Exhibit 3.0
Exchange Agreement
EXCHANGE AGREEMENT
This agreement is entered into the 7th day of February, 2003 between
URBAN TELEVISION NETWORK CORPORATION, a Nevada corporation, (herein, "URBAN
NEVADA") and URBAN TELEVISION NETWORK CORPORATION, a Texas corporation, (herein,
URBAN TEXAS) and URBAN TEXAS SHAREHOLDERS., (herein, Sellers") whose names are
attached on Exhibit "A". Urban Nevada, Urban Texas and Sellers desire to enter
into a share exchange transaction whereby Urban Nevada will issue shares to
Sellers in exchange for their shares of Urban Texas. It is the intent of the
parties that this exchange transaction qualify as a tax free reorganization
under Internal Revenue Code Section 368(a)(2)(B).
For good and valuable consideration, receipt of which is acknowledged
the parties agree, represent and warrant the following:
Agreement
A. Exchange of Shares. Urban Nevada and Sellers agree to exchange shares
whereby Urban Nevada will acquire all of Sellers' stock of Urban Texas which
represents 13,248,000 shares or Ninety (90%) percent of the issued and
outstanding capital stock of Urban Texas. Urban Nevada will issue its common
shares to Sellers in exchange for their Urban Texas shares. Urban Nevada will
issue one (1) share of its common stock for one (1) shares of Sellers' Urban
Texas common stock. Urban Nevada will acquire the Sellers' shares and issue to
Sellers a total of Thirteen Million Two Hundred Forty-eight Thousand
(13,248,000) shares of Urban Nevada common stock to Sellers pro-rata. The shares
will be issued from Urban Nevada's treasury pursuant to the securities
transaction exemption afforded by Section 4(2) of the Securities Act of 1933 and
Section 5(I)(a) and Rule 109.3 of the Texas Securities Act and Regulations. The
shares will be restricted securities bearing Urban Nevada's standard restrictive
stock legend as set forth in the example attached as Exhibit "B".
B. Representations, Warranties and Covenants of Urban Nevada: Urban Nevada
represents and warrants to Sellers as of the date hereof and as of the Closing
Date:
SECTION 1. Enforceability of Agreement Against Urban Nevada. Urban
Nevada has all necessary power and authority to enter into this Agreement to
which it is a party, to carry out the obligations hereunder and to consummate
the transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligations of Urban Nevada enforceable against it in
accordance with the respective terms.
SECTION 2. Shares. The shares when issued will be free and clear of all
liens, charges, demands or adverse claims or other restrictions on the exercise
of any of the attributes of ownership. There are no contracts, arrangements,
commitments or restrictions relating to the issuance, sale, transfer or purchase
or obtaining of shares or other ownership interests in the Shares, except for
this Agreement.
SECTION 3. Incorporation, Authority and Qualification of Urban Nevada.
Urban Nevada is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada. Urban Nevada has all necessary
corporate power and authority to carry on the business now being conducted by
it. Urban Nevada is duly qualified to do business, and is in good standing, in
each jurisdiction, if any, where the character of its properties owned, operated
or leased or the nature of its activities makes such qualification necessary.
Urban Nevada is authorized to issue 200,000,000 common shares, par value $0.0001
per share. As of December 31, 2002, Urban Nevada had 1,416,636 common shares
issued and outstanding. Urban Nevada is authorized to issue 500,000 preferred
shares, par value $1.00 per share. No preferred shares have been issued. No
other classes of stock are authorized or issued. There are no outstanding
options, warrants, rights or otherwise, other than those disclosed in the
financial statements.
SECTION 4. No Conflict. The execution and delivery by Urban Nevada of
this Agreement and each Related Document to which Urban Nevada is a party has
been obtained and all filings and notifications required by law, agreement or
otherwise have been made, the performance by Urban Texas of this Agreement and
each Related Document to which they are parties will not:
(a) Violate or conflict with any term or provision of the articles
or certificate of incorporation (or other charter documents)
of Urban Nevada;
(b) Conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
applicable to Company;
(c) Conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or
both, would become a default) under, give to others any rights
of termination, amendment, acceleration or cancellation of, or
result in the creation of any lien on any of the assets
pursuant to, any assigned contract or any licenses;
(d) Without limiting the generality of the foregoing, result in
the termination, denial or impairment of any material
contract, arrangement or benefit granted with respect to Urban
Nevada's business, or require the payment of any fees, taxes
or assessments, pursuant to any federal, state or local
program relating to minority-owned businesses.
SECTION 5. Consents, Approvals and Notifications. The execution and
delivery by Urban Nevada of this Agreement and each Related Document to which it
is a party does not, and the performance by it of this Agreement and such
Related Documents will not, require any consent, approval, authorization or
other action by, or filing with or notification to, any Governmental Authority
or any other Person.
SECTION 6. Litigation. There is no claim, action, investigation,
arbitration or proceeding pending or, threatened against Urban Nevada, or
against or relating to any of the assets or the ability of it to perform its
obligations hereunder, before any arbitrator, judge, court or governmental
authority, except as set forth in the Urban Nevada financial statements, or
Exhibits. Urban Nevada is not subject to any order, writ judgment, injunction,
decree, determination or award of any arbitrator, judge, court or governmental
authority.
B. Representations, Warranties Covenants of Sellers and Urban Texas:
Urban Texas and Sellers represent and warrant to Urban Nevada as of the date
hereof and as of the Closing Date:
SECTION 1. Enforceability of Agreement Against the Sellers and Urban
Texas. Urban Texas and Sellers have all necessary power and authority to enter
into this Agreement to which each is a party, to carry out the obligations
hereunder and to consummate the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligations of the Sellers and Urban
Texas enforceable against it in accordance with the respective terms.
SECTION 2. Shares and Shareholders. Sellers's shares have been validly
issued and are free and clear of all liens, charges, demands, community property
rights or adverse claims or other restrictions on the exercise of any of the
attributes of ownership. There are no contracts, arrangements, commitments or
restrictions relating to the issuance, sale, transfer or purchase or obtaining
of shares or other ownership interests in the Shares.
SECTION 3. Incorporation, Authority and Qualification of Urban Texas.
Urban Texas is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Texas. Urban Texas has all necessary
corporate power and authority to carry on the business now being conducted by
it. Urban Texas is duly qualified to do business, and is in good standing, in
each jurisdiction, if any, where the character of its properties owned, operated
or leased or the nature of its activities makes such qualification necessary.
Urban Texas is authorized to issue 50,000,000 common shares, par value $0.001
per share. As of the date of this Agreement, Urban Nevada has 14,720,000 common
shares issued and outstanding. No other classes of stock are authorized or
issued. There are no outstanding options, warrants, rights or otherwise, other
than those disclosed in the financial statements.
SECTION 4. No Conflict. The execution and delivery by the Sellers and
Urban Texas of this Agreement and each Related Document to which the each is a
party have been obtained and all filings and notifications required by law,
agreement or otherwise have been made, the performance by the Sellers and Urban
Texas of this Agreement and each Related Document to which each is a party will
not:
(1) Violate or conflict with any term or provision of the articles
or certificate of incorporation (or other charter documents)
of Urban Texas or entity seller;
(2) Conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
applicable to Urban Texas or Sellers;
(3) Conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or
both, would become a default) under, give to others any rights
of termination, amendment, acceleration or cancellation of, or
result in the creation of any lien on any of the exchange
shares pursuant to, any instrument, agreement or otherwise;
(4) Without limiting the generality of the foregoing, result in
the termination, denial or impairment of any material
contract, arrangement or benefit granted with respect to Urban
Texas or Sellers' business, or require the payment of any
fees, taxes or assessments, pursuant to any federal, state or
local program relating to minority-owned businesses.
SECTION 5. Consents, Approvals and Notifications. The execution and
delivery by the Sellers and Urban Texas of this Agreement and each Related
Document to which each is a party does not, and the performance by it of this
Agreement and such Related Documents will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
Governmental Authority or any other Person.
SECTION 6. Financial Statements.
6.1 Urban Texas has furnished to Urban Nevada copies of (a)
audited balance sheets of Urban Nevada and audited statements of income, changes
in shareholders' equity and statements of cash flow from inception through the
period ending December 31, 2001, together with the reports and notes thereon,
independent certified public accountants and (b) unaudited interim financial
statements for the year ending December 31, 2002, (collectively, the "Financial
Statements", "Exhibit C").
6.2 The Audited Financial Statements (a) have been prepared in
conformity with GAAP applied on a consistent basis from year to year (except as
noted otherwise therein); and are true and correct and present fairly in all
material respects the financial condition of Urban Texas and the results of
operations and changes in cash flow of Urban Texas for the periods to which each
relates.
6.3 To the knowledge of the Sellers and Urban Texas , the
Interim Financial Statements, if prepared, (a) have been prepared in conformity
with GAAP applied on a consistent basis from year to year (except as noted
otherwise therein), subject to normal recurring year-end adjustments (the effect
of which will not, individually or in the aggregate, be material) and the
absence of notes (which, if presented, would not differ materially from those
included in the Audited Financial Statements), and are true and correct and
present fairly in all material respects the financial condition of Urban Nevada
and the results of operations and changes in cash flow of Urban Texas for the
periods to which each relates.
SECTION 7. Litigation. There is no claim, action, investigation,
arbitration or proceeding pending or, threatened against Urban Texas, or against
or relating to any of the assets or the ability of it to operate its business or
perform its obligations hereunder, before any arbitrator, judge, court or
governmental authority, except as set forth in the Urban Texas financial
statements, or Exhibits. Urban Texas is not subject to any order, writ judgment,
injunction, decree, determination or award of any arbitrator, judge, court or
governmental authority.
SECTION 8. Contracts. To the extent applicable, Exhibit "D" contains an
accurate and complete list of all written and oral agreements and contracts in
effect on the date of this Agreement to which Urban Texas is a party in
connection with the business operations or by which any of its properties or
assets relating to the operation are bound. There are no contracts in formation
or which are capable of subsequent formation as a result of future satisfied
conditions. Urban Texas has made available to Urban Nevada true and complete
copies of the contracts (including any amendments or modifications thereto).
SECTION 9. Environmental Matters. Urban Texas has not used any
property, real or personal to generate, manufacture, refine, transport, treat,
store, handle, or dispose of any hazardous substances except in accordance with
all applicable federal and state environmental laws.
SECTION 10. Taxes. Urban Texas has filed all federal income tax returns
and all other federal, state, county, local or city tax returns which are
required to be filed, including, but not limited to, income and employee
withholding taxes, and it has paid or caused to be paid all taxes shown on said
returns or on any tax assessment received by it to the extent that such taxes
have become due, or has set aside on its books reserves (segregated to the
extent required by sound accounting practice) reasonably deemed by it to be
adequate with respect thereto.
SECTION 11. Absence of Changes. Since the date of the Financial
Statements, Urban Texas has operated its business in the ordinary course
consistent with past practices and there has not been, except as disclosed in
this Agreement or the Exhibits attached hereto:
i. any Material Adverse Effect;
ii. any damage, destruction or loss (whether or not covered by
insurance) affecting any tangible asset or property used or useful in the
business operations, normal wear and tear excepted;
iii. any payments, discharges or satisfactions by it of any liens,
claims, charges or liabilities (whether absolute, accrued, contingent or
otherwise and whether due or to become due) relating to the business operations,
other than in the ordinary course of the business and consistent with past
practice;
iv. any licenses, sales, transfers, pledges, mortgages or other
dispositions of any tangible or intangible assets having a value over $1,000 (in
the aggregate) used or held for use in connection with the operation of the
business, other than in the ordinary course of business and consistent with past
practice;
v. any write-offs as uncollectible of any accounts receivable or notes
receivable of the operations, or any portion thereof, not provided for in the
allowance for uncollectible accounts in the Interim Financial Statements;
vi. any cancellations of any material debts or claims of, or any
amendments, terminations or waivers of any rights of material value to, the
business operations;
vii. any general uniform increase in or change in the method of
computing the compensation of employees of it who perform services for the
benefit of the business operations;
viii. any material changes in the manner in which Urban Texas extends
discount or credits to customers or otherwise deals with customers of its
business;
ix. any material changes in the accounting methods or practices
followed by Urban Texas and or any changes in depreciation or amortization
policies or rates theretofore adopted;
x. any capital commitments by Urban Texas and for additions to
property, plant or equipment of the business operations;
xi. any agreements or commitments to merge or consolidate with or
otherwise acquire any other corporation, association, firm or other business
organization or division thereof;
xii. any declarations of dividend, payment of any dividend, issuance of
any securities, purchase or redemption of any securities, commitments or
authorizations for any changes to its Articles of Incorporation or amendments to
any by-laws, conversions of any options, warrants or otherwise into common
shares, and except as disclosed in paragraph B.1. relating to the total shares
issued and outstanding which resulted from a corporate reorganization;
xiii. any other material transaction relating to Urban Texas other than
in the ordinary course of the business and consistent with past practice; or
xiv. any agreements or understandings, whether in writing or otherwise,
for Urban Texas to take any of the actions specified in items i. through xii.
above.
SECTION 12. Undisclosed Liabilities. Urban Texas does not have any
liabilities or obligations of any nature that would be required by GAAP to be
reflected in the Financial Statements (subject, in the case of unaudited
statements, to normal year-end audit adjustments), except: (a) such liabilities
and obligations which are reflected in the Financial Statements, or (b) such
liabilities or obligations which were incurred in the ordinary course of
business for normal trade or business obligations and are not individually or in
the aggregate in excess of $1,000.
SECTION 13. Compliance with Laws. Except as individually or in the
aggregate would not have a Material Adverse Effect, Urban Texas has complied in
all respects with all laws of all Governmental Authorities (including all tariff
and reporting requirements) with respect to its business operations.
C. Miscellaneous Provisions.
SECTION 1. Conditions to Closing
1.1 Conditions to Obligations of Urban Nevada. The obligations
of Urban Nevada to consummate the share exchange will be subject to the
fulfillment, at or prior to the Closing, of each of the following conditions,
any one of which may be waived by the Urban Texas and, or Sellers without waiver
of any other rights or remedies which Urban Texas or Sellers may have under this
Agreement:
i. Urban Nevada's Closing Documents. At the Closing, Urban Texas and
Sellers will have executed and/or delivered the following Related Documents to
which they are parties or for which each is responsible: (1) A signed copy of
this Agreement; (2) a signed copy of the Stock Exchange Subscription Agreement
with completed and signed Questionnaire (Exhibit "E"); and (3) delivery to Urban
Nevada of the Urban Texas share certificates duly endorsed by each Seller.
1.2 Conditions to Obligations of Sellers. The obligations of
Sellers to consummate the purchase of the shares contemplated by this Agreement
will be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions, any one of which may be waived by Urban Nevada without
waiver of any other rights or remedies which Urban Nevada may have under this
Agreement.
i. Closing Documents. At the Closing, Sellers will have executed and/or
delivered (1) A signed copy of this Agreement; (2) signed copy of the
authorizing Urban Nevada board action, and (3) delivery of the Urban Nevada
exchange shares to the Urban Texas shareholders.
SECTION 2. Indemnification.
2.1 Survival. All representations and warranties and covenants and
agreements contained herein will survive the execution of hereof and the Closing
Date. Any investigations by or on behalf of any party will not constitute a
waiver as to enforcement of any representation, warranty or covenant contained
in this Agreement. No notice or information delivered by one party will affect
the other party's right to rely on any representation or warranty made by the
party delivering the notice or information or relieve that party of any
obligations under this Agreement as the result of a breach of any of its
representations and warranties.
SECTION 3. General Provisions.
3.1 Headings and Interpretation. The headings used in this Agreement
are for reference purposes only and will not affect the meaning or
interpretation of any term or provision of this Agreement.
3.2 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party.
3.3 Entire Agreement. This Agreement represents the entire
understanding of the parties with reference to the matters set forth herein.
This Agreement supersedes all prior negotiations, discussions, correspondence,
communications and prior agreements among the parties relating to the subject
matter herein.
3.4 Amendment. This Agreement may not be amended or modified except by
an instrument in writing signed by the parties hereto.
3.5 Applicable Law. This Agreement will be governed by the substantive
laws of the State of Texas, without regard to its conflict of laws provisions.
3.6 Counterparts and Facsimile Transmission Copies of Originals. This
Agreement may be executed in several original or facsimile copy counterparts and
all so executed and transmitted will constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart. Facsimile transmitted signatures will be
deemed valid as though they were originals and the parties may perform any and
all obligations and duties in reliance on the facsimile copies.
3.7 Further Assurances, Additional Documents, Etc. The parties will
cooperate with each other to accommodate the intent of this agreement.
IN WITNESS WHEREOF, the parties hereto have executed, or caused their
duly authorized representatives to execute, this Exchange Agreement as of the
date first written above.
URBAN TELEVISION NETWORK URBAN TELEVISION NETWORK
CORPORATION, a Nevada Corporation. CORPORATION, a Texas Corporation.
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By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:President Title: President
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By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Secretary Title: Secretary
URBAN TEXAS SHAREHOLDERS:
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▇▇▇▇▇ ▇▇▇▇▇▇▇ Clear Fork Investments, LLC
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. McConely
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JTWRS
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