EXHIBIT 10
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is made this 6th day of December 2001, by
and between ADPADS Incorporated, a Colorado corporation publicly traded on the
OTC Bulletin Board under the symbol "APAD" ("APAD"), and Blue Flying Fish,
Inc., a Delaware corporation ("BFFI").
WHEREAS, APAD desires to acquire all of the issued and outstanding shares
of common stock of BFFI in exchange for an aggregate of 4,783,333 authorized
but unissued restricted shares of the Series A Convertible Preferred Stock of
APAD (the "Preferred Stock"), and 18,800,000 authorized but unissued
restricted shares of common stock of APAD (the "Common Stock") (the "Exchange
Offer"); and
WHEREAS, BFFI desires to assist APAD in a business combination which will
result, if all of BFFI's shareholders desire to participate, in the
shareholders of BFFI owning approximately 95% of the then issued and
outstanding shares of APAD's Common Stock assuming all shares of Series A
Convertible Preferred Stock have been converted and APAD has completed a 1 for
40 reverse stock split), and APAD holding 100% of the issued and outstanding
shares of BFFI's common stock; and
WHEREAS, the voluntary share exchange contemplated hereby will result in
the BFFI shareholders tendering all of the outstanding common stock of BFFI to
APAD in exchange solely for the Preferred Stock and Common Stock and no other
consideration, which the parties hereto intend to treat as a tax free
reorganization under I.R.C. Section 368(a)(1)(B).
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
EXCHANGE OF SECURITIES
1.1 Issuance of Shares. Subject to all of the terms and conditions
of this Agreement, APAD agrees to offer .329885 shares of Preferred Stock and
1.296551724 shares of Common Stock for each share of BFFI common stock issued
and outstanding, or a total of 4,783,333 shares of APAD's Preferred Stock and
18,800,000 shares of APAD's Common Stock. The Preferred Stock and Common
Stock will be issued directly to the shareholders of BFFI which accept the
Exchange Offer. Schedule 1, which is attached hereto and incorporated herein
by reference, is a complete list of the shareholders of BFFI which sets forth
the number of shares each person owns in BFFI and the number of shares they
will be offered in APAD.
1.2 Exemption from Registration. The parties hereto intend that the
Preferred Stock and Common Stock to be issued by APAD to BFFI shareholders
shall be exempt from the registration requirements of the Securities Act of
1933, as amended (the "Act"), pursuant to Section 4(2) of the Act and the
rules and regulations promulgated thereunder.
1.3 Investment Intent. Prior to the consummation of the Exchange
Offer, the shareholders of BFFI accepting the Exchange Offer shall execute
Letters of Acceptance and such other documents containing, among other things,
representations and warranties relating to investment intent and investor
status, restrictions on transferability and restrictive legends such that the
counsel for both APAD and BFFI shall be satisfied that the offer and sale of
APAD shares as contemplated by this Agreement shall be exempt from the
registration requirements of the Act and any applicable state blue sky laws.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BFFI
Except as disclosed in Schedule 2 which is attached hereto and
incorporated herein by reference, BFFI hereby represents and warrants to APAD
that:
2.1 Organization. BFFI is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, has all necessary
corporate powers to own its properties and to carry on its business as now
owned and operated by it, and is duly qualified to do business and is in good
standing in each of the jurisdictions where its business requires
qualification.
2.2 Capital. The authorized capital stock of BFFI consists of
100,000,000 shares of Common Stock, $.0001 par value, of which 14,500,000 are
currently issued and outstanding and 10,000,000 shares of Preferred Xxxxx,
x.0000 par value, of which no shares are issued and outstanding. All of the
issued and outstanding shares of BFFI are duly authorized, validly issued,
fully paid, and nonassessable. There are no outstanding subscriptions,
options, rights, warrants, debentures, instruments, convertible securities, or
other agreements or commitments obligating BFFI to issue or to transfer from
treasury any additional shares of its capital stock of any class.
2.3 Subsidiaries. BFFI does not have any subsidiaries or own any
interest in any other enterprise (whether or not such enterprise is a
corporation) except as disclosed in Schedule 2.
2.4 Directors and Officers. Schedule 2 contains the names and titles
of all directors and officers of BFFI as of the date of this Agreement.
2.5 Financial Statements. BFFI has delivered to APAD unaudited
balance sheets as of July 31, 2001, for BFFI and its subsidiaries (the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated. The Financial Statements accurately set out and describe
the financial condition of BFFI as of July 31, 2001.
2.6 Absence of Changes. Since July 31, 2001, except for changes in
the ordinary course of business which have not in the aggregate been
materially adverse, to the best of BFFI's knowledge, BFFI has conducted its
business only in the ordinary course and has not experienced or suffered any
material adverse change in the condition (financial or otherwise), results of
operations, properties, business or prospects of BFFI or waived or surrendered
any claim or right of material value.
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2.7 Absence of Undisclosed Liabilities. Neither BFFI nor any of its
properties or assets are subject to any material liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise and whether due
or to become due, that are not reflected in the financial statements presented
to APAD or have otherwise been disclosed to APAD.
2.8 Tax Returns. Within the times and in the manner prescribed by
law, BFFI has filed all federal, state and local tax returns required by law,
or has filed extensions which have not yet expired, and has paid all taxes,
assessments and penalties due and payable.
2.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, APAD
and/or its attorneys shall have the opportunity to meet with accountants and
attorneys to discuss the financial condition of BFFI. BFFI shall make
available to APAD and/or its attorneys all books and records of BFFI.
2.10 Trade Names and Rights. BFFI does not use any trademark,
service xxxx, trade name, or copyright in its business, or own any trademarks,
trademark registrations or applications, trade names, service marks,
copyrights, copyright registrations or applications, except as set forth on
Schedule 2.
2.11 Compliance with Laws. To the best of BFFI's knowledge, BFFI has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning or other law, ordinance or regulation) affecting its
properties or the operation of its business, except for matters which would
not have a material affect on BFFI or its properties.
2.12 Litigation. BFFI is not a party to any suit, action,
arbitration or legal, administrative or other proceeding, or governmental
investigation pending or, to the best knowledge of BFFI, threatened against or
affecting BFFI or its business, assets or financial condition, except for
matters which would not have a material affect on BFFI or its properties.
BFFI is not in default with respect to any order, writ, injunction or decree
of any federal, state, local or foreign court, department, agency or
instrumentality applicable to it. BFFI is not engaged in any lawsuit to
recover any material amount of monies due to it.
2.13 Authority. BFFI has full corporate power and authority to enter
into this Agreement. The board of directors of BFFI has taken all action
required to authorize the execution and delivery of this Agreement by or on
behalf of BFFI and the performance of the obligations of BFFI under this
Agreement. No other corporate proceedings on the part of BFFI are necessary
to authorize the execution and delivery of this Agreement by BFFI in the
performance of its obligations under this Agreement. This Agreement is, when
executed and delivered by BFFI, and will be a valid and binding agreement of
BFFI, enforceable against BFFI in accordance with its terms, except as such
enforceability may be limited by general principles of equity, bankruptcy,
insolvency, moratorium and similar laws relating to creditors' rights
generally.
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2.14 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by BFFI of its obligations under
this Agreement, nor the consummation of the transactions contemplated under
this Agreement will to the best of BFFI's knowledge: (a) materially violate
any provision of BFFI's articles of incorporation or bylaws; (b) with or
without the giving of notice or the passage of time, or both, violate, or be
in conflict with, or constitute a material default under, or cause or permit
the termination or the acceleration of the maturity of, any debt, contract,
agreement or obligation of BFFI, or require the payment of any prepayment or
other penalties; (c) require notice to, or the consent of, any party to any
agreement or commitment, lease or license, to which BFFI is bound; (d) result
in the creation or imposition of any security interest, lien, or other
encumbrance upon any material property or assets of BFFI; or (e) violate any
material statute or law or any judgment, decree, order, regulation or rule of
any court or governmental authority to which BFFI is bound or subject.
2.15 Full Disclosure. None of the representations and warranties
made by BFFI herein, or in any schedule, exhibit or certificate furnished or
to be furnished in connection with this Agreement by BFFI, or on its behalf,
contains or will contain any untrue statement of material fact, or omit any
material fact, the omission of which would be materially misleading.
2.16 Assets. BFFI has good and marketable title to all of its
tangible properties and such tangible properties are not subject to any
material liens or encumbrances.
2.17 Material Contracts and Obligations. Attached hereto on Schedule
2.17 is a list of all agreements, contracts, indebtedness, liabilities and
other obligations to which BFFI is a party or by which it is bound that are
material to the conduct and operations of its business and properties, which
provide for payments to or by BFFI in excess of $5,000; or which involve
transactions or proposed transactions between BFFI and its officers,
directors, affiliates or any affiliate thereof. Copies of such agreements and
contracts and documentation evidencing such liabilities and other obligations
have been made available for inspection by APAD and its counsel. All of such
agreements and contracts are valid, binding and in full force and effect in
all material respects, assuming due execution by the other parties to such
agreements and contracts.
2.18 Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by BFFI in connection
with: (a) the execution and delivery by BFFI of this Agreement; (b) the
performance by BFFI of its obligations under this Agreement; or (c) the
consummation by BFFI of the transactions contemplated under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF APAD
Except as disclosed in Schedule 3 which is attached hereto and
incorporated herein by reference, APAD represents and warrants to BFFI that:
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3.1 Organization. APAD is a corporation duly organized, valid
existing, and in good standing under the laws of Colorado, has all necessary
corporate powers to own properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good
standing in each of the jurisdictions where its business requires
qualification.
3.2 Capitalization. The authorized capital stock of APAD consists of
50,000,000 shares of no par value Common Stock of which no more than
31,200,000 shares of Common Stock are currently issued and outstanding
(including the 5,100,000 shares being issued for the conversion of debt), and
5,000,000 shares of no par value non-voting preferred stock of which no shares
are issued and outstanding. APAD has also authorized 4,783,333 shares of
Series A Convertible Preferred Stock to be issued to the shareholders of BFFI
on the Closing and 10,000 shares of Series A Convertible Preferred Stock to be
issued to Xxxx & Company. (Each share of Series A Convertible Preferred Stock
is convertible into 120 shares of common stock.) All of the issued and
outstanding shares of Common Stock and Preferred Stock are duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in Schedule
3, there are no outstanding subscriptions, options, rights, warrants,
convertible securities, or other agreements or commitments obligating APAD to
issue or to transfer from treasury any additional shares of its capital stock
of any class.
3.3 Subsidiaries. Except as set forth in Schedule 3, APAD does not
presently have any subsidiaries or own any interest in any other enterprise
(whether or not such enterprise is a corporation).
3.4 Directors and Officers. Schedule 3 contains the names and titles
of all directors and officers of APAD as of the date of this Agreement.
3.5 Financial Statements. APAD has delivered to BFFI its audited
balance sheet and statements of operations and cash flows as of and for the
period ended December 31, 2000, and its unaudited balance sheet and statements
of operations and cash flows as of and for the period ended September 30, 2001
(collectively the "Financial Statements"). The Financial Statements are
complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated. The Financial Statements
accurately set out and describe the financial condition and operating results
of the Company as of the dates, and for the periods, indicated therein.
3.6 Absence of Changes. Since September 30, 2001, except for changes
in the ordinary course of business which have not in the aggregate been
materially adverse, to the best of APAD's knowledge, APAD has not experienced
or suffered any material adverse change in its condition (financial or
otherwise), results of operations, properties, business or prospects or waived
or surrendered any claim or right of material value.
3.7 Absence of Undisclosed Liabilities. Neither APAD nor any of its
properties or assets are subject to any liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise and whether due or
to become due, that are not reflected in the financial statements presented to
BFFI. The total liabilities of APAD at Closing, prior to the $50,000 payment
referred to in paragraph 7.10 below, will not exceed $217,000.
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3.8 Tax Returns. Within the times and in the manner prescribed by
law, APAD has filed all federal, state and local tax returns required by law
and has paid all taxes, assessments and penalties due and payable.
3.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, BFFI
shall have the opportunity to meet with APAD's accountants and attorneys to
discuss the financial condition of APAD. APAD shall make available to BFFI
all books and records of APAD.
3.10 Trade Names and Rights. APAD does not use any trademark,
service xxxx, trade name, or copyright in its business, or own any trademarks,
trademark registrations or applications, trade names, service marks,
copyrights, copyright registrations or applications.
3.11 Compliance with Laws. To the best of APAD's knowledge, APAD has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning, or other law, ordinance, or regulation) affecting its
properties or the operation of its business or with which it is otherwise
required to comply.
3.12 Litigation. APAD is not a party to any suit, action,
arbitration, or legal, administrative, or other proceeding, or governmental
investigation pending or, to the best knowledge of APAD, threatened against or
affecting APAD or its business, assets, or financial condition. APAD is not
in default with respect to any order, writ, injunction, or decree of any
federal, state, local, or foreign court, department agency, or
instrumentality. APAD is not engaged in any legal action to recover moneys
due to it.
3.13 No Pending Investigation. APAD is not aware of any pending
investigations or legal proceedings by the SEC, any state securities
regulatory agency, or any other governmental agency regarding APAD or any
officers or directors of APAD or any shareholders or controlling persons of
such shareholders.
3.14 Authority. APAD has full corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The Board of Directors of APAD has taken all action required to
authorize the execution and delivery of this Agreement by or on behalf of
APAD, the performance of the obligations of APAD under this Agreement and the
consummation by APAD of the transactions contemplated under this Agreement.
No other corporate proceedings on the part of APAD are necessary to authorize
the execution and delivery of this Agreement by APAD in the performance of its
obligations under this Agreement. This Agreement is, and when executed and
delivered by APAD, will be a valid and binding agreement of APAD, enforceable
against APAD in accordance with its terms, except as such enforceability may
be limited by general principles of equity, bankruptcy, insolvency, moratorium
and similar laws relating to creditors rights generally.
3.15 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by APAD of its obligations under
this Agreement, nor the consummation of the transactions contemplated under
this Agreement will, to the best of APAD's knowledge: (a) violate any
provision of APAD's articles of incorporation or bylaws; (b) with or without
the giving of notice or the passage of time, or both, violate, or be in
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conflict with, or constitute a default under, or cause or permit the
termination or the acceleration of the maturity of, any debt, contract,
agreement or obligation of APAD, or require the payment of any prepayment or
other penalties; (c) require notice to, or the consent of, any party to any
agreement or commitment, lease or license, to which APAD is bound; (d) result
in the creation or imposition of any security interest, lien or other
encumbrance upon any property or assets of APAD; or (e) violate any statute
or law or any judgment, decree, order, regulation or rule of any court or
governmental authority to which APAD is bound or subject.
3.16 Validity of APAD Shares. The shares of APAD Preferred Stock and
Common Stock to be delivered pursuant to this Agreement, when issued in
accordance with the provisions of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable.
3.17 Full Disclosure. None of the representations and warranties
made by APAD herein, or in any exhibit, certificate or memorandum furnished or
to be furnished by APAD, or on its behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading.
3.18 Assets. APAD has good and marketable title to all of its
tangible properties and such tangible properties are not subject to any liens
or encumbrances.
3.19 Material Contracts and Obligations. Attached hereto on Schedule
3 is a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which APAD is a party or by which it is bound that are material
to the conduct and operations of its business and properties, which provide
for payments to or by APAD in excess of $5,000; or which involve transactions
or proposed transactions between APAD and its officers, directors, affiliates
or any affiliate thereof. Copies of such agreements and contracts and
documentation evidencing such liabilities and other obligations have been made
available for inspection by BFFI and its counsel. All of such agreements and
contracts are valid, binding and in full force and effect in all material
respects, assuming due execution by the other parties to such agreements and
contracts.
3.20 Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by APAD in connection
with: (a) the execution and delivery by APAD of its obligations under this
Agreement; (b) the performance by APAD of its obligations under this
Agreement; or (c) the consummation by APAD of the transactions contemplated by
this Agreement.
3.21 Real Property. APAD does not own, use or claim any interest in
any real property, including without limitation any license, leasehold or any
similar interest in real property except as set forth on Schedule 3.
ARTICLE 4
COVENANTS
4.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized representatives,
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full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments, and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request. If the transaction contemplated hereby is not
completed, all documents received by each party and/or its attorneys and
accountants, auditors or other authorized representatives shall be returned to
the other party who provided same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to
the public, without the prior written consent of the party to which the
confidential information pertains. Each party shall take such steps as are
necessary to prevent disclosure of such information to unauthorized third
parties.
4.2 Conduct of Business. Prior to the Closing, APAD and BFFI shall
each conduct its business in the normal course, and shall not sell, pledge, or
assign any assets, without the prior written approval of the other party,
except in the regular course of business or as contemplated in previously
disclosed contractual obligations. Neither APAD nor BFFI shall amend its
Articles of Incorporation or Bylaws, declare dividends, redeem or sell stock
or other securities, incur additional or newly-funded liabilities, acquire or
dispose of fixed assets, change employment terms, enter into any material or
long-term contract, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less than its stated amount, pay
more on any liability than its stated amount, or enter into any other
transaction other than in the regular course of business except as otherwise
contemplated herein.
ARTICLE 5
CONDITIONS PRECEDENT TO APAD'S PERFORMANCE
5.1 Conditions. The obligations of APAD hereunder shall be subject
to the satisfaction, at or before the Closing, of all the conditions set forth
in this Article 5. APAD may waive any or all of these conditions in whole or
in part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by APAD of any other condition of or any
of APAD's other rights or remedies, at law or in equity, if BFFI shall be in
default of any of their representations, warranties, or covenants under this
Agreement.
5.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by BFFI in this Agreement
or in any written statement that shall be delivered to APAD by BFFI under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
5.3 Performance. BFFI shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to
be performed or complied with by it, on or before the Closing Date.
5.4 Acceptance by BFFI Shareholders. The holders of not less than
95% of the issued and outstanding shares of common stock of BFFI shall have
agreed to exchange their shares for shares of APAD Common Stock.
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5.5 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against BFFI on or before the Closing Date.
5.6 Officer's Certificate. BFFI shall have delivered to APAD a
certificate, dated the Closing Date, and signed by the Chief Executive Officer
of BFFI, certifying that each of the conditions specified in Sections 5.2
through 5.5 hereof have been fulfilled.
ARTICLE 6
CONDITIONS PRECEDENT TO BFFI'S PERFORMANCE
6.1 Conditions. BFFI's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in
this Article 6. BFFI may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by BFFI of any other condition of or any
of BFFI's rights or remedies, at law or in equity, if APAD shall be in default
of any of its representations, warranties, or covenants under this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by APAD in this Agreement
or in any written statement that shall be delivered to BFFI by APAD under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
6.3 Performance. APAD shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to
be performed or complied with by them, on or before the Closing Date.
6.4 Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against APAD on or before the Closing Date.
6.5 Directors of APAD. Effective on the Closing, APAD shall have
fixed the size of its Board of Directors at four (4) persons, and such Board
of Directors shall include Xxxx X. Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxx and
Xxxxxx Xxxxxxx. The current Officers and Directors of APAD shall have
submitted their resignations as the Officers and Directors of APAD effective
on the Closing of this transaction.
6.6 Officers of APAD. Effective on the Closing, APAD shall have
elected the following new Officers of APAD:
Xxxx X. Xxxxxx - Chairman of the Board and CEO
Xxxxxxx Xxxxxxx - Vice Chairman and COO
Xxxxx Xxxxxxx - Chief Financial Officer
6.7 Conversion of Debt. Prior to the Closing, APAD will have closed
the transaction whereby $220,000 of debt has been converted into up to
5,100,000 shares of APAD common stock.
6.8 Voting Powers. BFFI shall have obtained voting proxies from the
holders of at least 6,300,000 shares of APAD Common Stock.
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6.9 Officer Certificate. APAD shall have delivered to BFFI a
certificate, dated the Closing Date and signed by the President of APAD
certifying that each of the conditions specified in Sections 6.2 through 6.8
have been fulfilled.
ARTICLE 7
CLOSING
7.1 Closing. The Closing of this transaction shall be held at the
offices of Xxxx Xxxxx Xxxxxxxx Xxxxx & Xxxxxx, P.C., 600 Seventeenth Street,
Suite 0000 Xxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000, or such other place as shall
be mutually agreed upon, on such date as shall be mutually agreed upon by the
parties, but in no event shall the Closing be later than December 15, 2001.
At the Closing:
7.2 BFFI shall deliver Letters of Acceptance and the certificates
representing the shares of BFFI held by the shareholders of BFFI accepting the
Exchange Offer ("Accepting Shareholders") to APAD.
7.3 Each Accepting Shareholder shall receive certificates
representing the number of shares of APAD Preferred Stock and APAD Common
Stock for which the shares of BFFI common stock shall have been exchanged.
7.4 APAD shall deliver an officer's certificate, as described in
Section 6.9 hereof, dated the Closing Date, that all representations,
warranties, covenants and conditions set forth in this Agreement on behalf of
APAD are true and correct as of, or have been fully performed and complied
with by, the Closing Date.
7.5 APAD shall deliver a signed Consent and/or Minutes of the
Directors of APAD approving this Agreement and each matter to be approved by
the Directors of APAD under this Agreement.
7.6 BFFI shall deliver an officer's certificate, as described in
Section 5.6 hereof, dated the Closing Date, that all representations,
warranties, covenants and conditions set forth in this Agreement on behalf of
BFFI are true and correct as of, or have been fully performed and complied
with by, the Closing Date.
7.7 BFFI shall deliver a signed Consent or Minutes of the Directors
of BFFI approving this Agreement and each matter to be approved by the
Directors of BFFI under this Agreement.
7.8 APAD shall deliver a certificate for 10,000 shares of Preferred
Stock to Xxxx & Company as payment for its finder's fee.
7.9 APAD shall deliver copies of the agreements executed by the three
shareholders who are converting a total of $220,000 of debt into up to
5,100,000 shares of Common Stock.
7.10 BFFI shall place $50,000 into a separate account to be used
exclusively for the payment of APAD liabilities. A written Use of Proceeds
for the $50,000 shall be determined and mutually agreed upon prior to Closing.
After the payment of these liabilities, APAD's total liabilities outstanding
will not exceed $167,000.
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ARTICLE 8
POST CLOSING
8.1 Form 8-K. Within 15 days after the Closing Date, APAD will file
a Form 8-K with the SEC reporting this transaction.
8.2 Proxy Materials. Within 45 days after the Closing Date, APAD
will prepare and file proxy materials (or an Information Statement) with the
SEC for the purpose of calling a special shareholders meeting to be held as
soon as possible to approve (1) a 1 for 40 reverse stock split; (2) a name
change to _________________ or such name as shall be determined by the APAD
board of directors; (3) the establishment of a stock option plan; and (4) any
other matters that the board of directors determine necessary or appropriate.
ARTICLE 9
MISCELLANEOUS
9.1 Captions and Headings. The Article and paragraph 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.
9.2 No Oral Change. This Agreement and any provision hereof, may not
be waived, changed, modified, or discharged orally, but it can be changed by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, or discharge is sought.
9.3 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 (i) 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, (ii) the acceptance of
performance of anything 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 (iii) no
waiver by any party of one breach by another party shall be construed as a
waiver with respect to any other or subsequent breach.
9.4 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
9.5 Entire Agreement. This Agreement contains the entire Agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings.
9.6 Choice of Law. This Agreement and its application shall be
governed by the laws of the State of Colorado, except to the extent its
conflict of laws provisions would apply the laws of another jurisdiction.
11
9.7 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 date of service if served personally on the party
to whom notice is to be given, or 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 as follows:
APAD:
ADPADS Incorporated
0000 Xxxxxxx 00
Xxxxxxx, Xxx Xxxxxx 00000
with a copy to:
Xxxxxx Xxxxxxx
ADPADS Incorporated
0000 Xxxxxxx 00
Xxxxxxx, Xxx Xxxxxx 00000
BFFI:
Blue Flying Fish, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
(000) 000-0000
(000) 000-0000 - Facsimile
with a copy to:
Xxx X. Xxxxxx
Xxxx Xxxxx Xxxxxxxx & Xxxxxx, P.C.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
(000) 000-0000
(000) 000-0000 - Facsimile
9.8 Binding Effect. This Agreement shall inure to and be binding
upon the heirs, executors, personal representatives, successors and assigns of
each of the parties to this Agreement.
9.9 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other
and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein.
9.10 Brokers. The parties hereto represent and agree that, other
than Xxxx & Company, which is entitled to a finder's fee of 10,000 shares of
APAD Preferred Stock, no broker has brought about the aforementioned
transaction. Each of the parties hereto shall indemnify and hold the other
harmless against any and all claims, losses, liabilities or expenses which may
be asserted against it as a result of its dealings, arrangements or agreements
with any broker or person, except as described in this paragraph.
9.11 Announcements. APAD and BFFI will consult and cooperate with
each other as to the timing and content of any announcements of the
transactions contemplated hereby to the general public or to employees,
customers or suppliers.
12
9.12 Exhibits. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided for herein above, including any
items referenced therein or required to be attached thereto. Any material
changes to the Exhibits shall be immediately disclosed to the other party.
9.13 Use of 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.
AGREED TO AND ACCEPTED as of the date first above written.
ADPADS INCORPORATED BLUE FLYING FISH, INC.
By:/s/ Xxxxx Xxxxxxxxxx By:/s/ Xxxx X. Xxxxxx
Xxxxx Xxxxxxxxxx, President Xxxx X. Xxxxxx, Chief Executive
Officer
By:/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx, Chief Operating
Officer
13
SCHEDULE 1
Number of Number of
Number of Shares of Shares of
Shares of APAD's APAD's
Name and Address BFFI Preferred Stock Common Stock
---------------------- --------- --------------- ------------
The Xxxxx Xxxx Trust
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 0000 889,344 293,381 1,153,080
Xxxx Xxxx-Xxxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000 691,127 227,992 896,082
Xxxxx Xxxx
000 Xxxxxx Xxxxxxxxx
Xxxxxx, XX 00000 752,482 248,233 975,632
Xxxxxxx Xxxx
00 Xxxxx Xxxx
Xxxxxxxxx, XX 00000 350,433 115,603 454,355
Xxxxxxx Xxxxxxx
00 Xxxxxxxxx Xxxx
Xxxxx Xxxxxx Xxxxx, XX 00000 16,614 5,481 21,541
Xxxx Xxxxx
00 Xxxxxxxxxx Xxx
Xxxxxxxxxxxx, XX 00000 75,000 24,741 97,241
Xxxx Xxxxxxxx
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000 225,000 74,224 291,724
Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 690,000 227,621 894,621
Xxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 690,000 227,621 894,621
Xxxxxxx Xxxxx
0000 Xxxxxx Xxxxx, Xx. 000
Xxxxxxxxxx, XX 00000 690,000 227,621 894,621
Xxxxx Xxxxxxx
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000 600,000 197,931 777,931
Xxxx Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 150,000 49,483 194,483
Xxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 180,000 59,379 233,379
Xxxx Xxxxxx
00 Xxxxxxxx Xxx
Xxxxxxxxx Xxx., XX 00000 3,000,000 989,655 3,889,655
Will Xxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000 2,900,000 956,667 3,760,000
Xxxxx Xxxxx
X.X. Xxx 000
Xxxxxx Xxxx, XX 00000 50,000 16,494 64,828
Hope Xxxxx Xxxxxxx
X.X. Xxx 000
Xxxxxx Xxxx, XX 00000 50,000 16,494 64,828
Xxxxx Xxxxxxx
000 Xxxx 00xx Xxxxxx, 0X
Xxx Xxxx, XX 00000 800,000 263,908 1,037,241
Xxxxxxxx Xxxxxxx
c/o 000 Xxxx 00xx Xxxxxx, 0X
Xxx Xxxx, XX 00000 100,000 32,989 129,655
Xxxxxxxx Xxxxxxx
c/o 000 Xxxx 00xx Xxxxxx, 0X
Xxx Xxxx, XX 00000 100,000 32,989 129,655
R. Xxxxx Xxxxx
0000 X. Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 500,000 164,942 648,276
Xxxxx Xxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000 400,000 131,954 518,621
Xxxxxx Xxxxxxx
00 Xxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000 100,000 32,988 129,655
Xxxxx Xxxxxxx
00 Xxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000 100,000 32,988 129,655
North Star Resources, Inc.
X.X. Xxx 00
Xxxxxx Xxxx, XX 00000 325,000 107,213 421,379
Xxxxxx Xxxxxxx
Xxx Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx, XX 00000 75,000 24,741 97,241
Total 14,500,000 4,783,333 18,800,000
SCHEDULE 2
BLUE FLYING FISH, INC.
("BFFI")
2.3 Subsidiaries of BFFI:
Xxxx Industries, Inc. (New Jersey)
Native American Mortgage, Inc. (Delaware)
Blue Flying Fish Services, Inc. (Delaware)
2.4 The Officers and Directors of BFFI are as follows:
Name Position
Xxxx X. Xxxxxx Chairman and Chief Executive Officer
Xxxxxxx Xxxxxxx Vice Chairman and Chief Operating Officer
Xxxxx Xxxxxxx Chief Financial Officer and Director
Xxxxxx Xxxxxxx Director, Audit Committee Chair
2.9 Trade Names and Rights:
SCHEDULE 3
ADPADS INCORPORATED
("APAD")
3.3 Subsidiaries:
Visual Presentation Systems, Inc. (Delaware) [?]
3.4 Directors and Officers of APAD:
Name Position
Xxxxx Xxxxxxxxxx President, Chief Executive Officer,
Chief Financial Officer and Chairman
Xxxxxx Xxxxxxx Director, Secretary, General Counsel
Xxxxx Xxxxxxxxx Director
3.19 Material Contracts of APAD:
3.21 Real Estate:
ADPADS INCORPORATED
EXCHANGE OFFER FOR THE COMMON STOCK OF
BLUE FLYING FISH, INC.
LETTER OF ACCEPTANCE
____________ Shares of ADPADS Incorporated
Series A Convertible Preferred Stock and
_________ Shares of ADPADS Incorporated
Common Stock offered for your __________
Name(s) of Shareholder(s) shares of Blue Flying Fish, Inc.
Common Stock
_____________________________________________________________________________
THIS FORM MUST BE COMPLETED AND DELIVERED ON OR BEFORE 5:00 P.M. MOUNTAIN
TIME, NOVEMBER __, 2001, TO ADPADS INCORPORATED. THIS FORM MAY BE FAXED TO
___________ AT (___) ___-____ AND THEN MAILED.
______________________________________________________________________________
APPROVAL OR NONAPPROVAL OF EXCHANGE OFFER
The undersigned accepts rejects the Exchange Offer of ADPADS
Incorporated for his or her shares of Blue Flying Fish, Inc. common stock, as
specified above subject to the terms and conditions set forth in the Share
Exchange Agreement to be executed between Blue Flying Fish, Inc. and ADPADS
Incorporated.
The undersigned understands that approval of the Exchange Offer
constitutes (i) his or her approval of the terms and conditions of the
Exchange Offer, and the complete transfer of all of his or her shares of Blue
Flying Fish, Inc. common stock to ADPADS Incorporated, and (ii) his or her
acknowledgment and agreement that the shares of Series A Convertible Preferred
Stock and Common Stock of ADPADS Incorporated will be full payment for all of
his or her shares of Blue Flying Fish, Inc.
Date: ____________________ __________________________________________
__________________________________________
Signature(s) of Shareholder(s)
(NOTE: IF YOU ACCEPT THE EXCHANGE OFFER, YOU MUST ALSO SIGN ON PAGE 3 OF THIS
LETTER OF ACCEPTANCE. IN ADDITION, YOU MUST ENDORSE YOUR STOCK CERTIFICATE(S)
AND RETURN THEM WITH THIS LETTER OF ACCEPTANCE.)
REPRESENTATIONS AND WARRANTIES
1. The undersigned understands and acknowledges that the shares of
Preferred Stock and Common Stock ("Shares") of ADPADS Incorporated (the
"Company"), are being offered in reliance upon the exemptions provided in
Section 4(2), 4(6) and/or 3(b) of the Securities Act of 1933 as amended (the
"Act") and the Rules and Regulations adopted thereunder relating to nonpublic
offerings; and the undersigned makes the following representations and
warranties with the intent that the same may be relied upon in determining the
suitability of the undersigned as a purchaser of securities:
(a) The Shares will be acquired solely for the account of the
undersigned, for investment purposes only, and not with a view to, or for sale
in connection with, any distribution thereof and with no present intention of
distributing or reselling any part of the Shares.
(b) The undersigned agrees not to dispose of his or her Shares
or any portion thereof unless and until counsel for the Company shall have
determined that the intended disposition is permissible and does not violate
the Securities Act or any applicable state securities laws, or the rules and
regulations thereunder.
(c) The undersigned acknowledges that the Company has made all
documentation pertaining to all aspects of the Exchange Offer available to him
or her and has offered such person or persons an opportunity to discuss the
Exchange Offer with the officers of the Company. Included in such
documentation are copies of the Company's Form 10-KSB for the year ended
December 31, 2000, and the Form 10-QSB for the three months ended September
30, 2001, and a copy of the Share Exchange Agreement. The undersigned further
acknowledges and represents to the Company that he or she is a knowledgeable,
sophisticated investor who can fend for himself or herself and has adequate
means to make the investment contemplated herein; and that, in connection with
this investment, he or she has obtained the necessary investment advice from
appropriate outside sources, and had available to the undersigned all
information with respect to the Company which was deemed necessary by himself
or herself and his or her respective advisors.
2. The undersigned represents that the shares of Blue Flying Fish,
Inc. being exchanged are owned free and clear of any liens or encumbrances and
have not been pledged or optioned to any person.
3. The undersigned understands that he or she must bear the economic
risk of an investment in the Shares to be acquired pursuant to the Exchange
Offer for an indefinite period of time because the Shares have not been
registered under the Securities Act or any state securities laws and,
therefore, cannot be sold unless they are subsequently registered under the
Securities Act and any applicable state securities laws or unless exemptions
from such registrations are available. The current holding period requirement
of Rule 144 is one year from the date this transaction is closed, and sales
may thereafter be made only in compliance with the requirements of that Rule.
The undersigned acknowledges that only the Company can file a registration
statement, and that the Company has no obligation to do so or to take steps
necessary to make an exemption from registration available to the undersigned.
4. The undersigned agrees that the certificate evidencing the Shares
he or she acquires pursuant to the Exchange Offer will have a legend placed
thereon stating that the Shares have not been registered under the Securities
Act or any state securities laws and setting forth or referring to the
restrictions on transferability and sale of the Shares.
5. (a) The undersigned is, or is not, an "accredited investor,"
as that term is defined in Regulation D under the Securities Act of 1933, as
amended (the "Act"), as checked below:
YES NO
(b) If "Yes," I come within the following category of that
definition (check as applicable):
1. I am a natural person whose present net worth (or whose
joint net worth with my spouse) exceeds $1,000,000.
2. I am a natural person who had individual income in excess of
$200,000 in each of the last two years or joint income with my spouse in
excess of $300,000 during such two years, and I reasonably expect to have the
same income level in the current year.
3. I am an organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust or
partnership not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
4. I am an entity, all of whose equity owners are accredited
investors under paragraph 1, 2 and 3, above.
(c) If I have answered yes to (5)(a) above, I understand that
Regulation D requires that you have information which causes you to have a
reasonable belief that the foregoing statement is correct. Thus, if you care
to do so, you may contact my bank, my accountant or other persons whom I
designate below to corroborate the above. The name and telephone number of:
(i) My banker is ______________________________
_______________________________________________;
(ii) My accountant is ___________________________
___________________________________________; and
(iii) Other person is _____________________________
________________________________________________.
6. The undersigned hereby covenants and agrees to protect, indemnify
and hold the Company, and each of its officers, directors and shareholders,
harmless from and against any and all claims, demands, causes of action,
judgments, orders, decrees, damages, liabilities, court or other costs,
attorney fees, reasonable costs of investigation and other costs and expenses
whatsoever (i) arising out of or attributable to any breach or violation of,
or the falsity, inaccuracy or failure of, any representation, warranty or
covenant made by the undersigned in this letter, and (ii) arising from or
related to the acquisition, ownership or disposition by the undersigned of any
or all the Shares.
7. The undersigned's jurisdiction of residence is
____________________________.
8. I am acquainted with the requirements of Section 13(d) of the
Securities Exchange Act of 1934 and the rules and regulations issued
thereunder. I understand that, as a result of my acquisition of Shares, and
in order to comply with Section 13(d) and the rules and regulations issued
thereunder, I may be required to file a Schedule 13D and I agree to file if
that Schedule is required.
___________________________________ _________________________________
(Social Security or Tax I.D. Number) Signature(s) of Shareholder(s)
___________________________________ _________________________________
(Social Security or Tax I.D. Number) Signature(s) of Shareholder(s)
___________________________________
(Mailing Address)
___________________________________
Date:______________________________
