Exhibit 10.1
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT is made effective as of the 9th day of October,
2009
AMONG:
LITHIUM
CORPORATION (formerly, Utalk Communications
Inc.), a Nevada
corporation,
9121 Atlanta Avenue, #314, Huntington Beach, CA 92646
("Pubco")
AND:
NEVADA
LITHIUM CORPORATION (formerly, Lithium Corporation), a
Nevada
corporation,
9443 Axlund Road, Lynden, Washington 98264
("Priveco")
AND:
THE
SHAREHOLDERS OF PRIVECO AS LISTED ON Schedule 1 ATTACHED HERETO
(the
"Selling Shareholders")
WHEREAS:
A. The Selling Shareholders are the
registered and beneficial owners of all
12,350,000 issued and outstanding shares
in the capital of Priveco;
B. Pubco has agreed to issue 12,350,000
post forward split 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. DEFINITIONS
1.1 DEFINITIONS
The following terms have the following meanings, unless
the context indicates
otherwise:
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(a) "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;
(b) "CLOSING" shall mean the
completion of the Transaction, in accordance
with
Section 0 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;
(c) "CLOSING DATE" shall mean
a date mutually agreed upon by the parties
hereto in
writing and in accordance with Section
0 following the
satisfaction or waiver by Pubco
and Priveco of the conditions
precedent
set out in Sections 0 and 0 respectively;
(d) "CLOSING DOCUMENTS" shall
mean the papers, instruments and documents
required to
be executed and delivered at the Closing pursuant to this
Agreement;
(e) "EXCHANGE ACT" shall mean the
United States Securities Exchange Act of
1934, as
amended;
(f) "GAAP" shall
mean United States generally
accepted accounting
principles
applied in a manner consistent with prior periods;
(g) "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;
(h) "PRIVATE PLACEMENT"
shall mean a private placement
financing by
Priveco for
gross proceeds of $500,000, to be completed on or
before
the Closing
Date, to consist of 2,000,000 Priveco Shares and 4,000,000
share
purchase warrants (the "Priveco Warrants");
(i) "PRIVECO SHARES" shall
mean the 12,350,000 common shares 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,
including any
shares
issued pursuant to the Private Placement;
(j) "PUBCO SHARES" shall mean the
12,350,000 fully paid and non-assessable
(post Share
Split) common shares of Pubco, to be issued to the Selling
Shareholders
by Pubco on the Closing Date;
(k) "SEC" shall mean the Securities
and Exchange Commission;
(l) "SECURITIES ACT" shall mean the
United States Securities Act of 1933,
as
amended;
(m) "SHARE SPLIT"
shall mean a sixty for one forward split of
Pubco's
issued and
outstanding common shares, to be completed on or before the
Closing
Date;
(n) "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
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related
charge or amount, including interest,
fines, penalties and
additions to
tax, if any, arising out of tax assessments; and
(o) "TRANSACTION" shall mean
the purchase of the Priveco Shares by Pubco
from the
Selling Shareholders in consideration for the issuance of the
Pubco
Shares.
1.2 SCHEDULES
The following schedules are attached to and form part of this
Agreement:
Schedule 1 - Selling
Shareholders
Schedule 1A - Execution Page
for Selling Shareholders
Schedule 2 - US
Securities Law Questionnaire
Schedule 2A - Non-US
Securities Law Questionnaire
Schedule 3 - Directors
and Officers of Priveco
Schedule 4 - Directors
and Officers of Pubco
Schedule 5 - Priveco
Leases, Subleases, Claims, Capital Expenditures,
Taxes and Other Property Interests
Schedule 6 - Priveco
Intellectual Property
Schedule 7 - Priveco
Material Contracts
Schedule 8 - Priveco
Employment Agreements and Arrangements
1.3 CURRENCY
All references to currency referred to in this
Agreement are in United States
Dollars (US$), unless expressly stated otherwise.
2. THE OFFER, PURCHASE AND SALE OF SHARES
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
0, certain Pubco Shares for the Priveco Shares 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:
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"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."
For Selling Shareholders resident in the United States:
"NONE
OF THE SECURITIES REPRESENTED
HEREBY HAVE BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933,
AS AMENDED
(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
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<PAGE>
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) The execution page for the
Selling Shareholder in the form set out in
Schedule 1A;
and
(b) the applicable Securities Law
Questionnaire (the "QUESTIONNAIRE"), a
copy of
which is set out in Schedule 2 or Schedule 2A, as applicable.
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, which shall occur
within 45 days from the date
hereof, subject to any extension by mutual agreement of the
parties.
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.
2.7 EXEMPTIONS
The Selling Shareholders acknowledge
that Pubco has advised such Selling
Shareholders that Pubco is relying upon the
representations and warranties of
the Selling Shareholders set out in the Questionnaires to issue the
Pubco Shares
under an exemption from the registration requirements of the
Securities Act.
3. REPRESENTATIONS AND WARRANTIES OF PRIVECO
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 State of Nevada 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
corporation in each of the jurisdictions in which Priveco owns
property, leases
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<PAGE>
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:
(a) as limited by
applicable bankruptcy, insolvency,
reorganization,
moratorium, and other laws
of general application affecting
enforcement
of creditors' rights generally;
(b) as limited by
laws relating to the
availability of specific
performance,
injunctive relief, or other equitable remedies; and
(c) as limited by public policy.
3.3 CAPITALIZATION OF PRIVECO
The entire authorized capital stock and
other equity securities of Priveco
consists of 50,000,000 common shares (the "PRIVECO
COMMON STOCK"). As of the
date of this Agreement, there are
12,350,000 shares 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 State of Nevada. With the exception of the
Priveco Warrants, 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.
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<PAGE>
3.4 TITLE AND AUTHORITY OF SELLING SHAREHOLDERS
Each of the Selling Shareholders is
and will be as of the Closing,
the
registered and beneficial owner of and will have good
and marketable title to
all of the Priveco Common Stock held by it and will hold such
free and clear of
all liens, charges and encumbrances whatsoever;
and such Priveco Common Stock
held by such Selling Shareholders have been duly
and validly issued and are
outstanding as fully paid and non-assessable
common shares in the capital of
Priveco. Each of the Selling Shareholders
has due and sufficient right and
authority to enter into this Agreement on the terms and
conditions herein set
forth and to transfer the registered, legal and
beneficial title and ownership
of the Priveco Common Stock held by it.
3.5 SHAREHOLDERS OF PRIVECO COMMON STOCK
As of the Closing Date, 0 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.
3.6 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.
3.7 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.
3.8 NON-CONTRAVENTION
Neither the execution, delivery and
performance of this Agreement, nor the
consummation of the Transaction, will:
(a) 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;
(b) violate any provision of the
Constitution, Articles of Association or
any other
constating documents of Priveco, any of its subsidiaries
or
any
applicable laws; or
(c) 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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<PAGE>
3.9 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.
3.10 COMPLIANCE
(a) 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;
(b) 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;
(c) 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
(d) 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.
3.11 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.
3.12 FINANCIAL REPRESENTATIONS
The audited balance sheet for Priveco for its fiscal
year ended July 31, 2009,
(the "PRIVECO ACCOUNTING DATE"), together with
related statements of income,
cash flows, and changes in shareholder's equity for such
fiscal year then ended
(collectively, the "PRIVECO FINANCIAL STATEMENTS") to
be supplied on or before
the Closing Date:
(a) are in accordance with the books
and records of Priveco;
(b) 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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<PAGE>
(c) have been prepared in accordance
with GAAP.
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.
3.13 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:
(a) are not set forth in
the Priveco Financial Statements or have
not
heretofore
been paid or discharged;
(b) 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
(c) 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
3.14 TAX MATTERS
(a) As of the date hereof:
(i)
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
(ii) all
such returns are true and correct in all material respects;
(b) 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;
(c) 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;
(d) 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
(e) 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
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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.
3.15 ABSENCE OF CHANGES
Since the Priveco Accounting Date, Priveco has not:
(a) 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;
(b) sold, encumbered, assigned or
transferred any material fixed assets or
properties
except for ordinary course business transactions consistent
with past
practice;
(c) 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;
(d) 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;
(e) 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;
(f) suffered any damage,
destruction or loss, whether or not covered by
insurance, that materially and
adversely effects its business,
operations,
assets, properties or prospects;
(g) suffered any
material adverse change in its business,
operations,
assets,
properties, prospects or condition (financial or otherwise);
(h) 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;
(i) made commitments or
agreements for capital expenditures or capital
additions or
betterments exceeding in the aggregate $5,000;
(j) 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
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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;
(k) entered into any
transaction other than in the ordinary course
of
business
consistent with past practice; or
(l) agreed, whether in writing or
orally, to do any of the foregoing.
3.16 ABSENCE OF CERTAIN CHANGES OR EVENTS
Since the Priveco Accounting Date, there has not been:
(a) a Priveco Material Adverse
Effect; or
(b) any material change by Priveco
in its accounting methods, principles
or
practices.
3.17 SUBSIDIARIES
Priveco does not have any subsidiaries or
agreements of any nature to acquire
any subsidiary or to acquire or lease any other business
operations.
3.18 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, except as disclosed in
0.
3.19 INTELLECTUAL PROPERTY
(a) 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:
(i)
all functional business names, trading
names, registered and
unregistered trademarks, service
marks, and applications
(collectively, the "MARKS");
(ii)
all patents, patent applications, and
inventions, methods,
processes and discoveries that may be patentable
(collectively,
the "PATENTS");
(iii)all copyrights in both published works
and unpublished works
(collectively, the "COPYRIGHTS"); and
(iv) 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
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Priveco as licensee or licensor
(collectively, the "TRADE
SECRETS").
(b) Agreements
Schedule 6 contains a complete and
accurate list and summary
description, including any royalties paid or received by
Priveco, of
all
contracts and agreements relating to the
Intellectual Property
Assets
to which Priveco is a party or by which
Priveco is bound,
except for
any license implied by the sale of a product and perpetual,
paid-up
licenses for commonly available software programs with a value
of less than
$500 under which Priveco is the licensee.
To the best
knowledge of
Priveco, there are no outstanding or threatened disputes
or
disagreements with respect to any such agreement.
(c) Intellectual Property and
Know-How Necessary for the Business
Except as
set forth in Schedule 6, 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. Except as set forth in Schedule 6, 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.
(d) Patents
Except as
set out in Schedule 6, Priveco does not
hold any right,
title
or interest in and to any Patent and Priveco has not
filed any
patent
application with any third party. 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.
(e) Trademarks
Except as
set out in Schedule 6, Priveco does not
hold any right,
title or
interest in and to any Mark and Priveco has not registered or
filed
any application to register any Mark with any third
party. 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.
(f) Copyrights
Schedule 6 contains a complete
and accurate list and summary
description of all Copyrights. Priveco is
the owner of all right,
title,
and interest in and to each of the Copyrights, free and
clear
of all
liens, security interests, charges,
encumbrances, and other
adverse
claims. If applicable, all registered Copyrights are currently
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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.
(g) 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.
3.20 INSURANCE
The products sold by and the assets owned by Priveco are not
insured under any
policies of general product liability or other forms of
insurance consistent
with prudent business practices. No such policies are in
effect.
3.21 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.
3.22 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, as set out in 0, 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.
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3.23 MATERIAL CONTRACTS AND TRANSACTIONS
Schedule 7 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.
3.24 CERTAIN TRANSACTIONS
Priveco is not a guarantor or indemnitor of any indebtedness of any
third party,
including any person, firm or corporation.
3.25 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.
3.26 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.
4. REPRESENTATIONS AND WARRANTIES OF PUBCO
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 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.
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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:
(a) as limited by
applicable bankruptcy, insolvency,
reorganization,
moratorium, and other laws
of general application affecting
enforcement
of creditors' rights generally;
(b) as limited by
laws relating to the
availability of specific
performance,
injunctive relief, or other equitable remedies; and
(c) as limited by public policy.
4.3 CAPITALIZATION OF PUBCO
The entire authorized capital stock
and other equity securities of Pubco
consists of 75,000,000 shares of common stock
with a par value of $0.001 (the
"PUBCO COMMON STOCK"). As of the Closing Date, there are to be
48,200,000 shares
of Pubco Common Stock issued and outstanding, after
giving effect to the Share
Split and the share cancelation
required herein. 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 0.
4.5 CORPORATE RECORDS OF PUBCO
The corporate records of Pubco, as required to be
maintained by it pursuant to
the laws of the State of Nevada, are
accurate, complete and current in all
material respects, and the minute book of Pubco is, in
all material respects,
correct and contains all material records
required by the law of the State of
Nevada in regards to all proceedings, consents,
actions and meetings of the
shareholders and the board of directors of Pubco.
4.6 NON-CONTRAVENTION
Neither the execution, delivery and
performance of this Agreement, nor the
consummation of the Transaction, will:
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(a) 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 Pubco 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 Pubco or any of its
material
property or assets;
(b) violate any
provision of the applicable incorporation
or charter
documents of
Pubco; or
