SHARE EXCHANGE
AGREEMENT
THIS AGREEMENT
is made effective as of the 16th day of September, 2009
CHINA MEDIA
INC. , a Nevada
corporation, of 12/F, Block D, Chang An Guo Ji,
No. 88 Nan Guan
Zheng Street, Beilin District, Xi'an City, Shaan'xi Province,
China, 710068
VALLANT
PICTURES ENTERTAINMENT CO., LTD. ,
a British
Virgin Islands corporation, of OMC Chambers, P.O. Box 3152 Road
Town, Tortola, British Virgin Islands
THE UNDERSIGNED
SHAREHOLDERS OF PRIVECO AS LISTED ON SCHEDULE 1 ATTACHED
HERETO
(the “
Selling Shareholders ”)
A. The Selling
Shareholders are the registered and beneficial owners of all 1
issued and outstanding common share in the capital of
Priveco;
B. Pubco has agreed
to issue 7,000 common shares in the capital of Pubco as of the
Closing Date, as defined herein, to the Selling Shareholders as
consideration for the purchase by Pubco of all of the issued and
outstanding common shares of Priveco held by the Selling
Shareholders; and
C. Upon the terms and
subject to the conditions set forth in this Agreement, the Selling
Shareholders have agreed to sell all of the issued and outstanding
common shares of Priveco held by the Selling Shareholders to Pubco
in exchange for common shares of Pubco.
THEREFORE, in
consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration (the receipt
and sufficiency of which are hereby acknowledged), the parties
covenant and agree as follows:
1.1
Definitions . The following terms have the
following meanings, unless the context indicates
otherwise:
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“
Agreement ” shall mean this Agreement, and all the
exhibits, schedules and other documents attached to or referred to
in this Agreement, and all amendments and supplements, if any, to
this Agreement;
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“
Closing ” shall mean the completion of the
Transaction, in accordance with Section 7 hereof, at which the
Closing Documents shall be exchanged by the parties, except for
those documents or other items specifically required to be
exchanged at a later time;
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“
Closing Date ” shall mean a date mutually agreed upon
by the parties hereto in writing and in accordance with Section
10.6 following the satisfaction or waiver by Pubco and Priveco of
the conditions precedent set out in Sections 5.1 and 5.2
respectively, provided that such date shall be no later than six
(6) weeks after delivery of the Priveco Financial Statements to be
delivered under Section 5.1(h) hereof;
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“
Closing Documents ” shall mean the papers, instruments
and documents required to be executed and delivered at the Closing
pursuant to this Agreement;
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“
Exchange Act ” shall mean the United States Securities
Exchange Act of 1934, as amended;
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“
GAAP ” shall mean United States generally accepted
accounting principles applied in a manner consistent with prior
periods;
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“
Liabilities ” shall include any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted choate or inchoate, liquidated
or unliquidated, secured or unsecured;
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“
Priveco Shares” shall mean the 1 common share of
Priveco held by the Selling Shareholders, being all of the issued
and outstanding common shares of Priveco beneficially held, either
directly or indirectly, by the Selling Shareholders;
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“
Pubco Shares ” shall mean the 7,000 fully paid and
non-assessable common shares of Pubco, to be issued to the Selling
Shareholders by Pubco on the Closing Date;
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“
SEC ” shall mean the Securities and Exchange
Commission;
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“
Securities Act ” shall mean the United States
Securities Act of 1933, as amended;
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“
Taxes ” shall include international, federal, state,
provincial and local income taxes, capital gains tax, value-added
taxes, franchise, personal property and real property taxes,
levies, assessments, tariffs, duties (including any customs duty),
business license or other fees, sales, use and any other taxes
relating to the assets of the designated party or the business of
the designated party for all periods up to and including the
Closing Date, together with any related charge or amount, including
interest, fines, penalties and additions to tax, if any, arising
out of tax assessments; and
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“
Transaction ” shall mean the purchase of the Priveco
Shares by Pubco from the Selling Shareholders in consideration for
the issuance of the Pubco Shares.
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1.2
Schedules . The following schedules are attached
to and form part of this Agreement:
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Certificate of
Non-U.S. Shareholder
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Directors and
Officers of Priveco
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Directors and
Officers of Pubco
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1.3
Currency . All references to currency referred to
in this Agreement are in United States Dollars (US$), unless
expressly stated otherwise.
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THE OFFER,
PURCHASE AND SALE OF SHARES
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2.1
Offer, Purchase and Sale of Shares . Subject to
the terms and conditions of this Agreement, the Selling
Shareholders hereby covenant and agree to sell, assign and transfer
to Pubco, and Pubco hereby covenants and agrees to purchase from
the Selling Shareholders all of the Priveco Shares held by the
Selling Shareholders.
2.2
Consideration . As consideration for the sale of
the Priveco Shares by the Selling Shareholders to Pubco, Pubco
shall allot and issue the Pubco Shares to the Selling Shareholders
in the amount set out opposite each Selling Shareholder’s
name in Schedule 1 on the basis of 7,000 Pubco Shares for each
Priveco Share held by each Selling Shareholder. The
Selling Shareholders acknowledge and agree that the Pubco Shares
are being issued pursuant to an exemption from the prospectus and
registration requirements of the Securities Act. As
required by applicable securities law, the Selling Shareholders
agree to abide by all applicable resale restrictions and hold
periods imposed by all applicable securities
legislation. All certificates representing the Pubco
Shares issued on Closing will be endorsed with one of the following
legend pursuant to the Securities Act in order to reflect the fact
that the Pubco Shares will be issued to the Selling Shareholders
pursuant to an exemption from the registration requirements of the
Securities Act:
For Selling
Shareholders not resident in the United States:
“THE
SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE
TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED
HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “1933 ACT”).
NONE OF THE
SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED,
MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN
ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933
ACT. “UNITED STATES” AND “U.S.
PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933
ACT.”
2.3
Share Exchange Procedure . Each Selling
Shareholder may exchange his, her or its certificate representing
the Priveco Shares by delivering such certificate to Pubco duly
executed and endorsed in blank (or accompanied by duly executed
stock powers duly endorsed in blank), in each case in proper form
for transfer, with signatures guaranteed, and, if
applicable, with all stock transfer and any other required
documentary stamps affixed thereto and with appropriate
instructions to allow the transfer agent to issue certificates for
the Pubco Shares to the holder thereof, together with: a
Certificate of Non-U.S. Shareholder (the “ Regulation S
Certificate ”), a copy of which is set out in Schedule
2.
2.4
Fractional Shares. Notwithstanding any other
provision of this Agreement, no certificate for fractional shares
of the Pubco Shares will be issued in the
Transaction. In lieu of any such fractional shares, if
any of the Selling Shareholders would otherwise be entitled to
receive a fraction of a share of the Pubco Shares upon surrender of
certificates representing the Priveco Shares for exchange pursuant
to this Agreement, the Selling Shareholders will be entitled to
have such fraction rounded up to the nearest whole number of Pubco
Shares and will receive from Pubco a stock certificate representing
same.
2.5
Closing Date. The Closing will take place,
subject to the terms and conditions of this Agreement, on the
Closing Date.
2.6
Restricted Shares . The Selling Shareholders
acknowledge that the Pubco Shares issued pursuant to the terms and
conditions set forth in this Agreement will have such hold periods
as are required under applicable securities laws and as a result
may not be sold, transferred or otherwise disposed, except pursuant
to an effective registration statement under the Securities Act, or
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and in each
case only in accordance with all applicable securities
laws.
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REPRESENTATIONS
AND WARRANTIES OF PRIVECO
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As of the
Closing, Priveco and the Selling Shareholders, jointly and
severally, represent and warrant to Pubco, and acknowledge that
Pubco is relying upon such representations and warranties, in
connection with the execution, delivery and performance of this
Agreement, notwithstanding any investigation made by or on behalf
of Pubco, as follows:
3.1
Organization and Good Standing . Priveco is a
corporation duly organized, validly existing and in good standing
under the laws of the British Virgin Islands and has the requisite
corporate power and authority to own, lease and to carry on its
business as now being conducted. Priveco is duly
qualified to do business and is in good standing as a foreign
corporation in each of the jurisdictions in which Priveco owns
property, leases property, does business, or is otherwise required
to do so, where the failure to be so qualified would have a
material adverse effect on the business of Priveco taken as a
whole.
3.2
Authority . Priveco has all requisite corporate
power and authority to execute and deliver this Agreement and any
other document contemplated by this Agreement (collectively, the
“ Priveco Documents ”) to be signed by Priveco
and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and
delivery of each of the Priveco Documents by Priveco and the
consummation of the transactions contemplated hereby have been duly
authorized by Priveco’s board of directors. No
other corporate or shareholder proceedings on the part of Priveco
is necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has
been, and the other Priveco Documents when executed and delivered
by Priveco as contemplated by this Agreement will be, duly executed
and delivered by Priveco and this Agreement is, and the other
Priveco Documents when executed and delivered by Priveco as
contemplated hereby will be, valid and binding obligations of
Priveco enforceable in accordance with their respective terms
except:
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as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of
creditors’ rights generally;
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as limited by
laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies; and
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as limited by
public policy.
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3.3
Capitalization of Priveco . The entire authorized
capital stock and other equity securities of Priveco consists of
50,000 common shares with a par value of $1.00 per share
(the “ Priveco Common Stock ”). As of
the date of this Agreement, there is 1 share of Priveco Common
Stock issued and outstanding. All of the issued and
outstanding shares of Priveco Common Stock have been duly
authorized, are validly issued, were not issued in violation of any
pre-emptive rights and are fully paid and non-assessable, are not
subject to pre-emptive rights and were issued in full compliance
with the laws of the British Virgin Islands and its constating
documents. There are no outstanding options, warrants,
subscriptions, conversion rights, or other rights, agreements, or
commitments obligating Priveco to issue any additional common
shares of Priveco Common Stock, or any other securities convertible
into, exchangeable for, or evidencing the right to subscribe for or
acquire from Priveco any common shares of Priveco Common
Stock. There are no agreements purporting to restrict
the transfer of the Priveco Common Stock, no voting agreements,
shareholders’ agreements, voting trusts, or other
arrangements restricting or affecting the voting of the Priveco
Common Stock.
3.4
Shareholders of Priveco Common Stock . As of the
Closing Date, Schedule 1 contains a true and complete list of the
holders of all issued and outstanding shares of the Priveco Common
Stock including each holder’s name, address and number of
Priveco Shares held.
3.5
Directors and Officers of Priveco . The duly
elected or appointed directors and the duly appointed officers of
Priveco are as set out in Schedule 3.
3.6
Corporate Records of Priveco . The corporate
records of Priveco, as required to be maintained by it pursuant to
all applicable laws, are accurate, complete and current in all
material respects, and the minute book of Priveco is, in all
material respects, correct and contains all records required by all
applicable laws, as applicable, in regards to all proceedings,
consents, actions and meetings of the shareholders and the board of
directors of Priveco.
3.7
Non-Contravention . Neither the execution,
delivery and performance of this Agreement, nor the consummation of
the Transaction, will:
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conflict with,
result in a violation of, cause a default under (with or without
notice, lapse of time or both) or give rise to a right of
termination, amendment, cancellation or acceleration of any
obligation contained in or the loss of any material benefit under,
or result in the creation of any lien, security interest, charge or
encumbrance upon any of the material properties or assets of
Priveco or any of its subsidiaries under any term, condition or
provision of any loan or credit agreement, note, debenture, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Priveco or any of its subsidiaries, or any
of their respective material property or assets;
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violate any
provision of the constating documents of Priveco, any of its
subsidiaries or any applicable laws; or
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violate any
order, writ, injunction, decree, statute, rule, or regulation of
any court or governmental or regulatory authority applicable to
Priveco, any of its subsidiaries or any of their respective
material property or assets.
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3.8
Actions and Proceedings . To the best knowledge
of Priveco, there is no basis for and there is no action, suit,
judgment, claim, demand or proceeding outstanding or pending, or
threatened against or affecting Priveco or which involves any of
the business, or the properties or assets of Priveco that, if
adversely resolved or determined, would have a material adverse
effect on the business, operations, assets, properties, prospects,
or conditions of Priveco taken as a whole (a “ Priveco
Material Adverse Effect ”). There is no
reasonable basis for any claim or action that, based upon the
likelihood of its being asserted and its success if asserted, would
have such a Priveco Material Adverse Effect.
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To the best
knowledge of Priveco, Priveco is in compliance with, is not in
default or violation in any material respect under, and has not
been charged with or received any notice at any time of any
material violation of any statute, law, ordinance, regulation,
rule, decree or other applicable regulation to the business or
operations of Priveco;
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To the best
knowledge of Priveco, Priveco is not subject to any judgment, order
or decree entered in any lawsuit or proceeding applicable to its
business and operations that would constitute a Priveco Material
Adverse Effect;
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Priveco has
duly filed all reports and returns required to be filed by it with
governmental authorities and has obtained all governmental permits
and other governmental consents, except as may be required after
the execution of this Agreement. All of such permits and
consents are in full force and effect, and no proceedings for the
suspension or cancellation of any of them, and no investigation
relating to any of them, is pending or to the best knowledge of
Priveco, threatened, and none of them will be adversely affected by
the consummation of the Transaction; and
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Priveco has
operated in material compliance with all laws, rules, statutes,
ordinances, orders and regulations applicable to its
business. Priveco has not received any notice of any
violation thereof, nor is Priveco aware of any valid basis
therefore.
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3.10
Filings, Consents and Approvals . No filing or
registration with, no notice to and no permit, authorization,
consent, or approval of any public or governmental body or
authority or other person or entity is necessary for the
consummation by Priveco of the Transaction contemplated by this
Agreement or to enable Pubco to continue to conduct Priveco’s
business after the Closing Date in a manner which is consistent
with that in which the business is presently conducted.
3.11
Financial Representations . The consolidated
audited balance sheets for Priveco for the years ended June 30,
2008 and June 30, 2009 (the “ Priveco Accounting Date
”), together with related statements of income, cash flows,
and changes in shareholder’s equity for such fiscal years
(collectively, the “ Priveco Financial Statements
”) to be supplied on or before the Closing Date:
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are in
accordance with the books and records of Priveco;
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present fairly
the financial condition of Priveco as of the respective dates
indicated and the results of operations for such periods;
and
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have been
prepared in accordance with GAAP.
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Priveco has not
received any advice or notification from its independent certified
public accountants that Priveco has used any improper accounting
practice that would have the effect of not reflecting or
incorrectly reflecting in the Priveco Financial Statements or the
books and records of Priveco, any properties, assets, Liabilities,
revenues, or expenses. The books, records, and accounts
of Priveco accurately and fairly reflect, in reasonable detail, the
assets, and Liabilities of Priveco. Priveco has not
engaged in any transaction, maintained any bank account, or used
any funds of Priveco, except for transactions, bank accounts, and
funds which have been and are reflected in the normally maintained
books and records of Priveco.
3.12
Absence of Undisclosed Liabilities . Priveco does
not have any material Liabilities or obligations either direct or
indirect, matured or unmatured, absolute, contingent or otherwise
that exceed $5,000, which:
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are not set
forth in the Priveco Financial Statements or have not heretofore
been paid or discharged;
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did not arise
in the regular and ordinary course of business under any agreement,
contract, commitment, lease or plan specifically disclosed in
writing to Pubco; or
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have not been
incurred in amounts and pursuant to practices consistent with past
business practice, in or as a result of the regular and ordinary
course of its business since the date of the last Priveco Financial
Statements
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Priveco has
timely filed all tax returns in connection with any Taxes which are
required to be filed on or prior to the date hereof, taking into
account any extensions of the filing deadlines which have been
validly granted to Priveco, and
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all such
returns are true and correct in all material respects;
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Priveco has
paid all Taxes that have become or are due with respect to any
period ended on or prior to the date hereof, and has established an
adequate reserve therefore on its balance sheets for those Taxes
not yet due and payable, except for any Taxes the non-payment of
which will not have a Priveco Material Adverse Effect;
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Priveco is not
presently under or has not received notice of, any contemplated
investigation or audit by regulatory or governmental agency of body
or any foreign or state taxing authority concerning any fiscal year
or period ended prior to the date hereof;
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all Taxes
required to be withheld on or prior to the date hereof from
employees for income Taxes, social security Taxes, unemployment
Taxes and other similar withholding Taxes have been properly
withheld and, if required on or prior to the date hereof, have been
deposited with the appropriate governmental agency; and
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to the best
knowledge of Priveco, the Priveco Financial Statements contain full
provision for all Taxes including any deferred Taxes that may be
assessed to Priveco for the accounting period ended on the Priveco
Accounting Date or for any prior period in respect of any
transaction, event or omission occurring, or any profit earned, on
or prior to the Priveco Accounting Date or for any profit earned by
Priveco on or prior to the Priveco Accounting Date or for which
Priveco is accountable up to such date and all contingent
Liabilities for Taxes have been provided for or disclosed in the
Priveco Financial Statements.
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3.14
Absence of Changes . Since the Priveco Accounting
Date, Priveco has not:
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incurred any
Liabilities, other than Liabilities incurred in the ordinary course
of business consistent with past practice, or discharged or
satisfied any lien or encumbrance, or paid any Liabilities, other
than in the ordinary course of business consistent with past
practice, or failed to pay or discharge when due any Liabilities of
which the failure to pay or discharge has caused or will cause any
material damage or risk of material loss to it or any of its assets
or properties;
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sold,
encumbered, assigned or transferred any material fixed assets or
properties except for ordinary course business transactions
consistent with past practice;
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created,
incurred, assumed or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged or subjected any of the material
assets or properties of Priveco or its subsidiaries to any
mortgage, lien, pledge, security interest, conditional sales
contract or other encumbrance of any nature whatsoever;
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made or
suffered any amendment or termination of any material agreement,
contract, commitment, lease or plan to which it is a party or by
which it is bound, or cancelled, modified or waived any substantial
debts or claims held by it or waived any rights of substantial
value, other than in the ordinary course of business;
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declared, set
aside or paid any dividend or made or agreed to make any other
distribution or payment in respect of its capital shares or
redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or acquire any of its capital shares or equity
securities;
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suffered any
damage, destruction or loss, whether or not covered by insurance,
that materially and adversely effects its business, operations,
assets, properties or prospects;
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suffered any
material adverse change in its business, operations, assets,
properties, prospects or condition (financial or
otherwise);
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received notice
or had knowledge of any actual or threatened labor trouble,
termination, resignation, strike or other occurrence, event or
condition of any similar character which has had or might have an
adverse effect on its business, operations, assets, properties or
prospects;
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made
commitments or agreements for capital expenditures or capital
additions or betterments exceeding in the aggregate
$12,000;
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other than in
the ordinary course of business, increased the salaries or other
compensation of, or made any advance (excluding advances for
ordinary and necessary business expenses) or loan to, any of its
employees or directors or made any increase in, or any addition to,
other benefits to which any of its employees or directors may be
entitled;
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entered into
any transaction other than in the ordinary course of business
consistent with past practice; or
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agreed, whether
in writing or orally, to do any of the foregoing.
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3.15
Absence of Certain Changes or Events . Since the
Priveco Accounting Date, there has not been:
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a Priveco
Material Adverse Effect; or
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any material
change by Priveco in its accounting methods, principles or
practices.
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3.16
Personal Property . Priveco possesses, and has
good and marketable title of all property necessary for the
continued operation of the business of Priveco as presently
conducted and as represented to Pubco. All such property
is used in the business of Priveco. All such property is
in reasonably good operating condition (normal wear and tear
excepted), and is reasonably fit for the purposes for which such
property is presently used. All material equipment,
furniture, fixtures and other tangible personal property and assets
owned or leased by Priveco is owned by Priveco free and clear of
all liens, security interests, charges, encumbrances, and other
adverse claims.
3.17
Intellectual Property
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Intellectual
Property Assets . Priveco
owns or holds an interest in all intellectual property assets
necessary for the operation of the business of Priveco as it is
currently conducted (collectively, the “ Intellectual
Property Assets ”), including:
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all functional
business names, trading names, registered and
unregistered trademarks, service marks, and applications
(collectively, the “ Marks ”);
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all patents,
patent applications, and inventions, methods, processes and
discoveries that may be patentable (collectively, the “
Patents ”);
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all copyrights
in both published works and unpublished works (collectively, the
“ Copyrights ”); and
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all know-how,
trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings,
and blue prints owned, used, or licensed by Priveco as licensee or
licensor (collectively, the “ Trade Secrets
”).
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Intellectual
Property and Know-How Necessary for the Business
. Priveco
is the owner of all right, title, and interest in and to each of
the Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, and other adverse
claims, and has the right to use without payment to a third party
of all the Intellectual Property Assets. All former and
current employees and contractors of Priveco have executed written
contracts, agreements or other undertakings with Priveco that
assign all rights to any inventions, improvements, discoveries, or
information relating to the business of Priveco. No
employee, director, officer or shareholder of Priveco owns directly
or indirectly in whole or in part, any Intellectual Property Asset
which Priveco is presently using or which is necessary for the
conduct of its business. To the best knowledge of
Priveco, no employee or contractor of Priveco has entered into any
contract or agreement that restricts or limits in any way the scope
or type of work in which the employee may be engaged or requires
the employee to transfer, assign, or disclose information
concerning his work to anyone other than Priveco.
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Patents
. To
the best knowledge of Priveco, none of the products manufactured
and sold, nor any process or know-how used, by Priveco infringes or
is alleged to infringe any patent or other proprietary night of any
other person or entity.
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Trademarks
. To
the best knowledge of Priveco, none of the Marks, if any, used by
Priveco infringes or is alleged to infringe any trade name,
trademark, or service mark of any third party.
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Copyrights
. Priveco
is the owner of all right, title, and interest in and to each of
the Copyrights which it owns, free and clear of all liens, security
interests, charges, encumbrances, and other adverse
claims. If applicable, all registered Copyrights are
currently in compliance with formal legal requirements, are valid
and enforceable, and are not subject to any maintenance fees or
taxes or actions falling due within ninety days after the Closing
Date. To the best knowledge of Priveco, no Copyright is
infringed or has been challenged or threatened in any way and none
of the subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a
derivative work based on the work of a third party. All
works encompassed by the Copyrights have been marked with the
proper copyright notice.
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Trade
Secrets . Priveco
has taken all reasonable precautions to protect the secrecy,
confidentiality, and value of its Trade Secrets. Priveco
has good title and an absolute right to use the Trade
Secrets. The Trade Secrets are not part of the public
knowledge or literature, and to the best knowledge of Priveco, have
not been used, divulged, or appropriated either for the benefit of
any person or entity or to the detriment of Priveco. No
Trade Secret is subject to any adverse claim or has been challenged
or threatened in any way.
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3.18
Insurance . The products sold by and the assets
owned by Priveco are insured under various policies of general
product liability and other forms of insurance consistent with
prudent business practices. All such policies are in
full force and effect in accordance with their terms, no notice of
cancellation has been received, and there is no existing default by
Priveco, or any event which, with the giving of notice, the lapse
of time or both, would constitute a default
thereunder. All premiums to date have been paid in
full.
3.19
Employees and Consultants . All employees and
consultants of Priveco have been paid all salaries, wages, income
and any other sum due and owing to them by Priveco, as at the end
of the most recent completed pay period. Priveco is not
aware of any labor conflict with any employees that might
reasonably be expected to have a Priveco Material Adverse
Effect. To the best knowledge of Priveco, no employee of
Priveco is in violation of any term of any employment contract,
non-disclosure agreement, non-competition agreement or any other
contract or agreement relating to the relationship of such employee
with Priveco or any other nature of the business conducted or to be
conducted by Priveco.
3.20
Real Property . Priveco does not own any real
property. Each of the leases, subleases, claims or other
real property interests (collectively, the “ Leases
”) to which Priveco is a party or is bound is legal, valid,
binding, enforceable and in full force and effect in all material
respects. All rental and other payments required to be
paid by Priveco pursuant to any such Leases have been duly paid and
no event has occurred which, upon the passing of time, the giving
of notice, or both, would constitute a breach or default by any
party under any of the Leases. The Leases will continue
to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing
Date. Priveco has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
Leases or the leasehold property pursuant thereto.
3.21
Material Contracts and Transactions . Error!
Reference source not found. attached hereto lists each material
contract, agreement, license, permit, arrangement, commitment,
instrument or contract to which Priveco is a party (each, a “
Contract ”). Each Contract is in full force
and effect, and there exists no material breach or violation of or
default by Priveco under any Contract, or any event that with
notice or the lapse of time, or both, will create a material breach
or violation thereof or default under any Contract by
Priveco. The continuation, validity, and effectiveness
of each Contract will in no way be affected by the consummation of
the Transaction contemplated by this Agreement. There
exists no actual or threatened termination, cancellation, or
limitation of, or any amendment, modification, or change to any
Contract.
3.22
Certain Transactions . Priveco is not a guarantor
or indemnitor of any indebtedness of any third party, including any
person, firm or corporation.
3.23
No
Brokers . Priveco has not incurred any independent
obligation or liability to any party for any brokerage fees,
agent’s commissions, or finder’s fees in connection
with the Transaction contemplated by this Agreement.
3.24
Completeness of Disclosure . No representation or
warranty by Priveco in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be
furnished to Pubco pursuant hereto contains or will contain any
untrue statement of a material fact or omits or will omit to state
a material fact required to be stated herein or therein or
necessary to make any statement herein or therein not materially
misleading.
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REPRESENTATIONS
AND WARRANTIES OF PUBCO
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As of the
Closing, Pubco represents and warrants to Priveco and the Selling
Shareholders and acknowledges that Priveco and the Selling
Shareholders are relying upon such representations and warranties
in connection with the execution, delivery and performance of this
Agreement, notwithstanding any investigation made by or on behalf
of Priveco or the Selling Shareholders, as follows:
4.1
Organization and Good Standing . Pubco is duly
incorporated, organized, validly existing and in good standing
under the laws of the State of Nevada and has all requisite
corporate power and authority to own, lease and to carry on its
business as now being conducted. Pubco is qualified to
do business and is in good standing as a foreign corporation in
each of the jurisdictions in which it owns property, leases
property, does business, or is otherwise required to do so, where
the failure to be so qualified would have a material adverse effect
on the businesses, operations, or financial condition of
Pubco.
4.2
Authority . Pubco has all requisite corporate
power and authority to execute and deliver this Agreement and any
other document contemplated by this Agreement (collectively, the
“ Pubco Documents ”) to be signed by Pubco and
to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and
delivery of each of the Pubco Documents by Pubco and the
consummation by Pubco of the transactions contemplated hereby have
been duly authorized by its board of directors and no other
corporate or shareholder proceedings on the part of Pubco is
necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has
been, and the other Pubco Documents when executed and delivered by
Pubco as contemplated by this Agreement will be, duly executed and
delivered by Pubco and this Agreement is, and the other Pubco
Documents when executed and delivered by Pubco, as contemplated
hereby will be, valid and binding obligations of Pubco enforceable
in accordance with their respective terms, except:
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as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of
creditors’ rights generally;
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as limited by
laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies; and
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as limited by
public policy.
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4.3
Capitalization of Pubco . The entire authorized
capital stock and other equity securities of Pubco consists of
180,000,000 shares of common stock with a par value of $0.00001
(the “ Pubco Common Stock ”) and 20,000,000
shares of preferred stock with a par value of
$0.00001. As of the date of this Agreement, there are
39,743,000 shares of Pubco Common Stock and no shares of preferred
stock issued and outstanding. All of the issued and
outstanding shares of Pubco Common Stock have been duly authorized,
are validly issued, were not issued in violation of any pre-emptive
rights and are fully paid and non-assessable, are not subject to
pre-emptive rights and were issued in full compliance with all
federal, state, and local laws, rules and
regulations. There are no outstanding options, warrants,
subscriptions, phantom shares, conversion rights, or other rights,
agreements, or commitments obligating Pubco to issue any additional
shares of Pubco Common Stock, or any other securities convertible
into, exchangeable for, or evidencing the right to subscribe for or
acquire from Pubco any shares of Pubco Common Stock as of the date
of this Agreement. There are no agreements purporting to
restrict the transfer of the Pubco Common Stock, no voting
agreements, voting trusts, or other arrangements restricting or
affecting the voting of the Pubco Common Stock.
4.4
Directors and Officers of Pubco . The duly
elected or appointed directors and the duly appointed officers of
Pubco are as listed on Schedule 4.
4.5
Corporate Records of Pubco. The corporate
records of Pubco, as required to be maintained by it
pursuant
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