EXHIBIT 10.7
EXCHANGE AGREEMENT
This Exchange Agreement (the "Agreement") dated and effective as of
February 3, 2003, is by and between J&J Holdings, Inc., a Nevada corporation
("J&J"), and Kingdom Ventures, Inc., a Nevada corporation (the "Company").
W I T N E S S E T H :
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WHEREAS, the Company is indebted to J&J on the date hereof in the amount of
$246,777.65 pursuant to that certain promissory note dated as of January 31,
2003 (the "Promissory Note"); and
WHEREAS, the Company is authorized by its Articles of Incorporation to
issue up to 10,000,000 shares of Preferred Stock with designations, limitations,
privileges and relative rights to be determined by a resolution of the Company's
Board of Directors; and
WHEREAS, the Company has established the Series A Preferred Stock (the
"Series A Stock") with the designations, limitations, privileges and relative
rights set forth in Exhibit A attached hereto; and
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WHEREAS, J&J is desires to acquire shares of the Series A Stock in exchange
for the principal and accrued interest under the Promissory Note;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
EXCHANGE
J&J hereby agrees to forgive and exchange $246,777.65, in indebtedness,
pursuant to the Note, and the Company hereby agrees to issue and exchange
1,233,888 shares of the Series A Stock on the date hereof. In a simultaneous
delivery, J&J shall deliver the Note to the Company marked "Paid in Full" and
the Company shall issue and deliver to J&J a certificate representing 1,233,888
shares of the Series A Stock.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. REPRESENTATIONS AND WARRANTIES OF J&J. J&J hereby
represents and warrants to the Company that:
(a) it has been furnished with and has read the Company's Annual Report on
Form 1O-KSB for the year ended January 31, 2002, Quarterly Reports on Form
10-QSB for the quarters ended April 30, 2002, July 31, 2002, and October
31, 2002, and any Current Reports on Form 8-K filed by the Company since
January 31, 2002;
(b) it has received from the Company such other information concerning its
operations, financial condition and other matters as J&J has requested, and
considered all factors J&J deems material in deciding on the advisability
of investing in the Series A Stock and any securities into which the Series
A Stock is convertible at any time;
(c) it has been advised that the Series A Stock and any securities into
which the Series A Stock is convertible at any time has not been registered
under the Securities Act of 1933 (the "Securities Act") or registered or
qualified under any other securities law of any other jurisdiction;
(d) it is the bona fide beneficial owner of the Note;
(e) either alone or with its professional advisers who are unaffiliated
with, have no equity interest in and are not compensated by the Company or
any affiliate or selling agent of the Company, directly or indirectly, has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Series A
Stock and any securities into which the Series A Stock is convertible at
any time;
(f) it understands (x) the risks involved in this exchange, including the
speculative nature of the investment; (y) the financial hazards involved in
this exchange, including the risk of losing its entire investment; and (z)
the lack of liquidity and restrictions on transfers of the Series A Stock
and any securities into which the Series A Stock may be convertible at any
time;
(g) it is an "accredited investor" as defined in Rule 501(a) under the
Securities Act and is otherwise qualified under the regulations of the
State of Nevada to invest in and own the Series A Stock.
Section 2.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to J&J that:
(a) it is a corporation duly organized, and validly existing under the laws
of the state of its incorporation and has the requisite corporate power to
own its properties and to carry on its business as now being conducted;
(b) it is duly qualified as a foreign corporation to do business and is in
good standing in each jurisdiction where the nature of the business
conducted or property owned by it makes such qualification necessary, other
than those jurisdictions in which the failure to so qualify would not have
a material adverse effect on the business, operations or prospects or
condition (financial or otherwise) of the Company;
(c) all issued and outstanding shares of capital stock of the Company has
been duly authorized and validly issued and are fully paid and
non-assessable;
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(d) this Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general
principles of equity;
(e) it has full corporate power and authority necessary to enter into this
Agreement and to perform its obligations hereunder and all other agreements
entered into by the Company relating hereto;
(f) there are no outstanding agreements or preemptive or similar rights
affecting the Company's common stock and no outstanding rights, warrants or
options to acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the sale or issuance of any
shares of common stock or equity of the Company;
(g) no consent, approval, authorization or order of any court, governmental
agency or body or arbitrator having jurisdiction over the Company, or any
of its affiliates or NASDAQ or the Company's Shareholders is required for
execution of this Agreement, and all other agreements entered into by the
Company relating hereto, including, without limitation issuance of the
Series A Stock, and the performance of the Company's obligations hereunder;
(h) assuming the representations and warranties of J&J in Section 2.01 are
true and correct and J&J complies with its obligations under this
Agreement, neither the issuance and sale of the Series A Stock nor the
performance of its obligations under this Agreement and all other
agreements entered into by the Company relating thereto by the Company will
(x) violate, conflict with, result in a breach of, or constitute a default
(or an event which with the giving of notice or the lapse of time or both
would be reasonably likely to constitute a default) under (A) the articles
of incorporation, charter or bylaws of the Company, (B) to the Company's
knowledge, any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company of any court, governmental agency
or body, or arbitrator having jurisdiction over the Company or over the
properties or assets of the Company, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option
or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company, or any of its affiliates is a party, by
which the Company, or any of its affiliates is bound, or to which any of
the properties of the Company, or any of its affiliates is subject, or (D)
the terms of any "lock-up" or similar provision of any underwriting or
similar agreement to which the Company, or any of its affiliates is a
party; or (y) result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company;
(i) the Series A Stock are, or will be, have been, or will be, duly and
validly authorized; will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of the
Company; and will not subject the holders thereof to personal liability by
reason of being such holders.
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ARTICLE III
COVENANTS
Section 3.01. AGREEMENT TO REFRAIN FROM RESALES. Without in any way
limiting the representations and warranties herein, J&J agrees that it will not
pledge, hypothecate, sell, transfer, assign or otherwise dispose of any the
Series A Stock or securities into which the Series A Stock is convertible at any
time without the prior written consent of the Company.
Section 3.02. THE SECURITIES WILL BE RESTRICTED. The Series A Stock and
any securities into which the Series A Stock is convertible at any time will be
"restricted securities" as that term is defined in Rule 144 under the Securities
Act and, accordingly, that they must be held indefinitely unless they are
subsequently registered under the Securities Act and qualified or registered
under any other applicable securities law or exemptions from such registration
and qualification are available. Any instrument or certificate representing the
shares of Series A Stock or securities into which the Series A Stock is
converted at any time will bear legends the Company may consider necessary or
advisable to facilitate compliance with the Securities Act and any other
securities law.
Section 3.03. EXEMPT OFFERING. This exchange is being made pursuant to
the exemption from the registration contained in Section 3(a)(9) of the
Securities Act and afforded by Rule 149 thereunder. The Company is relying in
part on J&J's representations as set forth herein for purposes of claiming such
exemptions
Section 3.04. INDEMNIFICATION.
(a) The Company agrees to indemnify, hold harmless, reimburse and defend
J&J against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed
upon J&J which results, arises out of or is based upon (i) any
misrepresentation by Company or breach of any warranty by Company in this
Agreement or in any Exhibits or Schedules attached hereto, or Reports or
other Written Information; or (ii) any breach or default in performance by
Company of any covenant or undertaking to be performed by Company
hereunder, or any other agreement entered into by the Company and J&J
relating hereto.
(b) J&J agrees to indemnify, hold harmless, reimburse and defend the
Company at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company which results, arises out of or is
based upon (a) any misrepresentation by J&J in this Agreement or in any
Exhibits or Schedules attached hereto; or (b) any breach or default in
performance by J&J of any covenant or undertaking to be performed by J&J
hereunder, or any other agreement entered into by the Company and J&J
relating hereto.
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ARTICLE IV
MISCELLANEOUS.
Section 4.01. NOTICES. All notices or other communications given or
made hereunder shall be in writing and shall be personally delivered or deemed
delivered the first business day after being telecopied (provided that a copy is
delivered by first class mail) to the party to receive the same at its address
set forth below or to such other address as either party shall hereafter give to
the other by notice duly made under this Section;
if to the Company: Kingdom Ventures, Inc.
Attn: Xxxx Xxxxxxx
0000 Xxxxxxxxx Xxx
Xxxxxx, XX 00000
Fax: 000-000-0000
if to J&J: J&J Holdings, Inc.
Attn: Xxxx Xxxxxxx
X.X. Xxx 000
Xxxxx, XX 00000
Fax: 000-000-0000
Section 4.02. CLOSING. The consummation of the transactions
contemplated herein shall take place at the offices of the Company, as soon as
practical after the date hereof.
Section 4.03. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement represents
the entire agreement between the parties hereto with respect to the subject
matter hereof and may be amended only by a writing executed by both parties. No
right or obligation of either party shall be assigned by that party without
prior notice to and the written consent of the other party.
Section 4.04. EXECUTION. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. A facsimile
signature by any party on a counterpart of this Agreement shall be binding and
effective for all purposes. Such party shall, however, subsequently deliver to
the other party an original executed copy of this Agreement.
Section 4.05. LAW GOVERNING THIS AGREEMENT. This Agreement shall be
governed by and construed in accordance with the laws of the State of Nevada
without regard to principles of conflicts of laws. Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of Nevada or in the federal
courts located in the city of Minden, Nevada. Both parties and the individuals
executing this Agreement and other agreements on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law.
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Section 4.06. CONSENT TO JURISDICTION. Subject to Section 4.05 hereof,
each of the Company and J&J hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law.
IN WITNESS WHEREOF, the parties have signed and delivered this Agreement as
of the date first above written.
KINGDOM VENTURES, INC.
By: _____________________________
Xxxx Xxxxxxx, President
J&J HOLDINGS, INC.
By: _____________________________
Xxxx Xxxxxxx, President
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