EX 2.2
SHARE EXCHANGE AGREEMENT
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THIS SHARE EXCHANGE AGREEMENT (the "Agreement") is made and
entered
into as of this ____ day of January, 2004
(the "Effective Date") by and between
TELS Corporation, a Utah corporation (the
"Company") and, Pathway Advisors,
Inc., a ______________ corporation,
("Pathway") and Heith Pathway, the sole
shareholder of Pathway (the
"Shareholder").
WHEREAS, the respective Board of Directors of Pathway and the
Company
deem the acquisition by the Company of all
of the issued and outstanding capital
stock of Pathway on the terms set forth in
this Agreement to be desirable,
generally to the welfare and advantage of
each, and in the best interests of the
shareholders of each;
NOW THEREFORE, in consideration of the mutual promises and the
covenants and promises hereinafter
contained, and other good and valuable
consideration, the receipt and sufficiency
of which are hereby acknowledged, the
parties hereto, intending to be legally
bound hereby, agree as follows:
SECTION 1. EXCHANGE OF SHARES.
1.1 Exchange. On the terms and subject to the conditions set forth
in
this Agreement, at the Closing the
Shareholder will sell, convey, transfer and
assign to the Company, and the Company will
purchase and accept from the
Shareholder all right, title and interest
in and to the issued and outstanding
shares of common stock of Pathway, owned by
Shareholder in exchange for three
million shares of restricted common stock
of the Company.
1.2 Assets. As of the date of Closing, the assets of Pathway
shall
consist of the Contracts, Intellectual
Property, Tangible and Intangible Assets
and Records and Documents described in
Section 1.2 (a) through (d) hereof
(collectively, the "Assets"), free and
clear of all liens.
(a) Contracts. All rights and benefits of the Shareholder
under all agreements associated with the
Assets, any and all other license and
other agreements (if any), including,
without limitation, those set forth on
Schedule 1.2 (a). "Contracts" means all
contracts, agreements and other
arrangements whether written or oral, to
which Pathway is a party as to which
the breach, non-performance, failure to
renew, or cancellation could have a
material adverse effect on the Assets.
(b) Intellectual Property. All rights, title and interest in
and to, all United States and foreign
licenses, copyrights (registered and
unregistered) and copyright applications,
and Computer Software and other rights
associated with the foregoing, existing now
or in the future with respect to the
Assets, including, without limitation the
right to sue for past infringement
thereof and all other proprietary rights
that Pathway owns, licenses, or
possesses the right to use with respect to
the Assets (collectively, the
"Intellectual Property"). The Intellectual
Property is listed on Schedule 1.2
(b). "Computer Software" means all
computer
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source codes, programs, data files, and
other software (including both
applications software and operating
software), including all machine readable
code, printed listings of code,
documentation, and related property and
information relating to the Assets.
(c) Tangible and Intangible Assets. All tangible and
intangible personal property rights of
Pathway in and to the Assets (the
"Tangible and Intangible Assets"), which
are reflected on Schedule1.2 (c).
(d) Records and Documents. All books, records, files, papers,
databases, and other data (whether such
information is stored in print, on
electronic media, or pursuant to any audio
or video recording) located at
Pathway's facilities or elsewhere in
Pathway's custody or control (directly or
indirectly), or pertaining to the Assets,
all of which are reflected on Schedule
1.2(d).
(e) Bank Accounts. Attached hereto as Schedule 1.2(e) is a
listing of all bank accounts and account
numbers which are currently held by
Pathway The Shareholder shall take such
steps as necessary in order for the
Company or its designees to be named as
signatories.
(f) Financial Statements. Attached hereto as Schedule 1.2(f)
are the Financial statements for Pathway
dated December 31, 2003. Said
statements have been prepared using
Generally Accepted Accounting Principles.
These financial statements fairly present
the financial position of Pathway as
of the dates set forth in the unaudited
financial statements. The unaudited
financial statements have been prepared in
conformity with generally accepted
accounting principles consistently applied
and consistent with the books and
records of Pathway. There has been no
material change in the financial condition
of Pathway since the date of the financial
statements. All known liabilities of
the Company are set forth in the financial
statements and there are not
undisclosed liabilities of any kind or
nature.
If the December 31, 2003 audited financial statements reflect a
material change in the financial condition
of Pathway from that which was
previously represented in the unaudited
December 31, 2003 financial statements
which have previously been delivered to the
Company, the Company may, in its
sole and absolute discretion choose not to
proceed with Closing and this
Agreement will be of no further force or
effect and each party shall be liable
for their respective costs.
1.3 Closing
Date. The closing ("Closing") shall occur on or before
January ___, 2004 (the "Closing Date"). The
Closing will take place at 10:00
a.m. at the offices of Newman, Pollock
& Klein, LLP, 2101 NW Corporate Blvd.,
Suite 414, Boca Raton, FL 33431, or, at
such other date, time and place or
manner, as may be agreed upon by the
parties.
1.4 Delivery of Shares.
(a) At the Closing, the Shareholder shall deliver to the
Company a validly issued certificate
representing the Pathway Shares duly
endorsed in blank or accompanied by stock
powers duly executed in blank, with
all necessary stock transfer stamps
affixed.
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(b) At the Closing, the Company shall deliver to the
Shareholder a validly issued certificate
representing the TELS Shares duly
endorsed in blank or accompanied by stock
powers duly executed in blank, with
all necessary stock transfer stamps
affixed.
SECTION 2. PURCHASE PRICE.
2.1 Purchase Price. The Company shall convey, transfer, assign
three
million unregistered shares of common stock
of the Company ("Common Stock") in
exchange for all of the issued and
outstanding shares of common stock of Pathway
held by Shareholder. The shares of Common
Stock may only be resold in the future
under Rules 144 or 144A under the
Securities Act of 1933 (the "Securities Act"),
subject to compliance with all of the
provisions of the Rules. Rule 144 provides
that securities may be resold after a
one-year holding period from the date of
payment subject to compliance with the
Rule. Among other things, an order to
sell the securities may only be placed
after Form 144 has been mailed to the
Securities and Exchange Commission, the
securities must be sold to or through a
broker-dealer, the volume limitations must
be met (i.e., the greater of 1% of
the outstanding shares or the average
weekly trading volume for the four weeks
preceding the filing of Form 144) and there
can be no solicitation of any buy
orders. Rule 144A applies to sales to
institutions which are "qualified
institutional buyers".
The share certificate to be delivered to the law firm of
Newman,
Pollock & Klein, LLP to be held in
escrow subject to Pathway completing any and
all required audit requirements as set
forth in this Agreement.
SECTION 3. REPRESENTATIONS AND
WARRANTIES.
3.1 Pathway and Shareholder's Representations and Warranties.
Pathway
and the Shareholder hereby represent and
warrant to the Company, all of which
representations and warranties are true,
complete, and correct in all respects
as of the date hereof and will be as of the
Closing Date, as follows:
(a) Organization and Qualification. Pathway is a corporation
duly organized, validly existing and in
good standing under the laws of the
jurisdiction of its incorporation. Pathway
has all requisite power and authority
to own those properties and conduct those
businesses presently owned or
conducted by it, and is duly qualified to
do business as it is now being
conducted and is in good standing as a
foreign corporation in each other
jurisdiction where the property owned,
leased or used by it or the conduct of
its business makes such qualification
necessary. The copies of the articles of
incorporation and bylaws of Pathway, which
have been (or will be, at least two
days before the Closing Date) delivered to
the Company, are complete and correct
and are in full force and effect at the
date hereof. There are, and at the
Closing will be, no outstanding
subscriptions, options, warrants, convertible
securities, calls, commitments or
agreements calling for or requiring issuance
or transfer, sale or other disposition of
any shares of capital stock of the
Company or calling for or requiring the
issuance of any securities or rights
convertible into or exchangeable (including
on a contingent basis) for shares of
capital stock.
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(b) Authorization; No Restrictions, Consents or Approvals.
Pathway and the Shareholder have full power
and authority to enter into and
perform this Agreement. This Agreement has
been duly executed by Pathway and the
Shareholder and constitutes the legal,
valid, binding and enforceable obligation
of Pathway and the Shareholder, enforceable
against Pathway and the Shareholder
in accordance with its terms. The execution
and delivery of this Agreement, the
exchange of Shares and the consummation by
Pathway of the transactions
contemplated herein, do not and will not on
the Closing Date (i) conflict with
or violate any of the terms of the articles
of incorporation and bylaws of
Pathway or any applicable law relating to
the Shareholder or Pathway, (ii)
conflict with, or result in a breach of any
of the terms of, or result in the
acceleration of any indebtedness or
obligations under, any agreement, obligation
or instrument by which the Shareholder or
Pathway is bound or to which any
property of the Shareholder or Pathway is
subject, or constitute a default
thereunder, (iii) result in the creation or
imposition of any lien on any of the
assets of the Shareholder or Pathway, (iv)
constitute an event permitting
termination of any agreement or instrument
to which the Shareholder or Pathway
is a party or by which any property or
asset of the Shareholder or Pathway is
bound or affected, pursuant to the terms of
such agreement or instrument, or (v)
conflict with, or result in or constitute a
default under or breach or violation
of or grounds for termination of, any
license, permit or other governmental
authorization to which the Shareholder or
Pathway is a party or by which the
Shareholder or Pathway may be bound, or
result in the violation by the
Shareholder or Pathway of any laws to which
the Shareholder or Pathway may be
subject, which would materially adversely
affect the transactions contemplated
herein. No authorization, consent or
approval of, notice to, or filing with, any
public body or governmental authority or
any other person is necessary or
required in connection with the execution
and delivery by Pathway and the
Shareholder of this Agreement or the
performance by Pathway or the Shareholder
of his obligations hereunder.
(c) Capitalization. The authorized capitalization of Pathway
consists of __________ shares of common
stock, $ ____ par value, __________ of
which are issued and outstanding and owned
by the Shareholder. There are, and at
the Closing will be no outstanding
subscriptions, options, warrants, convertible
securities, calls, commitments or
agreements calling for or requiring issuance
or transfer, sale or other disposition of
any shares of capital stock of the
Company or calling for or requiring the
issuance of any securities or rights
convertible into or exchangeable (including
on a contingent basis) for shares of
capital stock. All of the outstanding
shares of the Company are duly authorized,
validly issued, fully paid and
non-assessable. There are no dividends due, to be
paid or are in arrears with respect to any
of the capital stock of Company.
(d) Subsidiaries. Pathway has no subsidiaries and does not own
any interest in any corporation,
partnership, joint venture, limited liability
company, association, trust or entity.
(e) Brokers' Fees. Pathway has no liability or obligation to
pay any fees or commissions to any broker,
finder, or agent with respect to the
transactions contemplated by this Agreement
for which the Company could become
liable or obligated.
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(f) Litigation. There are no actions, suits, proceedings, or
investigations pending or, to the best of
its knowledge, threatened or
contemplated against Pathway
(g) Assets. Pathway has good and marketable title to the
Assets, free and clear of any lien, which
Assets are reflected on Schedules 1.2
(a), (b), (c) and (d). Such Assets are not
subject to any Contracts other than
those listed on Schedule 1.2 (a).
(h) Employees. Attached hereto as schedule 3.1(h) is a list of
all Pathway employees together with the
salaries of each and any agreed to
benefit packages. Except as noted in the
schedule, there are no outstanding
employment agreements which cannot be
terminated on 30 days prior written
notice.
(i) No Material Adverse Change. Since the Pathway Balance
Sheet Date, there has not been any material
adverse change in the condition,
financial or otherwise, of Pathway's
business, nor has there been any material
transaction entered into by Pathway Pathway
has not incurred any material
obligations, contingent or otherwise except
for legal and accounting fees and
expenses in connection with the
transactions contemplated by this Agreement.
(j) Disclosure. No statement, representation or warranty by
Pathway and the Shareholder in this
Agreement, including the Schedules hereto,
contains any untrue statement of material
fact, or omits to state a material
fact, necessary to make such statements,
representations and warranties not
misleading. There is no fact known to
Pathway or the Shareholder which has
specific application to the Assets, and, so
far as Pathway and the Shareholder
can reasonably foresee, materially
threatens in the future, the Assets which has
not been set forth in this Agreement or the
Schedules hereto.
(k) Ownership of the Shares. The Shareholder owns 100% of the
issued and outstanding shares of stock of
Pathway. These Shares are owned free
and clear of any liens or encumbrances and
that the Shareholder is free to
transfer these Shares without the consent
of any third party.
(l) Restricted Securities. The Shareholder understands that
(a) the TELS Shares to be received by the
Shareholder hereunder are
characterized as "restricted securities"
under the federal securities laws
inasmuch as such securities are being
acquired from the Company in a transaction
not involving a public offering and that
under such laws and applicable
regulations such securities may be resold
without registration under the
Securities Act only in certain limited
circumstances and (b) the certificate(s)
representing the TELS Shares shall bear the
following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
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AMENDED. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR A WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO
THE ISSUER IN FORM AND SUBSTANCE, THAT SUCH TRANSFER IS
EXEMPT FROM THE REGIST
