Exhibit 2.1
Share Exchange Agreement between Solomon Alliance Group, Inc.
and the shareholders of Madison Holdings Inc., dated March 8, 2000
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement ("Agreement") between Solomon Alliance
Group, Inc., an Arizona corporation ("Sage"), and the persons listed in EXHIBIT
A hereof (collectively the "Shareholders"), being the owners of record of all of
the issued and outstanding stock of Madison Holdings, Inc., a Delaware
corporation ("Madison"), is entered into as of March 8, 2000.
RECITALS
A. Madison Holdings Inc., a Delaware corporation ("Madison"), is a public
shell company with no active business and no material assets or liabilities.
B. The Shareholders own all of the issued and outstanding shares of common
stock, par value $0.0001 of Madison (the "Madison Shares").
C. The Shareholders have agreed to sell to Sage, and Sage has agreed to
purchase, the Madison Shares from the Shareholders in exchange for shares of
Sage common stock, pursuant to the terms and conditions set forth in this
Agreement.
D. The Shareholders and Sage intend that the share exchange transaction
contemplated by this Agreement qualify as a reorganization within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended
In consideration of the mutual representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as follows:
1. EXCHANGE OF STOCK
(a) The Shareholders agree to transfer to Sage, and Sage agrees to
purchase from the Shareholders, all of the Shareholders' right, title and
interest in the Madison Stock, representing 100% of the issued and outstanding
stock of Madison, free and clear of all mortgages, liens, pledges, security
interests, restrictions, encumbrances, or adverse claims of any nature.
(b) At the Closing (as defined in Section 2 below), upon surrender by the
Shareholders of the certificates evidencing the Madison Stock duly endorsed for
transfer to Sage or accompanied by stock powers executed in blank by the
Shareholders, Sage will cause 300,000 shares (subject to adjustment for
fractionalized shares as set forth below) of the common voting stock, par value
$0.001 of Sage (the "Sage Stock") to be issued to the Shareholders, in full
satisfaction of any right or interest which each Shareholder held in the Madison
Stock. The Sage Stock will be issued to the
Shareholders on a pro rata basis, in the same proportion as the percentage of
their ownership interest in the Madison Stock, as set forth on EXHIBIT A. Any
fractional shares that will result due to such pro rata distribution will be
rounded up to the next highest whole number. As a result of the exchange of the
Madison Stock in exchange for the Sage Stock, Madison will become a wholly owned
subsidiary of Sage.
(c) Sage and the Shareholders have agreed that the Sage Stock to be
received by the Shareholders pursuant to this Agreement will be afforded certain
"piggyback" registration rights for a period of one year after the Closing.
2. CLOSING.
(a) The parties to this Agreement will hold a closing (the "Closing") for
the purpose of executing and exchanging all of the documents contemplated by
this Agreement and otherwise effecting the transactions contemplated by this
Agreement. The Closing will be held as soon as possible but not later than March
15, 2000, at the offices of Xxxxx & Xxxxxxx, LLC, 00 Xxxxxxxx, Xxxxx 0000, Xxx
Xxxx, XX 00000, unless another place or time is mutually agreed upon by the
parties. All proceedings to be taken and all documents to be executed and
exchanged at the Closing will be deemed to have been taken, delivered and
executed simultaneously, and no proceeding will be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
If agreed to by the parties, the Closing may take place through the exchange of
documents by fax and/or express courier.
(b) With the exception of any stock certificates which must be in their
original form, any copy, fax, e-mail or other reliable reproduction of the
writing or transmission required by this Agreement or any signature required
thereon may be used in lieu of an original writing or transmission or signature
for any and all purposes for which the original could be used, provided that
such copy, fax, e-mail or other reproduction is a complete reproduction of the
entire original writing or transmission or original signature.
3. REPRESENTATIONS AND WARRANTIES OF SAGE.
Sage represents and warrants as follows:
(a) Sage is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Arizona and is licensed or qualified as
a foreign corporation in all states in which the nature of its business or the
character or ownership of its properties makes such licensing or qualification
necessary.
(b) The authorized capital stock of Sage consists of (i) 100,000,000
shares of common stock, $0.001 par value per share, of which, based on the
records of Sage's stock transfer agent, 22,793,155 shares are issued and
outstanding as of March 8, 2000. To the knowledge of Sage, all issued and
outstanding shares of Sage's common stock are fully paid and nonassessable.
(c) Sage has one subsidiary, namely, Visual Link Wireless, Inc.
(d) Execution of this Agreement and performance by Sage hereunder has been
duly authorized by all requisite corporate action on the part of Sage, and this
Agreement constitutes a valid and binding obligation of Sage, and Sage's
performance hereunder will not violate any provision of any charter, bylaw,
indenture, mortgage, lease, or agreement, or any order, judgment, decree, or, to
Sage's knowledge any law or regulation, to which any property of Sage is subject
or by which Sage is bound.
(e) Sage has full corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, and will deliver at the
Closing a certified copy of resolutions of its board of directors authorizing
execution of this Agreement by its officers and performance hereunder.
(f) Sage has provided all financial statements and financial information
in its possession as has been requested by the Shareholders.
(g) There is no litigation or proceeding pending, or to the Company's
knowledge threatened, against or relating to Sage, its properties or business.
(h) Sage is acquiring the Madison shares to be transferred to it under
this Agreement for investment and not with a view to the sale or distribution
thereof.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant as follows:
(a) Madison is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and is licensed or qualified as
a foreign corporation in all states in which the nature of its business or the
character or ownership of its properties makes such licensing or qualification
necessary.
(b) The authorized capital stock of Madison consists of (i) 120,000,000
shares of common stock, $0.0001 par value per share, of which 5,000,000 shares
are issued and outstanding (the "Madison Shares"). Madison there are no
agreements purporting to restrict the transfer of the Madison Shares, nor any
voting agreements, voting trusts or other arrangements restricting or affecting
the voting of the Madison Shares, other than certain lock up agreements that
terminate upon the Closing. The Madison Shares held by the Shareholders are duly
and validly issued, fully paid and non-assessable, and issued in full compliance
with all federal, state, and local laws, rules and regulations. There are no
subscription rights, options, warrants, convertible securities, or other rights
(contingent or otherwise) presently outstanding, for the purchase, acquisition,
or sale of the capital stock of Madison, or any securities convertible into or
exchangeable for capital stock of Madison or other securities of Madison, from
or by Madison.
(c) The Shareholders have full right, power and authority to sell,
transfer and deliver the Madison Shares, and upon delivery of the certificates
therefor as contemplated in this Agreement, the Shareholders will transfer to
Sage valid and marketable title to the Madison Shares, including all voting and
other rights to the Madison Shares, free and clear of all pledges, liens,
security interests, adverse claims, options, rights of any third party, or other
encumbrances. Each of the Shareholders owns and holds that the number of Madison
Shares, which are, listed opposite their name on Exhibit A attached hereto.
(d) There is no litigation or proceeding pending, or to any Shareholder's
knowledge threatened, against or relating to Madison or to the Madison Shares.
(e) Madison is not a party to any material contract other than those
listed in Madison's Form 10-SB or any subsequent periodic report as filed with
the Securities Exchange Commission.
(f) Madison has no material assets and no liabilities whatsoever.
(g) Madison has no employees.
(h) Madison has filed in correct form all federal, state, and other tax
returns of every nature required to be filed by it and has paid all taxes as
shown on such returns and all assessments, fees and charges received by it to
the extent that such taxes, assessments, fees and charges have become due.
Madison has also paid all taxes which do not require the filing of returns and
which are required to be paid by it. To the extent that tax liabilities have
accrued, but have not become payable, they have been adequately reflected as
liabilities on the books of Madison.
(i) The current residence address or principal place of business (for any
non-individual shareholder) of the Madison Shareholders is as listed on Exhibit
A attached hereto.
(j) Madison is a publicly reporting company pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Act") and is in compliance
with all periodic reporting requirements of the Act. Madison's Form 10-SB and
any other periodic filings made by Madison as filed with the SEC, including all
exhibits, documents and attachments thereto, are true and correct in all
material respects and do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
any statement therein not materially misleading.
(k) The Madison Shareholders have had the opportunity to perform all due
diligence investigations of Sage and its business as they have deemed necessary
or appropriate and to ask questions of Sage's officers and directors and have
received satisfactory answers to all of their questions. The Shareholders have
had access to all documents and information about Sage and have reviewed
sufficient information to allow them to evaluate the merits and risks of the
acquisition of the Sage Stock.
(l) The Shareholders are acquiring the Sage Stock for their own account
(and not for the account of others) for investment and not with a view to the
distribution therefor. The Shareholders will not sell or otherwise dispose of
the Sage Stock without registration under the Securities Act of 1933, as
amended, or an exemption therefrom, and the certificate or certificates
representing the Sage Stock will contain a legend to the foregoing effect.
5. CONDUCT PRIOR TO THE CLOSING.
Sage and the Shareholders covenant that between the date of this Agreement
and the Closing as to each of them:
(a) No change will be made in the charter documents, by-laws, or other
corporate documents of Sage or Madison.
(b) Sage and Madison will each use its best efforts to maintain and
preserve its business organization, employee relationships, and goodwill intact,
and Madison will not enter into any material commitment except in the ordinary
course of business. The Shareholders acknowledge that Sage is currently engaged
in a number of acquisition transactions and is pursuing such transactions
simultaneously with the transactions contemplated by this Agreement.
(c) None of the Shareholders will sell, transfer, assign, hypothecate,
lien, or otherwise dispose or encumber the Madison Shares owned by them.
6. CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS.
The Shareholder's obligation to complete the transactions contemplated
herein is subject to fulfillment on or before the Closing of each of the
following conditions, unless waived in writing by the Shareholders as
appropriate:
(a) The representations and warranties of Sage set forth herein will be
true and correct at the Closing as though made at and as of that date, except as
affected by transactions contemplated hereby.
(b) Sage will have performed all covenants required by this Agreement to
be performed by it on or before the Closing.
(c) This Agreement will have been approved by the Board of Directors of
Sage.
(d) Sage will have delivered to the Shareholders the documents set forth
below in form and substance reasonably satisfactory to counsel for the
Shareholders, to the effect that:
(i) Sage is a corporation duly organized, validly existing, and in
good standing;
(ii) Sage's authorized capital stock is as set forth herein;
(iii) Certified copies of the resolutions of the board of directors
of Sage authorizing the execution of this Agreement and the consummation
hereof;
(iv) Secretary's certificate of incumbency of the officers of Sage;
and
(vi) Any further document as may be reasonably requested by counsel
to the Shareholders in order to substantiate any of the representations or
warranties of Sage set forth herein.
(e) Sage will have executed and delivered to the Shareholders a
registration rights agreement reasonably satisfactory to the Shareholders
affording the Sage Shares received by the Shareholders "piggyback" registration
rights for a period of one year after Closing.
(f) There will have occurred no material adverse change in the business,
operations or prospects of Sage.
7. CONDITIONS TO OBLIGATIONS OF SAGE.
Sage's obligation to complete the transaction contemplated herein will be
subject to fulfillment on or before the Closing of each of the following
conditions, unless waived in writing by the Sage, as appropriate:
(a) The representations and warranties of the Shareholders set forth
herein will be true and correct at the Closing as though made at and as of that
date, except as affected by transactions contemplated hereby.
(b) The Shareholders will have performed all covenants required by this
Agreement to be performed by them on or before the Closing.
(c) The Shareholders will have delivered to Sage the documents set forth
below in form and substance reasonably satisfactory to counsel for Sage, to the
effect that:
(i) Madison is a corporation duly organized, validly existing, and
in good standing;
(ii) Madison's authorized capital stock is as set forth herein;
(iii) Any further document as may be reasonably requested by counsel
to the Shareholders in order to substantiate any of the representations or
warranties of Sage set forth herein.
(d) There will have occurred no material adverse change in the business,
operations or prospects of Madison.
8. ADDITIONAL COVENANTS.
(a) Between the date of this Agreement and the Closing, the Shareholders,
with respect to Madison, and Sage, with respect to itself, will, and will cause
their respective representatives to, (i) afford the other party and its
representatives access to their personnel, properties, contracts, books and
records, and other documents and data, as reasonably requested by the other
party; (ii) furnish the other party and its representatives with copies of all
such contracts, books and records, and other existing documents and data as the
other may reasonably request in connection with the transaction contemplated by
this Agreement; and (iii) furnish the other party and its representatives with
such additional financial, operating, and other data and information as the
other may reasonably request. The Shareholders will cause Madison to, and Sage
will provide the Shareholders, with complete copies of all material contracts
and other relevant information on a timely basis in order to keep the other
party fully informed of the status of their respective business and operations.
(b) Sage and the Madison Shareholders will cooperate with each other in
the preparation of a Form 8-K to be filed with the SEC describing the
transaction contemplated by this Agreement and such other items as are required
by the SEC rules and regulations.
(c) Each of the Madison Shareholders will deliver a written statement to
Sage resigning from all officer and director positions held by them at Madison.
(d) The Madison Shareholders will deliver Madison's corporate books and
records, including all records relating to Madison's audited financial
statements, to Sage at Closing.
(e) The parties agree that they will not make, and the Shareholders will
not permit Madison to make, any public announcements relating to this Agreement
or the transactions contemplated herein without the prior written consent of the
other party, except as may be required upon the written advice of counsel to
comply with applicable laws or regulatory requirements after consulting with the
other party hereto and seeking their consent to such announcement.
9. TERMINATION.
This Agreement may be terminated (1) by mutual consent in writing; (2) by
either the Shareholders or Sage if there has been a material misrepresentation
or material breach of any warranty or covenant by any other party that is not
cured by March 15, 2000; or (3) by any of the Shareholders or Sage if the
Closing has not taken place within seven days following execution of this
Agreement, unless adjourned to a later date by mutual consent in writing.
10. EXPENSES.
Whether or not the Closing is consummated, each of the parties will pay
all of his, her, or its own legal and accounting fees and other expenses
incurred in the preparation of this Agreement and the performance of the terms
and provisions of this Agreement.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Shareholders and Sage set out in
this Agreement will survive the Closing for a period of one year.
12. WAIVER.
Any failure on the part of either party hereto to comply with any of its
obligations, agreements, or conditions hereunder may be waived in writing by the
party to whom such compliance is owed.
13. BROKERS.
Each party agrees to indemnify and hold harmless the other party against
any fee, loss, or expense arising out of claims by brokers or finders employed
or alleged to have been employed by the indemnifying party. The parties
acknowledge that Sage and MHE/PROJIX, LLC ("MHE/PROJIX") have entered into a
Service Agreement dated, on or about March 2, 2000, pursuant to which Sage is
obligated to pay MHE/PROJIX a fee in connection with services to be rendered by
MHE/PROJIX to Sage.
14. NOTICES.
All notices and other communications under this Agreement must be in
writing and will be deemed to have been given if delivered in person or sent by
prepaid first-class certified mail, return receipt requested, or recognized
commercial courier service, as follows:
If to Sage, to: Solomon Alliance Group, Inc.
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Shareholders, to: MHE/PROJIX, LLC
00000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
15. GENERAL PROVISIONS.
(a) This Agreement will be governed by and under the laws of the State of
Delaware, USA without giving effect to conflicts of law principles. If any
provision hereof is found invalid or unenforceable, that part will be amended to
achieve as nearly as possible the same effect as the original provision and the
remainder of this Agreement will remain in full force and effect.
(b) Any dispute arising under or in any way related to this Agreement will
be submitted to binding arbitration before a single arbitrator by the American
Arbitration Association in accordance with the Association's commercial rules
then in effect. The arbitration will be conducted in the State of Maryland. The
decision of the arbitrator will set forth in reasonable detail the basis for the
decision and will be binding on the parties. The arbitration award may be
confirmed by any court of competent jurisdiction.
(c) In any adverse action, the parties will restrict themselves to claims
for compensatory damages and/or securities issued or to be issued and no claims
will be made by any party or affiliate for lost profits, punitive or multiple
damages.
(d) This Agreement constitutes the entire agreement and final
understanding of the parties with respect to the subject matter hereof and
supersedes and terminates all prior and/or contemporaneous understandings and/or
discussions between the parties, whether written or verbal, express or implied,
relating in any way to the subject matter hereof. This agreement may not be
altered, amended, modified or otherwise changed in any way except by a written
agreement, signed by both parties.
(e) This Agreement will inure to the benefit of, and be binding upon, the
parties hereto and their successors and assigns; provided, however, that any
assignment by either party of its rights under this Agreement without the
written consent of the other party will be void.
(f) The parties agree to take any further actions and to execute any
further documents, which may from time to time be necessary or appropriate to
carry out the purposes of this Agreement. The Shareholders specifically agree to
provide reasonable assistance to Sage in connection with Sage including Madison
in its consolidated financial statements.
(g) The headings of the Sections, paragraphs and subparagraphs of this
Agreement are solely for convenience of reference and will not limit or
otherwise affect the meaning of any of the terms or provisions of this
Agreement. The references in this Agreement to Sections, unless otherwise
indicated, are references to sections of this Agreement.
(h) This Agreement may be executed in counterparts, each one of which will
constitute an original and all of which taken together will constitute one
document. This Agreement may be executed by delivery of a signed signature page
by fax to the other parties hereto and such fax execution and delivery will be
valid in all respects.
SIGNATURE PAGE FOLLOWS
EXECUTED:
SOLOMON ALLIANCE GROUP, INC.
By: /s/
------------------------------------
Xxxxxx X. Xxxxxx, Xx.
President & CEO
THE SHAREHOLDERS OF
MADISON HOLDINGS, INC.:
MHE/PROJIX, LLC
By: /s/
------------------------------------
Xxxx Xxxxxxxxx
Managing Director
/s/
----------------------------------------
Xxxx Xxxxxxxxx
/s/
----------------------------------------
Xxxxx Xxxxxxx
/s/
----------------------------------------
Xxxxx Xxxxxxxxx
/s/
----------------------------------------
Xxxxxx Xxxxxx Xxxxx
/s/
----------------------------------------
Xxxxxxx Xxxxxxx, Jr.
/s/
----------------------------------------
Xxxxx Xxxxxx
Exhibit A
MADISON SHAREHOLDERS
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NAME AND ADDRESS MADISON SHARES % SAGE SHARES
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MHE/PROJIX, LLC 4,750,000 95% 285,000
000 XX 0xx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000-0000
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Xxxx Xxxxxxxxx 87,500 1.75% 5,250
00000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
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Xxxxx Xxxxxxx 87,500 1.75% 5,250
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
--------------------------------------------------------------------------------
Xxxxx Xxxxxxxxx 25,000 0.5% 1,500
000 XX 0xx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000-0000
--------------------------------------------------------------------------------
Xxxxxx Xxxxxx Xxxxx 25,000 0.5% 1,500
000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
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Xxxxxxx Xxxxxxx, Jr. 12,500 0.25% 750
00000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
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Xxxxx Xxxxxx 12,500 0.25% 750
0000 X Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
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Total 5,000,000 100% 300,000
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