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