EXHIBIT 10.3
AGREEMENT FOR THE EXCHANGE OF STOCK
AGREEMENT made this 8th day of October, 1998, by and between Fragrance
Express, Inc., a Nevada corporation, including its wholly owned subsidiary,
Fragrance Express, inc., a Florida corporation (hereinafter collectively
referred to as the "ISSUER") and the individuals listed in Exhibit A attached
hereto, (the "SHAREHOLDERS"), which SHAREHOLDERS own all of the issued and
outstanding shares of National Boston Medical, Inc. a Delaware corporation.
("NBM")
In consideration of the mutual promises, covenants, and representations
contained herein, and other good and valuable consideration,
THE PARTIES HERETO AGREE AS FOLLOWS:
1. EXCHANGE OF SECURITIES. Subject to the terms and conditions of this
Agreement, the ISSUER agrees to issued to SHAREHOLDERS, 14,988,614 shares of
RESTRICTED common stock of ISSUER (calculated as post-split shares or 59,954,456
pre-split shares), $0.001 par value, in exchange for 100% of the issued and
outstanding shares of NBM, such that NBM shall become a wholly owned subsidiary
of the ISSUER. The shares to be issued to NBM will not be Registered, but will
be issued pursuant to an exemption from Registration.
2. REPRESENTATIONS AND WARRANTIES. ISSUER represents and warrants to
SHAREHOLDERS and NBM the following:
i. Organization. ISSUER is a corporation duly organized, validly
existing, and in good standing under the laws of Nevada, 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 Nevada. All actions taken by
the Incorporators, directors and shareholders of ISSUER have been valid and in
accordance with the laws of the State of Nevada. Additionally, ISSUER is
authorized to do business in the State of Florida. ISSUER has a wholly owned
subsidiary, Fragrance Express, Inc., a Florida corporation ("FEF"), which has
2,000,000 shares of common stock outstanding, 100% of which is owned by ISSUER
and no other class of shares are outstanding.
ii. Capital The authorized capital stock of ISSUER consists of
50,000,000 shares of common stock, $0.001 part value, 9,965,432 shares of which
were issued and outstanding as of close of business October 8, 1998, and
20,000,000 shares of preferred stock, 1,047,500 shares of which were issued and
outstanding as of the same date. This calculation is prior to a 1 for 4 reverse
split of all common shares by the board of Directors on October 8, 1998, and
prior to a 1 for 20 reverse split of all preferred shares approved by the Board
of Directors the same date. All outstanding shares are fully paid and
nonassessable, free of liens, encumbrances, options, restrictions and legal or
equitable rights of others not a party to this Agreement. All of the
shareholders of ISSUER have a valid title to such shares and acquired their
shares in a lawful transaction and in accordance with the state and federal
securities laws.
iii. Financial Statements. Exhibit B to this Agreement includes the
1997 Audited Financial Statements of ISSUER. The financial statements have been
prepared in accordance with generally accepted accounting principles
consistently followed by ISSUER throughout the periods indicated, and fairly
present the financial position of ISSUER as of the date of the financial
statements, and the results of its operations for the periods indicated.
iv. Liabilities. ISSUER has no liabilities other than as listed on
Exhibit C. ISSUER is not aware of any pending, threatened or asserted claims,
lawsuits or contingencies involving ISSUER and any third party, and no other
such dispute will exist at the time of closing.
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 or its
shareholders are a party, or by which they 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 or any lien, charge or encumbrance on any
asset of ISSUER or upon the securities of ISSUER to be acquired by SHAREHOLDERS.
vi. Full Disclosure. None of the representations and warranties made
by the ISSUER, or in any certificate or memorandum furnished or to be furnished
by the ISSUER, contains or will contain any untrue statement of a material fact,
or omit any material fact the omission of which would be misleading.
vii. Compliance with Laws. ISSUER has complied with, and is not in
violation of any federal, state, or local statute, law, and/or regulation
pertaining to ISSUER. ISSUER has complied with all federal and state securities
laws in connection with the issuance, sale and distribution of its securities.
viii. Conduct of Business. Prior to the closing, ISSUER shall conduct
its business in the normal course.
ix. Corporate Documents. Copies of each of the following documents,
which are true, complete and correct in all material respects, will be attached
to and made a part of this Agreement: 12. Articles of Incorporation; 13. Bylaws;
14. List of Officers and Directors; 15. 1997 Audited Financial Statements as
described in Section 2(iii); 16. List of Liabilities.
x. Documents. All minutes, consents or other documents pertaining to
ISSUER to be delivered at closing shall be valid and in accordance with both the
laws of Nevada and of Florida.
xi. Title. The Shares to be issued to SHAREHOLDERS will be, at
closing, free and clear of all liens, security interests, pledges, charges,
claims and encumbrances of any kind. They will, however, be RESTRICTED
SECURITIES, as that term is defined by the Securities Act of 1933. The Shares to
be issued to SHAREHOLDERS will not be Registered, but will be issued pursuant to
an exemption from Registration. They will be subject to certain resale
restrictions imposed by Rule 144, or other applicable provisions of state and/or
Fed3eral law. However, none of such Shares are or will be subject to any voting
trust or agreement. No person holds or has the right to receive any proxy or
similar instrument with respect to such shares, except as provided in this
Agreement. The ISSUER is not a party to any agreement which offers or grants to
any person the right to purchase or acquire any of the securities to be issued
to SHAREHOLDERS. 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 Shares.
The Availability of Federal and state exemptions and the legality of the
issuance of the Shares are conditioned upon, among other things, the fact that
the issuance of Shares to SHAREHOLDERS is for investment purposes only and not
with a view toward resale or distribution. Accordingly, SHAREHOLDERS represent
and do hereby represent that they are taking the Shares for their own account
and for the purpose of investment only, not with a view to, or in accordance
with, the distribution or sale of the Shares and that they will not sell,
pledge, assign or transfer or offer to sell, pledge, assign or transfer any of
their Shares without an effective registration statement under the Securities
Act, or an exemption therefrom and an opinion of counsel acceptable to the
Company that registration under the Securities Act is not required and that the
transaction complies with all applicable Federal and state securities or Blue
Sky laws.
3. SHAREHOLDERS and NBM represent and warrant to ISSUER the following:
i. Organization. NBM is a corporation duly organized, validly
existing, and 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 NBM have been valid and in
accordance with the laws of the State of Delaware.
ii. Capital. The authorized capital stock of NBM consists of
15,000,000 shares of common stock, $.01 par value, of which 14,988,614 shares
are issued and outstanding, and 590 shares of preferred stock, none of which are
issued and outstanding. All outstanding shares are fully paid and nonassessable,
free of liens, encumbrances, options, restrictions and legal or equitable rights
of others not a party to this Agreement. A total of 1,577,333 Warrants are
outstanding exercisable into 1,577,333 shares of Common Stock. At closing, there
will be no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating NBM to issue or to
transfer from treasury and additional shares of its capital stock except as set
forth herein. None of the outstanding shares of NBM are subject to any stock
restriction agreements. All of the shareholders of NBM have valid title to such
shares and acquired their shares in a lawful transaction and in accordance with
the laws of the State of Delaware.
iii. Liabilities. NBM is not aware of any pending, threatened or
asserted claims, lawsuits or contingencies involving NBM or its common stock.
There is no dispute of any kind between NBM and any third party, and no such
dispute will exist at the closing of this Agreement.
iv. Ability to Carry Out Obligations. NBM has the right, power, and
authority to enter into and perform its obligations under this Agreement. The
execution and delivery of this Agreement by NBM and the performance by NBM of
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 NBM or its
shareholders are a party, or by which they may be bound, no will any consents or
authorizations of any party other than those hereto be required, (b) an event
that would cause NBM to be liable to any party, or (c) an event that would
result in the creation or imposition or any lien, charge or encumbrance on any
asset of NBM or upon the securities of NBM to be acquired by ISSUER>
v. Full Disclosure. None of the representations and warranties made by
NBM, or in any certificate or memorandum furnished or to be furnished by NBM,
contains or will contain any untrue statement of a material fact, or omit any
material fact the omission of which would be misleading.
vi. Compliance with Laws. NBM has complied with, and is not in
violation of any federal, state, or local statute, law, and/or regulation
pertaining to NBM. NBM has complied with all federal and state securities laws
in connection with the issuance, sale and distribution of its securities.
vii. Corporate Documents. Copies of each of the following documents,
which are true complete and correct in all material respects, will be attached
to and made a part of this Agreement:
1. Articles of Incorporation;
2. Bylaws;
3. List of Officers and Directors;
viii. Documents. All minutes, consents or other documents pertaining
to NBM to be delivered at closing shall be valid and in accordance with the laws
of Florida.
4. BUY-BACK PROVISION.
ISSUER and NBM agree that immediately following the closing of this
Agreement, FEF shall cause to be issued, two (2) classes of Preferred Stock as
follows:
i. To existing management of FEF one (1) million shares designated as
Class A Preferred (preference being non-voting and each share convertible into
six (6) shares of Common Stock of FEF except as otherwise provided herein); and
ii. To the existing shareholders of ISSUER immediately prior to
closing, one (1) million shares of Class B Preferred (preference being
non-voting and each share convertible into tow (2) shares of FEF except as
otherwise provided herein).
Both classes of Preferred Stock shall be convertible into Common Stock
of FEF only upon the occurrence of the earlier of the following:
(a) Three years from and after the closing of this Agreement; or
(b) At any time more than one (1) year from and after the date of
this Agreement, the FEF Board of Directors approves a spin-off of the
corporation as a separate independent, operating entity.
In the event more than three (3) years from and after the date of this
Agreement passes and (A) a spin-off of FEF has not occurred or been initiated;
or (B) ISSUER has not been accepted for listing on the NASDAQ Small Cap Market,
NASDAQ National Market, American Stock Exchange, or other equivalent exchange,
and the Common Stock has not reached a minimum ten dollars ($10.00) per share
bid price on any such exchange for a minium of sixty (60) consecutive calendar
days at any time from and after the second anniversary date of the execution of
this Agreement, the Board of Directors of ISSUER and FEF shall jointly meet (a
simple majority of the combined Boards is sufficient for this action) and shall
make a final decision. In the event a spin-off of FEF in initiated and
completed, Preferred shares shall be converted into Common Stock as previously
stated. In the event the combined Board of Directors elect not to spin-off FEF,
the holders of the Class A and Class B Preferred shares shall have such shares
converted into Common Stock as follows:
(i) Each one (1) share of Class A Preferred into one (1) shares
of ISSUER; and
(ii) Each one (1) shares of Class B Preferred into three-fourths
(3/4) share of the Common Stock of ISSUER.
Notwithstanding any of the foregoing, one hundred percent (100%) of the
holders of Class A and Class B Preferred shares may elect at any time to convert
the Class A and Class B Preferred shares into the Common Stock of ISSUER at the
rate stated in the preceding sentence, and thereafter any conversion rights and
any other provisions with respect to a spin-off shall be forthwith null and
void.
In any and all such events, NBM shall retain a minimum of twenty percent
(20%) of the issued and outstanding common stock of FEF, and other equity
interests in the event tow (2) or more classes of stock are issued and
outstanding.
5. NAME CHANGE. Promptly after closing ISSUER shall change its name to National
Boston Medical, Inc.
6. CLOSING. The closing of this transaction shall take place at the law offices
of Mintmire & Associates @ 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx.
7. INDEMNIFICATION OF ISSUER AND ITS OFFICERS AND DIRECTORS. ISSUER shall
indemnify NBM, its Officers, Directors, Employees and Agents in accordance with
the following: (i) ISSUER shall indemnify and hold harmless NBM, its Officers,
Directors, Employees and Agents who is or will be a party, or is threatened to
be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, from any
action brought by or on behalf of any creditor of ISSUER or party injured by
ISSUER, its Officers, Directors, Employees or Agents or by reason of the fact
that he is or was a director, officer, employee or agent of ISSUER, or is or was
otherwise serving at the request of ISSUER as a director, officer, employee or
agent of another corporation, partnership joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, actually and reasonably incurred by NBM, its
Officers, Directors, Employees and Agents in connection with such action, suit
proceeding with regard to any debt or liability not communicated to and accepted
in writing by NBM; and, (ii) The indemnification provided by this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under this Agreement.
8. EXPENSE PROVISION. ISSUER and NBM agree to and shall reimburse the other for
any and all expenses, debts, claims or similar charges not disclosed to the
other herein and further agree that such items, if any, may be offset by either
party against any amounts owed or due the other.
9. REMEDIES.
i. 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 Palm Beach County, Florida in accordance with the
Rules of the American Arbitration Association under its Commercial Arbitration
Rules then existing, and judgment on the arbitration award may be entered in any
court having jurisdiction over the subject mater of the controversy.
10. MISCELLANEOUS.
i. Captions and Headings. The Article and paragraph headings
throughout this Agreement are for convenience and reference only, and shall in
now 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 herein, may not
be waived, changed, modified, or discharged orally, but only by a written
agreement signed by both parties to this Agreement.
iii. No Waiver. Except as otherwise 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 (a) 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, (b) 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 (c) 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.
iv. Ability to Ask Questions. SHAREHOLDERS have been given a full
opportunity to ask questions of and to receive answers from the ISSUER
concerning the terms and conditions of this Agreement and the business of the
ISSUER, and to obtain additional information necessary to verify the accuracy of
the information given him/her or to obtain such other information as is desired
in order to evaluate the ISSUER and this transaction. All such questions have
been answered to the full satisfaction of the SHAREHOLDER.
v. Advice of Counsel. NBM and SHAREHOLDERS have been represented by
independent counsel by Xxxxxx X. Xxxxxxxx, Esq. And Xxxxxxx X. Xxxxxxxxxx, Esq.
Of Mintmire & Associates and has also sought the advice of an independent tax
advisor with regard to the tax consequences of this Agreement. ISSUER has
proceeded without legal representation.
vi. Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
vii. Entire Agreement. This Agreement contains the entire Agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings.
viii. 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.
ix. 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, and by fax, as follows:
ISSUER: Fragrance Express, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
NBM: National Boston Medical, Inc.
X.X. Xxx 0000
00 Xxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxxxxxx
Mintmire & Associates
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
x. Agreement to Carry Out Purpose. The parties agree to execute any
and all additional documents reasonably required to effect and carry out the
terms of this Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Agreement this 8th
day of October, 1998.
ISSUER NBM
Fragrance Express, Inc. National Boston Medical, Inc.
a Nevada Corporation And SHAREHOLDERS
By: /s/ Xxxxxx X. B[illegible] By:/s/ Xxxxxx X. Xxxxx
EXHIBIT A
SHAREHOLDERS LIST
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EXHIBIT B
FINANCIAL STATEMENTS
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EXHIBIT C
LIABILITIES
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