AGREEMENT TO EXCHANGE SHARES
THIS AGREEMENT TO EXCHANGE SHARES (this "Agreement") is made and entered
into as of the 31st day of December, 1997, by and among World House
Entertainment, Inc., a Nevada corporation (hereinafter called "Holding
Company"), and Xxxxxxxxx Xxx Xxxxxx (the "Shareholder").
WHEREAS the Shareholder owns all of the outstanding shares of the common
stock of Songs for the Planet, Inc., a Tennessee corporation (the "Subsidiary
Corporation");
WHEREAS Holding Company desires to acquire all of the issued and
outstanding shares of common stock of the Subsidiary Corporation on the terms
and conditions hereinafter set forth; and
WHEREAS the parties desire that the transactions contemplated by this
Agreement constitute an exchange of property as provided in Section 351 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth herein, the parties agree as follows:
1. Representations of Shareholder and Officers. The Shareholder
represents and warrants with respect to herself and the Subsidiary Corporation
as provided in this Section 1. As used herein, "Knowledge" shall mean the
knowledge of the Shareholder in her capacity as shareholder and, if the
Shareholder is also an officer, director or employee of the Subsidiary
Corporation, the knowledge of such Shareholder in her capacity as an officer,
director or employee of the Subsidiary Corporation.
a. The Shareholder is the record owners and holder of the number of fully
paid and nonassessable shares of common stock of the Subsidiary
Corporation as of the date hereof as set forth at Schedule I attached
hereto, and all such shares of common stock are owned free and clear
of all liens, claims, encumbrances, charges, and assessments and are
subject to no restrictions with respect to transferability.
b. To the knowledge of the Shareholder, the authorized capital stock of
the Subsidiary Corporation consists of 200,000 shares of common stock,
without par value, of which 200,000 shares are issued and outstanding.
There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require such corporation to
issue, sell or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights
with respect to such corporation. There are no voting trusts, proxies,
or other agreements or
understandings with respect to the voting of the capital stock of
such corporation.
c. To the knowledge of the Shareholder, the Subsidiary Corporation is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted, and
is duly qualified to do business as a foreign corporation, if
required, and is in good standing in each jurisdiction in which the
ownership or leasing of its properties or the conduct of its business
require such qualification, except where the failure to be so
qualified would not have a material adverse effect on the assets,
business, results of operations or conditions (financial or otherwise)
of each of such corporation. The Subsidiary Corporation has
previously delivered to Holding Company true, complete and correct
copies of its charter and by-laws, as currently in effect.
d. To the knowledge of the Shareholder, the Subsidiary Corporation has no
subsidiaries, or any direct or indirect interest, whether by way of
stock ownership or otherwise, in any corporation, firm, association or
business enterprise.
e. To the knowledge of the Shareholder, the Subsidiary Corporation owns
and possesses, or is duly licensed in respect of, all licenses,
trademarks, trademark rights, applications for trademarks, trade
names, trade name rights, processes, and formulas, necessary for the
operation of its business, with no known material conflict with the
rights of others, and the same are subject to no liens, encumbrances,
claims, or charges.
f. As of the date of this Agreement, to the knowledge of the Shareholder,
there are no actions, suits, or proceedings pending or, to the
knowledge of the Shareholder, threatened, against the Subsidiary
Corporation, at law or in equity, or before or by any federal, state,
municipal, or other governmental agency or instrumentality, domestic
or foreign, except for those actions, suits, or proceedings which
would not have a material and adverse effect on the financial
condition of the Subsidiary Corporation. The Subsidiary Corporation
is not in default with respect of any order or decree of any court or
of any such governmental agency or instrumentality.
g. Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated, will conflict
with or result in the breach of, or accelerate the performance
required by, any terms of any agreement to which any of the Subsidiary
Corporation or the Shareholder are now a party, or constitute a
default thereunder, or result in the creation of any lien, charge, or
encumbrance upon any of the properties or assets of the Subsidiary
Corporation.
h. To the knowledge of the Shareholder, the Subsidiary Corporation is not
a party to any agreement or instrument subject to any charter or other
corporate restriction materially and adversely effecting the business,
property, or assets, operations or condition (financial or otherwise)
of such corporation.
i. To the knowledge of the Shareholder, the Subsidiary Corporation and
the Shareholder have timely filed all tax returns and reports required
to be filed by each, including without limitation all federal, state,
local and foreign tax returns, and all such tax returns and reports
are true, complete and correct in all material respects. The
Subsidiary Corporation has paid in full or made adequate provision by
the establishment of reserves for all such taxes and other charges
which have become due or have been asserted in writing by any taxing
authority to be due, relating to such corporation, including, if such
corporation was an S Corporation prior to the consummation of the
transactions contemplated by this Agreement, taxes and other charges
attributable to the S Corporation election by such corporation, and
has withheld with respect to their employees all federal and state
income taxes, FICA, FUTA and any other taxes or charges required to be
withheld except for those taxes or other charges the failure of which
to pay or withhold would not have a material and adverse effect on the
financial condition of the Subsidiary Corporation. To the knowledge of
the Shareholder, there is no tax deficiency proposed or threatened
against the Subsidiary Corporation and the Shareholder relating to
such corporation have no knowledge or any basis for the assertion of
any such claim, including if such corporation was an S Corporation
prior to the consummation of the transactions contemplated by this
Agreement, taxes and other charges attributable to the S Corporation
election by such corporation and its Shareholder except where such
deficiency would not have a material and adverse effect on the
financial condition of the Subsidiary Corporation. To the knowledge of
the Shareholder, the Subsidiary Corporation has made all payments of
estimated taxes, if any, when due in amounts sufficient to avoid the
imposition of any penalty except where such penalty would not have a
material and adverse effect on the financial condition of the
Subsidiary Corporation. There are no outstanding agreements, waivers,
or arrangements extending the statutory period of limitation
applicable to any claim for, or the period for the collection or
assessment of, taxes due from or with respect to the Subsidiary
Corporation for any taxable period, and no power of attorney granted
by or with respect to the Subsidiary Corporation relating to taxes is
currently in force. No closing agreement pursuant to Section 7121 of
the Internal Revenue Code of 1986, as amended, (or any predecessor
provision) or any similar provision of any state, local, or foreign
law has been entered into by or with respect to the Subsidiary
Corporation that could materially and negatively effect the future
liability for taxes of the Subsidiary Corporation. No audit or other
proceeding by any governmental authority has formally commenced and no
written notification has been given that such an audit or other
proceeding is
pending or threatened with respect to any taxes due from or with
respect to the Subsidiary Corporation that could materially and
negatively affect the future liability for taxes of the Subsidiary
Corporation. No unpaid assessment of tax has been proposed in writing
against the Subsidiary Corporation other than assessment of a type
that arise on a recurring basis in the ordinary course of business.
j. To the knowledge of the Shareholder, the Subsidiary Corporation has no
direct or indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, accrued, absolute,
contingent or otherwise ("Liabilities"), which would be required by
generally accepted accounting principles to be disclosed in their
respective financial statements (including, without limitation, in the
notes thereto), other than liabilities fully and adequately reflected
or reserved against their respective balance sheet, prepared in
accordance with generally accepted accounting principles. To the
knowledge of the Shareholder, since the date of the attached financial
statement, October 31, 1997, the Subsidiary Corporation has incurred
no liabilities which would be required by generally accepted
accounting principles to be disclosed in its financial statements
(including, without limitation, in the notes thereto), other than
Liabilities incurred since that date in the ordinary course of
business.
k. To the knowledge of the Shareholder, the Subsidiary Corporation is in
compliance in all material respects with all applicable laws
(including, but not limited to, rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of all federal, state or local governments, or any agency
or instrumentality of the foregoing, domestic or foreign, in respect
of the conduct of its business and ownership or leasing of its
properties, except where the failure to so comply would not have a
material adverse effect on the assets, business, results of operations
or condition (financial or otherwise) of such corporation. To the
knowledge of the Shareholder, the Subsidiary Corporation has all
licenses, permits, orders or approvals of all federal, state or local
governmental bodies, quasi-governmental bodies or authorities,
domestic or foreign, which are material to, or necessary for, the
conduct of the operations of such corporation. To the knowledge of the
Shareholder, no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or
commenced against the Subsidiary Corporation alleging any failure so
to comply, except where the failure to so comply would not have a
material and adverse effect on the assets, business, results of
operations or condition (financial or otherwise) of such corporation.
l. The following financial statements of the Subsidiary Corporation which
are attached hereto as Schedule II are true, correct and complete in
all material respects, have been prepared from and are in accordance
with the books and
records of the Subsidiary Corporation in accordance with
generally accepted accounting principles ("GAAP") consistently
applied except where otherwise indicated, and fairly present the
financial condition of the Subsidiary Corporation in all material
respects as at the dates stated and the results of operations of
such Subsidiary Corporation for the periods then ended
(collectively, the "Financial Statements").
m. Since the date of the Financial Statements, there has not been any
material adverse change in the business, financial condition,
operations, results of operations, or future prospects of the
Subsidiary Corporation.
n. The Subsidiary Corporation has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it,
located on its premises, or shown in its balance sheet, or acquired
after the date thereof, free and clear of all liens, claims,
encumbrances, charges, and assessments, except for properties and
assets disposed of in the ordinary course of business since the date
of the Financial Statements.
2. Exchange of Stock. On the closing date, as hereinafter fixed, the
Shareholder shall deliver, or cause to be delivered, to Holding Company
certificates representing all of the issued and outstanding shares of common
stock of the Subsidiary Corporation, as the same shall be constituted on the
closing date, duly endorsed in blank by the owner of record, or accompanied by
duly executed stock powers in blank, and accompanied by requisite revenue stamps
evidencing the payment of the transfer tax, if any. In consideration therefor
Holding Company shall, at the closing, deliver to the Shareholder a certificate
representing shares of common stock, $.001 par value per share, of Holding
Company (the "Common Stock"), as set forth below:
SHAREHOLDER NO. OF SHARES OF NO. OF SHARES OF
--------- ----------
SUBSIDIARY CORPORATION HOLDING COMPANY
--------- ----------
Xxxxxxxxx Xxx Xxxxxx 200,000 200,000
3. Closing. The closing date under this Agreement shall be simultaneous
with the execution of this Agreement or such other time as Holding Company and
the Shareholder may agree. The closing shall be held at the law offices of
Xxxxxxxx & Xxxxxxxxxx, P.C., 00000 Xxxxxxx Xxxxxxx Xxxxx, Xxxxx, Xxxxxxxx 00000
unless another place is mutually agreed upon by the Holding Company and the
Shareholder.
4. Indemnity for Damages. The Shareholder shall indemnify, fully defend
and save and hold harmless the Holding Company at all times from and against all
demands, claims, actions, causes of action, assessments, losses, damages,
liabilities, costs and expenses, including, without limitation, interest,
penalties and reasonable attorneys' fees and expenses, but net of any tax
savings and insurance proceeds actually received by the indemnitee as a result
of the matter
giving rise to the indemnification, asserted against, resulting to, imposed
upon or incurred by the Holding Company, by reason of or resulting from any
inaccurate representation made by the Shareholder in this Agreement, breach
of any of the warranties made by the Shareholder in this Agreement and breach
or default in performance by the Shareholder of any of the covenants which
she is to perform hereunder.
5. Conditions to Obligations of Holding Company. The obligations of
Holding Company hereunder are, except as may be waived in writing by Holding
Company, subject to the conditions that:
a. Certificates representing 100% of the issued and outstanding shares of
common stock of the Subsidiary Corporation, as such stock shall then
be constituted shall be tendered for exchange at the closing by the
Shareholder.
b. The representations contained in Sections 1 and 7 hereof shall be true
on and as of the closing date with the same effect as though such
representations had been made on and as of the closing date, and there
shall be delivered to Holding Company at the closing, if requested, a
certificate, in form and substance satisfactory to Holding Company and
its counsel, duly signed by the Shareholder to that effect.
6. Conditions to Obligations of Shareholder. The obligation of the
Shareholder hereunder to deliver to Holding Company shares of common stock of
the Subsidiary Corporations is, except as may be waived in writing by the
Shareholder, subject to the conditions that (i) Holding Company was formed for
the purpose of participating in the exchanges as contemplated in this Agreement
and no shares of Common Stock are issued or outstanding (other than as
contemplated pursuant to the terms of this Agreement); (ii) Holding Company is a
duly organized and existing corporation in good standing under the laws of the
State of Nevada; (iii) the shares of Common Stock of Holding Company being
delivered hereunder are validly issued, fully paid, and nonassessable; (iv) this
Agreement has been duly executed and delivered by Holding Company, and
constitutes the legal, valid, and binding obligation of Holding Company,
enforceable in accordance with its terms; and (v) as to such other matters
incident to the transactions contemplated by this Agreement as the Shareholder
may reasonably require.
7. Stock Received as Investment. The Shareholder represents that the
shares of Common Stock of Holding Company being acquired by her pursuant to the
terms and provisions of this Agreement are being acquired for her own account
for purposes of investment and not with a view to or for resale in connection
with any distribution thereof.
8. Survival of Representations. The representations and warranties of the
parties hereto shall survive the making of this agreement, any examination on
behalf of such parties, and the closing hereunder. Any waiver of any term or
condition of this agreement shall not operate as a waiver of any other breach of
such term or condition, or of any other term or condition, nor
shall any failure to enforce any provision hereof operate as a waiver of such
provision or of any other provision hereof.
9. Notices. All communications hereunder shall be in writing and
delivered or mailed to Holding Company, Suite 260, 00000 Xxxx Xxxxxx, Xxxxxxxx
Xxxx, Xxxxxx 00000, and to the Shareholder, as set forth at Schedule I hereof,
or at such other address as each party may specify in writing.
10. Broker. Holding Company and the Shareholder represent to each other
that no broker has been employed in connection with any transaction or
transactions involved in this Agreement.
11. Entire Agreement. This Agreement constitutes the entire contract
between the parties hereto and no party shall be liable or bound to another in
any manner by any warranties, representations or guarantees except as
specifically set forth herein.
12. Modification. This Agreement may not be changed or modified except by
an agreement in writing by the Holding Company and by the Shareholder or by any
person authorized to act on their behalf.
13. Benefit. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective legal representatives, successors,
and assigns of the parties hereto.
14. Governing law. This Agreement is made pursuant to and shall be
construed under the laws of the State of Tennessee, without regard to any
applicable conflicts of law provisions.
15. Counterparts. This Agreement may be executed and endorsed in one or
more counterparts, and each of such counter parts shall, for all purposes, be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF the parties hereto have duly caused this Agreement to be
executed as of the day and year first above written.
HOLDING COMPANY: SHAREHOLDER:
WORLD HOUSE ENTERTAINMENT, INC.
By: /s/ Xxxxxx X. Xxxx /s/ Xxxxxxxxx Xxx Xxxxxx
Xxxxxx X. Xxxx, President XXXXXXXXX XXX XXXXXX
Schedule I
SCHEDULE OF SHAREHOLDERS
NAME AND ADDRESS NO. OF SHARES
Xxxxxxxxx Xxx Xxxxxx, 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxx. 00000 200,000
Schedule II
FINANCIAL STATEMENTS
(Omitted)
