Exhibit 10.1
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT, dated as of this 4 day of May 2004 (this "Agreement"),
by and among Creative Vistas, Inc., an Arizona corporation ("CVSA"), and the
shareholders of Entec Software, Inc., a Delaware corporation ("Entec"), listed
on Exhibit A hereof (collectively, the "Shareholders"), relating to the purchase
and sale of all the outstanding shares of capital stock of Entec.
RECITALS
WHEREAS, the Shareholders currently and collectively own all of the issued
and outstanding common stock, par value $.01 per share, of Entec (the "Entec
Shares");
WHEREAS, each Shareholder is the record and beneficial owner of the number
of Entec Shares as set forth on Exhibit A;
WHEREAS, the Entec Shares represent all of the issued and outstanding
capital stock of Entec;
WHEREAS, the Shareholders desire to sell and CVSA desires to acquire all of
the Entec Shares on the terms and subject to the conditions set forth herein
(the "Exchange");
WHEREAS, it is the intention of the parties hereto that the Exchange will
qualify as a reorganization under Section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended, and related sections thereunder; and
WHEREAS, the parties have determined that it is in their respective best
interests to consummate the Exchange and to undertake such other actions
described herein, all on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, the parties agree as follows:
ARTICLE 1
EXCHANGE OF STOCK
1.1 NUMBER OF SHARES. The Shareholders agree to transfer to CVSA at the
Closing (defined below) the number of Entec Shares shown opposite their names on
Exhibit A, in exchange for an aggregate of 49,000,000 shares of no par Common
Stock of CVSA ("Common Stock") and 50,000,000 shares of Series A Convertible
Preferred Stock of CVSA ("Preferred Stock" and, together with the Common Stock,
"CVSA Shares"). The Preferred Stock of CVSA shall have the rights and
preferences set forth in the form of Certificate of Designation of Series A
Convertible Preferred Stock attached hereto as Exhibit B (the "Certificate of
Designation").
1.2 EXCHANGE OF CERTIFICATES. Each Shareholder of an outstanding
certificate or certificates representing Entec Shares shall surrender such
certificate or certificates for cancellation to CVSA, and shall receive in
exchange a certificate or certificates representing the number of CVSA Shares
into which the Entec Shares represented by the certificate or certificates so
surrendered shall have been converted, as set forth on Exhibit A. The transfer
of Entec Shares by the Shareholders shall be effected by the delivery to CVSA at
the Closing of certificates representing the Entec Shares endorsed in blank or
accompanied by stock powers executed in blank.
1.3 FRACTIONAL SHARES. Fractional CVSA Shares shall not be issued, but in
lieu thereof CVSA shall round up fractional CVSA Shares to the next highest
whole number.
1.4 UNEXCHANGED CERTIFICATES. Until surrendered, each outstanding
certificate that prior to the Closing represented Entec Shares shall be deemed
for all purposes, other than the payment of dividends or other distributions, to
evidence ownership of the number of CVSA Shares into which it was converted. No
dividend or other distribution shall be paid to the Shareholders of Entec Shares
until presented for exchange at which time any outstanding dividends or other
distributions shall be paid.
1.5 FURTHER ASSURANCES. At the Closing and from time to time thereafter,
the Shareholders shall execute such additional instruments and take such other
action as CVSA may request in order more effectively to sell, transfer, and
assign the Entec Shares to CVSA and to confirm CVSA's title thereto.
ARTICLE 2
CLOSING
2.1 TIME AND PLACE. The closing contemplated herein (the "Closing") shall
be held at _________ on ___________, 2004 at the offices of Xxxx X. Xxxx,
located at 000 Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000, unless another
place or time is agreed upon in writing by the parties without requiring the
meeting of the parties hereof. All proceedings to be taken and all documents to
be executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
The date of the Closing may be accelerated or extended by the written agreement
of the parties.
2.2 FORM OF DOCUMENTS. Any copy, facsimile telecommunication or other
reliable reproduction of the writing or transmission required by this Agreement
or any signature required thereon may be used in lieu of an original writing or
transmission or signature for any and all purposes for which the original could
be used, provided that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire original writing or
transmission or original signature.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, individually and separately, represent and warrant as
follows:
3.1 TITLE TO SHARES. The Shareholders, and each of them, are the owners,
free and clear of any liens and encumbrances, of the number of Entec Shares
which are listed on the attached Exhibit A and which they have contracted to
exchange.
3.2 AUTHORITY OF SHAREHOLDERS. Each of the Shareholders has the requisite
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and deliver of this Agreement by the
Shareholders and the consummation by the Shareholders of the transactions
contemplated hereby have been duly authorized by the Shareholders, and no other
actions on the part of either Shareholder is necessary to authorize this
Agreement and such transactions. This Agreement has been duly executed by the
Shareholders and, assuming the due authorization, execution and delivery by
CVSA, constitutes a valid and binding obligation of each Shareholder,
enforceable in accordance with its terms.
3.3 CORPORATE ORGANIZATION AND AUTHORITY OF ENTEC. Entec is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and is qualified to do business as a foreign corporation in
each jurisdiction, if any, in which its property or business requires such
qualification. Entec has all requisite corporate power and authority to own,
operate and lease its properties, to carry on its business as it is now being
conducted. This Agreement has been duly authorized and approved by Entec's board
of directors.
3.4 CAPITALIZATION OF ENTEC. The authorized capital stock of Entec consists
of 1,000,000 shares of Common Stock of Entec, $ .01 par value per share, of
which 1,000,000 shares are issued and outstanding and are owned of record and
beneficially by the Shareholders. All the outstanding Entec Shares are duly
authorized and validly issued, fully paid and non-assessable. There are no stock
grants, options, rights, warrants or other rights to purchase or obtain Entec
Shares or any preferred stock issued or committed to be issued.
3.5 SUBSIDIARIES. Except as set forth on a schedule attached hereto, Entec
has no subsidiaries.
3.6 FINANCIAL STATEMENTS. The financial statements of Entec shall be
audited for the past two fiscal years (the "Entec Financial Statements") for the
purpose of filing a Form 8-K/A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") in order for CVSA or successor to remain current
and reporting under the Exchange Act. The Entec Financial Statements shall
fairly present the financial condition of Entec as of the date therein and the
results of its operations for the periods then ended in conformity with
generally accepted accounting principles consistently applied.
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3.7 NO MATERIAL CHANGES. Except as set forth on a schedule attached hereto,
there has been no material adverse change in the business, properties, or
financial condition of Entec since the date of the Entec Financial Statements.
3.8 LITIGATION. There is no litigation or proceeding pending, or to either
Shareholder's knowledge threatened, against or relating to the Entec Shares held
by the Shareholders. Except as set forth on a schedule attached hereto, there is
not, to the knowledge of either Shareholder, any pending, threatened, or
existing litigation, bankruptcy, criminal, civil, or regulatory proceeding or
investigation, threatened or contemplated against Entec.
3.9 CONTRACTS. Except as forth on a schedule attached hereto, Entec is not
a party to any material contract not in the ordinary course of business that is
to be performed in whole or in part at or after the date of this Agreement other
than the agreements set forth on such schedule.
3.10 TITLE TO ENTEC PROPERTY. Except as forth on a schedule attached
hereto, Entec has good and marketable title to all the real property and good
and valid title to all other property included in the Entec Financial
Statements. Except as set out in the balance sheets which are part of the Entec
Financial Statements, the properties of Entec are not subject to any mortgage,
encumbrance, or lien of any kind except minor encumbrances that do not
materially interfere with the use of the property in the conduct of the business
of Entec.
3.11 NO VIOLATIONS. Neither the execution and delivery of this Agreement
nor the consummation of any of the transactions contemplated hereby will
constitute or result in a breach or default under any provision of any charter,
bylaw, indenture, mortgage, lease, or agreement, or any order, judgment, decree,
law, or regulation to which: (a) any property of either Shareholder is subject
or by which either Shareholder is bound; or (b) to which any property of Entec
is subject or by which Entec is bound.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CVSA
CVSA represents and warrants that:
4.1 CORPORATE ORGANIZATION AND GOOD STANDING AND AUTHORITY. CVSA is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Arizona and is qualified to do business as a foreign
corporation in each jurisdiction, if any, in which its property or business
requires such qualification. CVSA has all requisite corporate power and
authority to own, operate and lease its properties, to carry on its business as
it is now being conducted and to execute, deliver, perform and conclude the
transactions contemplated by this Agreement and all other agreements and
instruments related to this Agreement. Execution of this Agreement has been duly
authorized and approved by CVSA's board of directors.
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4.2 CAPITALIZATION. CVSA's authorized capital stock is as follows: (a)
100,000,000 shares of no par value Common Stock; and (b) 50,000,000 shares of no
par value preferred stock, without giving effect to the filing of the
Certificate of Designation pursuant to this Agreement. Immediately following the
filing of the Certificate of Designation with the Arizona Corporation
Commission, CVSA shall have 50,000,000 shares of duly authorized and unissued
Series A Convertible Preferred Stock. All the outstanding shares of Common Stock
are duly authorized and validly issued, fully paid and non-assessable, except as
set forth on a schedule attached hereto.
4.3 SUBSIDIARIES. CVSA has no wholly owned active and/or inactive
subsidiaries.
4.4 FINANCIAL STATEMENTS. CVSA's annual financial statements dated as of
September 30, 2003 and September 30, 2002, have been audited by independent
public accountants, and CVSA's quarterly financial statements for the periods
ended December 31, 2003, June 30, 2003, March 31, 2003, December 31, 2002, June
30, 3002, and March 31, 2002 have been reviewed by independent public
accountants (collectively, the "CVSA Financial Statements"), copies of which
will have been delivered by CVSA to Entec prior to the Closing, have been
prepared according the requirements of Regulation S-X promulgated by the U.S.
Securities and Exchange Commission, and fairly present the financial condition
of CVSA as of the dates therein and the results of its operations for the
periods then ended in conformity with generally accepted accounting principles
consistently applied. The CVSA Financial Statements fairly present the financial
condition of CVSA as of the date therein and the results of its operations for
the periods then ended in conformity with generally accepted accounting
principles consistently applied.
4.5 NO MATERIAL CHANGES. Except as set forth on a schedule attached hereto,
there has been no material adverse change in the business, properties, or
financial condition of CVSA since the date of the CVSA Financial Statements.
4.6 LITIGATION. Except as set forth on a schedule attached hereto, there is
not, to the knowledge of CVSA, any pending, threatened, or existing litigation,
bankruptcy, criminal, civil, or regulatory proceeding or investigation,
threatened or contemplated against CVSA.
4.7 CONTRACTS. Except as set forth on a schedule attached hereto, CVSA is
not a party to any material contract not in the ordinary course of business that
is to be performed in whole or in part at or after the date of this Agreement,
other than as provided under this Agreement.
4.8 TITLE. Except as set forth on a schedule attached hereto, CVSA has good
and marketable title to all the real property and good and valid title to all
other property included in the CVSA Financial Statements. Except as set out in
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the balance sheet thereof, the properties of CVSA are not subject to any
mortgage, encumbrance, or lien of any kind except minor encumbrances that do not
materially interfere with the use of the property in the conduct of the business
of CVSA.
4.9 NO VIOLATION. The Closing will not constitute or result in a breach or
default under any provision of any charter, bylaw, indenture, mortgage, lease,
or agreement, or any order, judgment, decree, law, or regulation to which any
property of CVSA is subject or by which CVSA is bound.
ARTICLE 5
CONDUCT PENDING THE CLOSING
CVSA and the Shareholders covenant that between the date of this Agreement
and the Closing as to each of them:
5.1 No change will be made in the charter documents, by-laws, or other
corporate documents of Entec.
5.2 Shareholders will use their best efforts to cause Entec to maintain and
preserve its business organization, employee relationships, and goodwill intact
and will not permit Entec to enter into any material commitment except in the
ordinary course of business.
5.3 No change will be made in the charter documents, by-laws, or other
corporate documents of CVSA, other than as expressly agreed by the parties
hereto in writing or to effect the terms of this Agreement, including, without
limitation, the filing of the Certificate of Designation with the Arizona
Corporation Commission.
5.4 CVSA will use its best efforts to file the Certificate of Designation
with the Arizona Corporation Commission at or before Closing.
5.5 CVSA will use its best efforts to maintain and preserve its business
organization and will not enter into any material commitment except in the
ordinary course of business.
5.6 Neither Shareholder will sell, transfer, assign, hypothecate, lien, or
otherwise dispose or encumber any or all of the Entec Shares owned by such
Shareholder.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDERS
The Shareholders' obligation to consummate the Exchange shall be subject to
fulfillment on or before the Closing of each of the following conditions, unless
waived in writing by the Shareholders as appropriate:
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6.1 CVSA'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CVSA set forth herein shall be true and correct at the Closing as
though made at and as of that date, except as affected by transactions
contemplated hereby.
6.2 BOARD OF DIRECTOR APPROVAL. This Agreement shall have been approved by
the board of directors of CVSA.
6.3 SUPPORTING DOCUMENTS OF CVSA. CVSA shall have delivered to the
Shareholders supporting documents in form and substance reasonably satisfactory
to the Shareholders, including:
(a) Secretary's certificate stating that CVSA has authorized capital
stock is as set forth herein;
(b) Certified copies of the resolutions of the board of directors of
CVSA authorizing the execution of this Agreement and the consummation of the
transactions contemplated herein;
(c) Evidence of the filing of the Certificate of Designation by CVSA
with the Arizona Corporation Commission;
(d) Secretary's certificate of incumbency of the officers and
directors of CVSA; and
(e) Any document as may be specified herein or required to satisfy the
conditions, representations and warranties enumerated elsewhere herein.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATION OF CVSA
CVSA's obligation to consummate the Exchange shall be subject to
fulfillment on or before the Closing of each of the following conditions, unless
waived in writing by CVSA:
7.1 SHAREHOLDERS' REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Shareholders set forth herein shall be true and correct at the
Closing as though made at and as of that date, except as affected by
transactions contemplated hereby.
7.2 ENTEC'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Entec set forth herein shall be true and correct at the Closing as
though made at and as of that date, except as affected by transactions
contemplated hereby.
7.3 BOARD OF DIRECTOR APPROVAL. This Agreement shall have been approved by
the board of directors of Entec.
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7.4 SUPPORTING DOCUMENTS OF ENTEC. Entec shall have delivered to CVSA
supporting documents in form and substance reasonably satisfactory to CVSA,
including:
(a) A good standing certificate from the Secretary of State of the
State of Delaware stating that Entec is a corporation duly organized, validly
existing, and in good standing;
(b) Secretary's certificate stating that Entec has authorized capital
stock is as set forth herein;
(c) Certified copies of the resolutions of the board of directors of
Entec authorizing the execution of this Agreement and the consummation hereof;
(d) Secretary's certificate of incumbency of the officers and directors
of Entec; and
(e) Any document as may be specified herein or required to satisfy the
conditions, representations and warranties enumerated elsewhere herein.
ARTICLE 8
TERMINATION
This Agreement may be terminated: (a) by written consent of each party to
this Agreement; (b) by the Shareholders if there has been a material
misrepresentation or material breach of any warranty or covenant by CVSA,
including, without limitation, that CVSA satisfy its obligations to deliver CVSA
Financial Statements as required under this Agreement; (c) by CVSA if there has
been a material misrepresentation or material breach of any warranty or covenant
by either Shareholder, including, without limitation, that the Shareholders
satisfy their obligation to deliver the Entec Financial Statements as required
under this Agreement; or (d) by the Shareholders or CVSA if the Closing shall
not have taken place within sixty (60) days following the filing of a Form 8-K
Current Report by Entec under the Exchange Act reporting the execution of this
Agreement, unless adjourned to a later date by written consent of each party to
this Agreement.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Shareholders and CVSA set forth
herein shall survive the Closing.
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ARTICLE 10
ARBITRATION
10.1 SCOPE. The parties to this Agreement hereby agree that any and all
claims under the terms of this Agreement will be resolved by arbitration before
the American Arbitration Association within the County of Maricopa, State of
Arizona.
10.2 CONSENT TO JURISDICTION, SITUS AND JUDGMENT. The parties hereby
irrevocably consent to the jurisdiction of the American Arbitration Association
and the situs of the arbitration (and any requests for injunctive or other
equitable relief) shall rest in the courts of Maricopa Count, Arizona. Any award
in arbitration may be entered in any domestic or foreign court having
jurisdiction over the enforcement of such awards.
10.3 APPLICABLE LAW. The law applicable to the arbitration and this
Agreement shall be that of the State of Arizona, determined without regard to
its provisions which would otherwise apply to a question of conflict of laws.
10.4 DISCLOSURE AND DISCOVERY. The arbitrator may, in its discretion, allow
the parties to make reasonable disclosure and discovery in regard to any matters
which are the subject of the arbitration and to compel compliance with such
disclosure and discovery order. The arbitrator may order the parties to comply
with all or any of the disclosure and discovery provisions of the Federal Rules
of Civil Procedure, as they then exist, as may be modified by the arbitrator
consistent with the desire to simplify the conduct and minimize the expense of
the arbitration.
10.5 RULES OF LAW. Regardless of any practices of arbitration to the
contrary, the arbitrator will apply the rules of contract and other law of the
jurisdiction whose law applies to the arbitration so that the decision of the
arbitrator will be, as much as possible, the same as if the dispute had been
determined by a court of competent jurisdiction.
10.6 FINALITY AND FEES. Any award or decision by the American Arbitration
Association shall be final, binding and non-appealable except as to errors of
law or the failure of the arbitrator to adhere to the arbitration provisions
contained in this Agreement. Each party to the arbitration shall pay its own
costs and counsel fees except as specifically provided otherwise in this
Agreement.
10.7 MEASURE OF DAMAGES. In any adverse action, the parties hereto shall
restrict themselves to claims for compensatory damages and\or securities issued
or to be issued and no claims shall be made by any party or affiliate for lost
profits, punitive or multiple damages.
10.8 COVENANT NOT TO XXX. The parties hereto covenant that under no
conditions will any party or any affiliate file any action against the other
(except only requests for injunctive or other equitable relief) in any forum
other than before the American Arbitration Association, and the parties agree
that any such action, if filed, shall be dismissed upon application and shall be
referred for arbitration hereunder with costs and attorney's fees to the
prevailing party.
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10.9 INTENTION. It is the intention of the parties hereto and their
affiliates that all disputes of any nature between them, whenever arising, under
this Agreement based on whatever law, rule or regulation, whether statutory or
common law, and however characterized, be decided by arbitration as provided
herein and that no party or affiliate be required to litigate in any other forum
any disputes or other matters except for requests for injunctive or equitable
relief, or rights of affiliates of the Shareholders under a separate securities
compliance services agreement or a secured note and pledge agreement executed in
connection with the securities compliance services agreement.
10.10 SURVIVAL. The provisions for arbitration contained herein shall
survive the termination of this Agreement for any reason.
ARTICLE 11
GENERAL PROVISIONS
11.1 FURTHER ASSURANCES. From time to time, each party hereto will execute
such additional instruments and take such actions as may be reasonably required
to carry out the intent and purposes of this Agreement.
11.2 WAIVER. Any failure on the part of any party hereto to comply with any
of its obligations, agreements, or conditions hereunder may be waived in writing
by the party to whom such compliance is owed.
11.3 BROKERS. CVSA agrees to indemnify and hold harmless the Shareholders
against any fee, loss, or expense arising out of claims by brokers or finders
employed or alleged to have been employed by CVSA. The Shareholders agree to
indemnify and hold harmless CVSA against any fee, loss, or expense arising out
of claims by brokers or finders employed or alleged to have been employed by
either Shareholder.
11.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class certified mail, return receipt requested, or recognized
commercial courier service, as follows:
If to CVSA:
Creative Vistas, Inc.
0000 Xxxx XxXxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx
If to the Shareholders:
Entec Software, Inc.
000 XX Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
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11.5 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Arizona.
11.6 ASSIGNMENT. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided,
however, that any assignment by any party of its rights under this Agreement
without the written consent of the other parties shall be void.
11.7 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures sent by
facsimile transmission shall be deemed to be evidence of the original execution
thereof.
11.8 REVIEW OF AGREEMENT. Each party hereto acknowledges that it has had
time to review this Agreement and, as desired, consult with counsel. In the
interpretation of this Agreement, no adverse presumption shall be made against
any party on the basis that it has prepared, or participated in the preparation
of, this Agreement.
11.9 SCHEDULES. All schedules attached hereto shall be acknowledged by each
party by signature or initials thereon and shall be dated.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT ON THE DATE
FIRST ABOVE WRITTEN.
CREATIVE VISTAS, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx, President and Chief Executive Officer
XXXXXXX XXXXXX
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
NETTEL HOLDINGS, INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
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EXHIBIT A
SHAREHOLDERS OF ENTEC SOFTWARE, INC.
Number of Shares of CVSA
Number of Entec Shares Number of Shares of Series A Convertible
Owned and to be CVSA Common Stock Preferred Stock
Name of Shareholder: Surrendered: to be Issued: to be Issued:
-------------------- ------------ ------------- -------------
Nettel Holdings, Inc. 600,000 29,400,000 30,000,000
Xxxxxxx Xxxxxx 400,000 19,600,000 20,000,000
TOTAL: 1,000,000 49,000,000 50,000,000
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EXHIBIT B
CERTIFICATE OF DESIGNATION OF SERIES A CONVERTIBLE
PREFERRED STOCK OF CREATIVE VISTAS, INC.
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