EXCHANGE AGREEMENT
------------------
THIS EXCHANGE AGREEMENT effective the 22nd day of April, 1999, by and
between ENTERTECH MEDIA GROUP, INC., formerly known as Inter-Link Communications
Group, Inc., a Nevada corporation, (hereinafter "Parent") and ENTERTECH LIMITED,
a Nevada corporation, (hereinafter "Subsidiary").
WITNESSETH:
WHEREAS, Parent and Subsidiary agree that it would be to their mutual
benefit for Parent to acquire all of the outstanding stock of Subsidiary in
exchange for shares of Parent stock.;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. [REPRESENTATIONS OF ENTER-TECH] Subsidiary hereby represents to
Parent that to the best of its knowledge:
(a) Subsidiary as of March 31, 1999 owns, and on the Closing Date
hereinafter provided will own, free and clear of all liens, charges and
encumbrances, all of the assets set forth on the Financial Statements attached
to Subsidiary's Private Placement Memorandum dated March 31, 1999 (the"PPM").
(b) Subsidiary has heretofore furnished to Parent copies of the
balance sheet of Subsidiary . Said balance sheet accurately sets forth the
financial condition of Subsidiary as of said date, prepared in conformity with
generally accepted accounting principles consistently applied.
(c) Subsidiary has good and marketable title to all of its property
and assets (except property and assets disposed of since such date in the usual
1
and ordinary course of business), subject to no mortgage, pledge, lien or other
encumbrance except as disclosed in such financial statements.
(d) Subsidiary has no obligations, liabilities or commitments,
contingent or otherwise, of a material nature, except as set forth in the PPM.
(e) Subsidiary is not a party to any employment contract, or to any
lease, agreement or other commitment not in the usual and ordinary course of
business, nor to any pension, insurance, profit-sharing or bonus plan, except as
disclosed in the PPM.
(f) Subsidiary is not a defendant, nor a plaintiff against whom a
counterclaim has been asserted, in any litigation, pending or threatened, nor
has any material claim been made or asserted against Subsidiary, nor are there
any proceedings threatened or pending before any federal, state or municipal
government, or any department, board, body or agency thereof, involving
Subsidiary except as disclosed in the PPM.
(g) Subsidiary is not in default under any agreement to which it is
a party nor in the payment of any of its obligations.
(h) Between the date of the Financial Statements referred to in
subparagraph "a" hereof and the Closing, Subsidiary will not have (i) mortgaged
or pledged or subjected to any lien, charge or other encumbrance any of their
assets, tangible or intangible, except in the usual and ordinary course of
business, or (ii) sold, leased, or transferred or contracted to sell, lease or
transfer any assets, tangible or intangible, or entered into any other
transactions, except in the usual and ordinary course of business, or (iii) made
any material change in any existing employment agreement or increased the
compensation payable or made any arrangement for the payment of any bonus to any
officer, director, employee or agent, except as set forth in the PPM.
2
(i) This Exchange Agreement has been duly executed by Subsidiary
and the execution and performance of this Exchange Agreement will not violate,
or result in a breach of, or constitute a default in any agreement, instrument,
judgment, order or decree to which Subsidiary is a party or to which Subsidiary
is subject nor will such execution and performance constitute a violation of or
conflict with any fiduciary duty to which Subsidiary is subject, to the best of
Subsidiary's knowledge.
(j) Subsidiary has timely filed or obtained the necessary
extensions with the appropriate governmental authorities, all tax and other
returns required to be filed by it. Such returns are true and complete and all
taxes shown thereon to be due have been paid. All material, federal, state,
local, county, franchise, sales, use, excise and other taxes assessed or due
have been duly paid or reserves for unpaid taxes have been set up as required on
the basis of the facts and in accordance with generally accepted accounting
principles.
(k) Except as may be disclosed in the PPM, Subsidiary is not in
default with respect to any order, writ, injunction , or decree of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, and there are no actions, suits, claims,
proceedings or investigations pending or, to the knowledge of Subsidiary
threatened against or affecting Subsidiary, at law or in equity, or before or by
any federal, state, municipal or other governmental court, department
commission, board, bureau, agency or instrumentality, domestic or foreign.
Subsidiary has complied in all material respects with all laws, regulations and
orders applicable to its business.
3
(l) No representation in this section, nor statement in any
document, certificate or schedule furnished or to be furnished pursuant to this
Exchange Agreement by Subsidiary, or in connection with the transactions
contemplated hereby, contains or contained any untrue statement of material
fact, nor does or will omit to state a material fact necessary to make any
statement of fact contained herein or therein not misleading.
(m) As of March 31, 1999, there were 10,000,000 shares of
Subsidiary's common stock issued and outstanding. In addition, Subsidiary is
offering a minimum of 1,500,000 shares and a maximum of 5,000,000 shares of its
common stock in units of 25,000 shares at a price of $1.00 per share pursuant to
the PPM dated March 31, 1999. This private placement of Subsidiary's shares
shall be completed after the effective date of this Exchange Agreement and the
shares sold pursuant to the PPM will be additional issued and outstanding shares
which the parties agree will be subject to this Exchange Agreement.
2. [REPRESENTATIONS OF PARENT] Parent represents to Subsidiary that:
(a) Parent is a corporation duly organized and validly existing and
in good standing under the laws of the State of Nevada; is qualified to transact
business in Nevada and no other state. Parent has an authorized capitalization
of 100,000,000 shares of common stock with a par value of $0.001 per share, of
which there are issued and outstanding 900,000 shares, and 10,000,000 shares of
preferred stock of which none are outstanding.
(b) Parent has delivered to Subsidiary its balance sheet, financial
statements for the period ended December 31, 1998. These financial statements
accurately set forth the financial condition of Parent as of the dates
specified, prepared in conformity with generally accepted accounting principles
consistently applied.
4
(c) Parent has good and marketable title to all of its property and
assets (except property and assets disposed of since such date in the usual and
ordinary course of business), subject to no mortgage, pledge, lien or other
encumbrance except as disclosed in such balance sheet.
(d) Parent has no obligations, liabilities or commitments,
contingent or otherwise, of a material nature which were not provided for,
except as set forth in such balance sheet.
(e) There has been no change in the nature of the business of
Parent, nor in its financial condition or property, other than changes in the
usual and ordinary course of business, none of which has been materially
adverse, and Parent has incurred no obligations or liabilities or made any
commitments other than in the usual and ordinary course of business except as
disclosed in its financial statements.
(f) Parent is not a party to any employment contract with any
officer, director, or stockholder, or to any lease, agreement or other
commitment not in the usual and ordinary course of business, nor to any pension,
insurance, profit-sharing or bonus plan, except as disclosed in its financial
statements.
(g) Parent is not defendant, nor a plaintiff against whom a
counterclaim has been asserted, in any litigation, pending or threatened, nor
has any material claim been made or asserted against Parent, nor are there any
proceedings threatened or pending before any federal, state or municipal
government, or any department, board, body or agency thereof, involving Parent,
except as disclosed in Exhibit "A".
(h) Parent is not in default under any agreement to which it is a
party nor in the payment of any of its obligations.
5
(i) Between the date of the balance sheet referred to in
subparagraph "a" hereof and the Closing, Parent will not have (i) paid or
declared any dividends on or made any disbursements in respect of, or issued,
purchased or redeemed, any of the outstanding shares of its capital stock, or
(ii) made or authorized any changes in its Articles of Incorporation or in any
amendment thereto or in its By-Laws, or (iii) made any commitments or
disbursements or incurred any obligations or liabilities of a substantial nature
or which are not in the usual and ordinary course of business, or (iv) mortgaged
or pledged or subjected to any lien, charge or other encumbrance any of their
assets, tangible or intangible, except in the usual and ordinary course of its
business, or (v) sold, leased, or transferred or contracted to sell, lease or
transfer any assets, tangible or intangible, or entered into any other
transactions, except in the usual and ordinary course of business, or (vi) made
any loan or advance to any stockholder of Parent, or to any other person, firm,
or corporation except in the usual and ordinary course of business, or (vii)
made any material change in any existing employment agreement or increased the
compensation payable or made any arrangement for the payment of any bonus to any
officer, director, employee or agent, except as set forth in Parent's financial
statements.
(j) This Exchange Agreement has been duly executed by Parent and
the execution and performance of this Exchange Agreement will not violate, or
result in a breach of, or constitute a default in any agreement, instrument,
judgment, order or decree to which it is a party or to which it is subject nor
will such execution and performance constitute a violation of or conflict with
any fiduciary duty to which it is subject.
(k) Parent has filed with the appropriate governmental authorities,
all tax and other returns required to be filed. Such returns are true and
complete and all taxes shown thereon to be due have been paid. All material,
0
xxxxxxx, xxxxx, xxxxx, xxxxxx, xxxxxxxxx, sales, use, excise and other taxes
assessed or due have been duly paid and no reserves for unpaid taxes have been
set up or are required on the basis of the facts and in accordance with
generally accepted accounting principles.
(l) Parent is not in default with respect to any order, writ,
injunction, or decree of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
and there are no actions, suits, claims, proceedings or investigations pending
or, to the knowledge of Parent threatened against or affecting Parent, at law or
in equity, or before or by any federal, state, municipal, or other governmental
court, department, commission, board, bureau, agency or instrumentality,
domestic or foreign, except as disclosed in Exhibit "B." Parent has complied in
all material respects with all laws, regulations and orders applicable to its
business.
(m) No representation in this section, nor statement in any
document, certificate or schedule furnished or to be furnished pursuant to this
Exchange Agreement by Parent, or in connection with the transactions
contemplated hereby, contains or contained any untrue statement of a material
fact, nor does or will omit to state a material fact necessary to make any
statement of fact contained herein or therein not misleading.
3. [DATE AND TIME OF CLOSING] The closing shall be held on April 22,
1999, at 10:00 am, local time, at 00 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx,
Xxxxxx, or at such other time and place as may be mutually agreed upon between
the parties in writing (hereinafter "the Closing").
4. [EXCHANGE OF SHARES OF STOCK AND OTHER ACTIONS] The mode of
carrying into effect the exchange provided for in this Agreement shall be as
follows:
7
(a) Subsidiary shall call a special meeting its board of directors
to be held on April 22, 1999, at 10:30 a.m., local time, at 00 Xxxx Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxx, Xxxxxx, for the following purposes:
(1) Ratifying, approving and carrying out the terms of this
Exchange Agreement; and
(2) Designating an Xxxx Xxxx as the Exchange Agent for purposes
of completing this Exchange Agreement.
(b) Parent shall call a special meeting its board of directors to
be held on April 22, 1999, at 10:30 a.m., local time, at 00 Xxxx Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxx, Xxxxxx, for the following purposes:
(1) Ratifying, approving and carrying out the terms of this
Exchange Agreement;
(2) Issuing shares to the Exchange Agent designated by
Subsidiary in amounts sufficient to carry out the terms of this Exchange
Agreement. Such shares shall be in the minimum amount of 11,500,000 shares
and a maximum amount of 15,000,00 shares, as the issuance of Subsidiary's
shares through the PPM may require.
(c) The Exchange Agent shall take all actions necessary to cause
the shares of Parent issued to the Exchange Agent to be exchange for all the
issued and outstanding shares of Subsidiary after Subsidiary's PPM is completed.
All Subsidiary shares shall thereafter be surrendered to Parent.
8
5. [NOTICES] Any notice under this Agreement shall be deemed to have
been sufficiently given if sent by Federal Express or other similar overnight
delivery service, or registered or certified mail, postage prepaid, addressed as
follows:
If to Subsidiary:
Xxxx Xxxxxx
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
If to Parent, to:
Xxxx Xxxxxx
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
or to any other address which may hereafter be designated by either party by
notice given in such manner. All notices shall be deemed to have been given as
of the date of receipt.
6. [COUNTERPARTS] This Exchange Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be an
original, but all such counterparts shall constitute one and the same
instrument.
7. [MERGER CLAUSE] This Exchange Agreement supersedes all prior
agreements and understandings between the parties and may not be changed or
terminated orally, and no attempted change, termination or waiver of any of the
provisions hereof shall be binding unless in writing and signed by the parties
hereto.
8. [GOVERNING LAW] This Agreement shall be governed by and construed
according to the laws of the State of Nevada.
IN WITNESS WHEREOF, the parties hereto have caused this Exchange
Agreement to be executed the day and year first above written.
9
ENTER-TECH MEDIA GROUP, INC.
A Nevada Corporation
By /s/Xxxx Tolnew
----------------------------------------
Xxxx Xxxxxx
Its: President
(Hereunto duly authorized)
ENTERTECH LIMITED
A Nevada Corporation
By /s/Xxxx Xxxxxx
----------------------------------------
Xxxx Xxxxxx
Its: President
(Hereunto duly authorized)
10
