SHARE EXCHANGE AGREEMENT
THIS AGREEMENT (the "Agreement" and/or the "Share Exchange") is entered
into as of August 15, 1997, between Profit Financial Corporation ("Profit"),
a Utah corporation and Origin Book Sales, Inc., a Utah corporation ("Origin").
REPRESENTATIONS
A. Profit is a corporation organized and existing under the laws of the
State of Utah.
B. The authorized capital stock of Profit consists of 25,000,000 shares
divided into 20,000,000 shares of common stock, par value $0.01, of which
approximately 6,715,031 shares are duly issued and outstanding on the date
hereof and 5,000,000 shares of preferred stock, par value $10.00, none of
which are issued and outstanding.
C. Origin is a corporation organized and existing under the laws of
the State of Utah.
D. The authorized capital stock of Origin consists of 1,000,000 shares
of common voting stock. As of the date hereof, 97,867 shares of common stock
in Origin have been duly issued and outstanding.
E. Profit and Origin enter into this Agreement whereby Profit will
acquire all of the issued and outstanding stock of Origin by issuing 30,269
shares of common stock of Profit to the shareholders of Origin in exchange
for shares of common stock of Origin held by them at an exchange rate of
.309287 shares of Profit for each one share of Origin held. Profit and Origin
intend the exchange to qualify as a tax-free reorganization under
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
AGREEMENT
In consideration of the foregoing recitals, the covenants and conditions
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Share Exchange, Effectiveness
The shareholders of shares of common stock of Origin shall exchange
their shares for newly issued shares of common stock of Profit in accordance
with the terms and conditions of this Agreement. Upon the execution of this
Agreement by Origin and Profit, the date for the effectiveness of this
Agreement (the "Effective Time of the Share Exchange") shall be the date at
which Origin shareholders owning 100% of the Origin share tender their shares
to Profit.
2. Exchange of Shares
At the Effective Time of the Share Exchange;
(a) Each shareholder of Origin shall be issued .309287 share(s) of
fully paid and nonassessable common stock of Profit for each share of Origin
stock they own. Each shareholder of Origin shall sign an investment letter
pursuant to Rule 144, substantially in the form attached hereto as
Exhibit A, upon receiving Profit shares.
(b) All shares of common stock of Origin that are tendered to Profit
shall be retained by Profit and Origin shall become a wholly owned
subsidiary of Profit. Origin shall issue a stock certificate to Profit for
97,867 common shares of Origin, which amount constitutes all of the issued
and outstanding shares of the Corporation.
3. Implementation
Each of Profit and Origin shall take, or cause to be taken, all action
or do, or cause to be done, all things necessary, proper or advisable under
the laws of the State of Utah to consummate and make effective the Share
Exchange.
4. Amendment
This Agreement may, to the extent permitted by law, be amended,
supplemented or interpreted at any time by action taken by the Board of
Directors of both Origin and Profit; provided, however, that this
Agreement may not be amended or supplemented after having been approved by
the shareholders of Origin except by a vote or consent of shareholders in
accordance with applicable law.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this AGREEMENT as of the date first set forth above.
PROFIT FINANCIAL CORPORATION ORIGIN BOOK SALES, INCORPORATED
/s/ Xxxxxxx X. Xxxxx
---------------------------------- --------------------------------------
By: By: Xxxxxxx X. Xxxxx
Its: Its: President
2
EXHIBIT A
Profit Financial Corporation
00000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Gentlemen:
This acknowledges receipt of ________________________________ ( )
shares of common stock of Profit Financial Corporation, a Utah corporation
(the "Corporation"). In connection with my acquisition of these securities, I
understand as follows:
The undersigned represents that he or she has the business or financial
experience necessary to have the capacity to protect his or her own interests
in connection with the proposed transaction.
These securities are not registered under the Securities Act of 1933 (the
"Act") as the transaction in which they are being acquired is exempt under
Section 4(2) of the Act as not involving any public offering. Reliance of the
Corporation and others upon this exemption is predicted in part upon my
representation (which I hereby confirm) that I am acquiring these securities
for my own account with no present intention of selling or otherwise
distributing the same to the public. I understand that in the view of the
Securities and Exchange Commission (the "SEC") the statutory and
administrative basis for exemption would not be present if, notwithstanding
my representation, I have in mind merely acquiring these securities for a
market rise, or for sale if the market does not rise, or for a fixed or
determinable period in the future.
These securities must be held by me indefinitely unless they are
subsequently registered under the Act or an exemption from registration is
available. Any routine sales of these securities made in reliance upon the
exemption afforded by Rule 144 of the SEC can be made only in limited amounts
in accordance with the terms and conditions of that rule, and, in the event
this rule is for some reason inapplicable, compliance with some other
registration exemption will be required. The Corporation will supply to me
such information in its possession as may be necessary to enable me to make
routine sales of the securities under Rule 144, if that Rule is available.
However, the Corporation is under no obligation to otherwise comply with any
other exemption, or to register the securities received by the undersigned.
In accordance with the policies of the SEC, the Corporation is placing
the following or substantially similar legend upon the certificates
representing the securities and is placing upon the Corporation's stock
transfer records a stop-transfer order preventing transfer of the securities
pending compliance with the conditions set forth in the legend:
These securities are not registered under state or federal
securities laws and may not be offered or sold, pledged
(except
a pledge pursuant to the terms of which any offer or sale
upon foreclosure would be made in a manner that would not
violate the registration provisions of federal or state
securities laws) or otherwise distributed for value, nor may
these securities be transferred on the books of the
Corporation, without opinion of counsel, concurred in by
counsel for the Corporation, that no violation of said
registration provisions would result therefrom.
I HAVE CAREFULLY READ THE FOREGOING AND UNDERSTAND THAT IT RELATES TO
RESTRICTIONS UPON MY ABILITY TO SELL AND/OR TRANSFER MY SECURITIES.
DATED: August , 1997
-- --------------------------------------
[NAME]
[ADDRESS]
2
RELEASE OF PLEDGE OF SHARES OF STOCK
On August 8, 1997, Origin Book Sales, Inc. issued two promissory notes to
Profit Financial Corporation. These notes were for the principle amounts of
$100,000 and $3,250 respectively.
Also, on August 8, 1997, Xxxxxx Xxxxxx pledged approximately 31% of his
shares of stock in Origin Book Sales, Incorporated as collateral for the
above mentioned notes.
Since August 8, 1997, Profit Financial Corporation has entered into a
Share Exchange Agreement whereby it has obtained all of the outstanding
shares of Origin Book Sales, Incorporated. Accordingly, Profit Financial
Corporation hereby releases the collateral previously pledged by Xx. Xxxxxx
and terminates the Pledge of Shares of Stock Agreement executed by Mr. Xxxxxx
Xxxxxx on August 8, 1997.
FINANCIAL PROFIT CORPORATION
--------------------------------------
Its:
