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SECURITIES EXCHANGE AGREEMENT

Stock Purchase Agreement

SECURITIES EXCHANGE AGREEMENT | Document Parties: AMERICAN SECURITY RESOURCES CORP. You are currently viewing:
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AMERICAN SECURITY RESOURCES CORP.

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Title: SECURITIES EXCHANGE AGREEMENT
Governing Law: Texas     Date: 11/1/2006

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SECURITIES EXCHANGE AGREEMENT

 

This SECURITIES EXCHANGE AGREEMENT (“Agreement”) dated as of October 28, 2005, is by and between AMERICAN SECURITY RESOURCES CORPORATION , a Nevada corporation (“American Security Resources”), eGo DESIGN, INC. , an Oregon corporation (“eGo”), and Edward L. Davis , Benjamin F. Schafer and James Twedt , all of whom are the only shareholders of eGo (the “Shareholders”.)

 

W I T N E S S E T H:

 

WHEREAS, as of September 30, 2005, there were 100,000 issued and outstanding shares of the common stock, no par value of eGo Designs, Inc. (the “eGo Stock”), all of which are owned by the Shareholders;

 

WHEREAS, as of September 30, 2005, there were 42,811,266 issued and outstanding shares of the common stock, par value $0.001 of American Security Resources Corporation common stock (the “American Security Resources Stock”);

 

WHEREAS, American Security Resources proposes to acquire one hundred percent (100%) of the issued and outstanding shares of eGo on a fully diluted basis at the time of Closing along with an exclusive right to market and license eGo’s fuel cell technology (“Exclusive Fuel Cell License”) for the exchange of twelve Million (12,000,000) restricted shares of Common Stock of American Security Resources Corporation. Said shares shall represent not less than twenty six percent (26%) of the issued and outstanding shares of American Security Resources Corporation on the Date of Closing. At the Date of Closing, the bid price for American Security shares shall be a minimum of $0.05 per share; and

 

WHEREAS, the Board of Directors of American Security Resources and eGo and the Shareholders have duly approved the terms and conditions of this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants, agreements, representations and warranties contained herein, the parties hereto agree as follows:

 

 

ARTICLE 1

EXCHANGE PRICE

 

1.1  

Exchange At the Closing (defined below) to be held in accordance with the provisions

of Article 3 below and subject to the terms and agreements set forth herein, eGo hereby exchanges with American Security Resources and American Security Resources hereby exchanges with eGo one hundred percent (100%) of the issued and outstanding shares of eGo on a fully diluted basis at the time of Closing (the “eGo shares”). The exchange price for the eGo shares shall be Twelve Million (12,000,000) shares of the Common Stock of American Security Resources Corporation. eGo will provide to American Security Resources the name, address, and tax identification number of the person(s) or entities to whom it desires to have the American Security Resources Stock issued.

 

.

 

 

 

ARTICLE 3

CLOSING

 

3.1  

Closing . The consummation of the purchase (the “Closing”) shall occur at a mutually

agreed location in Tualatin, Oregon, as soon as practicable after the mutual agreement of American Security Resources, eGo and the Shareholders that all conditions described in Articles 6 and 7 have been satisfied or waived by the applicable party and after American Security Resources has had reasonable time to review and verify eGo’s responses to American Security Resources’ Due Diligence Request. All costs and expenses associated with consummation of the transactions contemplated by this Agreement incurred by American Security Resources shall be the sole responsibility of American Security Resources, while all expenses incurred by the Shareholders and eGo shall be the sole responsibility of eGo.

 

3.2   Deliveries by American Security Resources . American Security Resources shall deliver, or cause to be delivered to the Shareholders at Closing six million (6,000,000) shares of Common Stock of American Security Resources Corporation, and an additional 6,000,000 shares within 5 business days.

 

3.3   Deliveries by eGo Designs, Inc . eGo Designs, Inc. shall deliver, or cause to be delivered to American Security Resources Corporation at Closing one hundred percent (100%) of the issued and outstanding common stock of eGo.

 

3.4   Appointment of a member of the Board of Directors . American Security Resources shall appoint Ed Davis to be a member of its board of Directors.

 

ARTICLE 4

REPRESENTATIONS OF eGO DESIGNS, INC.

 

eGo hereby represents and warrants to American Security Resources as follows (it being acknowledged that American Security Resources is entering into this Agreement in material reliance upon each of the following representations and warranties, and that the truth and accuracy of each, as evidenced by the execution of this Agreement by a duly authorized officer of eGo, constitutes a condition precedent to the obligations of American Security Resources hereunder).

 

4.1   Existence and Good Standing . eGo is a corporation duly organized, validly existing and in good standing under the laws of the State of Oregon. eGo has no subsidiaries. eGo has the power to own or lease its respective properties and assets and to carry on its businesses as now being conducted. eGo is duly qualified to do business and is in good standing in the State of Oregon, which is the only jurisdiction in which the character or location of the properties owned or leased by eGo or the nature of the business conducted by eGo makes such qualification necessary.

 

4.2   Capitalization . eGo currently has outstanding 100,000 shares of common stock and no shares of preferred stock. All such outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable. There are no outstanding options, warrants, rights, calls, commitments, conversion rights, rights of exchange, plans or other agreements, commitments or arrangements of any character providing for the purchase, subscription, issuance or sale of any shares of capital stock of eGo, other than the acquisition of the eGo shares as contemplated by this Agreement.

 

4.3   Ownership of Stock . eGo shall transfer one hundred percent (100%) of its issued and outstanding common stock of eGo on a fully diluted basis at the time of Closing to American Security Resources free and clear of all preemptive or similar rights, liens, encumbrances, restrictions and claims of every kind and the delivery to American Security Resources of the eGo Stock pursuant to the provisions of this Agreement will transfer to American Security Resources valid title thereto, free and clear of all liens, encumbrances, restrictions and claims of every kind. The eGo Stock to be exchanged herein has been duly authorized and validly issued and is fully paid and non-assessable.

 

4.4   Authority to Execute and Perform Agreement; No Breach . eGo has the full legal right and power and all authority and approval required to enter into, execute and deliver this Agreement, and to sell, assign, transfer and convey the eGo Stock and to perform fully their respective obligations hereunder. This Agreement has been duly executed and delivered by officers of eGo and, assuming due execution and delivery by, and enforceability against, American Security Resources, constitutes the valid and binding obligation of eGo enforceable in accordance with its terms, subject to the qualifications that enforcement of the rights and remedies created hereby is subject to (i) bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors, and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). No approval or consent of, or filing with, any governmental or regulatory body, and no approval or consent of, or filing with, any other person is required to be obtained by the Shareholders or in connection with the execution and delivery by the Shareholders of this Agreement and consummation and performance by them of the transactions contemplated hereby.

 

The execution, delivery and performance of this Agreement (including but not limited to the employment agreement incorporated by reference pursuant to Section 6 hereto) by the Shareholders and the consummation of the transactions contemplated hereby in accordance with the terms and conditions hereof, the Shareholders will not:

 

 

(a)

violate, conflict with, or result in the breach of any of the terms of, or constitute (or with notice or lapse of time or both would constitute) a default under, any contract, lease, agreement or other instrument or obligation to which a Shareholder is a party or by or to which any of the properties and assets of the Shareholder may be bound or subject;

 

 

(b)

violate any order, judgment, injunction, award or decree of any court, arbitrator, governmental or regulatory body, by which a Shareholder or the securities, assets, properties or business of any of him is bound; or

 

(c)  

violate any statute, law or regulation to which Shareholders are subject.

 

4.5   Securities Matters . eGo hereby represents, warrants and covenants to American Security Resources, as follows:

 

 

(a)

It has been advised that the American Security Resources Stock has not been registered under the Securities Act of 1933, as amended (the “Securities Act”,) or any state securities act in reliance on exemptions therefrom.

 

 

(b)

The American Security Resources Stock is being acquired solely for the account of eGo’s assignee, for investment, and is not being acquired with a view to or for the resale, distribution, subdivision or fractionalization thereof. The assignee has no present plans to enter into any such contract, undertaking, agreement or arrangement and the assignee further understands that the American Security Resources Stock may only be resold pursuant to a registration statement under the Securities Act or pursuant to some other available exemption.

 

 

(c)

eGo acknowledges, in connection with the exchange of the American Security Resources Stock, that no representation has been made by representatives of American Security Resources regarding its business, assets or prospects other than that set forth herein and that it is relying upon the information set forth in the filings made by American Security Resources pursuant to Section 13 of the Securities Exchange Act of 1934, as amended and such other representations and warranties as set forth in this Agreement.

 

 

(d)

They agree that the certificate or certificates representing the American Security Resources Stock will be inscribed with substantially the following legend:

 

“The securities represented by this certificate have not been registered under the Securities Act of 1933. The securities have been acquired for investment and may not be sold, transferred or assigned in the absence of an effective registration statement for these securities under the Securities Act of 1933 or an opinion of the Company’s counsel that registration is not required under said Act.”

 

4.6   Financial Statements and No Material Changes . Annexed hereto as Schedule 4.6(a) are the unaudited balance sheets, income statements and statements of cash flows of eGo as of October 28, 2005 (the “eGo Financial Statements”).

 

The eGo Financial Statements were carefully prepared from the books and records of eGo, present fairly the financial position, assets and liabilities of eGo and the results of its operations, for the respective periods indicated and reflect all necessary accruals, all in conformity with generally accepted accounting principles (“GAAP”) applied on a consistent basis. The eGo Financial Statements contain all adjustments (consisting of only normal recurring accruals) required to be made by GAAP, subject to normal year-end adjustments.

 

Except as disclosed in Schedule 4.6(b), since September 30, 2005 there has been (a) no material adverse change in the assets or liabilities, or in the business or condition, financial or otherwise, or in the results of operations or prospects, of eGo and (b) no material adverse change in the assets or liabilities, or in the business or condition, financial or otherwise, or in the results of operations or prospects, of eGo and to the best knowledge, information and belief of eGo, no fact or condition exists or is contemplated or threatened which might cause such a change in the future.

 

4.7   Books and Records . The minute books of eGo, all the contents of which have been previously made available to American Security Resources and their representatives, contain accurate records of all meetings of, and action taken by (including action taken by written consent) the Shareholder and the Board of Directors of eGo. Except as set forth on Schedule 4.7 attached hereto, eGo does not have any of its respective records, systems, controls, data or information recorded, stored, maintained, operated or otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the exclusive ownership and direct control of eGo.

 

4.8   Title to Properties; Encumbrances .

 

 

(a)

Except as set forth on Schedule 4.8 attached hereto, eGo has good, valid and marketable title to (a) all of its properties and assets (real and personal, tangible and intangible), including, without limitation, all of the properties and assets reflected in the balance sheet included as part of the eGo Financial Statements, except as indicated in the Schedules hereto; and (b) all of the properties and assets purchased by eGo since September 30, 2005 all of which purchases as of a date not more than two days prior to the date of this Agreement, have been set forth on Schedule 4.8 attached hereto; in each case subject to no encumbrance, lien, charge or other restriction of any kind or character.

 

 

(b)

The rights, properties and other assets presently owned, leased or licensed, by eGo reflected on the balance sheet included in the eGo Financial Statements or acquired since September 30, 2005 include all rights, properties and other assets necessary to permit eGo to conduct its business in the same manner as its business has heretofore been conducted. All such properties and assets owned or leased by eGo are in satisfactory condition and repair, other than ordinary wear and tear.

 

4.9   Leases . Schedule 4.9 attached hereto, contains an accurate and complete list and description of the terms of all leases to which eGo is a party (as lessee or lessor). Each lease listed on Schedule 4.6 (or required to be set forth on Schedule 4.6) is in full force and effect; all rents and additional rents due to date on each such lease have been paid; in each case, the lessee has been in peaceable possession since the commencement of the original term of such lease and is not in default thereunder and no waiver, indulgence or postponement of the lessee’s obligations thereunder has been granted by the lessor; and there exists no event of default or event, occurrence, condition or act (including the consummation of the transactions contemplated hereby) which, with the giving of notice, the lapse of time or the happening of any further event or condition, would become a default under such lease. eGo has not violated any of the terms or conditions under any such lease in any material respect, and, to the best knowledge, information and belief of eGo, all of the covenants to be performed by any other party under any such lease have been fully performed. The property leased by eGo is in a state of good maintenance and repair and is adequate and suitable for the purposes for which it is presently being used.

 

4.10   Material Contracts . Except as set forth on Schedule 4.10 attached hereto, eGo is not bound by:

 

 

(a)

any agreement, contract or commitment relating to the employment of any person by eGo, or any bonus, deferred compensation, pension, profit sharing, employee option, employee stock purchase, retirement or other employee benefit plan;

 

 

(b)

any agreement, indenture or other instrument which contains restrictions with respect to payment of dividends or any other distribution in respect of its shares;

 

 

(c)

any loan or advance to, or investment in, any individual, partnership, joint venture, corporation, trust, unincorporated organization, government or other entity (each a “Person”) or any agreement, contract or commitment relating to the making of any such loan, advance or investment;

 

 

(d)

any guarantee or other contingent liability in respect of any indebtedness or obligation of any Person (other than the endorsement of negotiable instruments for collection in the ordinary course of business);

 

 

(e)

any management service, consulting or any other similar type contract;

 

 

(f)

any agreement, contract or commitment limiting the freedom of eGo to engage in any line of business or to compete with any Person;

 

 

(g)

any agreement, contract or commitment not entered into in the ordinary course of business which involves $250,000 or more and is not cancelable without penalty or premium within 30 days; or

 

 

(h)

any agreement, contract or commitment which might reasonably be expected to have a potential adverse impact on the business or operations of eGo; or

 

 

(i)

any agreement, contract or commitment not reflected in the eGo Financial Statement under which eGo is obligated to make cash payments of, or deliver products or render services with a value greater than $100,000 individually or $300,000 in the aggregate, or receive cash payments of, or receive products or services with a value greater than $100,000 individually or $300,000 in the aggregate, and any other agreement, contract or commitment which is material to the conduct of the business of eGo.

 

Each contract or agreement set forth on Schedule 4.10 is in full force and effect and there exists no default or event o


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