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Stock Exchange Agreement

This is an actual contract by Duct Utility Construction & Technologies.

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Sectors: Utilities
Governing Law: Ohio, View Ohio State Laws
Effective Date: January 01, 2001
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This Stock Exchange Agreement (the "AGREEMENT") dated as of the __ day of _________, 2001 is by and amongst DUCT 2, Inc., an Ohio corporation (hereinafter referred to as "Buyer"), DUCT Utility Construction & Technologies, Inc., a Colorado corporation (hereinafter referred to as "DUCT"), and, BJ Boring, Inc., a Texas corporation, (the "Company"), Matthew Williams and Joseph Williams (hereinafter referred to as the "Shareholders"). The Shareholders and the Company may jointly be referred to as the "Seller".

WHEREAS, the respective Board of Directors of the Buyer and the Company deem the acquisition by Buyer of all of the issued and outstanding capital stock of the Company on the terms set forth in this Agreement to be desirable, generally for the welfare and advantage of each, and in the best interests of the shareholders of each; and

WHEREAS, the Buyer is a wholly owned subsidiary of DUCT; and

WHEREAS, the parties desire that this transaction be treated as a tax-free exchange under section 368 of the Internal Revenue Code.

NOW, THEREFORE, in consideration of the promises and the mutual agreements and covenants herein contained, and for the purpose of prescribing the terms and conditions of such acquisition, the mode of carrying it into effect, and such other details and provisions as are necessary or desirable, the parties hereto hereby represent, warrant, covenant and agree as follows:


1.01 Number of Shares and Purchase Price. Subject to the further conditions of this Agreement and the truth of the representations and warranties provided herein the Seller agrees to exchange 1,000 shares of the common stock of Seller, said shares

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representing all of the issued and outstanding shares of common stock of Seller, for a total of 195,000 shares of unregistered common stock of DUCT. Attached and marked Exhibit 1.01 is a list of all of the shareholders of the Seller together with the number of shares of common stock owned by each.

The current shareholders of the Seller shall receive such number of shares of DUCT shares based upon their equity ownership in the Seller.

The Shareholders who are executing this Agreement shall deliver their shares of BJ Boring, Inc. duly endorsed for transfer in exchange for their shares of DUCT.

In addition to the exchange of shares, the Buyer shall pay the following liabilities as set forth herein:

As to Joseph Williams $119,798.62

As to Cathy Barr $38,000

The foregoing shall be payable by Buyer nine months following the date of closing. Interest on the outstanding principal balance shall accrue at the rate of 8% per annum.

The Company has not incurred any liabilities in excess of $5,000 since the June 30, 2001 Balance Sheet that is attached hereto as Exhibit 2.02. To the extent that the Buyer becomes obligated for any liabilities in excess of $5,000 that are not set forth on the June 30, 2001 balance sheet, Buyer shall have the right to offset those amounts due Williams and Barr. Attached and marked Exhibit 1.01(b) is consents by Williams and Barr to the terms set forth herein.

1.02 Employment. In addition to the exchange of shares and as a material inducement for the Shareholders entering into this Agreement, it is contemplated that immediately following the closing the Buyer shall enter into employment agreements with Matt Williams, Joseph Williams, and Steven Talley at $75,000 per year. These employees will continue to be employed by the Seller. In addition to the annual compensation, the Shareholders shall be entitled to participate in such benefit plans as are generally available to the employees of the Seller then in effect.

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The Seller and its shareholders represent and warrant to Buyer that:
2.01 Incorporation, Common Stock, Etc. The Company is a corporation duly organized and existing in good standing under the laws of the State of Texas. Attached hereto, as Exhibit 2.01, is a copy of the Company's good standing certificate. The Company has full corporate power and authority to carry on its business as it is now being conducted and to own and operate its assets, businesses and properties. Company has authorized capital stock consisting of 100,000 shares of Common Stock, par value $1.00 per share, of which 1,000 shares are issued and outstanding. There are no preferred shares authorized. There are and at the Closing will be no outstanding subscriptions, options, warrants, convertible securities, calls, commitments or agreements calling for or requiring issuance or transfer, sale or other disposition of any shares of capital stock of the Company or calling for or requiring the issuance of any securities or rights convertible into or exchangeable (including on a contingent basis) for shares of capital stock. All of the outstanding shares of the Company are duly authorized, validly issued, fully paid and non-assessable. There are no dividends due, to be paid or are in arrears with respect to any of the capital stock of Company.

2.02 Company Financial Statements. Attached hereto as Exhibit 2.02 are the most recent financial statements for the Company dated as of June 30, 2001 and December 31, 2000. Said financial statements include the Company's Balance Sheet, Income Statement, and Changes in Stockholders Equity. The financial statements present fairly the financial position of the Company as of the dates set forth in the financial statements. The financial statements have been prepared in conformity with generally accepted accounting principles. There has been no material change in the financial condition since the date of the financial statements. All liabilities, contingent or otherwise, are set forth in the financial statements and there are no undisclosed

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liabilities of any kind or nature. Since the date of the financial statements, the Company has not incurred any liabilities in excess of $5,000 and except as contemplated by this transaction, there have been no transactions entered into outside of the usual course of business.

The Seller and the Shareholders, at the expense of DUCT, further agrees to provide the Buyer within 60 days of closing with certified financial statements in conformity with Securities and Exchange Commission reporting requirements. If the Company is unable to provide the required certified financial statements or, the certified financial statements reflect a material change in the financial condition of the Company from that which was represented in the financial statements, then in that event the Buyer may, in its sole and absolute discretion and in addition to any remedies available at law, rescind this Agreement.

2.03 Litigation and Liens. Except as set forth in Exhibit 2.03, there are no actions, suits, proceedings, or investigations pending or, to the best of its knowledge, threatened or contemplated against the Company, at law or in equity, before any federal, state, municipal or other governmental department, commission, board, agency or instrumentality, domestic or foreign. The Company is not subject to any outstanding judgments or operating under or subject to or in default with respect to any order, writ, injunction or decree of any court or federal, state, municipal or other governmental department, commission, board, agency or instrumentality, domestic or foreign. Attached and marked Exhibit 2.03(b) is a list of all outstanding liens filed against the Company.

2.04 Compliance with Laws. The Company has complied in all material respects with all laws, regulations, orders, domestic and foreign, and neither the present uses of their properties nor the conduct of its business violate any such laws, regulations, orders or requirements, and except as set forth in Schedule 2.04 (if applicable) the Company has not received any notice of any claim or assertion that it is not so in compliance.

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2.05 Indebtedness. Except as set forth in the Company Balance Sheet, the Company has not executed any instruments, entered into any agreements or arrangements pursuant to which the either has borrowed any money, incurred or guaranteed any indebtedness or established any line of credit which represents a liability of the Company as of the date thereof.

2.06 No Material Adverse Change. Since the date of the Company Balance Sheet, there has not been any material adverse change in the condition, financial or otherwise, of any aspect of its business taken as a whole; nor has there been any material transaction entered into by the Company. The Company has not incurred any material obligations, contingent or otherwise except for legal and accounting fees and expenses in connection with the transactions contemplated by this Agreement. There has not been any damage, destruction or loss, whether or not covered by insurance adversely affecting the Company, its business, property or assets; nor has the Company (a) created or incurred any indebtedness; (b) issued, sold, purchased, redeemed or granted any shares of Company Common Stock or any other securities or any options, warrants or other rights to purchase any shares of Company Common Stock except as set forth in Schedule 2.06; (c) amended its Certificate of Incorporation or bylaws, (d) paid any obligation or liability other than obligations or liabilities reflected in its Balance Sheet dated as of the Company Balance Sheet Date or incurred any liabilities except for legal and accounting fees and disbursements incurred in the ordinary course of business or in connection with this Agreement and the transactions contemplated hereby.

2.07 No Defaults. Neither the execution nor delivery of this Agreement nor the consummation of the contemplated transaction are events which, of themselves or with the giving of notice or passage of time or both, could constitute a violation of or conflict with or result in any breach of or default under the terms, conditions or provisions of any judgment, law or regulation of the Company's Certificate of Incorporation or Bylaws, or of any agreement or instrument to which the Company is a party or by which it is bound; or could result in the creation or imposition of any lien, charge or encumbrance of any

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nature whatsoever on the property or assets of Company; and no consent of any third party except as expressly contemplated herein is required for the consummation of this Agreement by Company.

2.08 Corporate Action of Company. The Board of Directors of the Company has duly authorized the execution and delivery of this Agreement. Subject to the approval of the stockholders of the Company, as provided herein, this Agreement constitutes a valid, legal and binding agreement of Company and is enforceable in accordance with its terms.

2.09 Liabilities. As of the date of this Agreement, the Company has not incurred any liabilities except in the ordinary course of business.

2.10 Taxes. Except as set forth on Schedule 2.10, all federal, state, and local tax returns, reports and declarations of estimated tax or estimated tax deposit forms required to be filed by Company. The Company has paid all taxes which have become due pursuant to such returns or pursuant to any assessment received by it, and has paid all installments of estimated taxes due; and all taxes, levies and other assessments which each is required by law to withhold or to collect have been duly withheld and collected and have been paid over to the proper governmental authorities. The Company has no knowledge of any tax deficiency that has been or might be asserted against it which would materially and adversely affect the business or operations of the Company. Prior to Closing, The Company shall provide Buyer with copies of all tax returns, of any kind or nature, filed by Company, together with all accounting information.

2.11 Title to Property; Leases. The Company has good and defensible title in fee simple to, or valid and enforceable leasehold estates in, all properties and assets, which are material to its continued operations, free and clear of all liens, encumbrances, charges or restrictions or are not materially significant or important in relation to its operations and business. All of such leases and subleases under which the Company e is the lessor or sublessor, lessee or sublessee of properties or assets or under which Company holds

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properties or assets as lessee or sublessee are in full force and effect. Company is not in default in respect of any of the terms or provisions of any of such leases or subleases, and no claim has been asserted by anyone adverse to their respective rights as lessor, sublessor, lessee or sublessee under any of the leases or subleases mentioned above, or affecting or questioning their respective rights to continued possession of the leased or subleased premises or assets under any such lease or sublease; and Company either owns or leases all such properties as are necessary to its operations as now conducted.

Attached hereto and marked Exhibit 2.11 is a list of all assets owned by the company including all tangible and intangible assets and assets owned through any subsidiaries.

2.12 Licenses. The Company has obtained all required licenses, permits or other governmental authorization for the conduct of its business as now being conducted. The Company is in compliance with all laws governing the operation of its business in any jurisdiction where the Company conducts business.

2.13 Bank Accounts. Attached hereto as Schedule 2.13 is a listing of all bank accounts and account numbers that are currently held by the Company. At Closing, the Company shall deliver to Buyer Board minutes approving Randall A. Drew as a signatory to the bank account and removing any of the other named signatories.

2.14 Contracts and Commitments. Except as set forth in Exhibit 2.14, there are neither contracts nor commitments of the Company requiring any future payment to an officer, director, employee, agent or shareholder of Company. Also attached and marked as Exhibit 2.14(b) is a list of all current employees and the salary of each.

2.15 Representations True and Correct. This Agreement and the Schedules and Exhibits attached hereto do not contain any untrue statemen
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