SHARE EXCHANGE AGREEMENT
This
SHARE EXCHANGE AGREEMENT (the “Agreement”)
dated
as of August 17, 2006 by and among Vitasti Inc., a Delaware corporation
(“VITS”),
and
Welwind Energy International Corporation, an Alberta, Canada corporation
(“WEIC”)
and the
undersigned shareholders of WEIC as listed on Schedule 1 attached hereto
(the “Selling
Shareholders”).
VITS,
WEIC and the Selling Shareholders are referred to collectively herein as the
“Parties.”
WHEREAS:
A. The
Selling Shareholders are the registered and beneficial owners of all 210 Class
A
issued and outstanding shares in the capital of WEIC;
X. XXXX
has
agreed to issue eleven million (11,000,000) common shares (the “Purchase
Price”)
of VITS
to the Selling Shareholders as consideration for the purchase of all of the
issued and outstanding common shares of WEIC held by the Selling
Shareholders;
C.
WEIC
represents that its current officers, managers and employees shall use
reasonable efforts to continue the ongoing operations of WEIC’s business
following closing of this transaction, including the development, construction,
and operation of the Projects defined below.
D. 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 WEIC held by the Selling Shareholders to VITS in exchange for common shares
of VITS.
E. The
agreement dated April 11, 2006 by and between VITS and WEIC with respect to
the
sale of assets of WEIC is hereby null and void and is superseded by this
Agreement by and between all parties.
NOW
THEREFORE THIS AGREEMENT WITNESSES
that in
consideration of covenants and agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree each with the other as
follows:
1.
DEFINITIONS
1.1 Definitions.
The following terms have the following meanings, unless the context indicates
otherwise:
“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;
“Closing”
shall
mean the completion of the Transaction, in accordance with §8 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;
“Closing
Date”
shall
mean a date mutually agreed upon by the parties hereto in writing and in
accordance with §8 following the satisfaction or waiver by VITS and WEIC of the
conditions precedent set out in §5.1 and §5.2 respectively; but in no event will
the Closing Date be later than July 25, 2006, without the consent of all parties
hereto;
“Closing
Documents” shall
mean the papers, instruments and documents required to be executed and delivered
at the Closing pursuant to this Agreement;
“Development
Stage” shall
mean non-operational, still under construction or undergoing preliminary
testing.
“Exchange
Act”
shall
mean the United States Securities Exchange Act of 1934, as amended;
“GAAP”
shall
mean United States generally accepted accounting principles applied in a manner
consistent with prior periods;
“Projects”
shall
mean the development of a 50 MW wind farm in the area of Yang Xi, China, and
the
development of a 50 MW wind farm in the area of Zhangjing, China.
“WEIC
Shares”
shall
mean the 210 Class A shares of WEIC held by the Selling Shareholders, being
all
of the issued and outstanding shares of WEIC beneficially held, either directly
or indirectly, by the Selling Shareholders;
“SEC”
shall
mean the Securities and Exchange Commission;
“Taxes”
shall
include international, federal, state, provincial and local income taxes,
capital gains tax, value-added taxes, franchise, personal property and real
property taxes, levies, assessments, tariffs, duties (including any customs
duty), business license or other fees, sales, use and any other taxes relating
to the assets of the designated party or the business of the designated party
for all periods up to and including the Closing Date, together with any related
charge or amount, including interest, fines, penalties and additions to tax,
if
any, arising out of tax assessments;
“Transaction”
shall
mean the purchase of the WEIC Shares by VITS from the Selling Shareholders
in
consideration for the issuance of the VITS Shares;
“VITS
Accounting Date” is
defined in section 4.11;
“VITS
Material Adverse Effect”
is
defined in section 4.7;
“VITS
SEC Documents” is
defined is section 4.10; and
“VITS
Shares” shall
mean those eleven million (11,000,000) fully paid and non-assessable common
shares of VITS to be issued to the Selling Shareholders by VITS on the Closing
Date.
§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 VITS, and VITS hereby
covenants and agrees to purchase from the Selling Shareholders all of the WEIC
Shares held by the Selling Shareholders.
2.2 Consideration.
As
consideration for the sale of the WEIC Shares by the Selling Shareholders,
VITS
shall allot and issue the VITS Shares to the Selling Shareholders in the amount
set out opposite each Selling Shareholder’s name in Schedule 1. The Selling
Shareholders acknowledge and agree that the VITS Shares are being issued
pursuant to an exemption from the registration requirements of the United States
Securities Act of 1933 (the “1933
Act”).
The
Selling Shareholders agree to abide by all applicable resale restrictions and
hold periods imposed by all applicable securities legislation. All certificates
representing the VITS Shares issued on Closing will be endorsed with the
following legend pursuant to the 1933 Act in order to reflect the fact that
the
VITS Shares are restricted securities and will be issued to the Selling
Shareholders pursuant to an exemption from the registration requirements of
the
1933 Act:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR WITH ANY STATE SECURITIES COMMISSION, AND MAY NOT
BE
TRANSFERRED OR DISPOSED OF BY THE HOLDER IN THE ABSENCE OF A REGISTRATION
STATEMENT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE LAWS AND RULES OR UNLESS SUCH TRANSFER MAY BE EFFECTED WITHOUT VIOLATION
OF THE SECURITIES ACT OF 1933 AND OTHER APPLICABLE STATE LAWS AND
RULES.”
Each
Selling Shareholder is either an accredited investor, as defined by Regulation
D
under the 1933 Act, or if a Canadian, an Accredited Investor as defined by
Canadian Securities Administrators’ Multilateral Instrument 45-103 or is a close
personal friend or business associate of a director or senior officer of VITS.
2.3 Share
Exchange Procedure.
On
Closing, each Selling Shareholder will exchange his, her or its certificate
representing the WEIC Shares by delivering such certificate to VITS a duly
executed and endorsed in blank (or accompanied by duly executed stock powers
duly endorsed in blank), in each case in proper form for transfer, with
signatures guaranteed, and, if applicable, with all stock transfer and any
other
required documentary stamps affixed thereto and with appropriate instructions
to
allow the transfer agent to issue certificates for the VITS Shares to the holder
thereof.
2.4 Fractional
Shares.
Notwithstanding any other provision of this Agreement, no certificate for
fractional shares of the VITS 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 VITS Shares upon
surrender of certificates representing the WEIC Shares for exchange pursuant
to
this Agreement, the Selling Shareholders will be entitled to receive from VITS
a
stock certificate representing the nearest whole number of VITS
Shares.
2.5 Closing
Date.
The
Closing will take place, subject to the terms and conditions of this Agreement,
on the Closing Date.
2.6 Restricted
Shares.
The
Selling Shareholders acknowledge that the VITS Shares are being 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 1933 Act, or pursuant to an exemption from,
or
in a transaction not subject to, the registration requirements of the 1933
Act
and in each case only in accordance with all applicable securities laws. Each
Selling Shareholder agrees that he/she/it has sought and obtained independent
legal advice as to the resale restrictions applicable in their jurisdiction
of
residence, and under US securities laws generally. VITS has not undertaken,
and
will have no obligation, to register any of the VITS Shares under the 1933
Act.
Restricted Shares are acquired in unregistered, private sales from an issuer
or
from an affiliate of the issuer. Restricted Shares, as defined under Rule 144
of
the 1933 Act (“Rule 144”), are not fully transferable until certain conditions
have been met. Upon satisfaction of those conditions, the shares become
transferable by the person or entity holding them. If the Selling Shareholders
want to sell there VITS Shares to the public, they can follow the conditions
set
forth in Rule 144. The rule is not the exclusive means for selling the VITS
Shares, but provides a “safe harbor” exemption to the Selling Shareholders. The
rule’s five conditions are as follows:
(a)
Selling Shareholders must hold the VITS Shares for at least one
year;
(b)
VITS
must provide adequate current information by being current in all its periodic
reporting requirements under the Securities Exchange Act of 1934;
(c)
after
the one-year holding period, the number of VITS Shares that Selling Shareholders
may sell during any three-month period can not exceed the greater of 1% of
the
issued and outstanding VITS common shares, unless by that time VITS common
shares are listed on a stock exchange or quoted on the NASDAQ, then the greater
of 1% or the average reported weekly trading volume during the four weeks
preceding the filing a notice of the sale on Form 144;
(d)
the
sales must be handled in all respects as routine trading transactions, brokers
may not receive more than a normal commission and neither the seller nor the
broker can solicit orders to buy the securities; and
(e)
at
the time any of the Selling Shareholders place an order, they must file a notice
with the SEC on Form
144
if the
sale involves more than five hundred (500) VITS Shares or the aggregate dollar
amount is greater than $10,000 in any three-month period.
2.7 Exemptions.
The
Selling Shareholders acknowledge that VITS has advised such Selling Shareholders
that VITS is relying on an exemption from the prospectus and registration
requirements of the Securities Acts (British Columbia and Alberta) (the
“B.C.
& Alberta Securities Acts”)
to
issue the VITS Shares to each of the Selling Shareholders and, as a consequence,
certain protections, rights and remedies provided by the B.C. & Alberta
Securities Acts, including statutory rights of rescission or damages, will
not
be available to the Selling Shareholders.
2.8 Canadian
Resale Restrictions.
The
Selling Shareholders acknowledge that VITS is not a reporting issuer in any
province or territory of Canada and accordingly, the Selling Shareholders
acknowledge that resale of any of the VITS Shares by the Selling Shareholders
to
a resident of Canada is restricted except pursuant to an exemption from
applicable securities legislation.
§3.
REPRESENTATIONS
AND WARRANTIES OF WEIC. WEIC
represents and warrants to VITS, and acknowledges that VITS 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 VITS, as follows:
3.1 Organization
and Good Standing.
WEIC is
a corporation duly organized, validly existing and in good standing under the
laws of Alberta, Canada, and has the requisite corporate power and authority
to
own, lease and to carry on its business as now being conducted. WEIC is duly
qualified to do business and is in good standing as a corporation in each of
the
jurisdictions in which WEIC owns property, leases property, does business,
or is
otherwise required to do so, where the failure to be so qualified would have
a
material adverse effect on the business of WEIC taken as a whole.
3.2 Authority.
WEIC
has all requisite corporate power and authority to execute and deliver this
Agreement and any other document contemplated by this Agreement (collectively,
the “WEIC
Documents”)
to be
signed by WEIC and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of each of the
WEIC
Documents by WEIC and the consummation of the transactions contemplated hereby
have been duly authorized by WEIC’s board of directors. No other corporate or
shareholder proceeding on the part of WEIC is necessary to authorize such
documents or to consummate the transactions contemplated hereby. This Agreement
has been, and the other WEIC Documents when executed and delivered by WEIC
as
contemplated by this Agreement will be, duly executed and delivered by WEIC
and
this Agreement is, and the other WEIC Documents when executed and delivered
by
WEIC as contemplated hereby will be, valid and binding obligations of WEIC
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 WEIC.
The
entire authorized capital stock and other equity securities of WEIC consist
of
an unlimited authorized amount of Class A, Class B, Class C and Class D shares,
of which Classes A & B have voting rights and Classes C & D have no
voting rights (the “WEIC
Common Stock”).
There
are 210 Class A shares of WEIC Common Stock issued and outstanding as of the
date of this Agreement. All of the issued and outstanding shares of WEIC 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
WEIC’s articles and bylaws. There are no outstanding options, warrants,
subscriptions, conversion rights, or other rights, agreements, or commitments
obligating WEIC to issue any additional common shares of WEIC Common Stock,
or
any other securities convertible into, exchangeable for, or evidencing the
right
to subscribe for or acquire from WEIC any common shares of WEIC Common Stock.
There are no agreements purporting to restrict the transfer of the WEIC Common
Stock, no voting agreements, shareholders’ agreements, voting trusts, or other
arrangements restricting or affecting the voting of the WEIC Common
Stock.
3.4 Shareholders
of WEIC Common Stock.
Schedule 1 contains a true and complete list of the holders of all issued
and outstanding shares of the WEIC Common Stock including each holder’s name,
address and number of WEIC Shares held.
3.5 Directors
and Officers of WEIC.
The
duly elected or appointed directors and the duly appointed officers of WEIC
are
as set out in Schedule 3.
3.6 Corporate
Records of WEIC.
The
corporate records of WEIC are accurate, complete and current in all material
respects, and the minute book of WEIC is, in all material respects, correct
and
contains all records required by the laws of Alberta, Canada, as applicable,
in
regards to all proceedings, consents, actions and meetings of the shareholders
and the board of directors of WEIC.
3.7
Continuation
of WEIC Business.
WEIC,
its
management and employees shall use reasonable efforts to continue to operate
the
WEIC Business, including efforts to move forward with the acquisition of
investment capital and the expansion and acquisition of technology and
properties.
3.8 No
Subsidiaries.
WEIC
does not have any subsidiaries or agreements of any nature to acquire any
subsidiary or to acquire or lease any other business operations.
3.9 Non-Contravention.
Neither
the execution, delivery and/or 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
WEIC 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 WEIC, or any of its material property or
assets;
(b)
violate
any provision of the articles or bylaws of WEIC; or
(c)
violate
any order, writ, injunction, decree, statute, rule, or regulation of any court
or governmental
or regulatory authority applicable to WEIC or any of its material property
or
assets.
3.10 Actions
and Proceedings.
To the
best knowledge of WEIC, there is no basis for and there is no action, suit,
judgment, claim, demand or proceeding outstanding or pending, or threatened
against or affecting WEIC or which involves any of the business, or the
properties or assets of WEIC that, if adversely resolved or determined, would
have a material adverse effect on the business, operations, assets, properties,
prospects, or conditions of WEIC taken as a whole (a “WEIC
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 WEIC
Material Adverse Effect.
3.11
Compliance.
(a)
To
the
best knowledge of WEIC, WEIC 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 WEIC;
(b) To
the
best knowledge of WEIC, WEIC 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 WEIC
Material Adverse Effect;
(c) WEIC
has
duly filed all reports and a return 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 WEIC, threatened, and none of them will
be adversely affected
by the consummation of the Transaction; and,
(d) WEIC
has
operated in material compliance with all laws, rules, statutes, ordinances,
orders
and regulations applicable to its business. WEIC has not received any notice
of
any violation thereof,
nor is WEIC aware of any valid basis therefore.
3.12 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 WEIC of the Transaction contemplated
by this Agreement or to enable WEIC to continue to conduct its business after
the Closing Date in a manner which is consistent with that in which the business
is presently conducted.
3.13 Financial
Representations.
The
books, records, and accounts of WEIC accurately and fairly reflect, in
reasonable detail, the assets and liabilities of WEIC. WEIC has not engaged
in
any transaction, maintained any bank account, or used any funds of WEIC, except
for transactions, bank accounts, and funds which have been and are reflected
in
the normally maintained books and records of WEIC.
3.14 Absence
of Undisclosed Liabilities.
Currently, there is an existing debt outstanding from WEIC to the existing
shareholders of approximately CDN $157,787.41 relating to expenses. The
shareholders will agree to defer this debt until the Projects are past the
Development Stage. Except as disclosed in this section 3.14 and in
Schedule 5, WEIC does not have any liabilities or obligations direct or
indirect, matured or unmatured, absolute, contingent or otherwise that could
in
the aggregate exceed $5,000, which have not heretofore been paid or discharged.
For purposes of this Agreement, the term “liabilities” includes, any direct or
indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured.
3.15 Tax
Matters.
(a)
as
of the
date hereof; (i) WEIC has timely filed all tax returns in connection with
any Taxes which are required to be filed on or prior to the date
hereof;
(b) WEIC
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 WEIC
Material Adverse Effect;
(c) WEIC
is
not presently under and has not received notice of, any contemplated
investigation
or audit by the Internal Revenue Service or any foreign or state taxing
authority concerning any
fiscal year or period
ended prior to the date hereof; and
(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.
3.16 Absence
of Changes.
Since
the date of incorporation of WEIC, and except as set out in Schedule 5,
WEIC 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 WEIC 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, except such as may be involved in ordinary
repair, maintenance
or replacement of its assets;
(j) other
than in the ordinary course of business, increase 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.
3.17
Personal
Property.
WEIC
possesses, and has good and marketable title of all property necessary for
the
continued operation of the business of WEIC as presently conducted and as
represented to VITS. All such property is used in the business of WEIC. 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 WEIC is owned by WEIC free
and
clear of all liens, security interests, charges, encumbrances, and other adverse
claims, except as disclosed in Schedule 5.
3.18 Real
Property.
WEIC
does not own any real property. Each of the leases, subleases, claims or other
real property interests (collectively, the “Leases”)
to
which WEIC is a party or is bound, as set out in Schedule 5, 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 WEIC 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. WEIC has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the Leases or the
leasehold property pursuant thereto.
3.19 Material
Contracts and Transactions.
Schedule 6 attached hereto lists each material contract, agreement,
license, permit, arrangement, commitment, instrument or contract to which WEIC
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 WEIC 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 WEIC. 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.
3.20 Certain
Transactions.
WEIC is
not a guarantor or indemnitor of any indebtedness of any third party, including
any person, firm or corporation.
3.21 No
Brokers.
WEIC
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.
3.22 Completeness
of Disclosure.
No
representation or warranty by WEIC in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be furnished to
VITS
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 VITS. VITS
represents and warrants to WEIC and the Selling Shareholders and acknowledges
that WEIC 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 WEIC or
the
Selling Shareholders, as follows:
4.1 Organization
and Good Standing.
VITS is
duly incorporated, organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and to carry on its business as now being conducted.
4.2 Authority.
VITS
has all requisite corporate power and authority to execute and deliver this
Agreement and any other document contemplated by this Agreement (collectively,
the “VITS
Documents”)
to be
signed by VITS and to perform its obligations hereunder and to consummate the
Transaction contemplated hereby. The execution and delivery of each of the
VITS
Documents by VITS and the consummation by VITS of the Transaction contemplated
hereby have been duly authorized by its board of directors and no other
corporate or shareholder proceedings on the part of VITS is necessary to
authorize such documents or to consummate the Transaction contemplated hereby.
This Agreement has been, and the other VITS Documents when executed and
delivered by VITS as contemplated by this Agreement will be, duly executed
and
delivered by VITS and this Agreement is, and the other VITS Documents when
executed and delivered by VITS, as contemplated hereby will be, valid and
binding obligations of VITS 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 VITS.
The
entire authorized capital stock and other equity securities of VITS consist
of
100,000,000 shares of common stock, par value $0.0000029 (the “VITS
Common Stock”).
As of
the date of this Agreement, there are approximately 73,536,494 shares of VITS
Common Stock issued and outstanding and no VITS Preferred Stock issued and
outstanding. All of the issued and outstanding shares of VITS 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 VITS to issue any additional shares of
VITS Common Stock, or any other securities convertible into, exchangeable for,
or evidencing the right to subscribe for or acquire from VITS any shares of
VITS
Common Stock as of the date of this Agreement. There are no agreements
purporting to restrict the transfer of the VITS Common Stock, no voting
agreements, voting trusts, or other arrangements restricting or affecting the
voting of the VITS Common Stock.
4.4 Directors
and Officers of VITS.
The
duly elected or appointed directors and the duly appointed officers of VITS
are
as listed on Schedule 4.
4.5 Non-Contravention.
Neither
the execution, delivery and performance of this Agreement, nor the consummation
of this 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
VITS 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 VITS or any of its material property or
assets;
(b) violate
any provision of the applicable incorporation or charter documents of VITS;
or
(c) violate
any order, writ, injunction, decree, statute, rule, or regulation of any court
or governmental or regulatory authority applicable to VITS or any of its
material property or assets.
4.6 Validity
of VITS Common Stock Issuable upon the Transaction.
The
VITS 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.
4.7 Actions
and Proceedings.
To the
best knowledge of VITS, 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 VITS, threatened against VITS which involves any of the
business, or the properties or assets of VITS that, if adversely resolved or
determined, would have a material adverse effect on the business, operations,
assets, properties, prospects or conditions of VITS taken as a whole (a
“VITS
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 VITS
Material Adverse Effect.
4.8
Compliance.
(a) To
the
best knowledge of VITS, VITS 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 VITS;
(b) To
the
best knowledge of VITS, VITS 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 VITS Material
Adverse Effect;
(c) VITS
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 VITS, threatened, and none of them will
be affected in a material
adverse manner by the consummation of the Transaction; and
(d) VITS
has
operated in material compliance with all laws, rules, statutes, ordinances,
orders
and regulations applicable to its business. VITS has not received any notice
of
any violation thereof, nor
is
VITS aware of any valid basis therefore.
4.9 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 VITS 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.
4.10
SEC
Filings.
VITS
has furnished or made available to WEIC and the Selling Shareholders a true
and
complete copy of each report, schedule, registration statement and proxy
statement filed by VITS with the SEC (collectively, and as such documents have
since the time of their filing been amended, the “VITS
SEC Documents”).
As of
their respective dates, the VITS SEC Documents complied in all material respects
with the requirements of the 1933 Act, or the Exchange Act, as the case may
be,
and the rules and regulations of the SEC thereunder applicable to such VITS
SEC
Documents.
4.11 Financial
Representations.
Included with the VITS SEC Documents are true, correct, and complete copies
of
audited balance sheets for VITS dated as of December 31, 2005 (the “VITS
Accounting Date”),
together with related statements of income, cash flows, and changes in
shareholder’s equity for the fiscal year then ended (collectively, the
“VITS
Financial Statements”).
The
VITS Financial Statements:
(a) are
in
accordance with the books and records of VITS;
(b) present
fairly the financial condition of VITS as of the respective dates indicated
and
the results of operations for such periods; and
(c) have
been
prepared in accordance with GAAP.
VITS
has
not received any advice or notification from its independent certified public
accountants that VITS has used any improper accounting practice that would
have
the effect of not reflecting or incorrectly reflecting in the VITS Financial
Statements or the books and records of VITS, any properties, assets,
liabilities, revenues, or expenses. The books, records, and accounts of VITS
accurately and fairly reflect, in reasonable detail, the assets, and liabilities
of VITS. VITS has not engaged in any transaction, maintained any bank account,
or used any funds of VITS, except for transactions, bank accounts, and funds
which have been and are reflected in the normally maintained books and records
of VITS.
4.12 Absence
of Undisclosed Liabilities.
VITS
has no material liabilities or obligations either direct or indirect, matured
or
unmatured, absolute, contingent or otherwise, which:
(a) are
not
set forth in the VITS 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 WEIC;
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 VITS Financial
Statements.
4.13 Tax
Matters.
(a) As
of the
date hereof; (i) VITS 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) VITS
has
paid all Taxes that have become or are due with respect to any period ended
on
or
prior
to the date hereof;
(c) VITS
is
not presently under and has not received notice of, any contemplated
investigation
or audit by the Canada Customs and 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) 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 VITS, the VITS Financial Statements contain full provision
for
all
Taxes
including any deferred Taxes that may be assessed to VITS for the accounting
period ended on the
VITS
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 VITS Accounting Date or for any profit
earned by VITS on
or
prior to the VITS Accounting Date or for which VITS is accountable up to such
date and all contingent
liabilities for Taxes have been provided for or disclosed in the VITS Financial
Statements.
4.14 Absence
of Certain Changes or Events.
Since
the VITS Accounting Date, except as and to the extent disclosed in the VITS
SEC
Documents, there has not been:
(a) a
VITS
Material Adverse Effect; or
(b) any
material change by VITS in its accounting methods, principles or
practices.
4.15 No
Subsidiaries.
VITS
does not have any subsidiaries or agreements of any nature to acquire any
subsidiary or to acquire or lease any other business operations.
4.16 Personal
Property.
There
are no material equipment, furniture, fixtures and other tangible personal
property and assets owned or leased by VITS, except as disclosed in the VITS
SEC
Documents.
4.17 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 VITS is a party except for
this Agreement and except as disclosed in writing to WEIC.
4.18 Fees.
VITS
has not incurred any obligation or liability to any party for any brokerage
fees
or agent’s commissions in connection with the Transaction contemplated by this
Agreement. As compensation under the terms of a Business Development Agreement
("BDA"), Xxxxx X. XxXxxx (“LDM”) shall receive the sum of $600,000 dollars (the
“LDM Compensation”) upon the successful closing of this Agreement. The
compensation shall be converted into shares of the Company’s common stock as set
forth in the BDA. It is anticipated that the LDM Compensation will be tendered
only subsequent to the closing of any business combination or acquisition as
set
forth under the terms of the BDA.
4.19 Completeness
of Disclosure.
No
representation or warranty by VITS in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be furnished to
WEIC
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 VITS.
The
obligation of VITS 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 §8. The Closing of
the Transaction contemplated by this Agreement will be deemed to mean a waiver
of all conditions to Closing. These conditions of closing are for the benefit
of
VITS and may be waived by VITS in its sole discretion.
(a) Representations
and Warranties. The representations and warranties of WEIC 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 WEIC will have delivered to VITS a certificate dated as
of
the Closing Date,
to
the effect that the representations and warranties made by WEIC in this
Agreement are true and correct.
(b) Performance.
All of the covenants and obligations that WEIC 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 WEIC Documents and all other documents
necessary
or reasonably required to consummate the Transaction, all in form and substance
reasonably satisfactory
to VITS, will have been executed and delivered to VITS.
(d) Secretary’s
Certificate - WEIC. VITS will have received a certificate from the Secretary
of
WEIC
attaching; (i) a copy of WEIC’s articles, bylaws and all other incorporation
documents, as amended
through the Closing Date; and (ii) copies of resolutions duly adopted by
the board of directors of WEIC
approving the execution and delivery of this Agreement and the consummation
of
the transactions contemplated
herein.
(e) Legal
Opinion - WEIC. VITS will have received an opinion, dated as of the Closing
Date,
from counsel for WEIC, and such other local or special counsel as is
appropriate, all of which opinion
will be in the form and substance reasonably satisfactory to VITS and its
counsel.
(f) Third
Party Consents. VITS will have received duly executed copies of all third party
consents
and approvals contemplated by this Agreement, in form and substance reasonably
satisfactory to VITS,
including without limitation, approval of VITS shareholders at a meeting of
shareholders called for the
purpose of approving this transaction, among other things.
(g) No
Material Adverse Change. No WEIC Material Adverse Effect will have occurred
since
the
date of this Agreement.
(h) 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.
(i) Outstanding
Shares. WEIC will have no more than 210 Class A shares of WEIC stock issued
and
outstanding on the Closing Date.
(j) Due
Diligence. VITS will be reasonably satisfied with its due diligence
investigation of WEIC
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 WEIC and
the
Selling Shareholders which are reasonably germane to the Transaction; or
(ii) a physical inspection of
the
assets of WEIC by VITS or its representatives; and (iii) title
to
the material assets of WEIC.
(k) Compliance
with Securities Laws. VITS will have received evidence satisfactory to VITS
that
the
VITS Shares issuable in the Transaction will be issuable without registration
pursuant to the 1933 Act
and
the B.C. & Alberta Securities Acts in reliance on a safe harbor from the
registration requirements of the 1933 Act and the B.C. & Alberta Securities
Acts; and,
(m) Closing.
The Closing will have occurred by the Closing Date.
5.2 Conditions
Precedent to Closing by WEIC.
The
obligation of WEIC 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 §8. 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 WEIC and the Selling Shareholders and may be waived by WEIC and
the
Selling Shareholders in their discretion.
(a) Representations
and Warranties. The representations and warranties of VITS 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 VITS will have delivered to WEIC a certificate dated the
Closing Date, to the
effect that the representations and warranties made by VITS in this Agreement
are true and correct.
(b) Performance.
All of the covenants and obligations that VITS is 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. VITS must have delivered each of the documents required
to be delivered by it pursuant
to this Agreement.
(c) Transaction
Documents. This Agreement, the VITS Documents and all other documents
necessary
or reasonably required to consummate the Transaction, all in form and substance
reasonably satisfactory
to WEIC, will have been executed and delivered by VITS.
(d)
Secretary’s
Certificate - VITS. WEIC will have received a certificate from the Secretary
of
VITS
attaching; (i) a copy of VITS’s articles of incorporation and bylaws, as
amended through the Closing
Date; and, (ii) copies of resolutions duly adopted by the board of
directors of VITS approving the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein.
(e) Legal
Opinion - VITS. WEIC will have received a legal opinion, dated as of the Closing
Date,
from counsel for VITS, and such other local or special legal counsel as is
appropriate, all of which opinion
shall be in the form and substance reasonably satisfactory to WEIC and its
counsel.
(f) Third
Party Consents. WEIC will have received from VITS duly executed copies of all
third-party
consents, permit, authorization, consent and approvals of any public, regulatory
(including SEC) or
governmental body or authority or person or entity contemplated by this
Agreement, in form and substance
reasonably satisfactory to WEIC.
(g) No
Material Adverse Change. No VITS Material Adverse Effect will have occurred
since the
date
of this Agreement.
(h) 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; (i) prevent the consummation of any of the transactions
contemplated by this Agreement;
or, (ii) cause the Transaction to be rescinded following
consummation.
(i) Public
Market. On the Closing Date, the shares of VITS Common Stock will be
quoted
on
the
National Association of Securities Dealers, Inc.’s OTC Bulletin
Board.
(j) Due
Diligence Review of Financial Statements. WEIC and its accountants will be
reasonably
satisfied with their due diligence investigation and review of the VITS
Financial Statements, the VITS
SEC
Documents, and the contents thereof, prepared in accordance with
GAAP.
(k) Consulting
Agreements. WEIC and VITS shall have entered into consulting agreements with
each of the Selling Shareholders in the form attached hereto as Exhibit
A.
(l) Liability
Releases. WEIC and VITS shall have delivered releases to each of the Selling
Shareholders in forms satisfactory to the Selling Shareholders, of any
liabilities arising from their acting as shareholders, directors or officers
of
WEIC.
| (m) |
Closing.
The Closing will have occurred by the Closing
Date.
|
§6. Pre-Closing
and Post -Closing Covenants.
The
Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing:
6.1 General.
Each of
the Parties will use its reasonable best efforts to take all actions and to
do
all things necessary and advisable in order to consummate and make effective
the
transactions contemplated by this Agreement, including satisfaction, but not
waiver, of the Closing conditions set forth in §8 below.
6.2 Notices
and Consents. Each
of
the Parties will give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents, and approvals
of
governments and governmental agencies in connection with the matters referred
herein.
6.3 Operation
and Preservation of Business.
WEIC
will continue to operate the WEIC Business, including its present operations,
working conditions, and relationships with, licensors, suppliers, customers,
and
employees subject to the terms of §3.7 above. Further, WEIC will not engage in
any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business. Without limiting the generality of the foregoing,
WEIC will not (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock; or, (ii) pay any amount to any third party
with respect to any liability or obligation including any costs and expenses
WEIC has incurred or may incur in connection with this Agreement and the
transactions contemplated hereby that would not constitute an Assumed Liability
if in existence as of the Closing.
6.4 Confidentiality.
All
information regarding the business of WEIC including, without limitation,
financial information that WEIC provides to VITS during VITS’s due diligence
investigation of WEIC will be kept in strict confidence by VITS and will not
be
used (except in connection with due diligence), dealt with, exploited or
commercialized by VITS or disclosed to any third party (other than VITS’s
professional accounting and legal advisors) without the prior written consent
of
WEIC. If the Transaction contemplated by this Agreement does not proceed for
any
reason, then upon receipt of a written request from WEIC, VITS will immediately
return to WEIC (or as directed by WEIC) any information received regarding
WEIC’s business. Likewise, all information regarding the business of VITS
including, without limitation, financial information that VITS provides to
WEIC
during its due diligence investigation of VITS will be kept in strict confidence
by WEIC and will not be used (except in connection with due diligence), dealt
with, exploited or commercialized by WEIC or disclosed to any third party (other
than WEIC’s professional accounting and legal advisors) without VITS’s prior
written consent (the foregoing in any form whatsoever shall be referred to
hereinafter as the “Confidential
Information”).
If the
Transaction contemplated by this Agreement does not proceed for any reason,
then
upon receipt of a written request from VITS, WEIC will immediately return to
VITS (or as directed by VITS) any information received regarding VITS’s
business
6.5 Full
Access.
WEIC
will permit representatives of VITS, including legal counsel and accountants,
to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of WEIC to all premises, properties,
personnel, books, records, contracts, and documents of or pertaining to WEIC.
VITS will treat and hold as such any Confidential Information it receives from
any WEIC Stockholder and WEIC in the course of the reviews contemplated by
this
§6.5, will not use any of the Confidential Information except in connection
with
this Agreement, and, if this Agreement is terminated for any reason whatsoever,
will return to WEIC Stockholders and WEIC all tangible embodiments of the
Confidential Information that are in its possession.
6.5 Notice
of Developments.
Each
Party will give prompt written notice to the other Party of any material adverse
development causing a breach of any of its own representations and warranties
in
§3 and §4 above. No disclosure by any Party pursuant to this §6.5, however,
shall be deemed to prevent or cure any misrepresentation, breach of warranty,
or
breach of covenant.
§7.
ADDITIONAL
COVENANTS OF THE PARTIES
7.1 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,
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 covenant in this Agreement or of the occurrence of any event that
may
make the satisfaction of such conditions impossible or unlikely.
7.2 Exclusivity.
Until
such time, if any, as this Agreement is terminated pursuant to this Agreement,
WEIC and VITS 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 WEIC or VITS, as applicable, or any
merger, consolidation, business combination, or similar transaction other than
as contemplated by this Agreement.
7.3 Conduct
of WEIC and VITS Business Prior to Closing.
From
the date of this Agreement to the Closing Date, and except to the extent that
VITS otherwise consents in writing, WEIC 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 WEIC otherwise consents in
writing, VITS 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.
7.4 Certain
Acts Prohibited - WEIC.
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, WEIC
will not, without the prior written consent of VITS:
(a) amend
its
articles, bylaws 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 WEIC except in the ordinary
course of business;
(c) dispose
of or contract to dispose of any WEIC 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 WEIC
Common Stock, or any rights, warrants or options to acquire, any such shares,
voting securities or convertible
securities;
(e) not:
(i) declare, set aside or pay any dividends on, or make any other
distributions in respect of the WEIC Common Stock; or (ii) split,
combine or reclassify any WEIC Common Stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for shares
of WEIC Common Stock; or
(f) not
materially increase benefits or compensation expenses of WEIC, 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.
7.5 Public
Announcements.
VITS
and WEIC 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 upon written advice of counsel to comply with
applicable laws or regulatory requirements after consulting with the other
party
hereto and seeking their reasonable consent to such announcement. WEIC
acknowledges that VITS must comply with securities laws requiring full
disclosure of material facts and agreements in which it is involved, and will
co-operate to assist VITS in meeting its obligations.
§8.
CLOSING
8.1 Closing.
The
Closing shall take place on the Closing Date at the offices of the lawyers
for
VITS 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 WEIC
and
VITS, provided such undertakings are satisfactory to each party’s respective
legal counsel.
8.2 Closing
Deliveries of WEIC and the Selling Shareholders.
At
Closing, WEIC and the Selling Shareholders will deliver or cause to be delivered
the following, fully executed and in the form and substance reasonably
satisfactory to VITS:
(a) copies
of
all resolutions and/or consent actions adopted by or on behalf of the board
of
directors
of WEIC 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 WEIC Shares as required by §2.3 of this
Agreement;
(d) all
certificates and other documents required by §5.1 of this
Agreement;
(e) a
certificate of an officer of WEIC, dated as of Closing, certifying that; (i)
each covenant and
obligation of WEIC has been complied with; and, (ii) each representation,
warranty and covenant of WEIC
is
true and correct at the Closing as if made on and as of the Closing;
and
(f) the
WEIC
Documents and any other necessary documents, each duly executed by WEIC,
as
required to give effect to the Transaction.
8.3 Closing
Deliveries of VITS.
At
Closing, VITS will deliver or cause to be delivered the following, fully
executed and in the form and substance reasonably satisfactory to
WEIC:
(a) copies
of
all resolutions and/or consent actions adopted by or on behalf of the board
of
directors
of VITS evidencing approval of this Agreement and the Transaction;
(b) share
certificates representing the VITS Shares to the Selling Shareholders in the
amounts as
set
out in Schedule 1;
(c) all
certificates and other documents required by §5.2 of this
Agreement;
(d) a
certificate of an officer of VITS, dated as of Closing, certifying that; (i)
each covenant and obligation of VITS has been complied with; and, (ii) each
representation, warranty and covenant of VITS is true and correct at the Closing
as if made on and as of the Closing; and
(e) the
VITS
Documents and any other necessary documents, each duly executed by VITS,
as
required to give effect to the Transaction.
§9. TERMINATION
9.1 Termination.
This
Agreement may be terminated at any time prior to the Closing Date contemplated
hereby by:
(a) mutual
agreement of VITS and WEIC;
(b) VITS,
if
there has been a material breach by WEIC or any of the Selling Shareholders
of
any material representation, warranty, covenant or agreement set forth in this
Agreement on the part of WEIC or the Selling Shareholders that is not cured,
to
the reasonable satisfaction of VITS, within ten business days after notice
of
such breach is given by VITS (except that no cure period will be provided for
a
breach by WEIC or the Selling Shareholders that by its nature cannot be
cured);
(c) WEIC,
if
there has been a material breach by VITS of any material representation,
warranty,
covenant or agreement set forth in this Agreement on the part of VITS that
is
not cured by the breaching
party, to the reasonable satisfaction of WEIC, within ten business days after
notice of such breach
is
given by WEIC (except that no cure period will be provided for a breach by
VITS
that by its nature
cannot be cured);
(d) VITS
or
WEIC, if the Transaction contemplated by this Agreement has not been
consummated
prior to July 5, 2006, unless the parties hereto agree to extend such date
in
writing; or
(e) VITS
or
WEIC if any injunction or other order of a governmental entity of competent
authority
prevents the consummation of the Transaction contemplated by this
Agreement.
9.2 Effect
of Termination.
In the
event of the termination of this Agreement as provided in §9.1, 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.
§10. MISCELLANEOUS
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. The representations, warranties and agreements will
survive the Closing Date and continue in full force and effect until six (6)
months after the Closing Date.
10.2 Further
Assurances and Provision of Information.
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. Additionally, WEIC and the Selling Shareholders
acknowledge that under SEC rules VITS must provide registration level
information regarding the business of WEIC and agree to provide such information
to VITS in a timely manner prior to closing, and allow VITS and its
representative’s free access to all books, records, and other information of
WEIC and to its personnel and advisors.
10.3 Amendment.
This
Agreement may not be amended except by an instrument in writing signed by each
of the parties.
10.4 Expenses.
Each
party to this Agreement will bear its respective expenses 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, counsel, and accountants.
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.
11.6 Notices.
All
notices and other communications required or permitted under to 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
WEIC or any of the Selling Shareholders:
Welwind
Energy International Corporation
x/x
Xxxxxx X. Xxxxxx
Xxxxxxx
Xxxxx XXX
0000
Xxxxxxxx Tower
000
Xxxxx
Xxxxxx XX
Xxxxxxx,
Xxxxxxx X0X 0X0
With
a
copy (which will not constitute notice) to:
Xxxxxx
X.
Xxxxxx
Xxxxxxx
Xxxxx LLP
3700
Canterra Tower
000
Xxxxx
Xxxxxx XX
Xxxxxxx,
Xxxxxxx X0X 0X0
If
to
VITS:
Vitasti,
Inc.
10-20172
000X Xxxxxx
Xxxxx
Xxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx
X0X 0X0
With
a
copy (which will not constitute notice) to:
Steadylaw
Group, LLP
0000
Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Tel
(000)
000-0000; Fax (000) 000-0000
All
such
notices and other communications will be deemed to have been received: (i)
in
the case of personal delivery, on the date of such delivery; (ii) in the case
of
a fax, when the party sending such fax has received electronic confirmation
of
its delivery; (iii) in the case of delivery by internationally-recognized
express courier, on the business day following dispatch; and, (iv) 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 Delaware 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 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
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.
10.14 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.
10.15 Independent
Legal Advice.
All
Selling Shareholders confirm that they have sought and obtained independent
legal advice prior to execution of this Agreement and cannot and do not rely
on
the representations of VITS or its advisors respecting the legal effects of
this
Agreement.
10.15 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.
VITASTI,
INC. WELWIND
ENERGY INT’L CORP.
_____________________________ _____________________________
By:
Xxxxx-Xxxx XxXxxx By:
Its:
President Its:
SELLING
SHAREHOLDERS
________________________________
Signature
________________________________
Name
________________________________
Signature
________________________________
Name
________________________________
Signature
________________________________
Name
SCHEDULE 1.
The
Selling Shareholders
|
Name
|
Address
|
Number
of WEIC Shares held before Closing
|
Number
of VITS Shares to be received on Closing
|
|
Xxxxxxxx
Xxxx
|
x/x
Xxxxxx X. Xxxxxx
Xxxxxxx
Xxxxx XXX
0000
Xxxxxxxx Tower
000
Xxxxx Xxxxxx XX
Xxxxxxx,
Xxxxxxx X0X 0X0
|
210
Class A
|
3,000,000
|
|
Xxxxxxx
xx Xxxxxx
|
x/x
Xxxxxx X. Xxxxxx
Xxxxxxx
Xxxxx XXX
0000
Xxxxxxxx Tower
000
Xxxxx Xxxxxx XX
Xxxxxxx,
Xxxxxxx X0X 0X0
|
210
Class A
|
4,000,000
|
|
Xxxx
Xxxx-Xxxxx
|
x/x
Xxxxxx X. Xxxxxx
Xxxxxxx
Xxxxx XXX
0000
Xxxxxxxx Tower
000
Xxxxx Xxxxxx XX
Xxxxxxx,
Xxxxxxx X0X 0X0
|
210
Class A
|
4,000,000
|
SCHEDULE
2.
[RESERVED]
SCHEDULE
3.
Directors
and Officers of WEIC
Directors: Xxxx
Xxxx-Xxxxx
Xxxxxxxx
Xxxx
Xxxxxxx
xx Xxxxxx
Officers:
Xxxx
Xxxx-Xxxxx
Xxxxxxxx
Xxxx
Xxxxxxx
xx Xxxxxx
SCHEDULE
4.
Directors
and Officers of VITS
Directors:
Xxxxx-Xxxx
XxXxxx
Xxxxxxx
Xxxxxxx
Xxxxxxx
deDelley
Xxxxx
Xxxx Xxx Xxx
Officers:
Xxxxx-Xxxx
XxXxxx
SCHEDULE
5.
Leases,
Subleases, Claims, Capital Expenditures and Other Property
Interests
