EXCHANGE AGREEMENT
This
Exchange Agreement (the “Agreement”),
dated
as of the 12th day of October, 2005, is made and entered into by and
among
a21, Inc., a Texas corporation (“a21”),
Clonure Limited an Isle of Xxxx corporation, Louis Xxxxxxx Xxxxxxx Xxxxxx
and
Xxxxx Xxxxxxx, (collectively the “Shareholders”).
WHEREAS,
the
Shareholders are the holders of Fourteen Thousand Four Hundred Eighty (14,480)
shares of Preferred Stock par value $0.001 per share of a21 which shares
of
Preferred Stock were issued to the Shareholders on October 12, 2005 (the
“Original
Issue Date”)
pursuant to the terms of that certain Share Purchase Agreement by and among
the
Shareholders and the other parties thereto dated as of October 12, 2005 (the
“Purchase
Agreement”);
and
WHEREAS,
the
Preferred Stock has a face value of $100 per share; and
WHEREAS,
a21 is
authorized to issue one hundred million (100,000,000) shares of Common Stock
par
value $0.001 per share (“a21
Common Stock”);
and
WHEREAS,
pursuant to the terms of the Purchase Agreement, the Shareholders are entitled
to exchange their shares of Preferred Stock for shares of a21 Common
Stock.
NOW,
THEREFORE,
in
consideration of the covenants and agreements set forth herein and in the
Purchase Agreement, and for other good and valuable consideration, and
sufficiency of which are hereby acknowledged and intending to be legally
bound
hereby the parties agree as follows:
1. Exchange
Rights at Option of the Holder.
At any
time, each share of Preferred Stock shall be exchangeable, at the option
of the
holder thereof, and without the payment of additional consideration by the
holder thereof, for such number of shares of fully paid, non-assessable shares
of a21 Common Stock at a rate equal to the face value of a share of Preferred
Stock divided by the Average Price, as hereinafter defined, of a21 Common
Stock,
but no less than fifty cents ($0.50) per share of a21 Common Stock (“Minimum
Exchange Price”). The rate at which shares of Preferred Stock may be exchanged
for shares of a21 Common Stock, shall be subject to adjustment as provided
below. “Average
Price”shall
mean the average of the Closing Price of the Common Stock for the 20 Trading
Day
period ending one Trading Day prior to the date notice of the exchange is
sent
by a Shareholder to a21; "Closing
Price"
shall
mean the closing price of the a21 Common Stock on the principal national
securities exchange (which for purposes of this definition shall include
the
Nasdaq Stock Market, Inc. and the OTC Bulletin Board) on which the shares
of a21
Common Stock are then traded, or if the shares of a21 Common Stock are not
traded on a principal national securities exchange, the mean of the bid and
asked prices of a share of a21 Common Stock in the over-the-counter market;
and
"Trading
Day"
shall
mean any day on which the shares of Common Stock are traded on their principal
trading market. Therefore, if the Minimum Exchange Price was $.50 per share,
each share of Series A Preferred Stock shall, as of the date hereof, be
exchangeable into 200 shares of a21 Common Stock.
2. Exchange/Redemption
Rights at Option of a21.
(a) At
any
time, the then outstanding shares of Preferred Stock shall be exchangeable,
at
the option of a21, and without the payment of additional consideration by
the
holder thereof, for such number of fully paid non-assessable shares of a21
Common Stock at a rate equal to ninety percent (90%) of the Average Price
at the
time of notice by a21 to the Shareholders but at a rate no greater than one
dollar ($1.00) per share of a21 Common Stock (“Maximum Exchange
Price”).
(b) In
addition, at any time prior to exchange of the Preferred Shares into a21
Common
Stock, the then outstanding shares of Preferred Stock shall be redeemable,
at
the option of a21, in exchange for an amount in cash equal to US $1,448,000
plus
five percent (5%) per annum, compounded annually, computed from the Original
Issue Date through and including the date the shares are redeemed.
3. Fractional
Shares.
No
fractional shares of a21 Common Stock shall be issued upon exchange of the
shares of Preferred Stock. In lieu of any fractional shares to which the
holder
would otherwise be entitled, a21 shall pay cash equal to such fraction
multiplied by the then effective Closing Price of a share of a21 Common Stock.
4. Mechanics
of an Exchange/Redemption.
(a) In
case
of an exchange pursuant to Section 1, in order for a holder of shares of
Preferred Stock to exchange shares of Preferred Stock for shares of a21 Common
Stock, such holder shall surrender the certificate or certificates for such
shares of Preferred Stock at the principal office of a21, together with written
notice (the “Exchange
Notice”)
to a21
that such holder elects to exchange all or any number of the shares of Preferred
Stock represented by such certificate or certificates. The Exchange Notice
shall
state such holder's name or the names of the nominees in which such holder
wishes the certificate or certificates for shares of a21 Common Stock to
be
issued. If required by a21, certificates surrendered for exchange shall be
endorsed or accompanied by a written instrument or instruments of transfer,
in
form reasonably satisfactory to a21, duly executed by the registered holder
or
such holder’s attorney duly authorized in writing. The date of receipt of such
certificates and the Exchange Notice by a21 shall be the exchange date (the
"Exchange
Date").
a21
shall, as soon as practicable after the Exchange Date, deliver at such office
to
such holder of Preferred Stock, or to such holder’s nominees, a certificate or
certificates for the number of shares of a21 Common Stock to which such holder
shall be entitled, together with cash in lieu of any fraction of a share.
On and
after the Exchange Date, such holder or such holder’s nominees shall be deemed
to be the record owner of such shares of a21 Common Stock and have all the
rights appertaining thereto.
(b) In
case
of an exchange pursuant to Section 2(a), in order for a21 to cause the holders
of shares of Preferred Stock to exchange their shares of Preferred Stock
for
shares of a21 Common Stock, a21 shall deliver to each holder of shares of
Preferred Stock a written notice (the “Company
Notice”)
that
a21 has elected to require such holder to exchange outstanding shares of
Preferred Stock into shares of a21 Common Stock, together with its calculation
of the number of shares of a21 Common Stock that such holder is entitled
to
receive upon surrender of such holder’s shares of Preferred Stock. In order to
receive certificates representing shares of a21 Common Stock, such holder
shall
surrender the certificate or certificates for such shares of Preferred Stock
at
the principal office of a21, together with the name, if any, of any person
other
than the holder in which such holder wishes the certificate or certificates
for
shares of a21 Common Stock to be issued. If required by a21, certificates
surrendered for exchange shall be endorsed or accompanied by a written
instrument or instruments of transfer, in form reasonably satisfactory to
a21,
duly executed by the registered holder or such holder’s attorney duly authorized
in writing. For purposes of Section 2, the Exchange Date shall be the date
of
receipt by the holders of the shares of Preferred Stock of the Company Notice.
a21 shall, as soon as practicable after the Exchange Date, deliver at such
office to such holder of Preferred Stock, or to such holder’s nominees, a
certificate or certificates for the number of shares of a21 Common Stock
to
which such holder shall be entitled, together with cash in lieu of any fraction
of a share. On and after the Exchange Date, such holder or such holder’s
nominees shall be deemed to be the record owner of such shares of a21 Common
Stock and have all the rights appertaining thereto.
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(c) In
case
of a redemption pursuant to Section 2(b), in order for a21 to cause the holders
of shares of Preferred Stock to surrender their shares of Preferred Stock
for
cash, a21 shall deliver to each holder of shares of Preferred Stock a written
notice (the “Redemption
Notice”)
that
a21 has elected to require such holder to surrender outstanding shares of
Preferred Stock into cash, together with its calculation of the amount of
cash
(the “Price”)
that
such holder is entitled to receive upon surrender of such holder’s shares of
Preferred Stock. In order to receive the Price, such holder shall surrender
the
certificate or certificates for such shares of Preferred stock at the principal
office of a21. If required by a21, certificates surrendered shall be endorsed
or
accompanied by a written instrument or instruments of transfer, in form
reasonably satisfactory to a21, duly executed by the registered holder or
such
holder’s attorney duly authorized in writing. a21 shall, as soon as practicable
after receipt of the certificates for Preferred Stock, deliver to such holder
of
Preferred Stock a certified or bank check for the Price for such
shares.
(d) All
shares of Preferred Stock which shall have been surrendered or deemed to
have
been surrendered for exchange or redemption as herein provided shall be
cancelled by a21 and shall no longer be deemed to be outstanding. All rights
with respect to such cancelled shares, including the right, if any, to receive
notices and to vote, shall immediately cease and terminate on the Exchange
Date,
except only the right of the holders thereof to receive certificates
representing shares of a21 Common Stock and cash in lieu of fractional shares
in
exchange therefor or the Price in cash as the case may be.
5. Reservation
of Shares.
a21
shall at all times when shares of Preferred Stock shall be outstanding, reserve
for the purpose of effecting the exchange of the shares of Preferred Stock,
such
number of its shares of a21 Common Stock as shall from time to time be
sufficient to effect the exchange of all outstanding shares of Preferred
Stock.
6. Adjustments
to Exchange Price.
(a) Adjustment
for Stock Splits and Combinations.
If a21
shall at any time or from time to time after the Original Issue Date effect
a
subdivision of the outstanding shares of a21 Common Stock, the Minimum Exchange
Price and Maximum Exchange Price then in effect immediately before that
subdivision shall be proportionately decreased. If a21 shall at any time
or from
time to time after the Original Issue Date combine the outstanding shares
of a21
Common Stock, the Minimum Exchange Price and the Maximum Exchange Price then
in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this Section 6(a) shall become effective at the close
of
business on the date the subdivision or combination becomes effective.
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(b) Adjustment
for Certain Dividends and Distributions.
In the
event a21 at any time, or from time to time after the Original Issue Date
shall
make or issue, or fix a record date for the determination of holders of shares
of a21 Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of a21 Common Stock, then and in each such event
the Minimum Exchange Price and Maximum Exchange Price shall be decreased
as of
the time of such insurance or, in the event such a record date shall have
been
fixed, as of the close of business on such record date, by multiplying the
Minimum Exchange Price and Maximum Exchange Price by a fraction:
(x)
the
numerator of which shall be the total number of shares of a21 Common Stock
issued and outstanding immediately prior to the time of such issuance or
the
close of business on such record date; and
(y)
the
denominator of which shall be the total number of shares of a21 Common Stock
issued and outstanding immediately prior to the time of such issuance or
the
close of business on such record date plus the number of shares of a21 Common
Stock issuable in payment of such dividend or distribution;
provided,
however, that if such record date shall have been fixed and such dividend
is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Minimum Exchange Price and Maximum Exchange Price for shall be recomputed
accordingly as of the close of business on such record date and thereafter
the
Minimum Exchange Price and Maximum Exchange Price shall be adjusted pursuant
to
this Section 6(b) as of the time of actual payment of such dividends or
distributions.
(c) Adjustments
for Stock Splits, Reverse Stock Splits, Other Dividends and
Distributions.
In the
event a21 at any time after the Original Issue Date shall make or issue,
or fix
a record date for the determination of holders of a21 Common Stock entitled
to
receive, a dividend or other distribution payable in securities of a21 other
than shares of a21 Common Stock, or shall subdivide its outstanding a21 Common
Stock or combine its outstanding a21 Common Stock into a smaller number of
shares of a21 Common Stock, then and in each such event a21 shall make provision
so that the holders of the shares of Preferred Stock shall receive upon exchange
thereof in addition to the number of shares of a21 Common Stock receivable
thereupon, the amount of securities of a21 that they would have received
had the
shares of Preferred Stock been exchanged for shares of a21 Common Stock
immediately prior to the date of such event and had they thereafter, during
the
period from the date of such event to and including the Exchange Date, retained
such securities receivable by them as aforesaid during such period, giving
application to all adjustments called for during such period under this Section
6(c) with respect to the rights of the holders of shares of Preferred Stock.
(d) Adjustment
for Reclassification, Exchange or Substitution.
If the
shares of a21 Common Stock issuable upon the exchange of the shares of Preferred
Stock shall be changed into the same or a different number of shares of any
class or classes of stock, whether by capital reorganization, reclassification,
or otherwise (other than a subdivision or combination of shares or stock
dividend provided for above, or a reorganization, merger, consolidation,
or sale
of assets or capital stock provided for below), then and in each such event
the
holder of each such share of Preferred Stock shall have the right thereafter
to
exchange such share into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification,
or other change, by holders of the number of shares of a21 Common Stock for
which such shares of Preferred Stock might have been exchanged immediately
prior
to such reorganization, reclassification, or change, all subject to further
adjustment as provided herein.
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(e) Adjustment
for Merger or Reorganization, etc.
In case
of any consolidation or merger of a21 with or into another corporation or
the
sale of all or substantially all of the assets of a21 to another corporation,
each share of Preferred Stock shall be exchangeable (or shall be exchanged
for a
security which shall be exchangeable) for the kind and amount of shares of
stock
or other securities or property to which a holder of the number of shares
of a21
Common Stock deliverable upon exchange of such shares of Preferred Stock
would
have been entitled upon such consolidation, merger or sale.
(f) No
Impairment.
Without
limiting the foregoing, a21 shall use its best efforts to carry out all the
provisions of this Section 6 and to take all such action as may be necessary
or
appropriate in order to protect against impairment the rights of the holders
of
shares of Preferred Stock to exchange their shares in accordance
herewith.
7. Other
Notices.
In case
at any time:
(a) a21
shall
declare any dividend upon a21 Common Stock payable in cash or stock or make
any
other distribution to the holders of a21 Common Stock;
(b) a21
shall
offer for subscription pro rata to the holders of a21 Common Stock any
additional shares of stock of any class or other rights;
(c) there
shall be any capital reorganization or reclassification of the capital stock
of
a21, or a consolidation or merger of a21 with or into another entity or
entities, or a sale, lease, abandonment, transfer or other disposition of
all or
substantially all its assets or a sale of 50% or more of the issued and
outstanding a21 Common Stock; or
(d) there
shall be a voluntary or involuntary dissolution, liquidation or winding up
of
a21;
then,
in
any one or more of said cases, a21 shall give, by delivery in person, certified
or registered mail, return receipt requested, telecopier or telex, addressed
to
each holder of any shares of Preferred Stock at the address of such holder
as
shown on the books of a21, (a) at least 20 days’ prior written notice of the
date on which the books of a21 shall close or a record shall be taken for
such
dividend, distribution or subscription rights or for determining rights to
vote
in respect of any such reorganization, reclassification, consolidation, merger,
disposition, dissolution, liquidation or winding up and (b) in the case of
any
such reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up, at least 20 days’ prior written notice
of the date when the same shall take place. Such notice in accordance with
the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of a21
Common
Stock shall be entitled thereto and such notice in accordance with the foregoing
clause (b) shall also specify the date on which the holders of a21 Common
Stock
shall be entitled to exchange their a21 Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding up, as the case
may
be.
8. Amendments.
This
Agreement shall not be modified, amended or terminated without the written
consent of all of the parties hereto.
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9. Further
Assurances.
Each of
the parties hereto shall use its commercially reasonable efforts to do all
things necessary and advisable to make effective the transaction contemplated
hereby and shall cooperate and take such action as may be reasonably requested
by the other party in order in carry out fully the provisions and purposes
of
this Agreement and the transactions contemplated thereby.
10. Counterparts.
This
Agreement may be executed in one or more counterparts (including by facsimile)
each of which shall be deemed to be an original, or which together shall
constitute one in the same instrument.
11. Governing
Law; Venue.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York, without regard to principles of conflicts of law. Each
party
agrees that it will bring any action or proceeding in respect to any claim
arising out of or related to this Agreement or the transaction whether in
tort
or contract or at law and equity, exclusively in the U.S. District Court
for the
Southern District of New York (the “Chosen Courts”). In connection with such
claims arising out of or related to this Agreement or the transaction, each
party irrevocably submits to the exclusive jurisdiction of the Chosen Courts,
waives any objection to laying venue in any such action or proceeding in
the
Chosen Courts, waives any objection that the Chosen Courts are on inconvenient
forum or do not have jurisdiction over any of the parties, agrees that service
of process in person or by certified or registered mail to its address will
constitute valid in person or service upon such party and its successors
and
assigns in any action or proceeding with respect to any matter as to which
it
has submitted to jurisdiction hereunder.
[The
balance of this page is intentionally left blank.]
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IN
WITNESS WHEREOF, this Exchange Agreement has been executed as of the day
and
year first above written.
|
a21, Inc.
/s/
Xxxxxx Xxxxx, as attorney
By:
Title:
CLONURE
LIMITED
/s/
By:
Title:
/s/
Louis Xxxxxxx Xxxxxxx Xxxxxx
Xxxxx
Xxxxxxx Xxxxxxx Xxxxxx
/s/
Xxxxx Xxxxxxx
Xxxxx
Xxxxxxx
|
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