CTD Holdings, Inc. Share Exchange Agr.

THIS AGREEMENT (the "Agreement") is dated as of August 11, 2005, by and between ELINE ENTERTAINMENT GROUP, INC., a Nevada corporation ("Eline"); CTD HOLDINGS, INC., a Florida corporation ("CTDH"); and RICK STRATTAN ("Strattan"), the President, CEO, Chairman and majority shareholder of CTDH. Eline is sometimes hereinafter referred to as the "Company."


PREAMBLE


WHEREAS, Strattan owns one (1) share of Series A Preferred Stock, which share represents controlling interest in the voting securities of CTDH; and


WHEREAS, Eline is desirous of acquiring one (1) share of Series A Preferred Stock from Strattan in exchange for two hundred thousand (200,000) restricted shares of the common stock of Eline; and


WHEREAS, as a result of this Agreement, CTDH will be a majority-owned subsidiary of Eline with one (1) share of the Series A Preferred Stock of CTDH being owned by Eline, which share represents controlling interest in the voting securities of CTDH.


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


1. RECITALS. The above recitals are true, correct and are herein incorporated by reference.


2. EXCHANGE OF SHARES. At the Closing (as hereinafter defined), Strattan agrees to transfer to Eline one (1) share of the Series A Preferred Stock of CTDH (the "CTDH Voting Control Stock"), which represents all of the issued Series A Preferred Stock of CTDH, solely in exchange for two hundred thousand (200,000) shares of the restricted common stock of Eline ("Eline Common Stock"). Strattan agrees to deliver the certificate representing the CTDH Voting Control Stock to Eline on the Closing Date, and Eline agrees to deliver a certificate to Strattan representing the Eline Common Stock. The certificate to be delivered by Strattan at the Closing shall be in negotiable form, and the certificate delivered by Eline at the Closing shall e subject to restrictions on transferability pursuant to Federal and state securities laws including, but not limited to, Rule 144 of the Securities Act of 1933, as amended or as applicable.


3. CLOSING DATE. The closing ("Closing") shall be held on the date hereof or such other date and time as may be agreed upon by the parties (Closing Date"). This Agreement may be canceled at the option of either party if the Closing does not occur within 90 days from the date first above written.


4. REPRESENTATIONS OF ELINE. Eline hereby makes the following representations and warranties to Strattan, each of which is true as of the date hereof and will be true as of the Closing Date with the same effect as though such representations and warranties had been made on the Closing Date:


(a) Eline is validly organized, existing and in good standing under the laws of the Sate of Nevada; that this Agreement and the transactions contemplated hereunder have been duly and validly authorized by all requisite corporate action; that Eline has the full right, power and capacity to execute and deliver this agreement and perform its obligations hereunder; that the execution and delivery of this Agreement and the performance by Eline of its obligations pursuant to this Agreement do not constitute a breach of or a default under any agreement or instrument to which Eline is a party or by which it or any of its assets are bound; and that this Agreement, upon execution and delivery of the same by Eline, will represent the valid and binding obligation of Eline in accordance with its terms.


(b) The authorized capital stock of Eline consists of thirty million (30,000,000) shares of common stock, par value $.01 per share and five million (5,000,000) shares of preferred stock par value $.01 per share. Of the authorized preferred stock, two hundred fifty thousand (250,000) shares have been designated as Series A Preferred Stock, rights and preference of which are set forth on Exhibit A attached hereto and incorporated herein by such reference, and one hundred eighty thousand (180,000) shares have been designated as Series B Preferred Stock, the designations, rights and preference of which are set forth on Exhibit A attached hereto and incorporated herein by such reference. All of the shares of capital stock have been duly authorized and validly issued and are fully paid and nonassessable and no personal liability attaches to the ownership thereof. The Eline Common Stock to be issued to Strattan at Closing will be fully paid and nonassessable.


(c) The business of Eline is as set forth in its Annual Report on Form 10-KSB for the fiscal year ended October 31, 2004. Except as set forth herein, Eline does not have any subsidiaries or own any interest in any other enterprise.


(d) Eline is an issuer required to file reports under Section 13(a) of the Securities Exchange Act of 1934 (the "Exchange Act"). Eline has filed with the SEC all reports (collectively, the "SEC Documents") required to be filed by reporting companies pursuant to the Exchange Act. As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act, each as in effect on the date so filed, and at the time filed with the SEC none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of Eline included in the SEC Documents comply as of their respective dates as to form in all material respects with the then applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except in the case of the unaudited statements, as permitted by Form 10-QSB under the Exchange Act) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present in all material respects the financial position of Eline as at the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein).


(e) Since the date of the last Balance Sheet filed with the SEC, there has not been any change in the financial condition or operations of Eline except for changes in the ordinary course of business, which changes have not in the aggregate been materially adverse, and transactions referred to in this Agreement.


(f) As of the date of this Agreement, Eline does not have any material debt, liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, and whether due or to become due, that is not reflected in the last Balance Sheet filed with the SEC or incurred in the ordinary course of business following the date of the Balance Sheet. Eline has no knowledge of any past or existing circumstance, condition, event or arrangement that may hereafter give rise to any liabilities of Eline, except as disclosed herein.


(g) Within the times and the manner prescribed by law, Eline has filed all federal, state and local tax returns required by law and has paid all taxes, assessments and penalties due and payable. There are no present audits or disputes or extensions as to taxes of any nature payable by CTDH. Adequate provision has been made on the Balance Sheet for all taxes of Eline as of the date hereof.


(h) Except for the consent of Eline, which is given by its execution of this Agreement, Eline does not require any third party consent, waiver, authorization or approval of any governmental or regulatory authority, domestic or foreign, or of any other person, firm or corporation, in connection with the execution and deliver of this Agreement by Eline and the performance by it of its obligations hereunder.


(i) Eline has all licenses and permits required other than those which would not have materially adverse effect on its business as contemplated.


(j) There are no claims, actions, suites, proceedings, labor disputes or investigations pending or, to the best of Eline's knowledge, threatened before any federal, state or local court or governmental or regulatory authority, domestic or foreign, or before any arbitrator of any nature, brought by or against Eline or any of its officers, directors, employees, agents or affiliates involving, affecting or relating to any assets, properties or operations of Eline or the transactions contemplated by this Agreement, nor is any basis known to it for any such action, suit, proceeding or investigation.


5. REPRESENTATION OF STRATTAN. Strattan hereby makes the following representations and warranties to the Company, each of which is true as of the date hereof and will be true as of the Closing Date with the same effect as though such representations and warranties had been made on the Closing Date:


(a) CTDH is a corporation duly organized, validly existing and in good standing under the laws of the Sate of Florida, has the necessary corporate powers to own properties and to carry on business as now owned and operated, and is duly qualified to do business in each of such states and other jurisdictions where its business requires such qualification.


(b) The authorized capital stock of CTDH consists of 100,000,000 shares of Class A Common Stock, par value $.0001 per share, of which there were 11,294,017 shares issued and outstanding as of March 31, 2005; 10,000,000 shares of Class B Non-Voting Common Stock par value $.0001 per share, of which there were 0 shares issued and outstanding as of March 31, 2005; and 5,000,000 shares of Preferred Stock, par value $.0001 per share of which there was one (1) share of Series A Preferred Stock issued and outstanding as of March 31, 2005. Each share of Series A Preferred Stock is entitled to one (1) vote more than one-half (1/2) of all votes entitled to be cast by all holders of the voting capital stock of CTDH on any matter submitted to common shareholders so as to ensure that the votes entitled to be cast by the holder of the Series A Preferred Stock are equal to at least a majority of the total of all votes entitled to be cast by the common shareholders. Each share of Series A Preferred Stock has a liquidation preference of $.0001. All such shares have been issued in compliance with all applicable U.S. securities laws. All of the issued and outstanding shares are duly and validly issued, fully paid and nonassessable. Except as set forth h ...