Arbitration
Association then existing. The arbitrator assigned shall have authority and
power to decide all arbitratible issues. Judgment on the arbitration award
may
be entered in any court having jurisdiction over the subject matter of the
controversy. The prevailing party in such claim or controversy shall be entitled
to recover all costs and expenses of such claim or controversy, including
attorney’s fees from the non-prevailing party.
8. POST-CLOSING
AGREEMENTS.
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i.
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Further
Assurances.
The parties shall execute such further documents and perform such
further
acts, as may be necessary to effect the transactions contemplated
hereby,
on the terms herein contained and otherwise to comply with the terms
of
this Agreement, provided, that, except as contemplated by this Agreement,
no party shall be required to waive any right or incur an obligation
in
connection therewith.
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ii.
|
Indemnification
of Directors and Officers.
For at least seven (7) years after the Closing Date, Issuer shall
(a)
maintain in effect the current provisions regarding the indemnification
of
officers and directors contained in Issuer’s Certificate of Incorporation
and Bylaws; provided, however, Issuer may adopt new indemnification
provisions no less favorable than the current provisions as to the
persons
who served as directors and officers of Issuer prior to the Closing
Date;
and (b) indemnify the persons who served as directors and officers
of
Issuer prior to the Closing Date to the fullest extent to which Issuer
is
permitted to indemnify such officers and directors under its Certificate
of Incorporation and ByLaws and applicable law as in effect immediately
prior to the Closing Date.
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iii.
|
Press
Release
Issuer and Members agree that no public announcement of the specifics
of
this transaction or a disclosure of the parties to this agreement
will be
made until the 8K filing with the SEC is completed and on record.
The
parties hereto agree that they will take steps to insure that this
provision is adhered to by Issuer and Members principals, employees,
agents and representatives.
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9. Miscellaneous.
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i.
|
Captions
and Headings.
The headings throughout this Agreement are for convenience and reference
only, and shall in no way be deemed to define, limit, or add to the
meaning of any provision of this
Agreement.
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ii.
|
No
Oral Change.
This Agreement and any provision hereof may not be waived, changed,
modified, or discharged orally, but only by an agreement in writing
signed
by the party against whom enforcement of any waiver, change, modification,
or discharge is sought.
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-9-
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iii.
|
Non
Waiver.
Except as otherwise expressly provided herein, no waiver of any covenant,
condition, or provision of this Agreement shall be deemed to have
been
made unless expressly in writing and signed by the party against
whom such
waiver is charged; and (1) the failure of any party to insist in
any one
or more cases upon the performance of any of the provisions, covenants,
or
conditions of this Agreement or to exercise any option herein contained
shall not be construed as a waiver or relinquishment for the future
of any
such provisions, covenants, or conditions; (2) the acceptance of
performance of any thing required by this Agreement to be performed
with
knowledge of the breach or failure of a covenant, condition, or provision
hereof shall not be deemed a waiver of such breach or failure; and
(3) no
waiver of any party of one breach by another party shall be construed
as a
waiver with respect to any subsequent
breach.
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iv.
|
Time
of Essence.
Time is of the essence of this Agreement and of each and every provision
hereof.
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v.
|
Entire
Agreement.
This Agreement contains the entire Agreement and understanding between
the
parties hereto, and supersedes all prior agreements and
understandings.
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vii.
|
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 third day after mailing if mailed to the party to whom notice
is to
be given, by first class mail, registered or certified, postage prepaid,
and properly addressed, and by fax, as
follows:
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Issuer:
000
Xxxxxxxxxxxxx Xxxxxxx, 0xx Xxxxx
Xxxx
Xxxx, Xxxxxxx 00000
Attention:
R. Xxxxxx Xxxx, CEO
Company
and Members:
Xxxxxx-Xxxxxx
Entertainment, LLC
00000
Xxxxxxx Xxxxx
Xxxxxxx,
XX 00000
Attention:
Xxxx Xxxxxx
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vi.
|
Counterparts.
This Agreement may be executed simultaneously in one or more counterparts,
each of which shall be deemed an original, but all of which together
shall
constitute one and the same
instrument.
|
-10-
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
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Xxxxxx-Xxxxxx
Entertainment, LLC
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||||
| By: | By: | |||
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Xxxx
Xxxxxx, President and CEO
|
R.
Xxxxxx Xxxx, President and CEO
|
MEMBERS:
ZCE,
Inc.
By:
______________________________
Name:
____________________________
Title:
_____________________________
Q-C
Entertainment, LLC
By
Its
Sole Members:
Xxxxx
Xxxxx, Member
Xxxx
Xxxxxxxx, Member
-11-
