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:
(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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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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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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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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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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(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.
14
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
(c) violate any order, writ, injunction, decree, statute, rule, or
regulation of any court or governmental or regulatory authority
applicable to Pubco or any of its material property or assets.
4.7 VALIDITY OF PUBCO COMMON STOCK ISSUABLE UPON THE TRANSACTION
The Pubco Shares to be issued to the Selling Shareholders upon consummation of
the Transaction in accordance with this Agreement will, upon issuance, have been
duly and validly authorized and, when so issued in accordance with the terms of
this Agreement, will be duly and validly issued, fully paid and non-assessable.
4.8 ACTIONS AND PROCEEDINGS
To the best knowledge of Pubco, there is no claim, charge, arbitration,
grievance, action, suit, investigation or proceeding by or before any court,
arbiter, administrative agency or other governmental authority now pending or,
to the best knowledge of Pubco, threatened against Pubco which involves any of
the business, or the properties or assets of Pubco that, if adversely resolved
or determined, would have a material adverse effect on the business, operations,
assets, properties, prospects or conditions of Pubco taken as a whole (a "PUBCO
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 Pubco Material Adverse Effect.
4.9 COMPLIANCE
(a) To the best knowledge of Pubco, Pubco 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 Pubco;
(b) To the best knowledge of Pubco, Pubco 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 Pubco Material Adverse
Effect;
(c) Pubco 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 Pubco,
threatened, and none of them will be affected in a material adverse
manner by the consummation of the Transaction; and
16
(d) Pubco has operated in material compliance with all laws, rules,
statutes, ordinances, orders and regulations applicable to its
business. Pubco has not received any notice of any violation thereof,
nor is Pubco aware of any valid basis therefore.
4.10 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 Pubco of the Transaction
contemplated by this Agreement to continue to conduct its business after the
Closing Date in a manner which is consistent with that in which it is presently
conducted.
4.11 SEC FILINGS
Pubco has furnished or made available to Priveco and the Selling Shareholders a
true and complete copy of each report, schedule, registration statement and
proxy statement filed by Pubco with the SEC (collectively, and as such documents
have since the time of their filing been amended, the "PUBCO SEC DOCUMENTS"). As
of their respective dates, the Pubco SEC Documents complied in all material
respects with the requirements of the Securities Act, or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such Pubco SEC Documents. The Pubco SEC Documents constitute all of the
documents and reports that Pubco was required to file with the SEC pursuant to
the Exchange Act and the rules and regulations promulgated thereunder by the
SEC.
4.12 FINANCIAL REPRESENTATIONS
Included with the Pubco SEC Documents are true, correct, and complete copies of
audited balance sheets for Pubco dated as of December 31, 2008, and unaudited
balance sheets for Pubco dated as of June 30, 2009 (the "PUBCO ACCOUNTING
DATE"), together with related statements of income, cash flows, and changes in
shareholder's equity for the fiscal year and interim period then ended
(collectively, the "PUBCO FINANCIAL STATEMENTS"). The Pubco Financial
Statements:
(a) are in accordance with the books and records of Pubco;
(b) present fairly the financial condition of Pubco as of the respective
dates indicated and the results of operations for such periods; and
(c) have been prepared in accordance with GAAP.
Pubco has not received any advice or notification from its independent certified
public accountants that Pubco has used any improper accounting practice that
would have the effect of not reflecting or incorrectly reflecting in the Pubco
Financial Statements or the books and records of Pubco, any properties, assets,
Liabilities, revenues, or expenses. The books, records, and accounts of Pubco
accurately and fairly reflect, in reasonable detail, the assets, and Liabilities
of Pubco. Pubco has not engaged in any transaction, maintained any bank account,
or used any funds of Pubco, except for transactions, bank accounts, and funds
which have been and are reflected in the normally maintained books and records
of Pubco.
4.13 ABSENCE OF UNDISCLOSED LIABILITIES
Pubco has no material Liabilities or obligations either direct or indirect,
matured or unmatured, absolute, contingent or otherwise, which:
17
(a) are not set forth in the Pubco 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 Priveco; 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 Pubco
Financial Statements.
4.14 TAX MATTERS
(a) As of the date hereof:
(i) Pubco 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 them, and
(ii) all such returns are true and correct in all material respects;
(b) Pubco has paid all Taxes that have become or are due with respect to
any period ended on or prior to the date hereof;
(c) Pubco is not presently under and has not received notice of, any
contemplated investigation or audit by the Canada Revenue Agency or
the Internal Revenue Service 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 Pubco, the Pubco Financial Statements contain
full provision for all Taxes including any deferred Taxes that may be
assessed to Pubco for the accounting period ended on the Pubco
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
Pubco Accounting Date or for any profit earned by Pubco on or prior to
the Pubco Accounting Date or for which Pubco is accountable up to such
date and all contingent Liabilities for Taxes have been provided for
or disclosed in the Pubco Financial Statements.
4.15 ABSENCE OF CHANGES
Since the Pubco Accounting Date, except as disclosed in the Public SEC Documents
and except as contemplated in this Agreement, Pubco 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;
18
(b) sold, encumbered, assigned or transferred any material fixed assets or
properties;
(c) created, incurred, assumed or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged or subjected any of the material
assets or properties of Pubco 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
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.
4.16 ABSENCE OF CERTAIN CHANGES OR EVENTS
Since the Pubco Accounting Date, except as and to the extent disclosed in the
Pubco SEC Documents, there has not been:
(a) a Pubco Material Adverse Effect; or
(b) any material change by Pubco in its accounting methods, principles or
practices.
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4.17 SUBSIDIARIES
Pubco does not have any subsidiaries or agreements of any nature to acquire any
subsidiary or to acquire or lease any other business operations, except as
disclosed in the Pubco SEC Documents.
4.18 PERSONAL PROPERTY
There are no material equipment, furniture, fixtures and other tangible personal
property and assets owned or leased by Pubco, except as disclosed in the Pubco
SEC Documents.
4.19 EMPLOYEES AND CONSULTANTS
Pubco does not have any employees or consultants, except as disclosed in the
Pubco SEC Documents.
4.20 MATERIAL CONTRACTS AND TRANSACTIONS
Other than as expressly contemplated by this Agreement, there are no material
contracts, agreements, licenses, permits, arrangements, commitments,
instruments, understandings or contracts, whether written or oral, express or
implied, contingent, fixed or otherwise, to which Pubco is a party except as
disclosed in writing to Priveco or as disclosed in the Pubco SEC Documents.
4.21 NO BROKERS
Pubco has not incurred any 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.
4.22 INTERNAL ACCOUNTING CONTROLS
Pubco maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Pubco's certifying officers have evaluated the effectiveness of
Pubco's controls and procedures as of end of the filing period prior to the
filing date of the Form 10-QSB for the quarter ended December 31, 2007 (such
date, the "Evaluation Date"). Pubco presented in its most recently filed Form
10-QSB the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in Pubco's internal controls (as such term is defined in Item 307 of
Regulation S-B under the Exchange Act) or, to Pubco's knowledge, in other
factors that could significantly affect Pubco's internal controls.
4.23 LISTING AND MAINTENANCE REQUIREMENTS
Pubco is currently quoted on the OTC Bulletin Board and has not, in the 12
months preceding the date hereof, received any notice from the OTC Bulletin
Board or the NASD or any trading market on which Pubco's common stock is or has
20
been listed or quoted to the effect that Pubco is not in compliance with the
quoting, listing or maintenance requirements of the OTCBB or such other trading
market.
4.24 APPLICATION OF TAKEOVER PROTECTIONS
Pubco and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under Pubco's certificate or articles
of incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to Pubco as a result of the
transactions under this Agreement or the exercise of any rights pursuant to this
Agreement.
4.25 NO LIABILITIES
Upon Closing, Pubco shall have no direct, indirect or contingent liabilities
outstanding that exceed $10,000.
4.26 COMPLETENESS OF DISCLOSURE
No representation or warranty by Pubco in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be furnished to
Priveco 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.
5. CLOSING CONDITIONS
5.1 CONDITIONS PRECEDENT TO CLOSING BY PUBCO
The obligation of Pubco to consummate the Transaction is subject to the
satisfaction or written waiver of the conditions set forth below by a date
mutually agreed upon by the parties hereto in writing and in accordance with
Section 0. The Closing of the Transaction contemplated by this Agreement will be
deemed to mean a waiver of all conditions to Closing. These conditions precedent
are for the benefit of Pubco and may be waived by Pubco in its sole discretion.
(a) Representations and Warranties
The representations and warranties of Priveco and the Selling
Shareholders set forth in this Agreement will be true, correct and
complete in all respects as of the Closing Date, as though made on and
as of the Closing Date and Priveco will have delivered to Pubco a
certificate dated as of the Closing Date, to the effect that the
representations and warranties made by Priveco in this Agreement are
true and correct.
(b) Performance
All of the covenants and obligations that Priveco and the Selling
Shareholders are required to perform or to comply with pursuant to
this Agreement at or prior to the Closing must have been performed and
complied with in all material respects.
(c) Transaction Documents
This Agreement, the Priveco Documents, the Priveco Financial
Statements and all other documents necessary or reasonably required to
21
consummate the Transaction, all in form and substance reasonably
satisfactory to Pubco, will have been executed and delivered to Pubco.
(d) Third Party Consents
Pubco will have received duly executed copies of all third party
consents and approvals contemplated by this Agreement, in form and
substance reasonably satisfactory to Pubco.
(e) No Material Adverse Change
No Priveco Material Adverse Effect will have occurred since the date
of this Agreement.
(f) No Action
No suit, action, or proceeding will be pending or threatened which
would:
(i) prevent the consummation of any of the transactions contemplated
by this Agreement; or
(ii) cause the Transaction to be rescinded following consummation.
(g) Private Placement and Outstanding Shares
Priveco shall have completed the Private Placement and will have no
more than 12,350,000 shares of Priveco Common Stock issued and
outstanding on the Closing Date.
(h) Delivery of Financial Statements
Priveco will have delivered to Pubco the Priveco Financial Statements,
which financial statements will include audited financial statements
for Priveco's two fiscal years, prepared in accordance with GAAP and
audited by an independent auditor registered with the Public Company
Accounting Oversight Board in the United States.
(i) Due Diligence Review of Financial Statements
Pubco and its accountants will be reasonably satisfied with their due
diligence investigation and review of the Priveco Financial
Statements.
(j) Due Diligence Generally
Pubco and its solicitors will be reasonably satisfied with their due
diligence investigation of Priveco that is reasonable and customary in
a transaction of a similar nature to that contemplated by the
Transaction, including:
(i) materials, documents and information in the possession and
control of Priveco and the Selling Shareholders which are
reasonably germane to the Transaction;
(ii) a physical inspection of the assets of Priveco by Pubco or its
representatives; and
(iii) title to the material assets of Priveco.
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(k) Compliance with Securities Laws
Pubco will have received evidence satisfactory to Pubco that the Pubco
Shares issuable in the Transaction will be issuable:
(i) without registration pursuant to the Securities Act in reliance
on an exemption from the registration requirements of the
Securities Act provided by Regulation S and/or Regulation D; and
(ii) in reliance upon an exemption from the prospectus and
registration requirements of any other applicable securities
legislation.
In order to establish the availability of the safe harbor from the
registration requirements of the Securities Act for the issuance of
Pubco Shares to each Selling Shareholder, Priveco will deliver to
Pubco on Closing, a US Securities Law Questionnaire, as applicable,
duly executed by each Selling Shareholder.
5.2 CONDITIONS PRECEDENT TO CLOSING BY PRIVECO
The obligation of Priveco and the Selling Shareholders to consummate the
Transaction is subject to the satisfaction or written waiver of the conditions
set forth below by a date mutually agreed upon by the parties hereto in writing
and in accordance with Section 0. The Closing of the Transaction will be deemed
to mean a waiver of all conditions to Closing. These conditions precedent are
for the benefit of Priveco and the Selling Shareholders and may be waived by
Priveco and the Selling Shareholders in their discretion.
(a) Representations and Warranties
The representations and warranties of Pubco set forth in this
Agreement will be true, correct and complete in all respects as of the
Closing Date, as though made on and as of the Closing Date and Pubco
will have delivered to Priveco a certificate dated the Closing Date,
to the effect that the representations and warranties made by Pubco in
this Agreement are true and correct.
(b) Performance
All of the covenants and obligations that Pubco are required to
perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been performed and complied with in all material
respects. Pubco must have delivered each of the documents required to
be delivered by it pursuant to this Agreement.
(c) Transaction Documents
This Agreement, the Pubco Documents and all other documents necessary
or reasonably required to consummate the Transaction, all in form and
substance reasonably satisfactory to Priveco, will have been executed
and delivered by Pubco.
(d) Third Party Consents
Priveco will have received from Pubco duly executed copies of all
third-party consents, permits, authorisations and approvals of any
public, regulatory (including the SEC) or governmental body or
23
authority or person or entity contemplated by this Agreement, in the
form and substance reasonably satisfactory to Priveco.
(e) No Material Adverse Change
No Pubco Material Adverse Effect will have occurred since the date of
this Agreement.
(f) No Action
No suit, action, or proceeding will be pending or threatened before
any governmental or regulatory authority wherein an unfavorable
judgment, order, decree, stipulation, injunction or charge would
result in and/or:
(i) prevent the consummation of any of the transactions contemplated
by this Agreement; or
(ii) cause the Transaction to be rescinded following consummation.
(g) Outstanding Shares
On the Closing Date, Pubco will have no more than 48,200,000 common
shares issued and outstanding in the capital of Pubco, following the
Share Split and the cancellation of 220,000,000 post Share Split
restricted shares of common stock.
(h) Share Split
On or before the Closing Date, the Share Split and Private Placement
shall be effective and have closed.
(i) Public Market
On the Closing Date, the shares of Pubco Common Stock will be quoted
on the National Association of Securities Dealers, Inc.'s OTC Bulletin
Board.
(j) Due Diligence Review of Financial Statements
Priveco and its accountants will be reasonably satisfied with their
due diligence investigation and review of the Pubco Financial
Statements, the Pubco SEC Documents, and the contents thereof,
prepared in accordance with GAAP.
(k) Due Diligence Generally
Priveco will be reasonably satisfied with their due diligence
investigation of Pubco that is reasonable and customary in a
transaction of a similar nature to that contemplated by the
Transaction.
6. ADDITIONAL COVENANTS OF THE PARTIES
6.1 NOTIFICATION OF FINANCIAL LIABILITIES
Priveco will immediately notify Pubco in accordance with Section 0 hereof, if
Priveco receives any advice or notification from its independent certified
public accounts that Priveco has used any improper accounting practice that
would have the effect of not reflecting or incorrectly reflecting in the books,
24
records, and accounts of Priveco, any properties, assets, Liabilities, revenues,
or expenses. Notwithstanding any statement to the contrary in this Agreement,
this covenant will survive Closing and continue in full force and effect.
6.2 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Priveco, on the one
hand, and Pubco, on the other hand, will, and will cause each of their
respective representatives to:
(a) afford the other and its representatives full and free access to its
personnel, properties, assets, contracts, books and records, and other
documents and data;
(b) furnish the other and its representatives with copies of all such
contracts, books and records, and other existing documents and data as
required by this Agreement and as the other may otherwise reasonably
request; and
(c) furnish the other and its representatives with such additional
financial, operating, and other data and information as the other may
reasonably request.
All of such access, investigation and communication by a party and its
representatives will be conducted during normal business hours and in a manner
designed not to interfere unduly with the normal business operations of the
other party. Each party will instruct its auditors to co-operate with the other
party and its representatives in connection with such investigations.
6.3 CONFIDENTIALITY
All information regarding the business of Priveco including, without limitation,
financial information that Priveco provides to Pubco during Pubco's due
diligence investigation of Priveco will be kept in strict confidence by Pubco
and will not be used (except in connection with due diligence), dealt with,
exploited or commercialized by Pubco or disclosed to any third party (other than
Pubco's professional accounting and legal advisors) without the prior written
consent of Priveco. If the Transaction contemplated by this Agreement does not
proceed for any reason, then upon receipt of a written request from Priveco,
Pubco will immediately return to Priveco (or as directed by Priveco) any
information received regarding Priveco's business. Likewise, all information
regarding the business of Pubco including, without limitation, financial
information that Pubco provides to Priveco during its due diligence
investigation of Pubco will be kept in strict confidence by Priveco and will not
be used (except in connection with due diligence), dealt with, exploited or
commercialized by Priveco or disclosed to any third party (other than Priveco's
professional accounting and legal advisors) without Pubco's prior written
consent. If the Transaction contemplated by this Agreement does not proceed for
any reason, then upon receipt of a written request from Pubco, Priveco will
immediately return to Pubco (or as directed by Pubco) any information received
regarding Pubco's business.
6.4 NOTIFICATION
Between the date of this Agreement and the Closing Date, each of the parties to
this Agreement will promptly notify the other parties in writing if it becomes
aware of any fact or condition that causes or constitutes a material breach of
any of its representations and warranties as of the date of this Agreement, if
it becomes aware of the occurrence after the date of this Agreement of any fact
or condition that would cause or constitute a material breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Schedules relating to such party,
25
such party will promptly deliver to the other parties a supplement to the
Schedules specifying such change. During the same period, each party will
promptly notify the other parties of the occurrence of any material breach of
any of its covenants in this Agreement or of the occurrence of any event that
may make the satisfaction of such conditions impossible or unlikely.
6.5 EXCLUSIVITY
Until such time, if any, as this Agreement is terminated pursuant to this
Agreement, Priveco and Pubco will not, directly or indirectly, solicit,
initiate, entertain or accept any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any person or entity relating to
any transaction involving the sale of the business or assets (other than in the
ordinary course of business), or any of the capital stock of Priveco or Pubco,
as applicable, or any merger, consolidation, business combination, or similar
transaction other than as contemplated by this Agreement.
6.6 CONDUCT OF PRIVECO AND PUBCO BUSINESS PRIOR TO CLOSING
From the date of this Agreement to the Closing Date, and except to the extent
that Pubco otherwise consents in writing, Priveco will operate its business
substantially as presently operated and only in the ordinary course and in
compliance with all applicable laws, and use its best efforts to preserve intact
its good reputation and present business organization and to preserve its
relationships with persons having business dealings with it. Likewise, from the
date of this Agreement to the Closing Date, and except to the extent that
Priveco otherwise consents in writing, Pubco will operate its business
substantially as presently operated and only in the ordinary course and in
compliance with all applicable laws, and use its best efforts to preserve intact
its good reputation and present business organization and to preserve its
relationships with persons having business dealings with it.
6.7 CERTAIN ACTS PROHIBITED - PRIVECO
Except as expressly contemplated by this Agreement or for purposes in
furtherance of this Agreement, between the date of this Agreement and the
Closing Date, Priveco will not, without the prior written consent of Pubco:
(a) amend its Constitution, Articles of Association or other incorporation
documents;
(b) incur any liability or obligation other than in the ordinary course of
business or encumber or permit the encumbrance of any properties or
assets of Priveco except in the ordinary course of business;
(c) dispose of or contract to dispose of any Priveco property or assets,
including the Intellectual Property Assets, except in the ordinary
course of business consistent with past practice;
(d) issue, deliver, sell, pledge or otherwise encumber or subject to any
lien any shares of the Priveco Common Stock, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities;
(e) not:
26
(i) declare, set aside or pay any dividends on, or make any other
distributions in respect of the Priveco Common Stock, or
(ii) split, combine or reclassify any Priveco Common Stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Priveco Common Stock; or
(f) not materially increase benefits or compensation expenses of Priveco,
other than as contemplated by the terms of any employment agreement in
existence on the date of this Agreement, increase the cash
compensation of any director, executive officer or other key employee
or pay any benefit or amount not required by a plan or arrangement as
in effect on the date of this Agreement to any such person.
6.8 CERTAIN ACTS PROHIBITED - PUBCO
Except as expressly contemplated by this Agreement, between the date of this
Agreement and the Closing Date, Pubco will not, without the prior written
consent of Priveco:
(a) incur any liability or obligation or encumber or permit the
encumbrance of any properties or assets of Pubco except in the
ordinary course of business consistent with past practice;
(b) dispose of or contract to dispose of any Pubco property or assets
except in the ordinary course of business consistent with past
practice;
(c) declare, set aside or pay any dividends on, or make any other
distributions in respect of the Pubco Common Stock; or
(d) materially increase benefits or compensation expenses of Pubco,
increase the cash compensation of any director, executive officer or
other key employee or pay any benefit or amount to any such person.
6.9 PUBLIC ANNOUNCEMENTS
Pubco and Priveco each agree that they will not release or issue any reports or
statements or make any public announcements relating to this Agreement or the
Transaction contemplated herein without the prior written consent of the other
party, except as may be required by the disclosure obligation imposed on Pubco
or Priveco or their respective affiliates under rules or regulations of any
stock exchange or laws of any jurisdiction.
7. CLOSING
7.1 CLOSING
The Closing shall take place on the Closing Date at the offices of the lawyers
for Pubco or at such other location as agreed to by the parties. Notwithstanding
the location of the Closing, each party agrees that the Closing may be completed
by the exchange of undertakings between the respective legal counsel for Priveco
and Pubco, provided such undertakings are satisfactory to each party's
respective legal counsel.
27
7.2 CLOSING DELIVERIES OF PRIVECO AND THE SELLING SHAREHOLDERS
At Closing, Priveco and the Selling Shareholders will deliver or cause to be
delivered the following, fully executed and in the form and substance reasonably
satisfactory to Pubco:
(a) copies of all resolutions and/or consent actions adopted by or on
behalf of the board of directors of Priveco evidencing approval of
this Agreement and the Transaction;
(b) if any of the Selling Shareholders appoint any person, by power of
attorney or equivalent, to execute this Agreement or any other
agreement, document, instrument or certificate contemplated by this
agreement, on behalf of the Selling Shareholder, a valid and binding
power of attorney or equivalent from such Selling Shareholder;
(c) share certificates representing the Priveco Shares as required by
Section 0 of this Agreement, if such have been issued;
(d) confirmation of cancellation of the Priveco Warrants;
(e) certificates and other documents required by Sections 0 and 0 of this
Agreement; and
(f) the Priveco Documents, the Priveco Financial Statements and any other
necessary documents, each duly executed by Priveco, as required to
give effect to the Transaction.
7.3 CLOSING DELIVERIES OF PUBCO
At Closing, Pubco will deliver or cause to be delivered the following, fully
executed and in the form and substance reasonably satisfactory to Priveco:
(a) copies of all resolutions and/or consent actions adopted by or on
behalf of the board of directors of Pubco evidencing approval of this
Agreement and the Transaction;
(b) all certificates and other documents required by Section 0 of this
Agreement, including confirmation of the share cancellation required
pursuant to Section 5.2(g);
(c) deliver or cause to be delivered the share certificates representing
the Pubco Shares and warrant certificates to replace the Priveco
Warrants on identical terms; and
(d) the Pubco Documents and any other necessary documents, each duly
executed by Pubco, as required to give effect to the Transaction.
8. TERMINATION
8.1 TERMINATION
This Agreement may be terminated at any time prior to the Closing Date
contemplated hereby by:
(a) mutual agreement of Pubco and Priveco;
(b) Pubco, if there has been a material breach by Priveco or any of the
Selling Shareholders of any material representation, warranty,
covenant or agreement set forth in this Agreement on the part of
Priveco or the Selling Shareholders that is not cured, to the
reasonable satisfaction of Pubco, within ten business days after
28
notice of such breach is given by Pubco (except that no cure period
will be provided for a breach by Priveco or the Selling Shareholders
that by its nature cannot be cured);
(c) Priveco, if there has been a material breach by Pubco of any material
representation, warranty, covenant or agreement set forth in this
Agreement on the part of Pubco that is not cured by the breaching
party, to the reasonable satisfaction of Priveco, within ten business
days after notice of such breach is given by Priveco (except that no
cure period will be provided for a breach by Pubco that by its nature
cannot be cured);
(d) Pubco or Priveco, if the Transaction contemplated by this Agreement
has not been consummated prior to 45 days after the date hereof,
unless the parties hereto agree to extend such date in writing; or
(e) Pubco or Priveco if any permanent injunction or other order of a
governmental entity of competent authority preventing the consummation
of the Transaction contemplated by this Agreement has become final and
non-appealable.
8.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement as provided in Section 0, this
Agreement will be of no further force or effect, provided, however, that no
termination of this Agreement will relieve any party of liability for any
breaches of this Agreement that are based on a wrongful refusal or failure to
perform any obligations.
9. INDEMNIFICATION, REMEDIES, SURVIVAL
9.1 CERTAIN DEFINITIONS
For the purposes of this Article 0 the terms "LOSS" and "LOSSES" mean any and
all demands, claims, actions or causes of action, assessments, losses, damages,
Liabilities, costs, and expenses, including without limitation, interest,
penalties, fines and reasonable attorneys, accountants and other professional
fees and expenses, but excluding any indirect, consequential or punitive damages
suffered by Pubco or Priveco including damages for lost profits or lost business
opportunities.
9.2 AGREEMENT OF PRIVECO TO INDEMNIFY
Priveco will indemnify, defend, and hold harmless, to the full extent of the
law, Pubco and its shareholders from, against, and in respect of any and all
Losses asserted against, relating to, imposed upon, or incurred by Pubco and its
shareholders by reason of, resulting from, based upon or arising out of:
(a) the breach by Priveco of any representation or warranty of Priveco
contained in or made pursuant to this Agreement, any Priveco Document
or any certificate or other instrument delivered pursuant to this
Agreement; or
(b) the breach or partial breach by Priveco of any covenant or agreement
of Priveco made in or pursuant to this Agreement, any Priveco Document
or any certificate or other instrument delivered pursuant to this
Agreement.
29
9.3 AGREEMENT OF THE SELLING SHAREHOLDERS TO INDEMNIFY
The Selling Shareholders will indemnify, defend, and hold harmless, to the full
extent of the law, Pubco and its shareholders from, against, and in respect of
any and all Losses asserted against, relating to, imposed upon, or incurred by
Pubco and its shareholders by reason of, resulting from, based upon or arising
out of:
(a) any breach by the Selling Shareholders of Section 0 of this Agreement;
or
(b) any misstatement, misrepresentation or breach of the representations
and warranties made by the Selling Shareholders contained in or made
pursuant to the Questionnaires executed by each Selling Shareholder as
part of the share exchange procedure detailed in Section 0 of this
Agreement.
9.4 AGREEMENT OF PUBCO TO INDEMNIFY
Pubco will indemnify, defend, and hold harmless, to the full extent of the law,
Priveco and the Selling Shareholders from, against, for, and in respect of any
and all Losses asserted against, relating to, imposed upon, or incurred by
Priveco and the Selling Shareholders by reason of, resulting from, based upon or
arising out of:
(a) the breach by Pubco of any representation or warranty of Pubco
contained in or made pursuant to this Agreement, any Pubco Document or
any certificate or other instrument delivered pursuant to this
Agreement; or
(b) the breach or partial breach by Pubco of any covenant or agreement of
Pubco made in or pursuant to this Agreement, any Pubco Document or any
certificate or other instrument delivered pursuant to this Agreement.
10. MISCELLANEOUS PROVISIONS
10.1 EFFECTIVENESS OF REPRESENTATIONS; SURVIVAL
Each party is entitled to rely on the representations, warranties and agreements
of each of the other parties and all such representation, warranties and
agreement will be effective regardless of any investigation that any party has
undertaken or failed to undertake. Unless otherwise stated in this Agreement,
and except for instances of fraud, the representations, warranties and
agreements will survive the Closing Date and continue in full force and effect
until one (1) year after the Closing Date.
10.2 FURTHER ASSURANCES
Each of the parties hereto will co-operate with the others and execute and
deliver to the other parties hereto such other instruments and documents and
take such other actions as may be reasonably requested from time to time by any
other party hereto as necessary to carry out, evidence, and confirm the intended
purposes of this Agreement.
10.3 AMENDMENT
This Agreement may not be amended except by an instrument in writing signed by
each of the parties.
30
10.4 EXPENSES
Pubco will bear all costs incurred in connection with the preparation, execution
and performance of this Agreement and the Transaction contemplated hereby,
including all fees and expenses of agents, representatives and accountants;
provided that Pubco and Priveco will bear its respective legal costs incurred in
connection with the preparation, execution and performance of this Agreement and
the Transaction contemplated hereby.
10.5 ENTIRE AGREEMENT
This Agreement, the schedules attached hereto and the other documents in
connection with this transaction contain the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
arrangements and understandings, both written and oral, expressed or implied,
with respect thereto. Any preceding correspondence or offers are expressly
superseded and terminated by this Agreement.
10.6 NOTICES
All notices and other communications required or permitted under this Agreement
must be in writing and will be deemed given if sent by personal delivery, faxed
with electronic confirmation of delivery, internationally-recognized express
courier or registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as will be specified by like notice):
If to Priveco or any of the Selling Shareholders:
NEVADA LITHIUM CORPORATION
9443 Axlund Road,
Lynden, Washington 98264
Attention: John Hiner
Telephone: 360- 318- 8352
If to Pubco:
LITHIUM CORPORATION
9121 Atlanta Avenue,
#314 Huntington Beach, CA 98264
Attention: Tom Lewis
Telephone: 509-723-1268
Facsimile: 509-536-2067
With a copy (which will not constitute notice) to:
W.L. MACDONALD LAW CORPORATION Suite 1210 - 777 Hornby Street
Vancouver, British Columbia Canada V6Z 1S4
Attention: William L. Macdonald
Telephone: (604) 689-1022
Facsimile: (604) 681-4760
31
All such notices and other communications will be deemed to have been received:
(a) in the case of personal delivery, on the date of such delivery;
(b) in the case of a fax, when the party sending such fax has received
electronic confirmation of its delivery;
(c) in the case of delivery by internationally-recognized express courier,
on the business day following dispatch; and
(d) in the case of mailing, on the fifth business day following mailing.
10.7 HEADINGS
The headings contained in this Agreement are for convenience purposes only and
will not affect in any way the meaning or interpretation of this Agreement.
10.8 BENEFITS
This Agreement is and will only be construed as for the benefit of or
enforceable by those persons party to this Agreement.
10.9 ASSIGNMENT
This Agreement may not be assigned (except by operation of law) by any party
without the consent of the other parties.
10.10 GOVERNING LAW
This Agreement will be governed by and construed in accordance with the laws of
the State of Nevada applicable to contracts made and to be performed therein.
10.11 CONSTRUCTION
The language used in this Agreement will be deemed to be the language chosen by
the parties to express their mutual intent, and no rule of strict construction
will be applied against any party.
10.12 GENDER
All references to any party will be read with such changes in number and gender
as the context or reference requires.
10.13 BUSINESS DAYS
If the last or appointed day for the taking of any action required or the
expiration of any rights granted herein shall be a Saturday, Sunday or a legal
holiday in the State of Nevada, then such action may be taken or right may be
exercised on the next succeeding day which is not a Saturday, Sunday or such a
legal holiday.
10.14 COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which will be
considered one and the same agreement and will become effective when one or more
32
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
10.15 FAX EXECUTION
This Agreement may be executed by delivery of executed signature pages by fax
and such fax execution will be effective for all purposes.
10.16 SCHEDULES AND EXHIBITS
The schedules and exhibits are attached to this Agreement and incorporated
herein.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
LITHIUM CORPORATION
Per: /s/ Tom Lewis
----------------------------------
Authorized Signatory
Name: Tom Lewis
Title: President
NEVADA LITHIUM CORPORATION
Per: /s/ John Hiner
----------------------------------
Authorized Signatory
Name: John Hiner
Title: President
33
SCHEDULE 1
TO THE SHARE EXCHANGE AGREEMENT
AMONG UTALK COMMUNICATIONS INC., NEVADA LITHIUM CORPORATION AND THE
SELLING SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
THE SELLING SHAREHOLDERS
Number of Total Number of
Priveco Shares Pubco Shares
Held before to be issued by
Shareholder's Name Closing Pubco on Closing
- ------------------ ------- ----------------
John E. Hiner 10,000,000 10,000,000
Banque SCS Alliance S.A. 1,000,000 1,000,000
Banque SCS Alliance S.A. 1,000,000 1,000,000
Nevada Alaska Mining Co.
Robert Craig
Barbara Anne Craig
Elizabeth Dickman 350,000 350,000
TOTAL 12,350,000 12,350,000
34
SCHEDULE 1A
TO THE SHARE EXCHANGE AGREEMENT
AMONG UTALK COMMUNICATIONS INC., NEVADA LITHIUM CORPORATION AND THE
SELLING SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
ACKNOWLEDGED AND AGREED TO THIS _____ day of ______________, 2009, BY:
- ----------------------------------------------------
(Name of Subscriber - Please type or print)
- ----------------------------------------------------
(Signature and, if applicable, Office)
- ----------------------------------------------------
(Address of Subscriber)
- ----------------------------------------------------
(City, State or Province, Postal Code of Subscriber)
- ----------------------------------------------------
(Country of Subscriber)
- ----------------------------------------------------
(Telephone number of Subscriber)
- ----------------------------------------------------
(Social Security/Insurance No. of Subscriber)
SCHEDULE 2
TO THE SHARE EXCHANGE AGREEMENT
AMONG UTALK COMMUNICATIONS INC., NEVADA LITHIUM CORPORATION AND THE
SELLING SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
U.S. SECURITIES LAW QUESTIONNAIRE
The following questionnaire is to be completed by you (the "Subscriber") in
furtherance of a proposed investment in Utalk Communcations Inc. ("Utalk"), as
described in the Agreement attached hereto, dated October 9, 2009, pursuant to
which the Subscriber has agreed to acquire certain shares of common stock (the
"Securities") from Utalk. This questionnaire will be relied upon by Utalk to
complete the transactions contemplated in the Agreement.
1. If not a resident in the United States, the Subscriber covenants, represents
and warrants to Utalk that:
(a) the Subscriber is not acquiring the Securities for the account or
benefit of, directly or indirectly, any U.S. Person;
(b) the Subscriber is not a U.S. Person;
(c) the Subscriber is resident in the jurisdiction set out on the
signature page of this Agreement;
(d) the sale of the Securities to the Subscriber as contemplated in the
Letter Agreement complies with or is exempt from the applicable
securities legislation of the jurisdiction of residence of the
Subscriber;
(e) the Subscriber is acquiring the Securities for investment only and not
with a view to resale or distribution and, in particular, it has no
intention to distribute either directly or indirectly any of the Units
in the United States or to U.S. Persons;
(f) the Subscriber is outside the United States when receiving and
executing this Agreement and is acquiring the Securities as principal
for the Subscriber's own account, for investment purposes only, and
not with a view to, or for, resale, distribution or fractionalisation
thereof, in whole or in part, and no other person has a direct or
indirect beneficial interest in such SECURITIES; and
(g) the Subscriber is not an underwriter of, or dealer in, the common
shares of the Company, nor is the Purchaser participating, pursuant to
a contractual agreement or otherwise, in the distribution of the
SECURITIES.
2. If resident in the United States, the Subscriber covenants, represents and
warrants to Utalk that:
(a) the Subscriber is a U.S. Person;
(b) the Subscriber has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks
of the transactions detailed in the Subscription Agreement and it is
able to bear the economic risk of loss arising from such transactions;
(c) the Subscriber is acquiring the Securities for investment only and not
with a view to resale or distribution and, in particular, it has no
intention to distribute either directly or indirectly any of the
Securities in the United States or to U.S. Persons; provided, however,
that the Subscriber may sell or otherwise dispose of any of the
Securities pursuant to registration thereof pursuant to the SECURITIES
ACT OF 1933 (the "1933 Act") and any applicable State securities laws
unless an exemption from such registration requirements is available
or registration is not required pursuant to Regulation S under the
1933 Act or registration is otherwise not required under this 1933
Act;
(d) the Subscriber satisfies one or more of the categories indicated below
(please check the appropriate box):
[ ] Category 1 An organization described in Section 501(c)(3) of
the United States Internal Revenue Code, a
corporation, a Massachusetts or similar business
trust or partnership, not formed for the specific
purpose of acquiring the Securities, with total
assets in excess of US $5,000,000;
[ ] Category 2 A natural person whose individual net worth, or
joint net worth with that person's spouse, on the
date of purchase exceeds US $1,000,000;
[ ] Category 3 A natural person who had an individual income in
excess of US $200,000 in each of the two most
recent years or joint income with that person's
spouse in excess of US $300,000 in each of those
years and has a reasonable expectation of reaching
the same income level in the current year;
[ ] Category 4 A "bank" as defined under Section (3)(a)(2) of the
1933 Act or savings and loan association or other
institution as defined in Section 3(a)(5)(A) of
the 1933 Act acting in its individual or fiduciary
capacity; a broker dealer registered pursuant to
Section 15 of the SECURITIES EXCHANGE ACT OF 1934
(United States); an insurance company as defined
in Section 2(13) of the 1933 Act; an investment
company registered under the INVESTMENT COMPANY
ACT OF 1940 (United States) or a business
development company as defined in Section 2(a)(48)
of such Act; a Small Business Investment Company
licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the SMALL BUSINESS
INVESTMENT ACT OF 1958 (United States); a plan
with total assets in excess of $5,000,000
established and maintained by a state, a political
subdivision thereof, or an agency or
instrumentality of a state or a political
subdivision thereof, for the benefit of its
employees; an employee benefit plan within the
meaning of the EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974 (United States) whose investment
decisions are made by a plan fiduciary, as defined
in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance
company or registered investment adviser, or if
the employee benefit plan has total assets in
excess of $5,000,000, or, if a self-directed plan,
whose investment decisions are made solely by
persons that are accredited investors;
[ ] Category 5 A private business development company as defined
in Section 202(a)(22) of the INVESTMENT ADVISERS
ACT OF 1940 (United States);
[ ] Category 6 A director or executive officer of Utalk;
[ ] Category 7 A trust with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring
the Securities, whose purchase is directed by a
sophisticated person as described in Rule
506(b)(2)(ii) under the 1933 Act; or
[ ] Category 8 An entity in which all of the equity owners
satisfy the requirements of one or more of the
foregoing categories; and
(e) the Subscriber is not acquiring the Securities as a result of any form
of general solicitation or general advertising including
advertisements, articles, notices or other communications published in
any newspaper, magazine or similar media or broadcast over radio, or
television, or any seminar or meeting whose attendees have been
invited by general solicitation or general advertising.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of
the _____ day of __________________, 2009.
If a Corporation, Partnership
or Other Entity: If an Individual:
- -------------------------------------- --------------------------------------
Print or Type Name of Entity Signature
- -------------------------------------- --------------------------------------
Signature of Authorized Signatory Print or Type Name
- -------------------------------------- --------------------------------------
Type of Entity Social Security/Tax I.D. No.
SCHEDULE 2A
TO THE SHARE EXCHANGE AGREEMENT AMONG UTALK COMMUNICATIONS INC.,
NEVADA LITHIUM CORPORATION AND THE SELLING SHAREHOLDERS AS
SET OUT IN THE
SHARE EXCHANGE AGREEMENT
CERTIFICATE OF NON-U.S. SHAREHOLDER
OF
UTALK COMMUNICATIONS INC.
In connection with the issuance of common stock (the "Pubco Shares" and,
together with the Pubco Shares, the "Pubco Securities") of Utalk Communications
Inc., a Nevada corporation ("Pubco"), to the undersigned, pursuant to that
certain Share Exchange Agreement dated October 9, 2009 (the "Agreement"), among
Pubco, Nevada Lithium Corporation., a company incorporated pursuant to the laws
of the State of Nevada ("Priveco") and the shareholders of Priveco as set out in
the Agreement (each, a "Selling Shareholder"), the undersigned hereby agrees,
acknowledges, represents and warrants that:
1. the undersigned is not a "U.S. Person" as such term is defined by Rule 902
of Regulation S under the United States Securities Act of 1933, as amended
("U.S. Securities Act") (the definition of which includes, but is not
limited to, an individual resident in the U.S. and an estate or trust of
which any executor or administrator or trust, respectively is a U.S. Person
and any partnership or corporation organized or incorporated under the laws
of the U.S.);
2. none of the Pubco Securities have been or will be registered under the U.S.
Securities Act, or under any state securities or "blue sky" laws of any
state of the United States, and may not be offered or sold in the United
States or, directly or indirectly, to U.S. Persons, as that term is defined
in Regulation S, except in accordance with the provisions of Regulation S
or pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the U.S. Securities Act and in compliance with
any applicable state and foreign securities laws;
3. the undersigned understands and agrees that offers and sales of any of the
Pubco Securities prior to the expiration of a period of one year after the
date of original issuance of the Pubco Securities (the one year period
hereinafter referred to as the Distribution Compliance Period) shall only
be made in compliance with the safe harbor provisions set forth in
Regulation S, pursuant to the registration provisions of the U.S.
Securities Act or an exemption therefrom, and that all offers and sales
after the Distribution Compliance Period shall be made only in compliance
with the registration provisions of the U.S. Securities Act or an exemption
therefrom and in each case only in accordance with applicable state and
foreign securities laws;
4. the undersigned understands and agrees not to engage in any hedging
transactions involving any of the Pubco Securities unless such transactions
are in compliance with the provisions of the U.S. Securities Act and in
each case only in accordance with applicable state and provincial
securities laws;
5. the undersigned is acquiring the Pubco Securities for investment only and
not with a view to resale or distribution and, in particular, it has no
intention to distribute either directly or indirectly any of the Pubco
Securities in the United States or to U.S. Persons;
6. the undersigned has not acquired the Pubco Securities as a result of, and
will not itself engage in, any directed selling efforts (as defined in
Regulation S under the U.S. Securities Act) in the United States in respect
of the Pubco Securities which would include any activities undertaken for
the purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the resale of any of the
Pubco Securities; provided, however, that the undersigned may sell or
otherwise dispose of the Pubco Securities pursuant to registration thereof
under the U.S. Securities Act and any applicable state and provincial
securities laws or under an exemption from such registration requirements;
7. the statutory and regulatory basis for the exemption claimed for the sale
of the Pubco Securities, although in technical compliance with Regulation
S, would not be available if the offering is part of a plan or scheme to
evade the registration provisions of the U.S. Securities Act or any
applicable state and provincial securities laws;
8. the undersigned has not undertaken, and will have no obligation, to
register any of the Pubco Securities under the U.S. Securities Act;
9. Pubco is entitled to rely on the acknowledgements, agreements,
representations and warranties and the statements and answers of the
Selling Shareholders contained in the Agreement and those of the
undersigned contained in this Certificate, and the undersigned will hold
harmless Pubco from any loss or damage either one may suffer as a result of
any such acknowledgements, agreements, representations and/or warranties
made by the Selling Shareholders and/or the undersigned not being true and
correct;
10. the undersigned has been advised to consult their own respective legal, tax
and other advisors with respect to the merits and risks of an investment in
the Pubco Securities and, with respect to applicable resale restrictions,
is solely responsible (and Pubco is not in any way responsible) for
compliance with applicable resale restrictions;
11. none of the Pubco Securities are listed on any stock exchange or automated
dealer quotation system and no representation has been made to the
undersigned that any of the Pubco Securities will become listed on any
stock exchange or automated dealer quotation system, except that currently
certain market makers make market in the common shares of Pubco on the OTC
Bulletin Board;
12. the undersigned is outside the United States when receiving and executing
this Agreement and is acquiring the Pubco Securities as principal for their
own account, for investment purposes only, and not with a view to, or for,
resale, distribution or fractionalization thereof, in whole or in part, and
no other person has a direct or indirect beneficial interest in the Pubco
Securities;
13. neither the SEC nor any other securities commission or similar regulatory
authority has reviewed or passed on the merits of the Pubco Securities;
14. the Pubco Securities are not being acquired, directly or indirectly, for
the account or benefit of a U.S. Person or a person in the United States;
15. the undersigned acknowledges and agrees that Pubco shall refuse to register
any transfer of Pubco Securities not made in accordance with the provisions
of Regulation S, pursuant to registration under the U.S. Securities Act, or
pursuant to an available exemption from registration under the U.S.
Securities Act;
16. the undersigned understands and agrees that the Pubco Securities will bear
the following legend:
"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."
17. the address of the undersigned included herein is the sole address of the
undersigned as of the date of this certificate.
IN WITNESS WHEREOF, I have executed this Certificate of Non-U.S. Shareholder.
Date:__________________________________________, 2009
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Signature
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Print Name
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Title (if applicable)
- --------------------------------------
Address
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SCHEDULE 3
TO THE SHARE EXCHANGE AGREEMENT
AMONG UTALK COMMUNICATIONS INC., NEVADA LITHIUM CORPORATION AND THE
SELLING SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
DIRECTORS AND OFFICERS OF PRIVECO
DIRECTORS:
John Hiner
OFFICERS:
John Hiner
SCHEDULE 4
TO THE SHARE EXCHANGE AGREEMENT
AMONG UTALK COMMUNICATIONS INC., NEVADA LITHIUM CORPORATION AND THE
SELLING SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
DIRECTORS AND OFFICERS OF PUBCO
DIRECTORS:
Mazen Hleiss
Tom Lewis
OFFICERS:
Tom Lewis
SCHEDULE 5
TO THE SHARE EXCHANGE AGREEMENT
AMONG UTALK COMMUNICATIONS INC., NEVADA LITHIUM CORPORATION AND THE
SELLING SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
PRIVECO LEASES, SUBLEASES, CLAIMS, CAPITAL EXPENDITURES,
TAXES AND OTHER PROPERTY INTERESTS
None (see schedule 7)
SCHEDULE 6
TO THE SHARE EXCHANGE AGREEMENT
AMONG UTALK COMMUNICATIONS INC., NEVADA LITHIUM CORPORATION AND THE
SELLING SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
PRIVECO INTELLECTUAL PROPERTY
None
SCHEDULE 7
TO THE SHARE EXCHANGE AGREEMENT
AMONG UTALK COMMUNICATIONS INC., NEVADA LITHIUM CORPORATION AND THE
SELLING SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
PRIVECO MATERIAL CONTRACTS
Document Name Date Parties Subject Matter / Related Document
------------- ---- ------- ---------------------------------
1. Lease Purchase Agreement June 1, 2009 Nevada Lithium Acquisition of lease interest in
Corporation (formerly certain mining claims in Esmeralda
Lithium Corporation) and County, Nevada
certain sellers
2. Letter of Intent March 16, 2009 Nevada Lithium Acquisition of lease interest in
Corporation (formerly certain mining claims in Nevada
Lithium Corporation) and
Cerro Rico Ventures LLC
SCHEDULE 8
TO THE SHARE EXCHANGE AGREEMENT
AMONG UTALK COMMUNICATIONS INC., NEVADA LITHIUM CORPORATION AND THE
SELLING SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
PRIVECO EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
None