SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 23, 2003
The X-Change Corporation
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(Exact name of registrant as specified in its charter)
Nevada 0-41703 43-1594165
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
36 West 44th Street, Suite 1201, New York, New York 10036
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (646) 728-7023
ITEM 5. OTHER EVENTS.
On January 23, 2003, the Registrant mailed a consent solicitation
statement to its stockholders. With the consent solicitation statement the
Registrant is seeking approval for a Securities Repurchase Agreement between the
Registrant, X-Change Technologies Corp., and two separate groups of the
Registrant's stockholders. The consent solicitation statement is attached to
this Current Report on Form 8-K as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
c) Exhibits.
EXHIBIT NUMBER DESCRIPTION
99.1 Consent Solicitation Statement dated January 23, 2003 relating
to Securities Repurchase Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
The X-Change Corporation
By: /s/ William F. Frank
Title: Chief Executive Officer
Date: January 23 2003
8-KtheX-ChangeCorporation23jan.DOC
EXHIBIT 99.1
CONSENT SOLICITATION STATEMENT RELATING TO SECURITIES REPURCHASE AGREEMENT
THE X-CHANGE CORPORATION
36 WEST 44TH STREET, SUITE 1201
NEW YORK, NEW YORK 10036
(646) 728-7023
_________________________________________________________
NOTICE OF CONSENT SOLICITATION
_________________________________________________________
To the Stockholders of The X-Change Corporation:
The board of directors of The X-Change Corporation is seeking your
consent to a Securities Repurchase Agreement and related transactions. We ask
that you return the enclosed written consent form as soon as possible, but in
any event by February 7, 2003. The Securities Repurchase Agreement was entered
into as of December 23, 2002 between us, X-Change Technologies Corp., which is
currently a wholly-owned subsidiary of ours, and two separate groups of our
stockholders. The first group of stockholders, which we will refer to as the
"WEBiX Holders," consists of those of our stockholders who formerly owned
interests in WEBiX, Inc., a Florida corporation, before WEBiX, Inc. was merged
into a subsidiary of ours on January 15, 2002. The second group of stockholders
that is a party to the Securities Repurchase Agreement consists of some of our
major stockholders who owned shares in us before the January 15, 2002 merger and
will be referred to as the "Original Holders."
Under the January 15, 2002 merger, WEBiX, Inc. was merged into a
subsidiary of ours, now known as X-Change Technologies Corp. Under the
Securities Repurchase Agreement, we will transfer all shares of X-Change
Technologies Corp. to the WEBiX Holders in exchange for the surrender of all
voting stock or other securities issued by us and held by the WEBiX Holders, and
the assumption by X-Change Technologies Corp. of all of our debt. In addition,
in connection with the Repurchase Agreement we will assign to X-Change
Technologies Corp. our rights under a technology license agreement. The
Securities Repurchase Agreement and related transactions is equivalent to the
sale of our assets in exchange for the surrender of securities held by the WEBiX
Holders and the assumption of our debt by X-Change Technologies Corp.
The Securities Repurchase Agreement and related transactions must be
approved by the holders of a majority of our common stock and Series A Preferred
Stock, voting as a single class. If your shares are held in street name, your
broker may consent on your behalf to the proposal if you do not otherwise
direct. December 26, 2002 is the record date for determining the stockholders
entitled to receive the attached Consent Solicitation Statement and to vote on
the Securities Repurchase Agreement and related transactions.
As of December 10, 2002, our board of directors approved the Securities
Repurchase Agreement and related transactions in accordance with the Nevada
Corporation Law. Our board of directors recommends that you consent to the
proposal to approve the Securities Repurchase Agreement and related
transactions.
By Order of the Board of Directors:
Susan Landin
Secretary
New York, New York
January 23, 2003
THE X-CHANGE CORPORATION
36 WEST 44TH STREET, SUITE 1201
NEW YORK, NEW YORK 10036
(646) 728-7023
______________________________
CONSENT SOLICITATION STATEMENT
_____________________________
GENERAL INFORMATION
This Consent Solicitation Statement and the enclosed written consent
form are being mailed by The X-Change Corporation, a Nevada corporation, on or
about January 23, 2003, to holders of record of shares of our common stock, par
value $0.001 per share, and our Series A Preferred Stock, par value $0.001 per
share. We ask that you return the enclosed written consent form as soon as
possible, but in any event by February 7, 2003.
This Consent Solicitation Statement relates to a Securities Repurchase
Agreement and related transactions. The Securities Repurchase Agreement was
entered into as of December 23, 2002 between us, X-Change Technologies Corp.,
which is currently a wholly-owned subsidiary of ours, and two separate groups of
our stockholders. The Securities Repurchase Agreement and related transactions
will be collectively referred to in this Consent Solicitation Statement as the
"Repurchase." The stockholders in the first group, whom we will refer to in this
Consent Solicitation Statement as the "WEBiX Holders," consists of those of our
stockholders who formerly owned interests in WEBiX, Inc., a Florida corporation,
before WEBiX, Inc. was merged into a subsidiary of ours on January 15, 2002. The
second group of stockholders that is a party to the Securities Repurchase
Agreement consists of some of our major stockholders who owned shares in us
before the January 15, 2002 merger. The stockholders in the second group will be
referred to in this Consent Solicitation Statement as the "Original Holders."
Under the January 15, 2002 merger, WEBiX, Inc. was merged into a
subsidiary of ours which is now known as X-Change Technologies Corp. and is a
Delaware corporation. Under the Securities Repurchase Agreement, we will
transfer all shares of X-Change Technologies Corp. to the WEBiX Holders in
exchange for the surrender of all common stock, preferred stock, warrants or
options issued by us and held by the WEBiX Holders, and the assumption by
X-Change Technologies Corp. of all of our indebtedness. The Repurchase is
essentially equivalent to the sale of our assets in exchange for the surrender
of securities held by the WEBiX Holders and the assumption of debt by X-Change
Technologies Corp. As a result of the Repurchase, the ability to exercise
control over our business, policies and affairs and exert substantial influence
over the election of our directors, and the approval or disapproval of actions
requiring a shareholder vote, will shift from the WEBiX Holders to the Original
Holders.
As of December 10, 2002, our board of directors approved the Repurchase
by unanimous written consent in accordance with the Nevada Corporation Law. With
this Consent Solicitation Statement, we are seeking the consent of the holders
of our voting stock, which consists of common stock, par value $0.001 per share,
and Series A Preferred Stock, par value $0.001 per share. Our board of directors
has fixed December 26, 2002 as the record date for determining the stockholders
entitled to receive this Consent Solicitation Statement and to vote on the
Repurchase. If your shares are held in street name, your broker may consent on
your behalf to the proposal if you do not otherwise direct. Our board of
directors recommends that you consent to the proposal to approve the Securities
Repurchase Agreement and related transactions.
We will bear the entire cost of furnishing this Consent Solicitation
Statement. We will request brokerage houses, nominees, custodians, fiduciaries
and similar parties who are holders of record of our voting securities to
forward this Consent Solicitation Statement to the beneficial owners of these
voting securities, and we will reimburse these parties for out-of-pocket
expenses incurred in forwarding the material.
_________________________________________
WE ARE NOT ASKING YOU FOR A PROXY AND
REQUEST THAT YOU NOT SEND US A PROXY.
THIS IS A REQUEST FOR STOCKHOLDER APPROVAL BY WRITTEN
CONSENT. YOU ARE REQUESTED TO INDICATE WHETHER YOU
APPROVE OF THE PROPOSED CORPORATE ACTION ON THE
ENCLOSED FORM AND TO RETURN THAT FORM TO US.
_________________________________________
FORWARD-LOOKING STATEMENTS
Some of the information included in this Consent Solicitation Statement
contains statements that are forward-looking, such as statements relating to the
Repurchase, statements about our business prospects and other statements of
outlook. These forward-looking statements involve important known and unknown
risks and uncertainties that could cause actual results and liquidity to differ
materially from those expressed or anticipated in any forward-looking
statements. These risks and uncertainties include, but are not limited to: the
impact of the Repurchase on our business; expenses incurred in connection with
the Repurchase; the failure of any of the parties to satisfy the closing
conditions for the Repurchase; and actions taken or failed to be taken by third
parties, including our customers, suppliers, competitors, and stockholders.
Actual results may differ materially from those expressed in any forward-looking
statement made by us or on our behalf. Any forward-looking statements speak only
as of the date made, and we undertake no obligation to update these
forward-looking statements to reflect subsequent events or circumstances.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to some of the informational requirements of the
Securities Exchange Act of 1934 and accordingly file periodic reports with the
Securities and Exchange Commission. Reports that we file with the SEC may be
inspected and copied at the public reference facilities maintained by the SEC at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You
may obtain information on the operation of the SEC's public reference facilities
by calling the SEC at 1-800-SEC-0330. You may obtain copies of periodic reports
and other information at prescribed rates by writing to the SEC, Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. This
information may also be accessed electronically through the SEC's home page on
the Internet at www.sec.gov.
PURPOSE AND EFFECT OF THE REPURCHASE
BACKGROUND AND PURPOSE OF THE REPURCHASE
Since the merger between us and WEBiX, Inc. on January 15, 2002, our
exclusive business has been the operation, through X-Change Technologies Corp.,
of an alternative trading system for over-the-counter stocks known as
WEBIXTRADER. WEBIXTRADER began operations in July 2002, but as a result of
declining market volume relating to a sluggish economy, as well as regulatory
and competitive factors, did not yet generate any volume. WEBIXTRADER suspended
its operations on December 26, 2002.
Our board of directors and management have been attempting to raise
capital to support the business of operating an alternative trading system but
have been unsuccessful. In addition, we have incurred debt as a result of the
operation of WEBIXTRADER, our attempts to raise capital and the expenses of
being a public company. We have not been able to pay employees in cash, and a
result have terminated some employees and have agreed to pay other employees
with stock.
As a result of the above factors, our board of directors began to
consider whether it would be appropriate to effectively unwind the January 15,
2002 merger between WEBiX, Inc. and us, which would allow the WEBiX Holders to
attempt to further develop the alternative trading system and allow us to pursue
other opportunities. In September 2002 we held discussions with a representative
of the Original Holders and with some of the WEBiX Holders regarding the
unwinding of the merger. At this time, we decided not to pursue this type of
transaction because it appeared that we might enter into a transaction resulting
in our realizing value from WEBIXTRADER and its underlying technology. In
December 2002, after it had become clear that this transaction would not occur,
we again held discussions with the representative of the Original Holders and
with some of the WEBiX Holders regarding a means of effectively unwinding the
merger. These discussions led to an agreement to complete the Repurchase.
Our board of directors believes that the Repurchase should be completed
because the operation of WEBIXTRADER is no longer appropriate for us, a public
company, due to its lack of profitability. Our board of directors believes that
the operation of WEBIXTRADER and any related businesses which may use its
technology have significant potential. However, the realization of this
potential is dependent almost entirely on the efforts of individuals with the
technological and market expertise to expand and operate WEBIXTRADER. While the
technology underlying the system is developed, the development of the system as
a viable, profitable entity is still in the early stages. Our board of directors
believes that it will be difficult for us to realize a value from this business,
in part because of the expenses of operating a public company. Completion of the
Repurchase will result in the transfer of the business of WEBIXTRADER to the
former stockholders of WEBiX, who will attempt to further develop this business.
X-Change Technologies Corp., which we no longer own, will assume our debt in
connection with this transaction. We will then attempt to locate a business
which is more suitable for operation by a public company.
CURRENT STATE OF BUSINESS
Our primary asset is a license to use the technology needed to operate
WEBIXTRADER system. The license is granted by WebIam, Inc., which owns the
technology. We have been in default under the license agreement since August
2002. However, while the default results in a revocation of the license, we
believe that there is an exception to this revocation under which we may use the
software necessary to operate the WEBIXTRADER System for two years from the time
of default. We have held discussions with WebIam to resolve the license issue.
Another asset we own, through X-Technologies Corp., is the right to use the name
"X-Change Technologies."
We suspended operations of WEBIXTRADER on December 26, 2002. However,
X-Change Technologies Corp., after the Repurchase, intends at some point in the
future to resume operations of the system, or to launch a similar system.
Accordingly, the above license may have significant value to the extent the
WEBIXTRADER system, or another alternative trading system, becomes operational.
After the Repurchase, any rights that we have to use the technology underlying
the WEBIXTRADER system will be transferred to X-Change Technologies Corp. and we
will have no interest whatsoever in WEBIXTRADER or the technology needed to
operate an alternative trading system. In addition, the right to use the name
"X-Change Technologies" will belong to X-Change Technologies Corp., and not to
us.
Our President and CEO, William Frank, operates a business known as
Domain Architects, LLC. Domain Architects provides technology-related services,
such as application hosting, software maintenance, software development and
technology planning. It was originally anticipated that the business of Domain
Architects would be combined with our business in some manner. Accordingly, some
of the services previously provided by Domain Architects have been provided,
since September 2002, through a newly-formed entity known as X-Change
Technologies Group, LLC. The "X-Change Technologies" portion of this name has
been used with our permission, but we do not have any ownership interest in
X-Change Technologies Group. While it has been determined that no business
combination will be completed between us and Domain Architects, Domain
Architects has continued to operate under the name "X-Change Technologies
Group." However, Domain Architects does not claim any ownership interest in the
"X-Change Technologies" name.
On September 19, 2002, we entered into an agreement with X-Change
Technologies Group under which X-Change Technologies Group agreed to provide
technical support services relating to WEBIXTRADER, in consideration for, among
other things, an exclusive right to provide these services and to communicate
directly with our clients, the right to use our hardware to provide its support
services, the right to seek new business from our clients, and the right to use
our facilities, including our data center. Subsequently we defaulted on our
lease and X-Change Technologies Group entered into a lease for the facilities
and has been paying the rent on them. X-Change Technologies Group has been
allowing us to use these facilities without the payment of any rent since this
time.
Dr. Frank, Susan Landin, our Chief Operating Officer, and Robert
Kaskel, our Chief Technology Officer, have acted as officers of ours since
September 2002, but have not received compensation from us and have indicated
that they will not seek compensation from us for their services as officers or,
in the case of Dr. Frank, a director. Dr. Frank, Ms. Landin and Mr. Kaskel
during this period have been compensated by Domain Architects and have provided
services to X-Change Technologies Group. It is anticipated that Domain
Architects will enter into a business relationship or business combination with
X-Change Technologies Corp. after the Repurchase.
EFFECT OF REPURCHASE ON CONTROL
The WEBiX Holders, as a group, currently beneficially own over 50% of
our voting securities, and as a result have the ability to exercise control over
our business, policies and affairs and exert substantial influence over the
election of our directors and the approval or disapproval of actions requiring a
shareholder vote. As a result of the Repurchase, this ability to exercise
control will shift from the WEBiX Holders to the Original Holders.
ADVANTAGES AND DISADVANTAGES OF THE REPURCHASE
Our board of directors believes that the advantage of the Repurchase is
that it will essentially place us in the same position as we were before the
merger of January 15, 2002. The WEBiX Holders will return a substantial number
of our voting shares in connection with the transaction and X-Change
Technologies Corp. will also assume our debt. The shares returned will include
shares issued to employees in lieu of cash payments. The transaction will allow
us to focus on new businesses that are more suitable for operation by a public
company.
The Repurchase may have significant disadvantages for you. As a result
of the Repurchase, we will have no interest in the business of X-Change
Technologies Corp., which operated WEBIXTRADER and may operate this system in
the future. To the extent the business of X-Change Technologies develops and
becomes profitable, you will not receive any benefits of the increase in value
of the X-Change Technologies Corp. business or any potential profitability.
Similarly, to the extent that the business of Domain Architects is combined with
the business of X-Change Technologies Corp. and increases the value of X-Change
Technologies Corp., you will not receive any benefits from this increase in
value.
CONFLICT OF INTEREST
Our board of directors has a conflict of interest in connection with
the Securities Repurchase Agreement. The Chairman of our board of directors,
Donald E. Weeden, is one of the major WEBiX Holders. Accordingly, Mr. Weeden
will have a large stake in X-Change Technologies Corp. after the merger. Our
other two directors, William Frank and Walter Raquet, are not WEBiX Holders but
plan to be officers and stockholders in, and may be directors of, X-Change
Technologies Corp. after the completion of the Repurchase.
Dr. Frank, Ms. Landin and Mr. Kaskel have been providing services to
X-Change Technologies Group, a legal vehicle controlled by Domain Architects
with which we have a contractual relationship but in which we have no ownership,
at the same time they have acted as our officers. Dr. Frank, Ms. Landin and Mr.
Kaskel have a conflict of interest in connection with the Repurchase because
Domain Architects may enter into a business combination or business relationship
with X-Change Technologies Corp. after the Repurchase.
As a result of the above conflicts of interest, independently of the
stockholder approval required for the Repurchase, we will seek to have the
Repurchase approved by a majority of the holders of our voting securities
excluding the WEBiX Holders.
THE SECURITIES REPURCHASE AGREEMENT
A copy of the Securities Repurchase Agreement is attached to this
Consent Solicitation Statement as Appendix A. Under the Securities Repurchase
Agreement, we will transfer all shares of X-Change Technologies Corp. to the
WEBiX Holders. As consideration for this transfer, the WEBiX Holders will
deliver all shares of our common stock or preferred stock, or options or
warrants to purchase shares of our common stock, owned by them to us for
surrender to treasury. In addition, under the Securities Repurchase Agreement,
X-Change Technologies Corp. will assume substantially all of our debt and we
will assign our rights under a license agreement between us and WebIam, Inc. to
X-Change Technologies Corp.
The Securities Repurchase Agreement contains a mutual general release
under which we, X-Change Technologies Corp., the Original Holders and the WEBiX
Holders agree to release each other from all liabilities that may have arisen
through the date of the Securities Repurchase Agreement. The Securities
Repurchase Agreement also includes a covenant on the part of us, X-Change
Technologies Corp., the Original Holders and the WEBiX Holders not to sue each
other.
The Securities Repurchase Agreement includes representations and
warranties by us regarding our authority to enter into the agreement and other
matters, including the accuracy of our periodic reports filed with the SEC. It
also includes representations and warranties of the Original Holders and the
WEBiX Holders regarding their authority to enter into the agreement.
There are several conditions to the obligation of the parties to the
agreement to close the transaction. These conditions are that:
o the representations and warranties of the parties to the agreement are
true;
o our stockholders have approved the Securities Repurchase Agreement;
o we have issued a press release regarding the agreement in a form
reasonably acceptable to us and a majority of the Original Holders;
o the Securities Repurchase Agreement and related transactions do not
result in the number of our holders of record falling below 300;
o we have not received written notice that any of our stockholders have
commenced litigation to prevent the closing of the Securities
Repurchase Agreement; and
o no proceeding has been brought by a governmental body or any other
person which threatens or questions the validity or legality of the
Securities Repurchase Agreement and related transactions.
The Securities Repurchase Agreement may be terminated before closing by
mutual written consent of the parties. It also may be terminated by our board of
directors on or after five business days after the expiration of a 21-day period
which begins on the date of the press release announcing the Securities
Repurchase Agreement, if we have been notified of litigation regarding the
transaction and have not been able to obtain a dismissal of the litigation.
VOTE REQUIRED
The stockholder vote required by the Delaware to approve the Securities
Repurchase Agreement, which is equivalent to a sale of our assets, is the
affirmative vote of the holders of a majority of our outstanding shares of
voting stock, with the holders of our common and preferred stock voting as a
single class. Section 78.320 of the Nevada Revised Statutes provides that the
written consent of the holders of outstanding shares of voting stock, having at
least the minimum number of votes that would be necessary to authorize or take
the action at a meeting at which all shares entitled to vote on the matter were
present and voted, may be substituted for a special meeting. In order to
eliminate the cost and delay involved in holding a special meeting and in order
to complete the Repurchase as soon as possible, our board of directors has
decided to seek the written consent of the holders of a majority of our
outstanding shares of common stock and Series A Preferred Stock.
We are mailing this Consent Solicitation Statement to seek approval of
the Repurchase by the holders of a majority of our voting stock. Our board of
directors has fixed December 26, 2002 as the record date for determining the
stockholders entitled to receive this Consent Solicitation Statement and to vote
on the Repurchase. In connection with the Repurchase, the holders of our common
stock and our Series A Preferred Stock will vote together as a single class. The
shares of Series A Preferred Stock vote based upon the number of shares of our
common stock into which they are convertible. The Series A Preferred Stock is
convertible into a total of 40,000,000 shares of our common stock. The
Repurchase will not be completed until 21 days following the mailing of this
Consent Solicitation Statement.
A consent executed by a stockholder may be revoked at any time provided
that a written, dated revocation is executed and delivered before the time that
signed unrevoked consents by the holders of more than 50% of the voting stock
outstanding on the record date have been delivered to us at the above address. A
revocation may be in any written form validly signed by the record holder as
long as it clearly states that the consent previously given is no longer
effective.
SHARE OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our shares of common stock as of December 31, 2002 by
(i) each director who beneficially owns shares of our common stock, (ii) each of
our executive officers, (iii) each person that is known by us to beneficially
own more than 5% of the outstanding shares of our common stock, and (iv) all
directors and executive officers as a group. As of December 31, 2002, we had
37,602,000 issued and outstanding shares of common stock.
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BENEFICIAL OWNERSHIP BEFORE OFFERING
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NAME BENEFICIAL % OF BENEFICIAL TOTAL % OF TOTAL
BENEFICIAL BENEFICIAL
OWNERSHIP OF OWNERSHIP OF OWNERSHIP OF
COMMON STOCK AND BENEFICIAL OWNERSHIP OF COMMON STOCK COMMON STOCK
WARRANTS AS OWNERSHIP OF SERIES A INCLUDING INCLUDING
CONVERTED INTO SERIES A PREFERRED STOCK WARRANTS AND WARRANTS AND
COMMON STOCK PREFERRED STOCK AS CONVERTED SERIES A SERIES A
EXCLUDING SERIES A AS CONVERTED INTO COMMON PREFERRED STOCK PREFERRED AS
PREFERRED STOCK INTO COMMON STOCK STOCK AS CONVERTED CONVERTED
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
Donald E. Weeden 21,245,993(1)(2)18,245,993(2)(3) 45.61% 39,491,986(2) 53.30%
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
K. Richard B. Niehoff 14,849,043(4) 1,849,043(5) 4.62% 16,698,086 40.43%
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
John D. Weeden Living Trust 4,178,630(6) 4,178,630(7) 10.45% 8,357,260 18.18%
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
Karl R.B. Niehoff Jr. 3,175,770(8) 3,175,770(9) 7.94% 6,351,540 14.45%
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
Robert Kaskel 3,000,000*(10) 0 -- 3,000,000 7.98%
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
WebIam, Inc. 2,000,000*(11) 0 -- 2,000,000 5.32%
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
Susan Landin 600,000(12) 0 -- 600,000 1.60%
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
William Frank 0 0 -- 0 --
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
Walter Raquet 0 0 -- 0 --
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
All Executive Officers and 24,845,993(13) 18,245,993(14) 45.61% 43,091,986 58.16%
Directors as a Group (5 Persons)
- ----------------------------------- -------------------- ------------------ ----------------- ----------------- -----------------
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* Indicates joint beneficial ownership of shares.
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(1) Consists of 3,000,000 shares of common stock and 18,245,993 shares
issuable upon the exercise of warrants at an exercise price of $1.00
per share.
- ------- ------------------------------------------------------------------------
(2) Includes shares held by, or issuable upon the exercise of warrants held
by, the Donald E. Weeden IRA Rollover, Weeden Foundation, Weeden Family
Trust No. 1 and High Fields, L.P.
- ------- ------------------------------------------------------------------------
(3) Consists of 1,824,599.3 shares of Series A Preferred Stock which are
convertible into, and have voting rights equivalent to, 18,245,993
shares of common stock.
- ------- ------------------------------------------------------------------------
(4) Consists of 13,000,000 shares of common stock and 1,849,043 shares
issuable upon the exercise of warrants at an exercise price of $1.00
per share.
- ------- ------------------------------------------------------------------------
(5) Consists of 184,904.3 shares of Series A Preferred Stock which are
convertible into, and have voting rights equivalent to, 1,849,043 shares
of common stock.
- ------- ------------------------------------------------------------------------
(6) Consists of 4,178,630 shares of common stock issuable upon the exercise
of warrants at an exercise price of $1.00 per share.
- ------- ------------------------------------------------------------------------
(7) Consists of 417,863 shares of Series A Preferred Stock which are
convertible into, and have voting rights equivalent to, 4,178,630 shares
of common stock.
- ------- ------------------------------------------------------------------------
(8) Consists of 3,175,770 shares of common stock issuable upon the exercise
of warrants at an exercise price of $1.00 per share.
- ------- ------------------------------------------------------------------------
(9) Consists of 317,577 shares of Series A Preferred Stock which are
convertible into, and have voting rights equivalent to, 3,175,770 shares
of common stock.
- ------- ------------------------------------------------------------------------
(10) Consists of 1,000,000 shares of common stock owned directly and
2,000,000 shares of common stock owned by WebIam, Inc. Mr. Kaskel owns
33-1/3% of WebIam, Inc.'s voting stock and is a director of WebIam,
Inc. Mr. Kaskel disclaims beneficial ownership of 1,334,000 of the
2,000,000 shares of common stock owned by WebIam, Inc.
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(11) Consists of 2,000,000 shares of common stock.
- ------- ------------------------------------------------------------------------
(12) Consists of 600,000 shares of common stock.
- ------- ------------------------------------------------------------------------
(13) Consists of 6,600,000 shares of common stock and 18,245,993 shares
issuable upon the exercise of warrants at an exercise price of $1.00
per share.
- ------- ------------------------------------------------------------------------
(14) Consists of 1,824,599.3 shares of Series A Preferred Stock which are
convertible into, and have the voting rights equivalent to, 18,245,993
shares of common stock.
- ------- ------------------------------------------------------------------------
APPENDIX A
SECURITIES REPURCHASE AGREEMENT DATED AS OF DECEMBER 23, 2002
SECURITIES REPURCHASE AGREEMENT
THIS AGREEMENT has been entered into as of December 23, 2002, and is
between The X-Change Corporation, a Nevada corporation ("XCHC"), X-Change
Technologies Corp., a Delaware corporation ("X-CHANGE TECHNOLOGIES"), the
shareholders of XCHC who formerly owned interests in Webix, Inc., a Florida
corporation ("WEBIX") and whose names appear on Schedule A to this Agreement
(the "WEBIX HOLDERS") and certain persons who are currently Shareholders of XCHC
and who owned shares of XCHC prior to January 15, 2002 and whose names appear on
Schedule B to this Agreement (the "ORIGINAL HOLDERS").
THE FOLLOWING PREMISES form an integral part of this Agreement:
WHEREAS, XCHC entered into a "PLAN OF MERGER" on December 14, 2001, with WEBIX
for the purpose of acquiring (through a forward triangular merger between WEBIX
and Popo Agie, Inc., a Delaware corporation wholly-owned by XCHC) ("POPO AGIE")
WEBIX and its business; WHEREAS, the Plan of Merger was closed on January 15,
2002 through the aforesaid forward triangular merger ("MERGER"), and WEBIX was
merged into Popo Agie, which is now known as X-Change Technologies and is a
wholly-owned subsidiary of XCHC; WHEREAS, the Original Holders entered into
various "LOCK UP AGREEMENTS" in order to facilitate the Plan of Merger and,
thereby, surrendered a portion of their shares to treasury and agreed not to
sell for a period of time such shares as remained to them; WHEREAS, in
consideration of the Merger, XCHC issued shares of its "restricted" common and
preferred stock and warrants, all of which are collectively referred to as the
"XCHC/WEBIX MERGER SECURITIES" to the WEBIX Holders; and WHEREAS, the officers
and directors of XCHC and WEBIX immediately prior to the Merger have determined
that it is in the mutual best interests of the respective corporations that the
parties hereto be placed in the same positions relative to XCHC and the business
of WEBIX as before the Merger;
NOW, THEREFORE, based upon the above and foregoing premises and such
other and further consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
SECURITIES REPURCHASE
1.1 CLOSING. The closing under this agreement ("Closing") shall take
place on the first business day following the expiration of a 21-day period
beginning the day the press release is made pursuant to Section 3.3 below in the
offices of X-Change Technologies, 36 W. 44th Street, Ste. 1209, New York, NY
10036 (or such other place as the parties may agree) at 10:00 a.m. local time
(the "Closing Date"); provided, however, that the Closing Date may be postponed
to a later time and date by mutual agreement of the parties. If the Closing Date
is postponed, all references to the Closing Date in this Agreement shall refer
to the postponed date.
1.2 TERMS OF THE REPURCHASE. In consideration for the repurchase: (i)
XCHC shall transfer, upon fulfillment of all conditions precedent, all shares of
X-Change Technologies which it owns to the WEBIX Holders, in proportion to the
percentages of ownership listed on Schedule A hereto; (ii) XCHC shall assign its
rights under that certain Software License Agreement dated as of January 15,
2002 among WEBIX, XCHC and WebIam, Inc., a New Jersey corporation, to X-Change
Technologies; (iii) the WEBIX Holders shall transfer, upon fulfillment of all
conditions precedent, for surrender to treasury: (A) the XCHC/X-Change
Technologies Merger Securities, and (B) any and all options, warrants or other
securities held by any WEBIX Holder giving such holder the right to purchase
shares of the common stock, $.001 par value, of XCHC; and (iv) X-Change
Technologies shall assume all indebtedness of XCHC as of the Closing Date.
1.3 MUTUAL GENERAL RELEASE BETWEEN XCHC, THE ORIGINAL HOLDERS AND THE
WEBIX HOLDERS. In consideration of the above and foregoing premises and the
mutual covenants, promises and agreements contained in this agreement, XCHC,
X-Change Technologies, the Original Holders and the WEBIX Holders (for
themselves, their successors and assigns) do each forever acquit, remise,
release and forever discharge one another (as well as their respective
directors, officers, employees, shareholders, accountants, legal counsel,
agents, successors, affiliates and assigns) from and against any and all
actions, suits, claims, demands, rights, controversies, debts, agreements,
damages, costs, expenses, liabilities, compensation and causes of action of any
kind or nature whatsoever which has happened, developed or occurred, whether now
known or unknown, at any time prior to and including the date of this Agreement.
1.4 COVENANT OF XCHC, ORIGINAL HOLDERS AND WEBIX HOLDERS NOT TO SUE.
XCHC, X-Change Technologies, the Original Holders and the WEBIX Holders further
covenant and agree that they will not, either individually or collectively,
bring, commence, institute, maintain, prosecute or instigate any action at law,
proceeding in equity, administrative proceeding or otherwise, nor prosecute or
sue one another (as well as one another's directors, officers, employees,
shareholders, accountants, legal counsel, agents, successors, affiliates and
assigns) either affirmatively or by way of cross-claim, defense or counterclaim,
or in any other manner, for any alleged claim, demand, liability or cause of
action in any way stemming from any claimed action or inaction prior to and
including the date of the execution and delivery of this agreement.
1.5 FINAL SETTLEMENT. The parties each acknowledge, understand and
agree that they are aware that they or their attorneys may hereafter discover
facts different from or in addition to the facts which they now know or believe
to be true, but that it is their intention to fully, finally, absolutely and
forever settle any and all claims, disputes and differences which now exist, may
exist or may have existed between them, and that in furtherance of such
intention, the general and other releases given herein shall be and remain in
effect as full and complete releases, notwithstanding any mistake of fact or the
discovery of any different or additional facts.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 REPRESENTATIONS AND WARRANTIES OF XCHC. XCHC represents and
warrants to the Original Holders and WEBIX Holders as follows: a. Authority. All
necessary action has been taken to make this agreement a legal, valid and
binding obligation of XCHC enforceable in accordance with its terms and
conditions. b. Violations. The execution and delivery of this agreement and the
performance by XCHC of its obligations hereunder will not result in any material
breach or violation of or material default under any material agreement,
indenture, lease, license, mortgage, instrument, or understanding, nor result in
any violation of any law, rule, regulation, statute, order or decree of any kind
to which XCHC or any of its affiliates is a party or by which any of them or any
of their property is or may be or become subject. c. Consents and Approvals of
Government Authorizations. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required in connection with the execution, delivery and performance
of this agreement by XCHC and the consummation of the transactions contemplated
hereby. d. XCHC Securities Issuances. Other than the XCHC/X-Change Technologies
Merger Securities, and 600,000 shares of XCHC common stock that shall be
transferred to XCHC for surrender to treasury by a WEBIX Holder pursuant to
Section 1.2(iii) of this Agreement, no securities of XCHC have been issued since
January 14, 2002. e. SEC Reports. XCHC is required to file periodic reports with
the Securities and Exchange Commission (the "Commission") pursuant to Section
15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"). Each
such report since January 15, 2002 (a) was prepared in all material respects in
accordance with the requirements of the Exchange Act and the rules and
regulations thereunder, and (b) none of such reports contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the filings in which they were made, not misleading. XCHC has filed all
reports required to be filed by it and is current in all of its filing
obligations. f. Full Disclosure. No representation or warranty in this agreement
contains any untrue statement of material fact or omits to state any material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading; further, there are
no facts known to XCHC which (either individually or in the aggregate) could or
would materially and adversely affect or involve any substantial possibility of
having a material, adverse effect upon the condition (financial or otherwise),
results of operations, assets, liabilities or businesses of XCHC which have not
been disclosed in this agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF ORIGINAL HOLDERS. Each Original
Holder represents and warrants to XCHC and the WEBIX Holders as follows: a.
Authority. All necessary action has been taken to make this agreement a legal,
valid and binding obligation of such Original Holder enforceable in accordance
with its terms and conditions. b. Full Disclosure. No representation or warranty
by such Original Holder in this agreement contains any untrue statement of
material fact or omits to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading.
2.3 REPRESENTATIONS AND WARRANTIES OF WEBIX HOLDERS. Each WEBIX Holder
represents and warrants to XCHC and the Original Holders as follows: a.
Authority. All necessary action has been taken to make this agreement a legal,
valid and binding obligation of such WEBIX Holder enforceable in accordance with
its terms and conditions. b. Investment Intent. Such WEBIX Holder is acquiring
the shares of X-Change Technologies for investment for his, her or its own
account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of (each
a "Transfer") any of the shares of X-Change Technologies unless (i) the Transfer
is pursuant to an effective registration statement under the United States
Securities Act of 1933, as amended, and the rules and regulations in effect
thereunder or the securities laws of any other relevant jurisdiction (the
"Securities Act"), or (ii) counsel for such WEBIX Holder shall have furnished
X-Change Technologies with an opinion, reasonably acceptable to X-Change
Technologies, that no such registration is required because of the availability
of an exemption under the Securities Act. c. Full Disclosure. No representation
or warranty by such WEBIX Holder in this agreement contains any untrue statement
of material fact or omits to state any material fact necessary in order to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading.
2.4 COVENANTS OF XCHC. XCHC covenants to the WEBIX Holders, X-Change
Technologies and the Original Holders as follows: a. Press Release/Form 8-K.
XCHC shall, forthwith after execution and delivery of this agreement, issue a
press release and contemporaneously file a Form 8-K, both in form and substance
mutually acceptable to XCHC and a majority of the Original Holders, informing
the public and regulatory authorities thereby of this agreement. b. Shareholder
Consent. XCHC shall forthwith solicit its shareholders for, and use its best
efforts to obtain, a consent in accord with the Nevada Corporation Code which
approves this Agreement. c. Other Actions Necessary for Transfer of Assets. XCHC
agrees to execute any consents, certificates, instruments, agreements and other
documents, and to take any other actions reasonably requested by X-Change
Technologies for the purpose of ensuring that X-Change Technologies has
ownership of all assets, including technology, needed to operate the alternative
trading system known as WEBIXTRADER, it being the intent of the parties that all
such ownership be vested in X-Change Technologies.
ARTICLE III
CONDITIONS CLOSING OBLIGATION
The obligation of XCHC, the Original Holders and the WEBIX Holders to
close under this agreement shall be subject to the satisfaction, on or before
Closing, of each of the following conditions:
3.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the respective parties contained herein shall be in all material
respects true and accurate as of the date when made and at and as of Closing as
though such representations and warranties were made at and as of such date,
except for changes permitted or contemplated by the terms of this agreement.
3.2 PERFORMANCE. The parties shall have performed and complied with all
agreements, obligations and conditions required by agreement to be performed or
complied with by it on or prior to Closing.
3.3 CONSENT OF STOCKHOLDERS. The shareholders of XCHC shall have acted
by consent in number sufficient to allow for approval of this agreement.
Further, XCHC shall issue a joint press release in form and substance reasonably
acceptable to XCHC and a majority of the Original Holders.
3.4 HOLDERS OF RECORD. The transfers of shares and other actions
contemplated by this Agreement shall not result in the number of XCHC's holders
of record falling below 300.
3.5 LACK OF DISAPPROVAL BY STOCKHOLDERS. XCHC shall not have received
written notice from any shareholder of the shareholder's having actually
commenced litigation to prevent Closing of this Agreement.
3.6 NO GOVERNMENTAL PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or entity or legal or administrative proceeding shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby.
3.7 RESIGNATION OF OFFICERS AND DIRECTORS. The officers and directors
of XCHC as of the date of this Agreement shall have resigned effective as of the
Closing Date.
ARTICLE IV
TERMINATION AND ABANDONMENT
4.1 METHODS OF TERMINATION. This agreement may be terminated prior to
Closing by: (a) mutual written consent of the parties; or (b) the board of XCHC
on or after five (5) business days after the 21-day period following the press
release set forth in paragraph 3.3 in the event of a notification pursuant to
paragraph 3.5 and failure to procure a dismissal with prejudice of the complaint
within the aforesaid time period.
4.2 PROCEDURE ON TERMINATION. In the event of termination and
abandonment by the board of XCHC, pursuant to Section 4.1(b), written notice
thereof shall forthwith be given to the Original Holders and WEBIX Holders, and
this agreement shall terminate, and the Closing be abandoned without further
action by XCHC, the Original Holders or the WEBIX Holders.
ARTICLE V
MISCELLANEOUS
5.1 ENTIRE AGREEMENT; MODIFICATION. This agreement sets forth and
constitutes the entire agreement between the parties hereto with respect to
transactions set forth herein, and supersedes any and all prior agreements,
understandings, promises, and representations made by any party to any other
party concerning the subject matter hereof and the terms applicable thereto.
This agreement may not be released, discharged, amended or modified in any
manner except by an instrument in writing signed by duly authorized
representatives of the parties hereto.
5.2 PARTIES INDEPENDENT. In making and performing this agreement, the
parties act and shall act at all times as independent persons, and nothing
contained in this agreement shall be construed or implied to create an agency or
partnership relationship between the parties. At no time shall any party make
commitments or incur any charges or expenses for or in the name of any other
party.
5.3 LEGAL REPRESENTATION. The parties acknowledge that Shefsky &
Froelich Ltd. is acting only as counsel for XCHC in connection with this
Agreement and the related transactions, and that each other party has had the
opportunity to consult with independent counsel.
5.4 SEVERABILITY. The invalidity or unenforceabilty of one or more
provisions of this agreement shall not affect the validity or enforceability of
any of the other provisions hereof, and this agreement shall be construed in all
respects as if such invalid or unenforceable provisions are omitted.
5.5 GOVERNING LAW. This agreement shall be deemed to have been entered
into and shall be construed and enforced in accordance with the laws of the
State of Nevada.
5.6 WAIVERS. The failure of any party hereto to insist, in any one or
more instances, upon the performance of any of the terms, covenants or
conditions of this agreement or to otherwise exercise any right hereunder, shall
not be construed as a waiver or relinquishment of the future performance of any
such term, covenant or condition or the future exercise of such right, but the
obligations of the party with respect to such future performance shall continue
in full force and effect.
5.7 HEADINGS. The headings in the articles, sections and paragraphs
used in this agreement are included for convenience only and are not to be used
in construing or interpreting this agreement.
5.8 COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
5.9 EXPENSES. Each party shall pay the expenses incurred by them under
or in connection with this agreement.
5.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties and agreements contained in this
agreement shall survive the execution hereof for a period of
one year, and shall be unaffected by any investigation made by
any party at any time.
IN WITNESS WHEREOF, THE PARTIES HAVE CAUSED THIS AGREEMENT TO BE EXECUTED AS OF
THE DATE FIRST WRITTEN ABOVE.
THE X-CHANGE CORPORATION:
By:
President
ATTEST:
Secretary
X-CHANGE TECHNOLOGIES:
By:
Its:_______________________
ORIGINAL HOLDERS:
CARIBBEAN ISLAND SHIPPING
By:
Its:_______________________
LYNN ELLIOT
CONNIE HOWARD
CYNTHIA JARED
THERESA MCKIE
GARY SWANCEY
TRANSWORLD SHIPPING
By:
Its:_______________________
RACHEL YORK
WEBIX HOLDERS:
ELIZABETH BAREK
JAMES B. BAYLEY
MOLLY G. BAYLEY
HOLLY BLUM
DAVID L. DAVIES
DRL PARTNERS
By:
Its:
EDWARD EYERMAN
RAY FAHRMEIER
ROBERT N. GORDON
HIGH FIELDS LP
By:
Its:
ROBERT M. KASKEL
NOAH KLARISH
SUSAN LANDIN
SUSAN LAPCZYNSKI
IVAN MATATICK
STEVEN MAYBAUM
MICHAEL A. MOOK
DANIEL F. MORRISSEY
MYRON G. MYERS
HC BUCK NIEHOFF
JEANNETTE NIEHOFF ROTH IRA
By:
Its:
K. RICHARD B. NIEHOFF
KARL R.B. NIEHOFF
KARL R.B. NIEHOFF ROTH IRA
By:
Its:
ERIC B. NISSAN
MANUEL PARRA
EDWARD PERRY
JEFFREY R. POWER
DMITRIY REZNIK
PATRICK C. AND JUDITH A. RYAN, JOINT TENANTS
Patrick C. Ryan
Judith A. Ryan
JEFFREY M. SCHAEFER
ROBERT TURCHYN
WEBIAM, INC.
By:
Its:
ALAN R. WEEDEN
DONALD E. WEEDEN
DONALD E. WEEDEN IRA ROLLOVER TRUST
By:
Its:
JOHN D. WEEDEN
WEEDEN FAMILY TRUST #1
By:
Its:
WEEDEN FOUNDATION
By:
Its:
IRMA ZIEGLER LIVING TRUST
By:
Its:
SCHEDULE A
WEBIX HOLDERS
NAME PERCENTAGES
Elizabeth Barek 0.809%
James B. Bayley 0.809%
Molly G. Bayley 0.619%
Holly Blum 0.310%
David L. Davies 0.619%
DRL Partners 0.323%
Edward Eyerman 1.617%
Ray Fahrmeier 0.809%
Robert N. Gordon 0.809%
High Fields LP 1.617%
Robert M. Kaskel 1.548%
Noah Klarish 1.869%
Susan Landin 0.929%
Susan Lapczynski 0.929%
Ivan Matatick 0.310%
Steven Maybaum 1.548%
Michael A. Mook 0.323%
Daniel F. Morrissey 0.929%
Myron G. Myers 0.809%
HC Buck Niehoff 0.970%
Jeannette Niehoff Roth IRA 0.097%
K. Richard Niehoff 22.986%
Karl R. B. Niehoff 4.819%
Karl R. B. Niehoff Roth IRA 0.097%
Eric B. Nissan 1.936%
Manuel Parra 0.970%
Edward Perry 0.162%
Jeffrey R. Power 1.294%
Dmitriy Reznik 0.039%
Patrick C. and Judith A. Ryan, Jt. Ten. 1.617%
Jeffrey M. Schaefer 2.897%
Lance & Rita Sherman 0.809%
Robert Turchyn 0.809%
WebIAm, Inc. 3.096%
Alan R. Weeden 0.323%
Donald E. Weeden 15.100%
Donald E. Weeden IRA Rollover Trust 8.086%
John D. Weeden 6.468%
Weeden Family Trust #1 3.234%
Weeden Foundation 4.851%
Irma Ziegler Living Trust 0.809%
24
SCHEDULE B
ORIGINAL HOLDERS
Bruce Pierce
Connie Howard
Gary Swancey
Teresa McKie
Lynn Elliott
Cynthia Jared
Rachel York
Transworld Shipping
Caribbean Island Shipping