Share Exchange Agreement
This
Share Exchange Agreement dated as of this 12th day of
January 2010 (the "Agreement") between East Coast Diversified Corporation, a
publicly-held Nevada corporation with offices located at 0000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx
000, Xxxx Xxxxxxxxxx, XX 00000 ("ECDC"), EarthSearch Communications
International, Inc., a Delaware corporation, with offices located at 000 Xxxxxxxxxx Xxxxx Xxxxxxx, Xxxxx
000, Xxxxxxx, XX 00000 ("EarthSearch") and the shareholders of
EarthSearch ("EarthSearch Shareholders") set forth in Annex A
hereto.
WHEREAS,
ECDC, EarthSearch and the EarthSearch Shareholders wish to enter into
this Agreement pursuant to which ECDC will acquire 100% of the issued and
outstanding shares co common stock of EarthSearch, par value $.__ ("EarthSearch
Shares") in exchange for thirty-five million (35,000,000) shares of the ECDC's
common stock, par value $.0001 ("ECDC Shares") in a transaction intended to
qualify as a reorganization within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended, and as a result of this Agreement,
EarthSearch will become a wholly-owned subsidiary of ECDC; and
WHEREAS,
the ECDC and EarthSearch
and the EarthSearch Shareholders agree that this Agreement shall become effective (the
"Effective Date") as of the completion by ECDC of the fulfillment of all obligations under a
separate private stock purchase agreement dated December 18, 2009 ("PSPA"), between those ECDC
shareholders set forth in the PSPA (the "Sellers") and Kayode Aladesuyi (the "Buyer").
NOW,
THEREFORE, ECDC, EarthSearch and the EarthSearch Shareholders agree as
follows:
1.
EXCHANGE OF STOCK
1.1
NUMBER OF SHARES. The parties have agreed to enter into this Agreement to
become effective as of the Effective Date as defined above. Upon the Effective
Date, the certificates evidencing EarthSearch Shares, will be delivered to the
ECDC, together with such other documentation of in order for ECDC to acquire
record and beneficial ownership of the EarthSearch Shares, and the ECDC will
cause its transfer agent to the EarthSearch Shareholders thirty-five million
(35,000,000) ECDC Shares.
1.2.
EXCHANGE OF CERTIFICATES. Each shareholder owning EarthSearch Shares shall take
all necessary steps and execute all necessary documentation to transfer record
and beneficial ownership of the EarthSearch Shares and in exchange, immediately
following the Effective Date, shall be issued and receive newly-issued ECDC
Shares as set forth above. The share exchange of EarthSearch Shares by the
shareholders of EarthSearch Shares into ECDC Shares shall be effected by ECDC at
the Effective Date.
1.3.
FURTHER ASSURANCES. At the Effective Date and from time to time thereafter, the
parties
shall execute such additional instruments and take such other action as ECDC and
EarthSearch
may request in order to effectively consummate the transactions and purposes of
this Agreement.
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2.
EFFECTIVE DATE
2.1. TIME
AND PLACE. The Effective Date contemplated herein shall be held as soon as
possible but not later than February __, 2010, at the offices of ECDC, or such
other place or date as is agreed to by the parties, without requiring the
meeting of the parties hereto. All proceedings to be taken and all documents to
be executed at the Effective Date 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 Effective Date 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.
3.
REPRESENTATIONS AND WARRANTIES OF EARTHSEARCH SHAREHOLDERS. The EarthSearch
Shareholders, individually and collectively, represent and warrant as
follows:
3.1.
TITLE TO SHARES. The EarthSearch Shareholders, and each of them, are the owners,
free and clear of any liens and encumbrances, of all of the issued and
outstanding EarthSearch Shares as set forth on Annex A.
3.2.
LITIGATION. There is no litigation or proceeding pending, or to any of the
EarthSearch Shareholder's knowledge threatened, against or relating to the
EarthSearch Shares held by the EarthSearch Shareholders.
4.
REPRESENTATIONS AND WARRANTIES OF ECDC. ECDC represents and warrants
that:
4.1.
CORPORATE ORGANIZATION. ECDC is a corporation duly organized under the laws of
the State of Nevada and is qualified to do business as a foreign corporation in
each jurisdiction, if any, in which its property or business requires such
qualification.
4.2.
REPORTING COMPANY STATUS. The ECDC has been a current reporting company pursuant
to Section 12 (g) of the Securities Exchange Act of 1934 ("Exchange
Act").
4.3.
CAPITALIZATION. The authorized capital stock of ECDC consists of 74,000,000
shares of common stock, $.001 par value, of which 7,260,639 ECDC Shares are
issued and outstanding, and 1,000,000 shares of preferred stock, par value
$.001, of which no shares are issued or outstanding.
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4.4.
ISSUED STOCK. All the 7,260,639 ECDC Shares issued and outstanding are duly
authorized and validly issued, fully paid and non-assessable.
4.5.
CORPORATE AUTHORITY. ECDC 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.
4.6.
AUTHORIZATION. Execution of this Agreement has been duly authorized and approved
by ECDC's board of directors and consented to by the holders of a majority of
ECDC Shares.
4.7. NO
SUBSIDIARIES. ECDC has no subsidiaries.
4.8.
FINANCIAL STATEMENTS. The financial statements of ECDC ("ECDC Financial
Statements") filed with the Securities and Exchange Commission ("SEC"), copies
of which have been made available to the management of EarthSearch and are
available to the EarthSearch Shareholders on the SEC website, fairly present the
financial condition of ECDC, in conformity with generally accepted accounting
principles consistently applied.
4.9.
ABSENCE OF DISCLOSED OR UNDISCLOSED LIABILITIES. Except to the extent reflected
or reserved against in the ECDC Financial Statements, ECDC did not have at the
date of this Agreement any liabilities or obligations (secured, unsecured,
contingent, or otherwise) of a nature customarily reflected in a corporate
balance sheet prepared in accordance with generally accepted accounting
principles.
4.10. NO
MATERIAL CHANGES. There has been no material adverse change in the business,
properties, or financial condition of ECDC since the date of the ECDC Financial
Statements.
4.11.
LITIGATION. There is not, to the knowledge of ECDC, any pending, threatened, or
existing litigation, bankruptcy, criminal, civil, or regulatory proceeding or
investigation, threatened or contemplated against ECDC.
4.12.
CONTRACTS. ECDC 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.
4.13. NO
VIOLATION. The transactions to be taken on or before the Effective Date 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 ECDC is subject or by which ECDC is
bound.
5.REPRESENTATIONS
AND WARRANTIES OF EARTHSEARCH. EarthSearch represents
and warrants that:
5.1.
CORPORATE ORGANIZATION AND GOOD STANDING. EarthSearch is a corporation
duly
organized and 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.
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5.2.
CAPITALIZATION. EarthSearch's authorized capital stock consists of 200,000,000
EarthSearch Shares, par value $.001, of which 123,832,494
EarthSearch Shares are issued and outstanding as of the date of this
Agreement.
5.3.
ISSUED STOCK. All the outstanding EarthSearch Shares are duly authorized and
validly issued, fully paid and non-assessable.
5.4.
STOCK RIGHTS. Other than as set forth on the attached schedule, there are no
stock grants, options, rights, warrants or other rights to purchase or obtain
EarthSearch Shares nor are any EarthSearch Shares committed to be issued other
than as contemplated under this Agreement.
5.5.
CORPORATE AUTHORITY. EarthSearch 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.
5.6.
AUTHORIZATION. Execution of this Agreement has been duly authorized and approved
by EarthSearch board of directors and consented to by the EarthSearch
Shareholders.
5.7.
FINANCIAL STATEMENTS. EarthSearch's financial statements for the years ended
December 31, 2008 and 2007 and the interim period through September 30, 2009, (a
review) copies of which shall be delivered by EarthSearch to ECDC prior to the
Effective Date, have been audited by independent public accountants according
the requirements of Regulation S-X promulgated by the SEC, and fairly present
the financial condition of EarthSearch as of the above dates and the results of
its operations for the periods then ended in conformity with generally accepted
accounting principles consistently applied (the "EarthSearch Financial
Statements"). EarthSearch acknowledges and agrees that as a condition to the
consummation of the transactions contemplated by this Agreement, prior to
Effective Date, the audited EarthSearch Financial Statements for such periods
must satisfy the requirements under the Exchange Act. EarthSearch shall be
responsible for the costs of preparation of the EarthSearch Financial
Statements.
5.8.
ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected or reserved
against in the EarthSearch Financial Statements, EarthSearch did not have at
that date any liabilities or obligations (secured, unsecured, contingent, or
otherwise) of a nature customarily reflected in a corporate balance sheet
prepared in accordance with generally accepted accounting
principles.
5.9. NO
MATERIAL CHANGES. Except as set out by attached schedule, if any, there has been
no material adverse change in the business, properties, or financial condition
of EarthSearch since the date of the EarthSearch Financial
Statements.
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5.10.
LITIGATION. To the knowledge of EarthSearch, there is no any pending,
threatened, or existing litigation, bankruptcy, criminal, civil, or regulatory
proceeding or investigation, threatened or contemplated against
EarthSearch.
5.11.
CONTRACTS. Except as set out by attached schedule, if any, EarthSearch 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.
5.12.
TITLE. Except as set out by attached schedule, if any, EarthSearch has good and
marketable title to all the real property and good and valid title to all other
property included in the EarthSearch Financial Statements. Except as set out in
the balance sheets thereof, the properties of EarthSearch 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 EarthSearch.
5.13. NO
VIOLATION. The transaction contemplated by this Agreement and at the Effective
Date 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 EarthSearch is
subject or by which EarthSearch is bound.
6. CONDUCT
PENDING THE EFFECTIVE DATE. ECDC and
EarthSearch covenant that between the date of this Agreement and the Effective
Date as to each of them:
6.1 No
change will be made in the charter documents, by-laws, or other corporate
documents of ECDC.
6.2. ECDC
will use its best efforts to maintain and preserve its business organization and
except as contemplated under this Agreement will not enter into any material
commitment other than as provided herein.
6.3.
EarthSearch will use its best efforts to maintain and preserve its business
organization, employee relationships, and goodwill intact, and will not enter
into any material commitment except in the ordinary course of
business.
6.4
EarthSearch shall have prepared and delivered to ECDC the EarthSearch Financial
Statements as provided in Section 5.8 above.
6.5. None
of the EarthSearch Shareholders listed in Annex A will sell, transfer, assign,
hypothecate, lien, or otherwise dispose or encumber the EarthSearch Shares owned
by them.
7. CONDITIONS
PRECEDENT TO OBLIGATIONS OF EARTHSEARCH. EarthSearch's obligations to consummate
the share exchange pursuant to this Agreement shall be subject to fulfillment on
or before the Effective Date each of the following conditions, unless waived in
writing by the EarthSearch Shareholders as appropriate:
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7.1.
ECDC'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of ECDC set forth herein shall be true and
correct at the date of this Agreement and at the Effective Date, as though made
at and as of such dates, except as affected by transactions contemplated
hereby.
7.2.
ECDC'S COVENANTS. ECDC shall have performed all covenants required by this
Agreement to be performed by it on or before the Effective Date.
8. CONDITIONS PRECEDENT TO
OBLIGATIONS OF ECDC. EarthSearch's obligations to
consummate this share exchange shall be subject to fulfillment on or before the
Effective Date each of the following conditions, unless waived in writing by
ECDC:
8.1.
EARTHSEARCH'S REPRESENTATIONS AND WARRANTIES. The representations and warranties
of EarthSearch set forth herein shall be true and correct at the date of this
Agreement and at the Effective Date as though made at and as of that date,
except as affected by transactions contemplated hereby.
8.2.
EARTHSEARCH'S COVENANTS. EarthSearch shall have performed all covenants required
by this Agreement to be performed by them on or before the Effective
Date.
8.3.
EARTHSEARCH BOARD OF DIRECTORS AND SHAREHOLDER APPROVALS. This Agreement shall
have been approved by the Board of Directors of EarthSearch and by the consent
of the holders of a majority of the issued and outstanding EarthSearch
Shares.
8.4.
SUPPORTING DOCUMENTS OF EarthSearch. EarthSearch shall have delivered to ECDC
supporting documents in form and substance reasonably satisfactory to
EarthSearch, to the effect that:
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(a)
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A
certificate from the Secretary of State of Delaware, stating that
EarthSearch is a corporation duly organized and validly
existing;
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(b)
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A
Secretary's certificate stating that EarthSearch has the authorized
capital stock is as set forth
herein;
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(c)
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Copies
of the resolutions of the board of directors of EarthSearch authorizing
the execution of this Agreement and the consummation
hereof;
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(d)
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A
Secretary's certificate of incumbency of the officers and directors of
EarthSearch;
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(e)
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Any
document as may be specified herein or required to satisfy the conditions,
representations and warranties enumerated elsewhere
herein.
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9. CONDUCT AND COVENANTS. On or
prior to the Effective Date the parties shall take the
following actions:
|
(a)
|
ECDC
shall prepare and file with FINRA all necessary documents and forms
necessary to effect the name change of ECDC to EarthSearch Communications
International, Inc. in an expedited
manner;
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(b)
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ECDC
will take no action to terminate its registration under Section 12(g) the
Exchange Act;
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(c)
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ECDC
shall continue to utilize the services of a recognized stock transfer
agent and shall execute and deliver all necessary and proper documentation
to effect in an expeditious mannerthe
issuance of ECDC Shares as provided in this Agreement and the transactions
contemplated hereby in compliance with the Federal securities laws and the
rules and regulations of the SEC.
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(d)
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EarthSearch
shall cooperate with all reasonable requests and provide all necessary
documents in order to ECDC to become a reporting company and remain
current under the Exchange Act.
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10. SURVIVAL
OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of the
EarthSearch and ECDC set out herein shall survive the Effective
Date.
11. ARBITRATION
11.1
SCOPE. The parties hereby agree that any and all under the terms of this
Agreement will be resolved by arbitration before the American Arbitration
Association within Dade County, State of Florida.
11.2.
APPLICABLE LAW. The law applicable to the arbitration and this Agreement shall
be that of the State of Florida determined without regard to its provisions
which would otherwise apply to a question of conflict of laws.
11.3.
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.
11.4.
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.
11.5.
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.
11.6.
MEASURE OF DAMAGES. In any adverse action, the parties 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.
11.7.
COVENANT NOT TO XXX. The parties 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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11.8.
INTENTION. It is the intention of the parties 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.
11.9.
SURVIVAL. The provisions for arbitration contained herein shall survive the
termination of this Agreement for any reason.
12.
MISCELLANEOUS.
12.1.
FURTHER ASSURANCES. From time to time, each party will execute such additional
instruments and take such actions as may be reasonably required to carry out the
intent and purposes of this Agreement.
12.2.
WAIVER. Any failure on the part of either 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.
12.3.
BROKERS. Each party agrees to indemnify and hold harmless the other party
against any fee, loss, or expense arising out of claims by brokers or finders
employed or alleged to have been employed by the indemnifying
party.
12.4.
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
ECDC, to:
East
Coast Diversified Corporation
Attention:
Xxxxx Xxxxxx, President
0000 Xxxx
Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx
Xxxxxxxxxx, XX 00000
If to EarthSearch Communications
International, Inc.
Attention: Kayode Aladesuyi, CEO and
President
000 Xxxxxxxxxx Xxxxx Xxxxxxx,
Xxxxx 000
Xxxxxxx,
XX 00000
12.5. GOVERNING LAW. This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Florida.
12.6.
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 either party of its rights under this Agreement without the
written consent of the other party shall be void.
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12.7.
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.
12.8.
REVIEW OF AGREEMENT. Each party 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.
12.9.
SCHEDULES. All exhibits an/or schedules attached hereto, if any, shall be
acknowledged by each party by signature and/or initials thereon and shall be
dated.
The
parties have duly executed this Agreement this 12th day of January 2010.
East Coast Diversified
Corporation
By:
/s/ Xxxxx
Xxxxxx
Xxxxx
Xxxxxx, President
EarthSearch
Communications International, Inc.
By: /s/ Kayode
Aladesuyi
Kayode
Aladesuyi, CEO and President
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