Exhibit 10.1
THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") NOR REGISTERED UNDER ANY STATE
SECURITIES LAWS AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE
144, UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933
ACT THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
AGREEMENT FOR THE EXCHANGE OF COMMON STOCK
Agreement made this 21st day of July, 2010, by and between Domark
International, Inc., a Nevada corporation, OTCBB DOMK (the "Issuer"), and
Virtual Devices, Inc., a Pennsylvania corporation (the "Company"), and the
shareholders of Company, (the "Shareholders").
In consideration of the mutual promises, covenants, and representations
contained herein, and other good and valuable consideration,
THE PARTIES HERETO AGREE AS FOLLOWS:
1. TERMS.
Subject to the terms and conditions of this Agreement, the Issuer agrees:
i. That the total common shares issued and outstanding of the Issuer at
Closing shall be 100,000 Convertible Preferred Series A par value
$.001 and Thirty Six Million Four Hundred Sixty Thousand Eight Hundred
Thirty Five (36,460,835) common shares. The Convertible Preferred
shares are convertible at the rate of one share of convertible
preferred for 1000 shares of common stock of the Issuer.
ii. That the Issuer at Closing shall transfer to the Shareholders, Forty
Thousand Nine Hundred Thirty Eight Shares of preferred convertible
series A stock of Issuer, $.001 par value, in exchange for 100% of the
issued and outstanding shares of Company, such that Company shall
become a wholly owned subsidiary of the Issuer. The CEO of Issuer
shall surrender 40,938 shares of Convertible Preferred Series A for
cancelation and reissue to Shareholders as set forth herein.
iii. That the Issuer requires the Company to:
a) Agree to the announcement of the transaction with the SEC on form
8K within 4 days of the execution of this agreement, if
applicable.
b) Execute any and all documentation to reflect the intent of the
parties that Company becomes a wholly owned subsidiary of Issuer.
iv. That this transaction is subject to delivery by the Issuer of all
required documents pre and post closing to effectuate the transaction
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v. That Issuer shall take all necessary corporate actions so that at
closing, all actions required of Issuer will be in accordance with the
Bylaws of Issuer.
2.REPRESENTATIONS OF ISSUER Issuer is in good standing under the laws of
Nevada, and has all necessary corporate powers to own properties and carry on a
business, and is duly qualified to do business and is in good standing in
Nevada. All actions taken by the incorporators, directors and shareholders of
Issuer have been valid and in accordance with the laws of the State of Nevada.
i. Capital. The authorized capital stock of Issuer consists of two
million shares of preferred convertible series A stock, $.001 par
value of which 100,000 Shares are issued and outstanding, and
(200,000,000) shares of common stock, $.001 par value, of which
36,460,835 shares are issued and outstanding. All outstanding shares
are fully paid and non-assessable, free of pre-emptive rights. At the
Closing, there will be no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreements or commitments
obligating Issuer to issue or to transfer from treasury any additional
shares of its capital stock, except as may be disclosed in the Issuer
SEC filings.
ii. SEC Reports. Issuer has filed all required forms, reports, statements,
schedules and other documents with the Securities and Exchange
Commission ("SEC") (collectively, the "Issuer SEC Reports"). The
financial statements, including all related notes and schedules,
contained in the Issuer SEC Reports (or incorporated by reference
therein) fairly present the consolidated financial position of Issuer
as at the respective dates thereof and the consolidated results of
operations and cash flows of Issuer for the periods indicated in
accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except
for changes in accounting principles disclosed in the notes thereto)
and subject in the case of interim financial statements to normal
year-end adjustments and the absence of notes. For purposes of this
Agreement, the balance sheet of Issuer as of last filing date of
Issuer prior to Closing, is referred to as the "Issuer Balance Sheet"
and the date thereof is referred to as the "Issuer Balance Sheet
Date".
iii. Absence of Changes. Since the Issuer Balance Sheet Date, there has not
been any change in the financial condition or operations of Issuer,
except changes in the ordinary course of business, which changes have
not in the aggregate been materially adverse to Issuer.
iv. Liabilities. Issuer does not have any debt, liability, or obligation
of any nature, whether accrued, absolute, contingent, or otherwise,
and whether due or to become due, that is not reflected on the Issuers
Balance Sheet and schedules contained in the Issuer's SEC filings at
www.sec.gov. Issuer is not aware of any pending, threatened, or
asserted claims, lawsuits or contingencies involving Issuer or its
common stock, except any matters set forth in the Issuer's SEC
filings. There is no material dispute of any kind between Issuer and
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any third party, and no such dispute will exist at Closing not fully
disclosed to Company at closing.
v. Ability to Carry Out Obligations. Issuer has the right, power, and
authority to enter into and perform its obligations under this
Agreement. The execution and delivery of this Agreement by Issuer and
the performance by Issuer of its obligations hereunder will not cause,
constitute, or conflict with or result in (a) any breach or violation
or any of the provisions of or constitute a default under any license,
indenture, mortgage, charter, instrument, articles of incorporation,
bylaw, or other agreement or instrument to which Issuer is a party, or
by which it may be bound, nor will any consents or authorizations of
any party other than those hereto be required, (b) an event that would
cause Issuer to be liable to any party, or (c) an event that would
result in the creation or imposition of any lien, charge, encumbrance
on any asset of Issuer.
vi. Full Disclosure. None of the representations and warranties made by
the Issuer in this Agreement, contains any untrue statement of a
material fact, or omit any material fact, the omission of which would
be misleading.
vii. Contract and Leases. Issuer is currently carrying on its business and
is not a party to contracts, agreements, or lease other than those
items disclosed on the Issuer Balance Sheet. No person holds a power
of attorney from Issuer.
viii.Compliance with Laws. To the best of its knowledge, Issuer has
complied with all federal, state, and local statutes, laws, and
regulations pertaining to Issuer. To the best of its knowledge, Issuer
has complied with all federal and state securities laws in connection
with the issuance, sale, and distribution of its securities.
ix. Litigation. Issuer is not (and has not been), except as may be
disclosed in the Issuers SEC filings and press releases, a party to
any suit, action, arbitration, or legal, administrative, or other
proceeding, or pending governmental investigation. To the best
knowledge of the Issuer, there is no basis for any such action or
proceeding and no such action or proceeding is threatened against
Issuer, and Issuer is not subject to or in default with respect to any
order, writ, injunction, or decree of any federal, state, local, or
foreign court, department, agency, or instrumentality.
x. Conduct of Business. From the Issuer Balance Sheet Date to the
Closing, Issuer has conducted its business in the normal course, and
has not (1) sold, pledged, or assigned any assets, other than in the
ordinary course of business; (2) amended its Certificate of
Incorporation or ByLaws; (3) declared dividends; (4) redeemed or sold
stock or other securities; (5) incurred any liabilities, other than in
the ordinary course of business; (6) acquired or disposed of any
assets, other than in the ordinary course of business; (7) entered
into any contract, other than in the ordinary course of business; (8)
guaranteed obligations of any third party; or (9) entered into any
other transaction, other than in the ordinary course of business.
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xi. Documents. All minutes, consents, or other documents pertaining to
Issuer to be delivered at Closing shall be valid and in accordance
with the laws of the State of Nevada.
xii. Title. At the Closing all shares issued to Shareholders shall be
non-assessable; and (ii) free and clear of all liens, security
interests, pledges, charges, claims, encumbrances and restrictions of
any kind. There is no applicable local, state, or federal law, rule,
regulation, or decree which would, as a result of the issuance of the
Shares to Shareholders, impair, restrict, or delay Shareholders voting
rights with respect to the Issuer Shares.
xiii.Brokers. Issuer has not retained any Broker or finder to which
compensation would be due in connection with this transaction.
3. REPRESENTATIONS AND WARRANTIES OF COMPANY. Company represents and
warrants to Issuer the following:
i. Organization. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Pennsylvania, and it has all necessary corporate powers to own
properties and carry on a business, and is duly qualified to do
business and is in good standing in the jurisdictions where
qualification is required. All actions taken by the incorporators,
directors, and stockholders of Company have been valid and in
accordance with the laws of the State of Pennsylvania.
ii. Capital. The authorized capital stock of Company consists of 1,000,000
shares, no par value of which 112,150 shares are issued and
outstanding (the "Shares"). The Shareholders are the sole record and
beneficial owners of the shares and have sole management and
dispositive power over the securities, and there are no other
agreements or commitments obligating the Company to issue or to
transfer from treasury any additional shares of its capital stock.
iii. If a requirement of the materiality test, Company shall engage an
auditor after closing to perform the necessary audits required under
the rules and regulations of the Securities and Exchange Commission.
If applicable, Audited financials on an 8Ka must be filed with the SEC
within 75 days of closing of this transaction. Company agrees to take
all steps to insure that the auditor has full access to the Company
books and records in order to timely file the reports required under
the rules.
iv. Absence of Changes. Since the date of the Company financial
statements, there has not been any change in the financial condition
or operations of Company, except changes in the ordinary course of
business.
v. Liabilities. Company does not have any debt, liability, or obligation
of any nature, whether accrued, absolute, contingent, or otherwise,
and whether due or to become due, that is not reflected on the
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Financial Statements provided to Issuer at closing. Company is not
aware of any pending, threatened, or asserted claims, lawsuits or
contingencies involving its capital stock.
vi. Ability to Carry Out Obligations. Company has the right, power, and
authority to enter into and perform its obligations under this
Agreement. The execution and delivery of this Agreement by Company and
the performance by Company of its obligations hereunder will not
cause, constitute, or conflict with or result in (a) any breach of
violation or any of the provisions of or constitute a default under
any license, indenture, mortgage, charter, instrument, articles of
incorporation, bylaw, or other agreement or instrument to which
Company is a party, or by which either of them may be bound, nor will
any consents or authorizations of any party other than those hereto be
required; (b) an event that would cause Company to be liable to any
party; or (c) an event that would result in the creation or imposition
of any lien, charge, encumbrance on any asset of Company.
vii. Full Disclosure. None of the representations and warranties made by
Company herein contains any untrue statement of a material fact, or
omits any material fact the omission of which would be misleading.
viii.Compliance with Laws. Company has complied with, and is not in
violation of any federal, state, or local statute, law, and/or
regulation pertaining to them. Company has complied with all federal
and state securities laws in connection with the issuance, sale, and
distribution of its securities.
ix. Litigation. Company is not and has never a party to any suit, action,
arbitration, or legal, administrative, or other proceeding, or pending
governmental investigation. To the best knowledge of Company, there is
no basis for any such action or proceeding and no such action or
proceeding is threatened against Company, and Company is not subject
to or in default with respect to any order, wit, injunction, or decree
of any federal, state, local, or foreign court, department, agency, or
instrumentality.
x. Conduct of Business. From the date of Company financial statements to
the Closing Date, Company has conducted its business in the normal
course, and has not (1) sold, pledged, or assigned any assets other
than in the ordinary course of business; (2) amended its Certificate
of Incorporation or Bylaws; (3) declared dividends; (4) redeemed or
sold stock or other securities except in the ordinary course of
business; (5) incurred any liabilities not in the ordinary course of
business; (6) acquired or disposed of any assets other than in the
ordinary course of business; (7) entered into any contract other than
in the ordinary course of business; (8) guaranteed obligations of any
third party; or (9) entered into any other transactions other than in
the ordinary course of business.
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xi. Documents. All minutes, consents, or other documents pertaining to
Company and to be delivered by Company to Issuer, are true, complete,
and correct, and are valid and in accordance with applicable law.
xii. Title. The Shares of Company to be delivered to Issuer will be, at
closing, free and clear of all liens, security interests, pledges,
charges, claims, encumbrances and restrictions of any kind. None of
the Shares are subject to any voting trust or agreement. No person
holds or has the right to receive any proxy or similar instrument with
respect to the Shares, except as provided in this Agreement. Company
is not a party to any agreement that offers or grants to any person
the right to purchase or acquire any of the Shares. There is no
applicable local, state, or federal law, rule, regulation, or decree
which would, as a result of the transfer of the Shares to Issuer,
impair, restrict, or delay Issuer's voting rights with respect to the
Shares.
xiii.Counsel. Company and Shareholders represent and warrant that prior to
Closing, that they are represented by independent counsel or have had
the opportunity to retain independent counsel to represent them in
this transaction and that prior to Closing, Counsel for the Company
and Shareholders have not represented either the Issuer or Issuer's
stockholders in any manner whatsoever known to the Company.
xiv. Brokers. Company and/or Shareholders have not retained a broker in
connection with this transaction.
xv. Conflicts of Interests of Issuer Company and Shareholders have
reviewed and understand the conflicts of interests, if any, between
the Issuer and its officers and directors as disclosed in the Issuers
filings with the SEC, if any.
4. INVESTMENT INTENT.
i. Restricted Shares. Shareholder understands that (A) the Issuer Shares
Shareholder is receiving from Issuer under this Agreement have not
been registered under the Securities Act of 1933, as amended ("the
Act") or the securities laws of any state, based upon an exemption
from such registration requirements pursuant to Section 4(2) of the
Act; (B) the Issuer Shares are and will be "restricted securities", as
said term is defined in Rule 144 of the Rules and Regulations
promulgated under the Act; and (C) the Issuer Shares may not be sold
or otherwise transferred unless exemptions from such registration
provisions are available with respect to said resale or transfer or
the shares have been registered under the Act.
ii. Transferability. Shareholder will not sell or otherwise transfer any
of the Issuer Shares, any interest therein unless and until (A) the
Issuer Shares shall have first been registered under the Act and/or
all applicable state securities laws; or (B) Shareholder shall have
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first delivered to Issuer a written opinion of counsel, which counsel
and opinion (in form and substance) shall be reasonably satisfactory
to Issuer, to the extent that the proposed sale or transfer is exempt
from the registration provisions of the Act and all applicable state
securities laws.
iii. Investment Intent. Shareholder is acquiring the Issuer Shares for
Investment purposes only, without a view for resale or distribution
thereof.
iv. Legend. Shareholder understands that the certificates representing the
Issuer Shares will bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, TRANSFERRED, FURTHER PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR
SUCH SECURITIES UNDER SAID ACT OR (II) AN OPINION OF COMPANY COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.
v. Closing. The Closing of the share exchange and the transactions
contemplated by this Agreement (the "Closing") shall be upon the
completion of due diligence by all parties and the delivery of all
documents and items required to be delivered under this agreement but
in no event later than August 15, 2010. Both parties to this agreement
acknowledge that the closing date may be extended by mutual written
consent of the parties.
5. Documents to be Delivered at Closing.
i. By Issuer:
(1) Resolution of the Board of Directors authorizing the issuance of a
certificate for the number of shares to be delivered to Shareholders
and a resolution approving the transaction.
(2) Certificates for the number of Issuer shares registered in the names
of the shareholders as set forth in the attached shareholders list.
(3) Such other resolutions of Issuer directors and officers and writings
as may reasonably be required by Company and Shareholders.
(4) Such other agreements relating to the transaction as may reasonably be
required by the Company or Shareholders.
(5) Copy of a draft press release for review and approval.
(6) Certificate of Good Standing from the State of Nevada
(7) A Certified Copy of the shareholder list of Issuer
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By Company and Shareholders:
(8) Delivery to the Issuer, certificates evidencing the Company Shares,
and such stock powers as are required in order to transfer to Issuer
good and marketable title to the Shares.
(9) Resolution by the Board of Directors of Company approving the
transaction.
(10) Copies of the basic corporate records, including bylaws, minute books
and articles of incorporation, together with financial statements with
supporting schedules for the periods ending 12-31-08, 12-31-09 and
2010 year to date of closing. Company shall retain all other records
at its current principal address.
(11) A certificate of good standing from the State of Pennsylvania.
(12) Such other resolutions of Company and Shareholder and/or directors as
may reasonably be required by Issuer.
(13) Such other agreements or documents relating to the transaction as may
reasonably be required by the Issuer.
7. ARBITRATION. Any controversy or claim arising out of, or relating to,
this Agreement, or the making, performance, or interpretation thereof, shall be
settled by arbitration in Orlando, Florida in accordance with the Commercial
Rules of the American Arbitration Association then existing. The arbitrator
assigned shall have authority and power to decide all arbitratible issues.
Judgment on the arbitration award may be entered in any court having
jurisdiction over the subject matter of the controversy. The prevailing party in
such claim or controversy shall be entitled to recover all costs and expenses of
such claim or controversy, including attorney's fees from the non-prevailing
party.
8. POST-CLOSING AGREEMENTS.
I. Further Assurances. The parties shall execute such further documents
and perform such further acts, as may be necessary to effect the
transactions contemplated hereby, on the terms herein contained and
otherwise to comply with the terms of this Agreement, provided, that,
except as contemplated by this Agreement, no party shall be required
to waive any right or incur an obligation in connection therewith.
II. Indemnification of Directors and Officers. For at least seven (7)
years after the Closing Date, Issuer shall (a) maintain in effect the
current provisions regarding the indemnification of officers and
directors contained in Issuer's Certificate of Incorporation and
Bylaws; provided, however, Issuer may adopt new indemnification
provisions no less favorable than the current provisions as to the
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persons who served as directors and officers of Issuer prior to the
Closing Date; and (b) indemnify the persons who served as directors
and officers of Issuer prior to the Closing Date to the fullest extent
to which Issuer is permitted to indemnify such officers and directors
under its Certificate of Incorporation and ByLaws and applicable law
as in effect immediately prior to the Closing Date.
III. Press Release Issuer, Company and Shareholder agree that no public
announcement of the specifics of this transaction or a disclosure of
the parties to this agreement will be made until the 8K filing with
the SEC is completed and on record if applicable. The parties hereto
agree that they will take steps to insure that this provision is
adhered to by Issuer and Shareholders, principals, employees, agents
and representatives.
IV. Financing Issuer shall commence activities to procure financing in a
minimum amount of $500,000 and a maximum amount of $1 million, which
funds will be used to grow the Company's business. Should issuer be
unable to obtain a minimum financial commitment of $500,000 on or
before November 30, 2010, Shareholders may "put" their issuer shares
back to Issuer and shall receive the shares of Company exchanged in
this transaction. A financial commitment as set forth herein to Issuer
will automatically void this put provision.
V. Earn Up Shareholders of Company shall be entitled to receive earn up
shares in an amount that will increase their percentage ownership of
Issuer up to a maximum of 85% based upon certain performance
milestones of the Company in revenues and earnings. This earn up
agreement shall be a mutual agreement between Issuer and Shareholders
to be consummated prior to closing of this transaction and this
transaction is subject to and wholly conditioned upon a mutually
agreed earn up schedule.
VI. Appointment to the Board of Directors. A representative of Company
will be appointed to the Board of Directors of Issuer at closing.
Issuer shall have in force a minimum D&O policy of $2 million dollars
at closing.
VII. Rescission. The parties to this agreement shall enter into a mutually
agreeable escrow agreement which shall provide for the automatic
rescission of this transaction in the event of a material unfavorable
ruling against Domark in the Domark-Victory Lane litigation actions,
or any other condition as outlined in this agreement. The exact terms
of the escrow agreement shall be determined and executed as of the
closing.
9. Miscellaneous.
i. Captions and Headings. The headings throughout this Agreement are for
convenience and reference only, and shall in no way be deemed to
define, limit, or add to the meaning of any provision of this
Agreement.
ii. No Oral Change. This Agreement and any provision hereof may not be
waived, changed, modified, or discharged orally, but only by an
agreement in writing signed by the party against whom enforcement of
any waiver, change, modification, or discharge is sought.
iii. Non Waiver. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the
party against whom such waiver is charged; and (1) the failure of any
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party to insist in any one or more cases upon the performance of any
of the provisions, covenants, or conditions of this Agreement or to
exercise any option herein contained shall not be construed as a
waiver or relinquishment for the future of any such provisions,
covenants, or conditions; (2) the acceptance of performance of any
thing required by this Agreement to be performed with knowledge of the
breach or failure of a covenant, condition, or provision hereof shall
not be deemed a waiver of such breach or failure; and (3) no waiver of
any party of one breach by another party shall be construed as a
waiver with respect to any subsequent breach.
iv. Time of Essence. Time is of the essence of this Agreement and of each
and every provision hereof.
v. Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings.
vii. Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have
been duly given on the third day after mailing if mailed to the party
to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, and by fax, as
follows:
Company and Shareholder:
Steve Montellese, CTO and Chairman
ISSUER:
R. Thomas Kidd, CEO
Domark International, Inc.
1809 East Broadway #125
Oviedo, Florida 32765
vi. Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(SIGNATURES ON NEXT PAGE)
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IN WITNESS WHEREOF, the undersigned has executed this Agreement this 21st day of
July, 2010.
Domark International, Inc. Virtual Devices, Inc.
By: /s/ R. Thomas Kidd By: /s/ Steve Montellese
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Its CEO Its CEO
SHAREHOLDERS:
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