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 5th day of November, 2007, by and between SportsQuest, Inc., a
Delaware corporation, OTCBB SPQS (the “Issuer”), and Javaco, Inc. an Ohio
corporation (the “Company”), and Xxxxxx Xxxxxxx, the shareholder of Company,
(the “Shareholder”).
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 common shares issued and outstanding of the Issuer at Closing shall
be
______________________ Preferred Series A, and _______________ common shares.
ii.
that
the Issuer at Closing shall transfer to the Shareholders, One Million Dollars
($1,000,000) 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 common shares of Issuer
shall be computed by dividing the average closing price of the Issuer shares
for
the 5 days prior to closing into the purchase price of $1 million.
In
addition to the consideration as set forth above, Shareholders 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.
iii.
that
the Issuer requires the Company to .
| a) |
Agree
to the announcement of the transaction with the SEC on form 8K within
4
days of the Closing if applicable.
|
| b) |
Execute
any and all documentation to reflect the intent of the parties that
Company become a wholly owned subsidiary of Subsidiary.
|
iv.
that
this transaction is subject to delivery by the Issuer of all required documents
pre and post closing to effectuate the transaction
1
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.
| i. |
Capital.
The authorized capital stock of Issuer consists of 1,200,000, shares
of
preferred series A stock, $.0001 par value of which __________ Shares
are
issued and outstanding, and (98,000,000) shares of common stock, $.0001
par value, of which _____________ 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 may be disclosed
in the
Issuer SEC filings.
|
| ii. |
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”.
|
| iii. |
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.
|
| iv. |
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.
|
2
| v. |
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.
|
| vi. |
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.
|
| vii. |
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.
|
| viii. |
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.
|
| ix. |
Litigation.
Issuer is not (and has not been), except as may be 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 judgments, lawsuits
or material claims against the Issuer as of the date of this
agreement.
|
| x. |
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.
|
3
| xi. |
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.
|
| xii. |
Title.
At
the Closing all shares issued to Shareholders 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 Shareholders,
impair, restrict, or delay Shareholders voting rights with respect
to the
Issuer Shares.
|
| xiii. |
Brokers.
Issuer has not retained any Broker or finder to which compensation
would
be due in connection with this transaction.
|
3. REPRESENTATIONS
AND WARRANTIES OF COMPANY.
Company represents and warrants to Issuer the following:
| i. |
Organization.
The Company is a corporation duly organized, validly existing, and
in good
standing under the laws of Ohio, and it 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 the jurisdictions where qualification
is required. All actions taken by the incorporators, directors, and
stockholders of Company have been valid and in accordance with the
laws of
the State of Ohio.
|
| ii. |
Capital.
The authorized capital stock of Company consists of ____________ shares
of
common stock, ___ par value, of which ____________ shares are issued
and
outstanding (the “Shares”). The Shareholder is the sole record and
beneficial owner of the Shares and has 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.
|
| iii. |
Financial
Statements. Within
5 days of the Closing, Company shall engage its accountant to provide
an
audited financial statement for the periods ending 12-31-05 and 12-31-06,
or such other dates as the Issuer may require, and Company warrants
that
its books and records are in auditable form for the required audit
for the
Issuer annual report on 10K.
|
| iv. |
Absence
of Changes.
Since October 31, 2007, there has not been any change in the financial
condition or operations of Company, except changes in the ordinary
course
of business.
|
4
| v. |
Liabilities.
Company 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 Financial Statement provided
to
Issuer at closing. Company is not aware of any pending, threatened,
or
asserted claims, lawsuits or contingencies involving its capital stock.
|
| vi. |
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.
|
| vii. |
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.
|
| viii. |
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.
|
| ix. |
Litigation.
Company is not (and has never been) 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.
|
| x. |
Conduct
of Business.
From October 31, 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.
|
5
| xi. |
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.
|
| xii. |
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.
|
| xiii. |
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 Shareholders have not
represented either the Issuer or Issuer’s stockholders in any manner
whatsoever known to the Company.
|
| xiv. |
Brokers.
Company and/or Shareholder have retained Xxxxxxxx Xxxxx for which a
3%
commission ($30,000) will become due as a result of the closing of
this
transaction. Issuer agrees to pay said commission at closing in shares
of
Issuer stock. The number of shares to be paid to Xxxxxxxx Xxxxx will
be
determined based upon the formula contained in paragraph
1(ii).
|
| xv. |
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, if any.
|
4. INVESTMENT
INTENT.
| i. |
Restricted
Shares.
Shareholders understand that (A) the Issuer Shares Shareholders 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.
|
6
| ii. |
Transferability.
Shareholder will not sell or otherwise transfer any of the Issuer Shares,
any interest therein 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.
|
| iii. |
Investment
Intent.
Shareholder is acquiring the Issuer Shares for Investment purposes
only,
without a view for resale or distribution
thereof.
|
| iv. |
Legend.
Shareholder understands that the certificates representing the Issuer
Shares will bear the following legend:
|
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 delivery of all documents and
certificates required to be delivered by each party to the other. In the event
this transaction has not closed on or before November 20, 2007, this agreement
shall become null and void, unless extended by mutual written consent of the
parties. The Closing is subject to the completion of due diligence by both
parties to this agreement.
5. Documents
to be Delivered at Closing.
| i. |
By
Issuer:
|
| (1) |
Resolution
of the Board of Directors authorizing the issuance of a certificate
for
the number of shares to be delivered to Shareholder pursuant to Schedule
6(i)(1).
|
| (2) |
Schedule
for the number of Issuer shares registered in the name of Shareholder
pursuant to schedule 6(i)(1).
|
| (3) |
Certificate
for the number of Issuer shares registered in the name of Xxxxxx Xxxxxxx
pursuant to Schedule 6(i)(1).
|
7
| (4) |
Such
other resolutions of Issuer directors as may reasonably be required
by
Company and Shareholders.
|
| (5) |
Such
other agreements relating to the transaction as may reasonably be required
by the Company or Shareholders.
|
| (6) |
Certificate
of Good Standing from the State of
Delaware.
|
| (7) |
Copy
of the draft 8K to be filed with the SEC.
|
| (8) |
Copy
of a draft press release for review and
approval.
|
| (9) | An employment agreement between the Company.and Xxxxxx Xxxxxxx on terms acceptable to the company and Xxxxxx Xxxxxxx. |
| (9) |
By
Company and Shareholders:
|
| (10) |
Delivery
to the Issuer, certificate evidencing the Shares, and such stock powers
as
are required in order to transfer to Issuer good and marketable title
to
the Shares.
|
| (11) |
Resolution
by the Board of Directors approving the
transaction.
|
| (12) |
Copies
of the basic corporate records, Company shall retain all other records
at
its current principal address.
|
| (13) |
A
certificate of good standing from the State of Ohio. Company shall
convert
from an S corporation to a C corporation prior to closing and shall
provide Issuer with any and all documentation to Issuer as requested
to
verify said conversion.
|
| (14) |
Such
other resolutions of Company and Shareholders and/or directors as may
reasonably be required by Issuer.
|
| (15) |
Such
other agreements relating to the transaction as may reasonably be required
by the Issuer.
|
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
8. POST-CLOSING
AGREEMENTS.
| i. |
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.
|
| 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.
|
| iii. |
Press
Release
Issuer and Shareholders 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 Shareholders principals, employees,
agents and representatives.
|
9. Miscellaneous.
|
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.
|
|
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.
|
|
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.
|
9
|
iv.
|
Time
of Essence.
Time is of the essence of this Agreement and of each and every provision
hereof.
|
|
v.
|
Entire
Agreement.
This Agreement contains the entire Agreement and understanding between
the
parties hereto, and supersedes all prior agreements and
understandings.
|
|
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:
|
Issuer:
R.
Xxxxxx
Xxxx, CEO
000
Xxxxxxxxxxxxx Xxxxxxx 0xx Xxxxx
Xxxx
Xxxx, Xxxxxxx 00000
Company
and Shareholder:
Xxxxxx
Xxxxxxx, President
Javaco,
Inc.
|
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 has executed this Agreement this 5th day of
November, 2007.
|
Javaco,
Inc.
|
|||
| By: ___________________________________ | By: _________________________________ | ||
|
Its
President
|
Its
CEO
|
||
SHAREHOLDER:
___________________________
Xxxxxx
Xxxxxxx
11
