================================================================================
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 18, 2005
HYBRID TECHNOLOGIES, INC.
----------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Nevada 000-33391 88-0490890
- --------------------- ----------------------- -------------------------
(State or Other Jurisdiction (Commission ( I.R.S. Employer
of Incorporation) File Number) Identification No.)
5001 East Bonanza Road, Suite 138-145, Las Vegas, Nevada 89110
- -----------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (818) 780-2403
- -----------------------------------------------------------------------
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
{ } Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
{ } Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a -12)
{ } Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d -2(b))
{ } Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e -4(c))
- -----------------------------------------------------------------------
Item 1.01. Entry into a Material Definitive Agreement.
On August 18, 2005, Hybrid Technologies, Inc. (the "Company", "we", or
"us"), and our wholly-owned subsidiary Whistlertel, Inc. ("Whistlertel"), a
Nevada corporation, entered into an Agreement and Plan of Reorganization (the
"Agreement"), with Javakingcoffee, Inc., a Nevada corporation ("Javaking"),
pursuant to which, on August 19, 2005, we sold all of the outstanding shares of
Whistlertel to Javaking, in exchange for the issuance of 80,000,000 shares of
Javaking's common stock, or 69.56% of Javaking's outstanding common stock
following such issuance.
FOR THE FULL TERMS OF THE AGREEMENT AND PLAN OF REORGANIZATION, PLEASE REFER TO
THE COPY OF THE AGREEMENT FILED AS AN EXHIBIT WITH THIS REPORT.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On August 19, 2005, we completed the sale of Whistlertel, formerly our
wholly-owned subsidiary, to Javaking in exchange for the issuance of 80,000,000
shares of Javaking common stock, pursuant to the Agreement as described above.
On December 3, 2004, we had acquired, through our wholly-owned
subsidiary, Whistlertel, formed on November 24, 2004, all of the assets of Trade
Winds Telecom, LLC, Fort Lauderdale, Florida, for a purchase price of $100,000.
$20,000 of the purchase price was paid at closing on December 3, 2004, and the
$80,000 balance of the purchase price is represented by a one-year note. In the
sale of Whistlertel to Javaking, we have retained liability for the note. The
stated objective of Whistlertel through its acquisition of the assets of Trade
Winds Telecom LLC was to develop a superior multilevel platform that provides
highly reliable and advanced telecommunications services. WhistlerTel planned to
focus its efforts in many parts of the globe including developing countries
where most areas are equipped with simple cable broadband internet services
only, not telephone connections. The VoIP system is developed to work via the
internet thus allowing those destinations to have access to a highly advanced
telephone system. The immediate focus was planned to be Mexico, Guatemala,
Honduras, Peru, Argentina, and mainland China. WhistlerTel currently services
customers in North America, Central America, Latin America and Europe.
The audited financial statements of Trade Winds Telecom, LLC from
inception through December 2, 2004, are attached as Exhibit C to the Agreement
which is filed as an Exhibit to this report.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
10.17 Agreement and Plan of Reorganization, dated as of August 18, 2005, among
the Company, Whistlertel, Inc. and Javakingcoffee, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HYBRID TECHNOLOGIES, INC.
Dated: August 23, 2005 By: /s/ Holly Roseberry
--------------------------------------
Holly Roseberry, Chief Executive Officer
================================================================================
EXHIBIT 10.17
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of August 18, 2005 (this
"Agreement") among JAVAKINGCOFFEE, INC., a Nevada corporation ("JVKG"),
WHISTLERTEL, INC., a Nevada corporation (the "Company"), and the sole
stockholder of the Company, Hybrid Technologies, Inc., a Nevada corporation (the
"Stockholder").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this Agreement, the
Stockholder will exchange 75,000 shares of common stock of the Company,
constituting 100% of the issued and outstanding shares of the Company's common
stock, for 80,000,000 shares of JVKG's common stock, par value $.001 per share
to be issued (the "Exchange"), and JVKG will thus acquire 100% of the issued and
outstanding securities of the Company, making JVKG the sole stockholder of the
Company; .
WHEREAS, for federal income tax purposes, the Exchange is intended to qualify as
a reorganization under the provisions of section 368(a)(1)(B) of the United
States Internal Revenue Code of 1986, as amended (the "Code"); and.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, JVKG, the
Company and Stockholder hereby agree as follows:.
ARTICLE I: THE EXCHANGE.
SECTION 1.01. The Exchange. Upon the terms and subject to the conditions set
forth in Article VII, at the Effective Time (as defined below in Section 1.02),
as a result of the Exchange, JVKG will become the sole shareholder of the
Company.
SECTION 1.02. Effective Time; Closing. As promptly as practicable and in no
event later than the fifth business day following the satisfaction or, if
permissible, waiver of the conditions set forth in Article VII (or such other
date as may be agreed in writing by each of the parties hereto), the parties
hereto shall cause the Exchange to be consummated by Stockholder delivering to
JVKG, or its representatives, the certificates representing 100% of the
outstanding Company Securities (as defined below in Section 2.01 (c)), duly
endorsed (or with duly executed stock powers) so as to make JVKG the sole owner
thereof free and clear of all claims and encumbrances except as specifically
assumed by JVKG. The term "Effective Time" means the date and time of the
Closing (or such later time as may be agreed in writing by each of the parties
hereto) to be held at the offices of JVKG, Richmond, British Columbia, Canada
(or such other place as the parties may agree).
SECTION 1.03. Effect of the Exchange. At the Effective Time, the effect of the
Exchange shall be that JVKG will become the 100% controlling shareholder of the
Company.
ARTICLE II: DELIVERY OF SECURITIES; EXCHANGE OF CERTIFICATES.
SECTION 2.01. Delivery of Securities. At the Effective Time, by virtue of the
Exchange: 80,000,000 shares of common stock, at $0.001 par value , of JVKG (the
"JVKG Common Stock") shall be issued in exchange for 75,000 (100%) of all
outstanding shares of capital stock of the Company (the "Shares" or "Company
Securities") issued and outstanding immediately prior to the Effective Time.
Each share of Company Securities shall be converted, subject to Section 2.02(e),
into the right to receive a ratable portion of 1,066,667 shares (the "Exchange
Ratio") of JVKG Common Stock; provided, however, that, if between the date of
this Agreement and the Effective Time the outstanding shares of JVKG Common
Stock shall have been changed into a different number of shares or a different
class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Exchange Ratio
shall be correspondingly adjusted to the extent appropriate to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares (all such shares of JVKG Common Stock being
herein referred to as the "JVKG Securities" or the "Exchange Consideration");
and each Share held in the treasury of the Company immediately prior to the
Effective Time shall be cancelled and extinguished without any conversion
thereof and no payment or distribution shall be made with respect thereto.
Section 2.02. Exchange of Certificates.
(a) At the Closing, the Stockholder shall deliver to JVKG all
certificates representing Company Securities (the "Certificates")
delivered to it (together with any stock transfer tax stamps required
by reason of the payment of the Exchange Consideration to a person
other than the registered holder of the Certificate surrendered),
together with such other customary documents as may reasonably be
required by JVKG, in exchange for the Exchange Consideration. The
certificate representing the Exchange Consideration shall be issued to
the Stockholder.
(b) All shares of JVKG Common Stock issued upon conversion of the
Company Securities in accordance with the terms hereof shall be deemed
to have been issued in full satisfaction of all rights pertaining to
such Company Securities.
SECTION 2.03. Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration
of transfers of Shares thereafter on the records of the Company.
From and after the Effective Time, the holders of Certificates representing
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares, except as otherwise provided in this
Agreement or by Law.
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in this Agreement and disclosed in Exhibit A, the Company
and the Stockholder hereby jointly and severally represent and warrant to JVKG
that:.
SECTION 3.01. Organization and Qualification; Subsidiaries. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nevada and has all requisite corporate power to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such corporate power, have not had, and could not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect (as defined below). The Company has no subsidiaries. The Company
is duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that have not had, and could not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The
term "Company Material Adverse Effect" means any change in or effect on the
business of the Company that is materially adverse to the financial condition or
results of operations of the Company, except for any such changes or effects
resulting from or arising in connection with (i) this Agreement or the
transactions contemplated by this Agreement or the announcement hereof, (ii) any
changes in economic, regulatory or political conditions or (iii) any issue or
condition otherwise known to JVKG prior to the date of this Agreement.
SECTION 3.02. Certificate of Incorporation and By-Laws. The Company has
heretofore made available to JVKG a complete and correct copy of the Certificate
of Incorporation and the By-Laws of the Company. Such Certificate of
Incorporation and By-Laws are in full force and effect. The Company is not in
violation of any of the provisions of its Certificate of Incorporation or
By-Laws.
SECTION 3.03. Capitalization. Except as indicated on Exhibit A, (i) all Company
Securities will be issued and outstanding and will be validly issued, fully paid
and non-assessable and (ii) there are no outstanding options or warrants to
purchase Company Securities no shares are reserved for future issuance pursuant
to any such options or warrants. All shares of Company Securities subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of Company Securities. There are no material outstanding
contractual obligations of the Company to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other person.
SECTION 3.04. Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the Exchange and the
other transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
Exchange and the other transactions contemplated by this Agreement have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the Exchange and the other transactions contemplated
by this Agreement. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by JVKG, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) Except as described on Exhibit A, the execution and delivery of this
Agreement by the Company does not, and the performance of this Agreement by
the Company will not, (i) conflict with or violate the Certificate of
Incorporation or By-laws of the Company, (ii) assuming that all consents,
approvals, authorizations and other actions described in Section 3.05(b)
have been obtained and all filings and obligations described in Section
3.05(b) have been made, to the best knowledge of the Company after inquiry,
conflict with or violate any foreign or domestic law, statute, ordinance,
rule, regulation, order, judgment or decree ("Law") applicable to the
Company or by which any property or asset of the Company is bound or
affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration
or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except, with respect to clause
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences that have not had, and could not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect,
and that could not reasonably be expected to prevent or materially delay
the consummation of the transactions contemplated by this Agreement.
(b) Except as described on Exhibit A, the execution and delivery of this
Agreement by the Company does not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any domestic or foreign
governmental or regulatory authority ("Governmental Entity"), except (i)
for applicable requirements, if any, of state securities or "blue sky" laws
("Blue Sky Laws"), state takeover laws, the filing and recordation of
appropriate Exchange documents as required under the laws of its
jurisdiction of organization and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, has not had, and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and
could not reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
SECTION 3.06. Absence of Certain Changes or Events. Since the date of its
organization, except as contemplated by or as disclosed in this Agreement, the
Company has conducted its business only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been (a) any
material change by the Company in its accounting methods, principles or
practices, (b) any declaration, setting aside or payment of any dividend or
distribution in respect of the Common Stock or any redemption, purchase or other
acquisition of any of the Company's securities or (c) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any executive officers of the Company, except in the ordinary course
of business.
SECTION 3.07. Absence of Litigation. Except as set forth on Exhibit A, as of the
date of this Agreement, there is no litigation, suit, claim, action, proceeding
or investigation pending or, to the knowledge of the Company, threatened against
the Company, or any property or asset of the Company, before any court,
arbitrator or governmental entity, domestic or foreign, which (i) has had, or
could reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the Company or (ii) seeks to delay or prevent the
consummation of any other material transaction contemplated by this Agreement.
As of the date of this Agreement, neither the Company nor any property or asset
of the Company is subject to any continuing order of, consent decree, settlement
agreement or other similar written agreement with, or, to the knowledge of the
Company, continuing investigation by, any governmental entity, or any order,
writ, judgment, injunction, decree, determination or award of any governmental
entity or arbitrator having, individually or in the aggregate, a material
adverse effect on the Company.
SECTION 3.08. Employee Benefit Plans; Labor Matters. The Company does not, and
has never in the past, maintained or contributed to any employee benefit plan,
program, arrangement and contract (including, without limitation, any "employee
benefit plan", as defined in section 3(3) of ERISA).
SECTION 3.09. Contracts.
(a) The Company has furnished to JVKG the following written contracts and
agreements of the Company (such contracts and agreements being "Material
Contracts"): (i) each contract and agreement for the purchase or lease of
personal property with any supplier or for the furnishing of services to
the Company that in each case involves annual payment in excess of
US$5,000; (ii) all broker, exclusive dealing or exclusivity, distributor,
dealer, manufacturer's representative, franchise, agency, sales promotion
and market research agreements involving annual payments in excess of
US$5,000, to which the Company is a party or any other material contract
that compensates any person other than employees based on any sales by the
Company; (iii) all leases and subleases of real property; (iv) all
contracts and agreements relating to indebtedness for borrowed money other
than trade indebtedness of the Company; (v) all contracts and agreements
involving annual payments in excess of $1,000 with any Governmental Entity
to which the Company is a party; and (vi) any other material agreement of
the Company which is terminable upon or prohibits a change of ownership or
control of the Company.
(b) Each Material Contract: (i) is valid and binding on the Company and, to the
knowledge of the Company, on the other parties thereto, and is in full
force and effect, and (ii) upon consummation of the transactions
contemplated by this Agreement, shall continue in full force and effect
without material penalty or other material adverse consequence. The Company
is not in material breach of, or material default under, any Material
Contract and, to the knowledge of the Company, no other party to any
Material Contract is in material breach thereof or material default
thereunder.
SECTION 3.10. Taxes. Except as for such matters that could not reasonably be
expected to have a Company Material Adverse Effect,
(a) the Company has timely filed or will timely file all returns and
reports required to be filed by it with any taxing authority with
respect to Taxes for any period ending on or before the Effective Time,
taking into account any extension of time to file granted to or
obtained on behalf of the Company,
(b) all Taxes shown to be payable on such returns or reports that are due
prior to the Effective Time have been paid or will be paid,
(c) as of the date of this Agreement, no deficiency for any material amount
of Tax has been asserted or assessed by a taxing authority against the
Company, and
(d) the Company has provided adequate reserves in its financial
statements for any Taxes that have not been paid in accordance with
generally accepted accounting principles, whether or not shown as being
due on any returns.
As used in this Agreement, "Taxes" shall mean any and all taxes, fees, levies,
duties, tariffs, imposts and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added or gains taxes;
license, registration and documentation fees; and customers' duties, tariffs and
similar charges.
SECTION 3.11. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Exchange
or the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
SECTION 3.12. Financial Statements. The audited financial statements of the
Company from inception (December 8, 2003) through December 2, 2004 (attached
hereto as Exhibit C) and the unaudited financial statements of the Company as of
January 31, 2005 (included in the Stockholder's Current Report on Form 8-K/A,
filed with the Securities and Exchange Commission on May 20, 2005 (together, the
"Financials Statements"), are true and correct in all material respects and have
been prepared in accordance with United States generally accepted accounting
principles consistently applied. Since the date of the last of the Financial
Statements there have been no expenditures or purchases except in the ordinary
course of business; and there have been no claims made against the Company, its
principals or its assets.
SECTION 3.13. Business. The Company owns and operates a voice-over internet
service provider business (the "Business") and has title free and clear of all
liens, charges and liabilities to all assets used in the Business and has no
liabilities other than those stated in the Financial Statements and those
incurred in the ordinary course of business since the date of the last of the
Financial Statements.
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF JVKG
Except as set forth in this Agreement and disclosed in Exhibit B, JVKG hereby
represents and warrants to the Company that:
SECTION 4.01. Organization and Qualification; Subsidiaries. JVKG is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nevada and has all corporate requisite power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such corporate power, authority and governmental approvals have not had, and
could not reasonably be expected to have, individually or in the aggregate, a
JVKG Material Adverse Effect (as defined below). JVKG has no subsidiaries. JVKG
is duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that have not had, and could not reasonably be expected to
have, individually or in the aggregate, a JVKG Material Adverse Effect. The term
"JVKG Material Adverse Effect" means any change in or effect on the business of
JVKG that is materially adverse to the financial condition or results of
operations of JVKG, except for any such changes or effects resulting from or in
connection with (i) this Agreement or the transactions contemplated by this
Agreement or the announcement hereof, (ii) any changes in economic, regulatory
or political conditions or (iii) any issue or condition otherwise known to the
Company prior to the date of this Agreement.
SECTION 4.02. Certificate of Incorporation and By-Laws. JVKG has heretofore made
available to the Company a complete and correct copy of the Certificate of
Incorporation and the By-Laws of JVKG.
Such Certificate of Incorporation and By-Laws are in full force and
effect.
JVKG is not violation of any of the provisions of its Certificate of
Incorporation or By-Laws.
SECTION 4.03. Capitalization. The authorized capital stock of JVKG consists of
(a) 250,000,000 shares of JVKG Common Stock, at par value $0.001, and (b) no
shares of preferred stock. As of the date of this Agreement, (i) 35,000,000
shares of the JVKG Common Stock are issued and outstanding, all of which are
validly issued, fully paid and non-assessable, (ii) no shares of JVKG Common
Stock are held in the treasury of JVKG or by JVKG Subsidiaries and (iii) no
shares are reserved for future issuance pursuant to stock options. There are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of JVKG or
obligating JVKG to issue or sell any shares of capital stock of, or other equity
interests in, JVKG. All shares of JVKG Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable.
The shares of JVKG Common Stock to be issued pursuant to the Exchange in
accordance with Section 2.01 (i) will be duly authorized, validly issued, fully
paid and non-assessable and not subject to preemptive rights created by statute,
the JVKG' Certificate of Incorporation or By-Laws or any agreement to which the
JVKG is a party or is bound and (ii) will, when issued, be exempt from
registration under the Securities Act of 1933, as amended (together with the
rules and regulations promulgated thereunder, the "Securities Act") and the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act") and exempt from
registration under applicable Blue Sky Laws provided that the representations of
the Stockholder as set out in this Agreement are accurate. The shares of JVKG
Common Stock to be issued pursuant to the Exchange in accordance with Section
2.01 will bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for such
JVKG Securities): "The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The Securities may not
be sold, transferred or assigned in the absence of an effective registration
statement for the Securities under said Act, or an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable
transactions, that registration is not required under said Act."
SECTION 4.04. Authority Relative to This Agreement. JVKG has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the Exchange and the other
transactions contemplated by this Agreement, subject to the rules promulgated
under the Exchange Act. The execution and delivery of this Agreement by JVKG and
the consummation by JVKG of the Exchange and the other transactions contemplated
by this Agreement have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of JVKG are
necessary to authorize this Agreement or to consummate the Exchange and the
other transactions contemplated by this Agreement. This Agreement has been duly
and validly executed and delivered by JVKG and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of JVKG, enforceable against JVKG in accordance with its terms.
SECTION 4.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by JVKG does not, and the
performance of this Agreement by JVKG will not,
(i) conflict with or violate the Certificate of Incorporation or By-laws
of JVKG,
(ii) assuming that all consents, approvals, authorizations and other
actions described in Section 4.05(b) have been obtained and all
filings and obligations described in Section 4.05(b) have been made,
conflict with or violate any Law applicable to JVKG or by which any
property or asset of JVKG is bound or affected, or
(iii) result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or
give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of JVKG pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation, except, with
respect to clause (iii), for any such conflicts, violations, breaches,
defaults, or other occurrences that have not had, and could not
reasonably be expected to have, individually or in the aggregate, a
JVKG Material Adverse Effect, and that could not reasonably be
expected to prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement by JVKG does not, and the
performance of this Agreement by JVKG will not, require any consent,
approval, authorization or permit of, or filing with or notification to,
any Governmental Entity, except (i) for applicable requirements, if any, of
the Exchange Act, Blue Sky Laws, the Securities Act, the OTC, state
takeover laws, the filing and recordation of appropriate Exchange documents
as required under the laws of its jurisdiction of organization and (ii)
where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, has not had, and could
not reasonably be expected to have, individually or in the aggregate, a
JVKG Material Adverse Effect, and could not reasonably be expected to
prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
SECTION 4.06. Absence of Certain Changes or Events. Except as contemplated by or
as disclosed in this Agreement, JVKG has conducted its business only in the
ordinary course and in a manner consistent with past practice and, since such
date, there has not been
(a) any JVKG Material Adverse Effect,
(b) any material change by JVKG in its accounting methods, principles or
practices,
(c) any declaration, setting aside or payment of any dividend or distribution
in respect of the Shares or any redemption, purchase or other acquisition
of any of JVKG' securities or
(d) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of
JVKG, except in the ordinary course of business consistent with past
practice.
SECTION 4.07. Absence of Litigation. As of the date of this Agreement, there is
no litigation, suit, claim, action, proceeding or investigation pending or, to
the knowledge of JVKG, threatened against JVKG, or any property or asset of
JVKG, before any court, arbitrator or Governmental Entity, domestic or foreign,
which (i) has had, or could reasonably be expected to have, individually or in
the aggregate, a JVKG Material Adverse Effect or (ii) seeks to delay or prevent
the consummation of the Exchange or any other material transaction contemplated
by this Agreement.
As of the date of this Agreement, neither JVKG nor any property or asset of JVKG
is subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the knowledge of JVKG, continuing
investigation by, any Governmental Entity, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Entity or
arbitrator having, individually or in the aggregate, a JVKG Material Adverse
Effect.
SECTION 4.08. Employee Benefit Plans. JVKG does not, and has never in the past,
maintained or contributed to any employee benefit plan, program, arrangement and
contract (including, without limitation, any "employee benefit plan", as defined
in section 3(3) of ERISA).
SECTION 4.09. Contracts.
(a) JVKG has furnished the Company each of the following written contracts and
agreements of JVKG (such contracts and agreements being "Material
Contracts"): (i) each contract and agreement for the purchase or lease of
personal property with any supplier or for the furnishing of services to
JVKG; (ii) all broker, exclusive dealing or exclusivity, distributor,
dealer, manufacturer's representative, franchise, agency, sales promotion
and market research agreements, to which JVKG is a party or any other
material contract that compensates any person other than employees based on
any sales by JVKG; (iii) all leases and subleases of real property; (iv)
all contracts and agreements relating to indebtedness for borrowed money
other than trade indebtedness of JVKG; (v) all contracts and agreements
involving annual payments in excess of $10,000 with any Governmental Entity
to which JVKG is a party; and (iv) any other material agreement of JVKG
which is terminable upon or prohibits a change of ownership or control of
JVKG.
(b) Each Material Contract: (i) is valid and binding on JVKG and, to the
knowledge of JVKG, on the other parties thereto, and is in full force and
effect, and (ii) upon consummation of the transactions contemplated by this
Agreement, shall continue in full force and effect without material penalty
or other material adverse consequence. JVKG is not in material breach of,
or material default under, any Material Contract and, to the knowledge of
JVKG, no other party to any Material Contract is in material breach thereof
or material default thereunder.
SECTION 4.10. Taxes. Except for such matters that would not have a JVKG Material
Adverse Effect, (a) JVKG has timely filed or will timely file all returns and
reports required to be filed by it with any taxing authority with respect to
Taxes for any period ending on or before the Effective Time, taking into account
any extension of time to file granted to or obtained on behalf of JVKG, (b) all
Taxes shown to be payable on such returns or reports that are due prior to the
Effective Time have been paid or will be paid, (c) as of the date of this
Agreement, no deficiency for any material amount of Tax has been asserted or
assessed by a taxing authority against JVKG and (d) JVKG has provided adequate
reserves in its financial statements for any Taxes that have not been paid in
accordance with generally accepted accounting principles, whether or not shown
as being due on any returns.
SECTION 4.11. Accounting and Tax Matters. To the knowledge of JVKG Resources,
neither JVKG nor any of its affiliates has taken or agreed to take any action
that would prevent the Exchange from constituting a transaction qualifying under
Section 368(a) of the Code. JVKG is not aware of any agreement, plan or other
circumstance that would prevent the Exchange from qualifying under Section
368(a) of the Code.
SECTION 4.12. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Exchange
or the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of JVKG.
ARTICLE V: CONDUCT OF BUSINESSES PENDING THE EXCHANGE
SECTION 5.01. Conduct of Business by the Company Pending the Exchange. The
Company agrees that, between the date of this Agreement and the Effective Time,
except as contemplated by any other provision of this Agreement, unless JVKG
shall otherwise consent in writing:
(a) the businesses of the Company shall be conducted only in, and the Company
shall not take any action except in, the ordinary course of business and in
a manner consistent with past practice; and
(b) the Company shall use its reasonable best efforts to preserve substantially
intact its business organization, to keep available the services of the
current officers, employees and consultants of the Company and to preserve
the current relationships of the Company with customers, suppliers and
other persons with which the Company has significant business relations.
By way of amplification and not limitation, except as contemplated by this
Agreement, the Company shall not, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or propose to do, any of the
following without the prior written consent of JVKG:
(a) amend or otherwise change its Certificate of Incorporation or By-Laws or
equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
such capital stock, or any other ownership interest (including, without
limitation, any phantom interest), of the Company or (ii) any material
assets of the Company;
(c) declare, set aside, make or pay any dividend or other distribution, payable
in cash, stock, property or otherwise, with respect to any of its capital
stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by Exchange, consolidation, or
acquisition of stock or assets) any interest in any corporation,
partnership, other business organization or any division thereof or any
assets, other than acquisitions of assets in the ordinary course of
business consistent with past practice; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans or advances, except for
indebtedness incurred in the ordinary course of business and consistent
with past practice; (iii) enter into any contract or agreement material to
the business, results of operations or financial condition of the Company;
or (iv) enter into or amend any contract, agreement, commitment or
arrangement that, if fully performed, would not be permitted under this
Section 5.01(e);
(f) increase the compensation payable or to become payable to its employees, or
enter into any employment or severance agreement with, any director or
employee of the Company, or establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director or employee; or
(g) take any action, other than reasonable and usual actions in the ordinary
course of business and consistent with past practice, with respect to
accounting policies or procedures.
SECTION 5.02. Conduct of Business by JVKG Pending the Exchange. JVKG agrees
that, between the date of this Agreement and the change in a majority of the
directors of JVKG to nominees of the Company, except as contemplated by any
other provision of this Agreement, unless the Company shall otherwise consent in
writing:
(a) the business of the JVKG shall be conducted only in, and JVKG shall not
take any action except in the ordinary course of business and in a manner
consistent with past practice; and
(b) JVKG shall use its reasonable best efforts to preserve substantially intact
its business organization, to keep available the services of the current
officers, employees and consultants of JVKG and to preserve the current
relationships of JVKG with customers, suppliers and other persons with
which JVKG has significant business relations.
By way of amplification and not limitation, except as contemplated by this
Agreement, JVKG shall not, between the date of this Agreement and the Effective
Time, directly or indirectly, do, or propose to do, any of the following without
the prior written consent of the Company:
(a) amend or otherwise change its Certificate of Incorporation or By-Laws or
equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
such capital stock, or any other ownership interest (including, without
limitation, any phantom interest), of JVKG, or (ii) any material assets of
JVKG;
(c) declare, set aside, make or pay any dividend or other distribution, payable
in cash, stock, property or otherwise, with respect to any of its capital
stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by Exchange, consolidation, or
acquisition of stock or assets) any interest in any corporation,
partnership, other business organization or any division thereof or any
assets, other than acquisitions of assets in the ordinary course of
business consistent with past practice; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans or advances, except for
indebtedness incurred in the ordinary course of business and consistent
with past practice; (iii) enter into any contract or agreement material to
the business, results of operations or financial condition of JVKG; or (iv)
enter into or amend any contract, agreement, commitment or arrangement
that, if fully performed, would not be permitted under this Section
5.02(e);
(f) increase the compensation payable or to become payable to its officers or
employees, or grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or other
employee of JVKG, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee; or
(g) take any action, other than reasonable and usual actions in the ordinary
course of business and consistent with past practice, with respect to
accounting policies or procedures.
ARTICLE VI: ADDITIONAL AGREEMENTS
SECTION 6.01. Filing of Form 8-K. Not later than four business days after the
execution of this Agreement, JVKG will procure the prompt preparation and file
with the Securities and Exchange Commission appropriate notice describing this
Agreement on Form 8-K, and otherwise comply with the provisions of the Exchange
Act.
SECTION 6.02. Filing of Amended Form 8-K. Not later than seventy-five days after
the Effective Time (provided the Form 8-K referred to in Section 6.01 is filed
on or before August 19, 2005, and if after that date, then not later than four
business days after the Effective Date), new management of JVKG will procure the
prompt preparation and file with the Securities and Exchange Commission
appropriate report describing this transaction on Form 8-K and including
required financial statements, and otherwise comply with the provisions of the
Exchange Act.
SECTION 6.03. Access to Information; Confidentiality. Except as required
pursuant to any confidentiality agreement or similar agreement or arrangement to
which JVKG or the Company is a party or pursuant to applicable Law, from the
date of this Agreement to the Effective Time, JVKG and the Company shall: (i)
provide to the other (and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives, collectively,
"Representatives") access at reasonable times upon prior notice to the officers,
employees, agents, properties, offices and other facilities of the other and to
the books and records thereof and (ii) furnish promptly such information
concerning the business, properties, contracts, assets, liabilities, personnel
and other aspects of the other party as the other party or its Representatives
may reasonably request.
SECTION 6.04. Obligations of JVKG. JVKG shall take all action necessary to cause
the JVKG to perform its obligations under this Agreement and to consummate the
Exchange on the terms and subject to the conditions set forth in this Agreement.
SECTION 6.05. Obligations of the Company. The Company shall take all action
necessary to cause the Company to perform its obligations under this Agreement
and to consummate the Exchange on the terms and subject to the conditions set
forth in this Agreement.
SECTION 6.06. Further Action; Consents; Filings. Upon the terms and subject to
the conditions hereof, each of the parties hereto shall use its reasonable best
efforts to (i) take, or cause to be taken, all appropriate action and do, or
cause to be done, all things necessary, proper or advisable under applicable law
or otherwise to consummate and make effective the Exchange and the other
transactions contemplated by this Agreement, (ii) obtain from Governmental
Entities any consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by JVKG or the Company in connection with
the authorization, execution and delivery of this Agreement and the consummation
of the Exchange and the other transactions contemplated by this Agreement and
(iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement, the Exchange and the other
transactions contemplated by this Agreement required under (A) the Exchange Act
and the Securities Act and the rules and regulations thereunder and any other
applicable federal or state securities laws and (B) any other applicable Law.
The parties hereto shall cooperate with each other in connection with the making
of all such filings, including by providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, by
accepting all reasonable additions, deletions or changes suggested in connection
therewith.
SECTION 6.07. Plan of Exchange. This Agreement is intended to constitute a "plan
of reorganization" within the meaning of section 1.368-2(g) of the income tax
regulations promulgated under the Code. From and after the date of this
Agreement and until the Effective Time, each party hereto shall use its
reasonable best efforts to cause the Exchange to qualify, and will not knowingly
take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken which action or failure to act could prevent the
Exchange from qualifying, as a reorganization under the provisions of section
368(a) of the Code. Following the Effective Time, neither JVKG nor any of its
affiliates shall knowingly take any action, cause any action to be taken, fail
to take any action or cause any action to fail to be taken, which action or
failure to act could cause the Exchange to fail to qualify as a reorganization
under section 368(a) of the Code.
SECTION 6.08. Board of Directors and Officers of JVKG. Immediately after the
Effective Date, the present Directors of JVKG shall cause the appointment of two
nominees designated by the Company to the Board of Directors of JVKG, and shall
further cause the appointment of such officers of JVKG as may be designated by
the Company. In connection with such election, JVKG shall have provided its
securityholders with an Information Statement pursuant to Section 14f of the
Exchange Act and SEC Rule 14f-1, if required.
SECTION 6.09. Public Announcements. The initial press release relating to this
Agreement shall be a joint press release the text of which has been agreed to by
each of JVKG and the Company.
SECTION 6.10. Restricted Stock. The Stockholder acknowledges that all JVKG
shares issued in consideration of the acquisition of the Company will be
restricted stock bearing a restrictive legend and there is no obligation on JVKG
to register the shares for resale by the Stockholder. Stockholder acknowledges
it will obtain legal advice prior to sale of any JVKG shares.
ARTICLE VII: CONDITIONS TO THE EXCHANGE
SECTION 7.01. Conditions to the Obligations of Each Party. The obligations of
the Company, JVKG and Stockholder to consummate the Exchange are subject to the
satisfaction or waiver (where permissible) of the following conditions:
(a) this Agreement and the issuance of the Exchange Consideration pursuant to
the terms of the Exchange, as the case may be, contemplated hereby shall
have been approved and adopted by the requisite affirmative vote of the
board of directors of JVKG in accordance with the laws of the State of
Nevada;
(b) no Governmental Entity or court of competent jurisdiction located or having
jurisdiction in the United States shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, judgment, decree, executive
order or award (an "Order") which is then in effect and has the effect of
making the Exchange illegal or otherwise prohibiting consummation of the
Exchange; and
(c) all consents, approvals and authorizations legally required to be obtained
to consummate the Exchange shall have been obtained from and made with all
Governmental Entities.
SECTION 7.02. Conditions to the Obligations of JVKG . The obligations of JVKG to
consummate the Exchange are subject to the satisfaction or waiver (where
permissible) of the following additional conditions:
(a) to the best of the Company's knowledge and belief, each of the
representations and warranties of the Company contained in this Agreement
shall be true and correct as of the Effective Time as though made on and as
of the Effective Time, except where failure to be so true and correct would
not have a Company Material Adverse Effect, and except that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date, except where
failure to be so true and correct would not have a Company Material Adverse
Effect, and JVKG shall have received a certificate of the Chief Executive
Officer of the Company to such effect;
(b) the Company shall have performed or complied with all agreements and
covenants required by this Agreement to be performed or complied with by it
on or prior to the Effective Time, except where the failure to so comply
would not have a Company Material Adverse Effect;
(c) the Stockholder will have provided evidence satisfactory to JVKG that it is
an "Accredited Investor" as determined under the Securities Act of 1933 or
that the Exchange is an exempt transaction under the Securities Act; and
(d) JVKG will have received a valuation of the Company from a business valuator
in form and substance and indicating a value of the Company satisfactory to
JVKG.
SECTION 7.03. Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Exchange are subject to the satisfaction or waiver
(where permissible) of the following additional conditions:
(a) each of the representations and warranties of JVKG contained in this
Agreement shall be true and correct as of the Effective Time, as though
made on and as of the Effective Time, except where the failure to be so
true and correct would not have a JVKG Material Adverse Effect, and except
that those representations and warranties which address matters only as of
a particular date shall remain true and correct as of such date, except
where the failure to be so true and correct would not have a JVKG Material
Adverse Effect, and the Company shall have received a certificate of the
Chief Executive Officer or Chief Financial Officer of JVKG to such effect;
(b) JVKG shall have performed or complied with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, except where the failure to comply would not
have a JVKG Material Adverse Effect;
ARTICLE VIII: TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and the Exchange and
the other transactions contemplated by this Agreement may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite approval and
adoption of this Agreement and the transactions contemplated by this Agreement,
as follows:
(a) by mutual written consent duly authorized by the Boards of Directors of
each of JVKG and the Company;
(b) by either JVKG or the Company if the Effective Time shall not have occurred
on or before August 20, 2005; provided, however, that the right to
terminate this Agreement under this Section 8.01(b) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date;
(c) there shall be any Order which is final and non-appealable preventing the
consummation of the Exchange;
(d) by JVKG upon a breach of any material representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 7.02(a) and
Section 7.02(b) would not be satisfied ("Terminating Company Breach");
provided, however, that, if such Terminating Company Breach is curable by
the Company through the exercise of its best efforts and for so long as the
Company continues to exercise such best efforts, JVKG may not terminate
this Agreement under this Section 8.01(d).
(e) by the Company upon a breach of any material representation, warranty,
covenant or agreement on the part of JVKG set forth in this Agreement, or
if any representation or warranty of JVKG shall have become untrue, in
either case such that the conditions set forth in Section 7.03(a) and
Section 7.03(b) would not be satisfied ("Terminating JVKG Breach");
provided, however, that, if such Terminating Company Breach is curable by
JVKG through the exercise of its best efforts and for so long as JVKG
continues to exercise such best efforts, the Company may not terminate this
Agreement under this Section 8.01(e).
SECTION 8.02. Effect of Termination. Except as provided in Section 9.01, in the
event of termination of this Agreement pursuant to Section 8.01, this Agreement
shall forthwith become void, there shall be no liability under this Agreement on
the part of JVKG or the Company or any of their respective officers or
directors, and all rights and obligations of each party hereto shall cease,
provided, however, that nothing herein shall relieve any party from liability
for the willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time, any party hereto
may (a) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (b) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 8.05. Expenses. All Expenses (as defined below) incurred in connection
with this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such expenses, whether or not the Exchange or any
other transaction is consummated. "Expenses" as used in this Agreement shall
include all reasonable out-of-pocket expenses (including, without limitation,
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and all other matters
related to the closing of the Exchange and the other transactions contemplated
by this Agreement.
ARTICLE IX: GENERAL PROVISIONS
SECTION 9.01. Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement and in any
certificate delivered pursuant hereto shall survive until the date that is One
Hundred Eighty (180) days after the Effective Time, and the agreements set forth
in Articles I and II and Sections 6.01 and 6.02 and this Article IX shall
survive the Effective Time. The agreements set forth in Sections 8.02 and 8.05
and this Article IX shall survive termination.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, facsimile, telegram or telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.02):
if to JVKG:
Javakingcoffee, Inc.
Suite 248, 811A Ryan Road
Richmond, British Columbia
Canada V7A 2E4
Attn: Chen Wu
Facsimile: (604) 488-0263
with a copy to (which shall not constitute notice to JVKG):
Gregory S. Yanke Esq.
200 - 675 West Hastings St.
Vancouver, B.C. V6B 1N2
Facsimile: 604-681-7622
if to the Company:
Whistlertel, Inc.
5001 East Bonanza Drive, Suite 138-145
Las Vegas, NV 89110
Attn: Holly A. Roseberry, President
Facsimile: (702) 383-6921
with a copy to (which shall not constitute notice to such party):
Jackson & Campbell, P.C.
Attn: Michael Paige, Counsel
1120 20th Street, N.W.
South Tower
Washington, D.C. 20036
Facsimile: (202) 457-1678
SECTION 9.03. Certain Definitions. For purposes of this Agreement, the term
(a) "affiliate" of a specified person means a person who directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with such specified person;
(b) "control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit arrangement or
otherwise;
(c) "knowledge" means, with respect to any matter in question, that the
executive officers of the Company or JVKG, as the case may be, have actual
knowledge of such matter;
(d) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person"
as defined in section 13(d)(3) of the Exchange Act), trust, association or
entity or government, political subdivision, agency or instrumentality of a
government; and
(e) "subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person
(either alone or through or together with any other subsidiary) owns,
directly or indirectly, more than 50% of the stock or other equity
interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.04. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated by this Agreement is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated by this Agreement be
consummated as originally contemplated to the fullest extent possible.
SECTION 9.05. Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
SECTION 9.06. Incorporation of Documents and Exhibits. All documents furnished
by the Company pursuant to Section 3.10 and all documents furnished by JVKG
pursuant to Section 4.11 and all exhibits attached hereto and referred to herein
are hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein.
SECTION 9.07. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 9.08. Governing Law; Forum. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Nevada.
SECTION 9.09. Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.10. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
SECTION 9.11. Entire Agreement. This Agreement (including the Exhibits)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
IN WITNESS WHEREOF, JVKG, the Stockholder and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ATTEST: JAVAKINGCOFFEE, INC.
/s/ Chen Wu
- --------------------------------------
Chen Wu, President
ATTEST: WHISTLERTEL, INC.
/s/ Holly Roseberry
- --------------------------------------
Holly Roseberry, President
ATTEST: STOCKHOLDER:
HYBRID TECHNOLOGIES, INC.
/s/ Holly Roseberry
By: ______________________________
Holly Roseberry, President
EXHIBIT A
None.
EXHIBIT B
None.
EXHIBIT C
TRADE WINDS TELECOM, LLC
Financial Statements
December 2, 2004
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Trade
Winds Telecom, LLC
We have audited the accompanying balance sheet of Trade Winds Telecom, LLC as of
December 2, 2004, and the related statements of operations and members' deficit
and cash flows from December 8, 2003 (Inception) through December 2, 2004. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Trade Winds Telecom, LLC as of
December 2, 2004, and the results of its operations and its cash flows from
December 8, 2003 (Inception) to December 2, 2004 in conformity with U.S.
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $68,234 from December 8, 2003 (Inception)
through December 2, 2004. At December 2, 2004, current liabilities exceeded
current assets by $88,227 and total liabilities exceeded total assets by
$68,234. As discussed in Note A to the financial statements, the Company's
significant operating losses raise substantial doubt about its ability to
continue as a going concern. These factors, discussed in Note A, raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
/s/ Mason Russell West, LLC
Littleton, CO
May 11, 2005
TRADE WINDS TELECOM, LLC
Balance Sheet
December 2, 2004
Assets
Current Assets
Cash $ 1,619
Accounts receivable 2,281
Inventory 4,849
----------
Total Current Assets 8,749
----------
Software 23,045
Accumulated amortization (3,052)
----------
Total Assets $ 28,742
==========
Liabilities and Stockholders' Deficit
Current Liabilities
Deferred revenue $ 2,065
Related party payable 94,911
----------
Total current liabilities 96,976
----------
Members' Deficit
Accumulated deficit (68,234)
-----------
Total Liabilities and Stockholders' Deficit $ 28,742
===========
See Accompanying Notes And Accountant's Report
-2-
TRADE WINDS TELECOM, LLC
Statement of Operations and Member's Deficit
From December 8, 2003 (Inception) to December 2, 2004
Revenues $ 29,077
Cost of goods sold
(75,481)
----------
(46,404)
General and administrative expenses 21,830
----------
Net loss (68,234)
Members' deficit, beginning -
----------
Members' deficit, ending $ (68,234)
==========
See Accompanying Notes And Accountant's Report
-3-
TRADE WINDS TELECOM, LLC
Statement of Cash Flow
From December 8, 2003 (Inception) to December 2, 2004
Cash flow from operating activities:
Net loss $ (68,234)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,052
(Increase) Decrease in:
Accounts receivable (2,281)
Inventory (4,849)
Increase (Decrease) in:
Deferred revenue 2,065
----------
Net cash used by operating activities (70,247)
----------
Cash flow from investing activities:
Purchase of software (23,045)
----------
Net cash used by investing activities (23,045)
-----------
Cash flow from financing activities:
Advances from members 128,600
Repayments to members (33,689)
----------
Net cash used by financing activities 94,911
----------
Summary:
Increase in cash and cash equivalents 1,619
Cash and cash equivalents, beginning -
----------
Cash and cash equivalents, ending $ 1,619
===========
See Accompanying Notes And Accountant's Report
-4-
TRADE WINDS TELECOM, LLC
Notes to Financial Statements
December 2, 2004
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities
-------------------
Trade Winds Telecom, LLC (the Company), was formed in 2003 and is
engaged in selling internet based voice telecommunications products
and services to international customers.
Basis of Presentation
---------------------
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or
the amount and classification of liabilities that might be
necessary should the Company be unable to continue as a going
concern. The Company's continuation as a going concern is dependent
upon its ability to generate sufficient cash flow to meet its
obligations on a timely basis, to obtain additional financing as
may be required, and to begin generating sales.
As shown in the financial statements, the Company incurred a net
loss of $68,234 from December 8, 2003 to December 2, 2004. At
December 2, 2004, current liabilities exceeded current assets by
$88,227 and total liabilities exceeded total assets by $68,234.
These factors raise substantial doubt about the Company's ability
to continue as a going concern.
Use of Estimates
----------------
Management uses estimates and assumptions in preparing these
financial statements in accordance with generally accepted
accounting principles. Those estimates and assumptions affect the
reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were
used.
Fair Value of Financial Instruments
-----------------------------------
The Company's financial instruments consist of cash and cash
equivalents, and accounts receivable. The carrying value of all
financial instruments approximate fair value.
Revenue Recognition
-------------------
Revenues from sales of telecommunication products and services are
recognized when persuasive evidence of an arrangement exists,
delivery has occurred, the price is fixed and collectibility is
probable.
-5-
TRADE WINDS TELECOM, LLC
Notes to Financial Statements
December 2, 2004
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
-------------------------------------------------------
Cash Equivalents
----------------
The Company considers all liquid investments with a maturity of
three months or less to be cash equivalents.
Accounts Receivable
-------------------
Accounts receivable include balances billed but not yet paid by
customers. Accounts receivable as of December 2, 2004 were $2,281.
All receivables are expected to be collected within the Company's
normal operating cycle.
Inventory
---------
Inventory is stated at the lower of cost or market cost and
determined based on the specific identification method.
Software and Website Development Costs
--------------------------------------
The Company has developed software and website applications that
are used in providing internet phone services to customers.
Software and website development costs are capitalized once
technological feasibility of the software has been established.
Costs incurred prior to establishing technological feasibility are
expensed as incurred. Technological feasibility is established when
the Company has completed all planning and designing activities
that are necessary to determine that a product can be produced to
meet its design specifications, including functions, features and
technical performance requirements. Capitalization of costs ceases
when the product is available for general use. Software and website
development costs are amortized using the straight-line method over
the estimated useful life of the software, which is generally three
years. Amortization expense from inception to December 2, 2004 was
$3,052.
Advertising Costs
-----------------
All of the Company's advertising costs are expensed as incurred.
The amount charged to expense for the period January 1, 2004 to
December 2, 2004 was $1,627.
Income Taxes
------------
The Company is treated as a partnership for federal income tax
purposes. Under those provisions, the Company does not pay Federal
or State corporate income taxes on its taxable income. Instead, the
members are liable for individual Federal and State income taxes on
the Company's taxable income. Therefore, no expense or liability
for Federal or State income taxes has been included in these
financial statements. The Company's net loss is allocated among the
members in accordance with the regulations of the Company.
-6-
TRADE WINDS TELECOM, LLC
Notes to Financial Statements
December 2, 2004
NOTE B - LEASES
------
The company utilizes office space owned by the members or entities
owned by members of the Company. No formal lease agreement is in
effect and rent has not been charged to the Company.
NOTE C - RELATED PARTY TRANSACTIONS
--------------------------
The Company's expenses were paid and operating funds advanced to
the Company from time to time by a related party owned by the
members of the Company. The amount of $94,911 reflected on the
balance sheet as at December 2, 2004 represents the advances net of
any repayments. The balance is due on demand. The approximate
average balance from inception to December 2, 2004 was $47,133. In
addition, the Company paid $8,657 to an employee of an entity owned
by the members of the Company for consulting services.
NOTE D - SUBSEQUENT EVENT
----------------
On December 3, 2004 the Company entered into a definitive agreement
with WhistlerTel, Inc., (a wholly-owned subsidiary of Hybrid
Technologies, Inc. (formerly Whistler Investments, Inc.), to sell
the assets related to its internet based voice telecommunications
products and services for $100,000. The purchase price was paid
with a cash payment of $20,000 and a one-year note in the principal
amount of $80,000.
-7-