petro8k100307ex10-1.htm


    
      

      

    

     

    SHARE
      EXCHANGE AGREEMENT

     

     

    THIS
      AGREEMENT is made effective as of the 30th day of
September, 2007

     

    AMONG:

     

    PetroSouth
      Energy Corp., a Nevada corporation

     

    (“Pubco”)

     

    AND:

     

    PetroSouth
      Energy Corp., a British Virgin Islands corporation

     

    (“Priveco”)

     

    AND:

     

    THE
      UNDERSIGNED SHAREHOLDERS OF PRIVECO AS LISTED ON SCHEDULE 1
      ATTACHED HERETO

     

    (the
      “SellingShareholders”)

     

    WHEREAS:

     

    A.                    The
      Selling Shareholders are the registered and beneficial owners of all
      1,000 issued and outstanding common shares in the capital
      of Priveco;

     

    B.                    Pubco
      has agreed to issue (i) 28,266,666 common shares in the capital of Pubco and
      (ii) 28,266,666 warrants to purchase common shares in the capital of Pubco
      at
      $1.25 per common share as of the Closing Date (as defined herein) to the Selling
      Shareholders as consideration for the purchase by Pubco of all of the issued
      and
      outstanding common shares of Priveco held by the Selling Shareholders;
      and

     

    C.                    Upon
      the terms and subject to the conditions set forth in this Agreement, the Selling
      Shareholders have agreed to sell all of the issued and outstanding common shares
      of Priveco held by the Selling Shareholders to Pubco in exchange for common
      shares of Pubco.

     

    THEREFORE,
      in consideration of the mutual covenants and agreements herein contained and
      other good and valuable consideration (the receipt and sufficiency of which
      are
      hereby acknowledged), the parties covenant and agree as follows:

     

    
      	
              1.

            	
              DEFINITIONS

            


    

     

    1.1                   Definitions.  The
      following terms have the following meanings, unless the context indicates
      otherwise:

     

     

    


    
      
        
                

                          
    

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (a)

            	
              “Agreement”
                shall mean this Agreement, and all the exhibits, schedules and other
                documents attached to or referred to in this Agreement, and all amendments
                and supplements, if any, to this
                Agreement;

            


    

     

    
      	
               

            	
              (b)

            	
              “Closing”
                shall mean the completion of the Transaction, in accordance with
                Section 7
                hereof, at which the Closing Documents shall be exchanged by the
                parties,
                except for those documents or other items specifically required to
                be
                exchanged at a later time;

            


    

     

    
      	
               

            	
              (c)

            	
              “Closing
                Date” shall mean a date mutually agreed upon by the parties
                hereto in writing and in accordance with Section 10.6 following the
                satisfaction or waiver by Pubco and Priveco of the conditions precedent
                set out in Sections 5.1 and 5.2
                respectively;

            


    

     

    
      	
               

            	
              (d)

            	
              “Closing
                Documents” shall mean the papers, instruments and documents
                required to be executed and delivered at the Closing pursuant to
                this
                Agreement;

            


    

     

    
      	
               

            	
              (e)

            	
              “Exchange
                Act” shall mean the United States Securities Exchange Act of
                1934, as amended;

            


    

     

    
      	
               

            	
              (f)

            	
              “GAAP”
                shall mean United States generally accepted accounting principles
                applied
                in a manner consistent with prior
                periods;

            


    

     

    
      	
               

            	
              (g)

            	
              “Liabilities”
                shall include any direct or indirect indebtedness, guaranty, endorsement,
                claim, loss, damage, deficiency, cost, expense, obligation or
                responsibility, fixed or unfixed, known or unknown, asserted choate
                or
                inchoate, liquidated or unliquidated, secured or
                unsecured;

            


    

     

    
      	
               

            	
              (h)

            	
              “Priveco
                Shares” shall mean the 1,000 common shares of Priveco held by the
                Selling Shareholders, being all of the issued and outstanding common
                shares of Priveco beneficially held, either directly or indirectly,
                by the
                Selling Shareholders;

            


    

     

    
      	
               

            	
              (i)

            	
              “Pubco
                Securities” shall mean the Pubco Shares and the Pubco
                Warrants.

            


    

     

    
      	
               

            	
              (j)

            	
              “Pubco
                Shares” shall mean the 28,266,666 fully paid and non-assessable
                common shares of Pubco, to be issued to the Selling Shareholders
                by Pubco
                on the Closing Date;

            


    

     

    
      	
               

            	
              (k)

            	
              “Pubco
                Warrants” shall mean the 28,266,666 share purchase warrants to be
                issued to the Selling Shareholders by Pubco on the Closing Date,
                each
                Pubco Warrant entitling the holder thereof to purchase one common
                share of
                Pubco at $1.25;

            


    

     

    
      	
               

            	
              (l)

            	
              “SEC”
                shall mean the Securities and Exchange
                Commission;

            


    

     

    
      	
               

            	
              (m)

            	
              “Securities
                Act” shall mean the United States Securities Act of 1933, as
                amended;

            


    

     

    


    


    
      
        
          
          

        

        
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              (n)

            	
              “Taxes”
                shall include international, federal, state, provincial and local
                income
                taxes, capital gains tax, value-added taxes, franchise, personal
                property
                and real property taxes, levies, assessments, tariffs, duties (including
                any customs duty), business license or other fees, sales, use and
                any
                other taxes relating to the assets of the designated party or the
                business
                of the designated party for all periods up to and including the Closing
                Date, together with any related charge or amount, including interest,
                fines, penalties and additions to tax, if any, arising out of tax
                assessments; and

            


    

     

    
      	
               

            	
              (o)

            	
              “Transaction”
                shall mean the purchase of the Priveco Shares by Pubco from the Selling
                Shareholders in consideration for the issuance of the Pubco
                Securities.

            


    

     

    1.2                   Schedules.  The
      following schedules are attached to and form part of this
      Agreement:

     

    
      	
              Schedule 1

            	
              –

            	
              Selling
                Shareholders

            
	
              Schedule 2

            	
              –

            	
              Certificate
                of Non-U.S. Shareholder

            
	
              Schedule 3

            	
              –

            	
              Directors
                and Officers of Priveco

            
	
              Schedule 4

            	 	
              Priveco
                Financial Statements

            
	
              Schedule 5

            	
              –

            	
              Directors
                and Officers of Pubco

            
	
              Schedule 6

            	
              –

            	
              Priveco
                Leases, Subleases, Claims, Capital Expenditures, Taxes and Other
                Property
                Interests

            
	
              Schedule 7

            	
              –

            	
              Priveco
                Intellectual Property

            
	
              Schedule 8

            	
              –

            	
              Priveco
                Material Contracts

            
	
              Schedule 9

            	
              –

            	
              Priveco
                Employment Agreements and Arrangements

            
	
              Schedule 10

            	 	
              Subsidiaries

            


    

     

    1.3                   Currency.  All
      references to currency referred to in this Agreement are in United States
      Dollars (US$), unless expressly stated otherwise.

     

    
      	
              2.

            	
              THE
                OFFER, PURCHASE AND SALE OF
                SHARES

            


    

     

    2.1                   Offer,
      Purchase and Sale of Shares.  Subject to the terms and conditions
      of this Agreement, the Selling Shareholders hereby covenant and agree to sell,
      assign and transfer to Pubco, and Pubco hereby covenants and agrees to purchase
      from the Selling Shareholders all of the Priveco Shares held by the Selling
      Shareholders.

     

    2.2                   Consideration.  As
      consideration for the sale of the Priveco Shares by the Selling Shareholders
      to
      Pubco, Pubco shall allot and issue the Pubco Securities to the Selling
      Shareholders or their nominees in the amount set out opposite each Selling
      Shareholder’s name in Schedule 1 on the basis
      of approximately 28,266.666 Pubco Shares and 28,266.666
      Pubco Warrants for each Priveco Share held by each Selling
      Shareholder.  The Selling Shareholders acknowledge and agree that the
      Pubco Securities are being issued pursuant to an exemption from the prospectus
      and registration requirements of the Securities Act.  As required by
      applicable securities law, the Selling Shareholders agree to abide by all
      applicable resale restrictions and hold periods imposed by all applicable
      securities legislation.  All certificates representing the Pubco
      Securities issued on Closing will be endorsed with the following legend pursuant
      to the Securities Act in order to reflect the fact that the Pubco Securities
      will be issued to the Selling Shareholders pursuant to an exemption from the
      registration requirements of the Securities Act:

     

    
 

    
      
        
          
          

        

        
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    “THE
      SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION
      TO A
      PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION
      S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933
      ACT”).

     

    NONE
      OF
      THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT,
      OR
      ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED
      OR
      SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO
      U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER
      THE
      1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT,
      OR
      PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
      THE
      REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE
      WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING
      TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
      WITH THE 1933 ACT.  “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED
      BY REGULATION S UNDER THE 1933 ACT.”

     

    2.3                   Share
      Exchange Procedure.  Each Selling Shareholder may exchange his,
      her or its certificate representing the Priveco Shares by delivering such
      certificate to Pubco duly executed and endorsed in blank (or accompanied by
      duly
      executed stock powers duly endorsed in blank), in each case in proper form
      for
      transfer, with signatures guaranteed, and, if applicable,
      with all stock transfer and any other required documentary stamps affixed
      thereto and with appropriate instructions to allow the transfer agent to issue
      certificates for the Pubco Securities to the holder thereof or their nominee,
      together with a Certificate of Non-U.S. Shareholder (the
“Certificate”) properly completed and signed by such Selling
      Shareholder and, if applicable, such Selling Shareholder’s nominee, a copy of
      which is set out in Schedule 2.

     

    2.4                   Fractional
      Shares/Warrants.  Notwithstanding any other provision of this
      Agreement, no certificate for fractional shares or warrants of the Pubco
      Securities will be issued in the Transaction.  In lieu of any such
      fractional shares or warrants the Selling Shareholders would otherwise be
      entitled to receive upon surrender of certificates representing the Priveco
      Shares for exchange pursuant to this Agreement, the Selling Shareholders will
      be
      entitled to have such fraction rounded up to the nearest whole number of Pubco
      Shares and Pubco Warrants and will receive from Pubco a stock certificate and
      warrant certificate representing same.

     

    2.5                   Closing
      Date.  The Closing will take place, subject to the terms and
      conditions of this Agreement, on the Closing Date.

     

    2.6                   Restricted
      Securities.  The Selling Shareholders acknowledge that the Pubco
      Securities issued pursuant to the terms and conditions set forth in this
      Agreement will have such hold periods as are required under applicable
      securities laws and as a result may not be sold, transferred or otherwise
      disposed, except pursuant to an effective registration statement under the
      Securities Act, or pursuant to an exemption from, or in a transaction not
      subject to, the registration requirements of the Securities Act and in each
      case
      only in accordance with all applicable securities laws.

     

    
 

    
      
        
          
          

        

        
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              3.

            	
              REPRESENTATIONS
                AND WARRANTIES OF
                PRIVECO

            


    

     

    Priveco
      and the Selling Shareholders, jointly and severally, represent and warrant
      to
      Pubco, and acknowledge that Pubco is relying upon such representations and
      warranties, in connection with the execution, delivery and performance of this
      Agreement, notwithstanding any investigation made by or on behalf of Pubco,
      as
      follows:

     

    3.1                   Organization
      and Good Standing.  Priveco is a corporation duly organized,
      validly existing and in good standing under the laws of its jurisdiction of
      incorporation and has the requisite corporate power and authority to own, lease
      and to carry on its business as now being conducted.  Priveco is duly
      qualified to do business and is in good standing as a corporation in each of
      the
      jurisdictions in which Priveco owns property, leases property, does business,
      or
      is otherwise required to do so, where the failure to be so qualified would
      have
      a material adverse effect on the business of Priveco taken as a
      whole.

     

    3.2                   Authority.  Priveco
      has all requisite corporate power and authority to execute and deliver this
      Agreement and any other document contemplated by this Agreement (collectively,
      the “Priveco Documents”) to be signed by Priveco and to perform
      its obligations hereunder and to consummate the transactions contemplated
      hereby.  The execution and delivery of each of the Priveco Documents
      by Priveco and the consummation of the transactions contemplated hereby have
      been duly authorized by Priveco’s board of directors.  No other
      corporate or shareholder proceedings on the part of Priveco is necessary to
      authorize such documents or to consummate the transactions contemplated
      hereby.  This Agreement has been, and the other Priveco Documents when
      executed and delivered by Priveco as contemplated by this Agreement will be,
      duly executed and delivered by Priveco and this Agreement is, and the other
      Priveco Documents when executed and delivered by Priveco as contemplated hereby
      will be, valid and binding obligations of Priveco enforceable in accordance
      with
      their respective terms except:

     

    
      	
               

            	
              (a)

            	
              as
                limited by applicable bankruptcy, insolvency, reorganization, moratorium,
                and other laws of general application affecting enforcement of creditors’
                rights generally;

            


    

     

    
      	
               

            	
              (b)

            	
              as
                limited by laws relating to the availability of specific performance,
                injunctive relief, or other equitable remedies;
                and

            


    

     

    
      	
               

            	
              (c)

            	
              as
                limited by public policy.

            


    

     

    3.3                   Capitalization
      of Priveco.  The entire authorized capital stock and other equity
      securities of Priveco consists of 1,000 common shares (the
“Priveco Common Stock”).  As of the date of this
      Agreement, there are 1,000 shares of Priveco Common Stock
      issued and outstanding.  All of the issued and outstanding shares of
      Priveco Common Stock have been duly authorized, are validly issued, were not
      issued in violation of any pre-emptive rights and are fully paid and
      non-assessable, are not subject to pre-emptive rights and were issued in full
      compliance with the laws of the British Virgin Islands.  There are no
      outstanding options, warrants, subscriptions, conversion rights, or other
      rights, agreements, or commitments obligating Priveco to issue any additional
      common shares of Priveco Common Stock, or any other securities convertible
      into,
      exchangeable for, or evidencing the right to subscribe for or acquire from
      Priveco any common shares of Priveco Common Stock.  There are no
      agreements purporting to restrict the transfer of the Priveco Common Stock,
      no
      voting agreements, shareholders’ agreements, voting trusts, or other
      arrangements restricting or affecting the voting of the Priveco Common
      Stock.

     

    
 

    
      
        
          
          

        

        
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    3.4                   Title
      and Authority of Selling Shareholders.  Each of the Selling
      Shareholders is and will be as of the Closing, the registered and beneficial
      owner of and will have good and marketable title to all of the Priveco Common
      Stock held by it and will hold such free and clear of all liens, charges and
      encumbrances whatsoever; and such Priveco Common Stock held by such Selling
      Shareholders have been duly and validly issued and are outstanding as fully
      paid
      and non-assessable common shares in the capital of Priveco.  Each of
      the Selling Shareholders has due and sufficient right and authority to enter
      into this Agreement on the terms and conditions herein set forth and to transfer
      the registered, legal and beneficial title and ownership of the Priveco Common
      Stock held by it.

     

    3.5                   Shareholders
      of Priveco Common Stock. Schedule 1 contains a true and complete list
      of the holders of all issued and outstanding shares of the Priveco Common Stock
      including each holder’s name, address and number of Priveco Shares
      held.

     

    3.6                   Directors
      and Officers of Priveco.  The duly elected or appointed directors
      and the duly appointed officers of Priveco are as set out in
      Schedule 3.

     

    3.7                   Corporate
      Records of Priveco.  The corporate records of Priveco, as required
      to be maintained by it pursuant to all applicable laws, are accurate, complete
      and current in all material respects, and the minute book of Priveco is, in
      all
      material respects, correct and contains all records required by all applicable
      laws, as applicable, in regards to all proceedings, consents, actions and
      meetings of the shareholders and the board of directors of Priveco.

     

    3.8                   Non-Contravention.  Neither
      the execution, delivery and performance of this Agreement, nor the consummation
      of the Transaction, will:

     

    
      	
               

            	
              (a)

            	
              conflict
                with, result in a violation of, cause a default under (with or without
                notice, lapse of time or both) or give rise to a right of termination,
                amendment, cancellation or acceleration of any obligation contained
                in or
                the loss of any material benefit under, or result in the creation
                of any
                lien, security interest, charge or encumbrance upon any of the material
                properties or assets of Priveco or any of its subsidiaries under
                any term,
                condition or provision of any loan or credit agreement, note, debenture,
                bond, mortgage, indenture, lease or other agreement, instrument,
                permit,
                license, judgment, order, decree, statute, law, ordinance, rule or
                regulation applicable to Priveco or any of its subsidiaries, or any
                of
                their respective material property or
                assets;

            


    

     

    
      	
               

            	
              (b)

            	
              violate
                any provision of the constating documents of Priveco, any of its
                subsidiaries or any applicable laws;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              violate
                any order, writ, injunction, decree, statute, rule, or regulation
                of any
                court or governmental or regulatory authority applicable to Priveco,
                any
                of its subsidiaries or any of their respective material property
                or
                assets.

            


    

     

    
 

    
      
        
          
          

        

        
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    3.9                   Actions
      and Proceedings.  To the best knowledge of Priveco, there is no
      basis for and there is no action, suit, judgment, claim, demand or proceeding
      outstanding or pending, or threatened against or affecting Priveco, any of
      its
      subsidiaries or which involves any of the business, or the properties or assets
      of Priveco or any of its subsidiaries that, if adversely resolved or determined,
      would have a material adverse effect on the business, operations, assets,
      properties, prospects, or conditions of Priveco and its subsidiaries taken
      as a
      whole (a “Priveco Material Adverse Effect”).  There
      is no reasonable basis for any claim or action that, based upon the likelihood
      of its being asserted and its success if asserted, would have such a Priveco
      Material Adverse Effect.

     

    3.10                 Compliance.

     

    
      	
               

            	
              (a)

            	
              To
                the best knowledge of Priveco, Priveco and each of its subsidiaries
                is in
                compliance with, is not in default or violation in any material respect
                under, and has not been charged with or received any notice at any
                time of
                any material violation of any statute, law, ordinance, regulation,
                rule,
                decree or other applicable regulation to the business or operations
                of
                Priveco and its subsidiaries;

            


    

     

    
      	
               

            	
              (b)

            	
              To
                the best knowledge of Priveco, neither Priveco nor  any of its
                subsidiaries is subject to any judgment, order or decree entered
                in any
                lawsuit or proceeding applicable to its business and operations that
                would
                constitute a Priveco Material Adverse
                Effect;

            


    

     

    
      	
               

            	
              (c)

            	
              Each
                of Priveco and its subsidiaries has duly filed all reports and returns
                required to be filed by it with governmental authorities and has
                obtained
                all governmental permits and other governmental consents, except
                as may be
                required after the execution of this Agreement.  All of such
                permits and consents are in full force and effect, and no proceedings
                for
                the suspension or cancellation of any of them, and no investigation
                relating to any of them, is pending or to the best knowledge of Priveco,
                threatened, and none of them will be adversely affected by the
                consummation of the Transaction;
                and

            


    

     

    
      	
               

            	
              (d)

            	
              Each
                of Priveco and its subsidiaries has operated in material compliance
                with
                all laws, rules, statutes, ordinances, orders and regulations applicable
                to its business.  Neither Priveco nor any of its subsidiaries
                has received any notice of any violation thereof, nor is Priveco
                aware of
                any valid basis therefore.

            


    

     

    3.11                 Filings,
      Consents and Approvals.  No filing or registration with, no notice
      to and no permit, authorization, consent, or approval of any public or
      governmental body or authority or other person or entity is necessary for the
      consummation by Priveco or any of its subsidiaries of the Transaction
      contemplated by this Agreement or to enable Pubco to continue to conduct
      Priveco’s business after the Closing Date in a manner which is consistent with
      that in which the business is presently conducted.

     

    


    


    
      
        
          
          

        

        
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    3.12                 Financial
      Representations.  Schedule 4 hereto contains true, correct,
      and complete copies of the consolidated audited balance sheet for Priveco dated
      as of September 10, 2007 and a consolidated unaudited balance sheet for Priveco
      dated as of September 10, 2007 (the “Priveco Accounting Date”),
      together with related statements of income, cash flows, and changes in
      shareholder’s equity for such fiscal years and interim period then ended
      (collectively, the “Priveco Financial
      Statements”).  The Priveco Financial Statements:

     

    
      	
               

            	
              (a)

            	
              are
                in accordance with the books and records of
                Priveco;

            


    

     

    
      	
               

            	
              (b)

            	
              present
                fairly the financial condition of Priveco as of the respective dates
                indicated and the results of operations for such periods;
                and

            


    

     

    
      	
               

            	
              (c)

            	
              have
                been prepared in accordance
                with  GAAP.

            


    

     

    Priveco
      has not received any advice or notification from its independent certified
      public accountants that Priveco has used any improper accounting practice that
      would have the effect of not reflecting or incorrectly reflecting in the Priveco
      Financial Statements or the books and records of Priveco, any properties,
      assets, Liabilities, revenues, or expenses.  The books, records, and
      accounts of Priveco accurately and fairly reflect, in reasonable detail, the
      assets, and Liabilities of Priveco.  Priveco has not engaged in any
      transaction, maintained any bank account, or used any funds of Priveco, except
      for transactions, bank accounts, and funds which have been and are reflected
      in
      the normally maintained books and records of Priveco.

     

    3.13                 Absence
      of Undisclosed Liabilities.  Neither Priveco nor any of its
      subsidiaries has any material Liabilities or obligations either direct or
      indirect, matured or unmatured, absolute, contingent or otherwise that exceed
      $5,000, which:

     

    
      	
               

            	
              (a)

            	
              are
                not set forth in the Priveco Financial Statements or have not heretofore
                been paid or discharged;

            


    

     

    
      	
               

            	
              (b)

            	
              did
                not arise in the regular and ordinary course of business under any
                agreement, contract, commitment, lease or plan specifically disclosed
                in
                writing to Pubco; or

            


    

     

    
      	
               

            	
              (c)

            	
              have
                not been incurred in amounts and pursuant to practices consistent
                with
                past business practice, in or as a result of the regular and ordinary
                course of its business since the date of the last Priveco Financial
                Statements

            


    

     

    3.14                 Tax
      Matters.

     

    
      	
               

            	
              (a)

            	
              As
                of the date hereof:

            


    

     

    
      	
               

            	
              (i)

            	
              each
                of Priveco and its subsidiaries has timely filed all tax returns
                in
                connection with any Taxes which are required to be filed on or prior
                to
                the date hereof, taking into account any extensions of the filing
                deadlines which have been validly granted to Priveco or its subsidiaries,
                and

            


    

     

    
      	
               

            	
              (ii)

            	
              all
                such returns are true and correct in all material
                respects;

            


    

     

    
      	
               

            	
              (b)

            	
              each
                of Priveco and its subsidiaries has paid all Taxes that have become
                or are
                due with respect to any period ended on or prior to the date hereof,
                and
                has established an adequate reserve therefore on its balance sheets
                for
                those Taxes not yet due and payable, except for any Taxes the non-payment
                of which will not have a Priveco Material Adverse
                Effect;

            


    

     

    
 

    
      
        
          
          

        

        
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              (c)

            	
              neither
                Priveco nor any of its subsidiaries is presently under or has received
                notice of, any contemplated investigation or audit by regulatory
                or
                governmental agency of body or any foreign or state taxing authority
                concerning any fiscal year or period ended prior to the date
                hereof;

            


    

     

    
      	
               

            	
              (d)

            	
              all
                Taxes required to be withheld on or prior to the date hereof from
                employees for income Taxes, social security Taxes, unemployment Taxes
                and
                other similar withholding Taxes have been properly withheld and,
                if
                required on or prior to the date hereof, have been deposited with
                the
                appropriate governmental agency;
                and

            


    

     

    
      	
               

            	
              (e)

            	
              to
                the best knowledge of Priveco, the Priveco Financial Statements contain
                full provision for all Taxes including any deferred Taxes that may
                be
                assessed to Priveco or its subsidiaries for the accounting period
                ended on
                the Priveco Accounting Date or for any prior period in respect of
                any
                transaction, event or omission occurring, or any profit earned, on
                or
                prior to the Priveco Accounting Date or for any profit earned by
                Priveco
                on or prior to the Priveco Accounting Date or for which Priveco is
                accountable up to such date and all contingent Liabilities for Taxes
                have
                been provided for or disclosed in the Priveco Financial
                Statements.

            


    

     

    3.15                 Absence
      of Changes.  Since the Priveco Accounting Date, neither Priveco or
      any of its subsidiaries has:

     

    
      	
               

            	
              (a)

            	
              incurred
                any Liabilities, other than Liabilities incurred in the ordinary
                course of
                business consistent with past practice, or discharged or satisfied
                any
                lien or encumbrance, or paid any Liabilities, other than in the ordinary
                course of business consistent with past practice, or failed to pay
                or
                discharge when due any Liabilities of which the failure to pay or
                discharge has caused or will cause any material damage or risk of
                material
                loss to it or any of its assets or
                properties;

            


    

     

    
      	
               

            	
              (b)

            	
              sold,
                encumbered, assigned or transferred any material fixed assets or
                properties except for ordinary course business transactions consistent
                with past practice;

            


    

     

    
      	
               

            	
              (c)

            	
              created,
                incurred, assumed or guaranteed any indebtedness for money borrowed,
                or
                mortgaged, pledged or subjected any of the material assets or properties
                of Priveco or its subsidiaries to any mortgage, lien, pledge, security
                interest, conditional sales contract or other encumbrance of any
                nature
                whatsoever;

            


    

     

    
      	
               

            	
              (d)

            	
              made
                or suffered any amendment or termination of any material agreement,
                contract, commitment, lease or plan to which it is a party or by
                which it
                is bound, or cancelled, modified or waived any substantial debts
                or claims
                held by it or waived any rights of substantial value, other than
                in the
                ordinary course of business;

            


    

     

    
      	
               

            	
              (e)

            	
              declared,
                set aside or paid any dividend or made or agreed to make any other
                distribution or payment in respect of its capital shares or redeemed,
                purchased or otherwise acquired or agreed to redeem, purchase or
                acquire
                any of its capital shares or equity
                securities;

            


    

     

    
 

    
      
        
          
          

        

        
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              (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 labour trouble,
                termination, resignation, strike or other occurrence, event or condition
                of any similar character which has had or might have an adverse effect
                on
                its business, operations, assets, properties or
                prospects;

            


    

     

    
      	
               

            	
              (i)

            	
              made
                commitments or agreements for capital expenditures or capital additions
                or
                betterments exceeding in the aggregate
                $5,000;

            


    

     

    
      	
               

            	
              (j)

            	
              other
                than in the ordinary course of business, increased the salaries or
                other
                compensation of, or made any advance (excluding advances for ordinary
                and
                necessary business expenses) or loan to, any of its employees or
                directors
                or made any increase in, or any addition to, other benefits to which
                any
                of its employees or directors may be
                entitled;

            


    

     

    
      	
               

            	
              (k)

            	
              entered
                into any transaction other than in the ordinary course of business
                consistent with past practice; or

            


    

     

    
      	
               

            	
              (l)

            	
              agreed,
                whether in writing or orally, to do any of the
                foregoing.

            


    

     

    3.16                 Absence
      of Certain Changes or Events.  Since the Priveco Accounting Date,
      there has not been:

     

    
      	
               

            	
              (a)

            	
              a
                Priveco Material Adverse Effect; or

            


    

     

    
      	
               

            	
              (b)

            	
              any
                material change by Priveco in its accounting methods, principles
                or
                practices.

            


    

     

    3.17                 Subsidiaries.  Except
      as set forth on Schedule 10, Priveco does not have any subsidiaries or
      agreements of any nature to acquire any subsidiary or to acquire or lease any
      other business operations.  Each subsidiary of Priveco is a
      corporation duly organized, validly existing and in good standing under the
      laws
      of the British Virgin Islands and has the requisite corporate power and
      authority to own, lease and to carry on its business as now being
      conducted.  Each subsidiary of Priveco is duly qualified to do
      business and is in good standing as a corporation in each of the jurisdictions
      in which Priveco owns property, leases property, does business, or is otherwise
      required to do so, where the failure to be so qualified would have a material
      adverse effect on the business of Priveco and its subsidiaries taken as a
      whole.  Priveco owns all of the shares of each subsidiary of Priveco
      and there are no outstanding options, warrants, subscriptions, conversion
      rights, or other rights, agreements, or commitments obligating any subsidiary
      of
      Priveco to issue any additional common shares of such subsidiary, or any other
      securities convertible into, exchangeable for, or evidencing the right to
      subscribe for or acquire from any subsidiary of Priveco any shares of such
      subsidiary.

     

    
 

    
      
        
          
          

        

        
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    3.18                 Personal
      Property. Each of Priveco and its subsidiaries possesses, and has good and
      marketable title of all property necessary for the continued operation of the
      business of Priveco and its subsidiaries as presently conducted and as
      represented to Pubco.  All such property is used in the business of
      Priveco and its subsidiaries.  All such property is in reasonably good
      operating condition (normal wear and tear excepted), and is reasonably fit
      for
      the purposes for which such property is presently used.  All material
      equipment, furniture, fixtures and other tangible personal property and assets
      owned or leased by Priveco and its subsidiaries is owned by Priveco or its
      subsidiaries free and clear of all liens, security interests, charges,
      encumbrances, and other adverse claims, except as disclosed in
      Schedule 6.

     

    3.19                 Intellectual
      Property

     

    
      	
               

            	
              (a)

            	
              Intellectual
                Property Assets.  Priveco and its subsidiaries own or hold
                an interest in all intellectual property assets necessary for the
                operation of the business of Priveco and its subsidiaries as it is
                currently conducted (collectively, the “Intellectual Property
                Assets”), including:

            


    

     

    
      	
               

            	
              (i)

            	
              all
                functional business names, trading names, registered
                and unregistered trademarks, service marks, and
                applications (collectively, the
                “Marks”);

            


    

     

    
      	
               

            	
              (ii)

            	
              all
                patents, patent applications, and inventions, methods, processes
                and
                discoveries that may be patentable (collectively, the
                “Patents”);

            


    

     

    
      	
               

            	
              (iii)

            	
              all
                copyrights in both published works and unpublished works (collectively,
                the “Copyrights”);
                and

            


    

     

    
      	
               

            	
              (iv)

            	
              all
                know-how, trade secrets, confidential information, customer lists,
                software, technical information, data, process technology, plans,
                drawings, and blue prints owned, used, or licensed by Priveco and
                its
                subsidiaries as licensee or licensor (collectively, the “Trade
                Secrets”).

            


    

     

    
      	
               

            	
              (b)

            	
              Agreements.
                Schedule 7 contains a complete and accurate list and summary
                description, including any royalties paid or received by Priveco
                and its
                subsidiaries, of all contracts and agreements relating to the Intellectual
                Property Assets to which Priveco and its subsidiaries is a party
                or by
                which Priveco and its subsidiaries is bound, except for any license
                implied by the sale of a product and perpetual, paid-up licenses
                for
                commonly available software programs with a value of less than $500
                under
                which Priveco or its subsidiaries is the licensee.  To the best
                knowledge of Priveco, there are no outstanding or threatened disputes
                or
                disagreements with respect to any such
                agreement.

            


    

     

    


    


    
      
        
          
          

        

        
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            11
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (c)

            	
              Intellectual
                Property and Know-How Necessary for the Business.  Except as
                set forth in Schedule 7, Priveco and its subsidiaries is the owner of
                all right, title, and interest in and to each of the Intellectual
                Property
                Assets, free and clear of all liens, security interests, charges,
                encumbrances, and other adverse claims, and has the right to use
                without
                payment to a third party of all the Intellectual Property
                Assets.  Except as set forth in Schedule 7, all former and
                current employees and contractors of Priveco and its subsidiaries
                have
                executed written contracts, agreements or other undertakings with
                Priveco
                and its subsidiaries that assign all rights to any inventions,
                improvements, discoveries, or information relating to the business
                of
                Priveco and its subsidiaries.  No employee, director, officer or
                shareholder of Priveco or any of its subsidiaries owns directly or
                indirectly in whole or ion part, any Intellectual Property Asset
                which
                Priveco or any of its subsidiaries is presently using or which is
                necessary for the conduct of its business.  To the best
                knowledge of Priveco, no employee or contractor of Priveco or its
                subsidiaries has entered into any contract or agreement that restricts
                or
                limits in any way the scope or type of work in which the employee
                may be
                engaged or requires the employee to transfer, assign, or disclose
                information concerning his work to anyone other than Priveco or its
                subsidiaries.

            


    

     

    
      	
               

            	
              (d)

            	
              Patents.  Except
                as set out in Schedule 7, neither Priveco nor any of its subsidiaries
                holds ay right, title or interest in and to any Patent and Priveco
                has not
                filed any patent application with any third party.  To the best
                knowledge of Priveco, none of the products manufactured and sold,
                nor any
                process or know-how used, by Priveco or any of its subsidiaries infringes
                or is alleged to infringe any patent or other proprietary night of
                any
                other person or entity.

            


    

     

    
      	
               

            	
              (e)

            	
              Trademarks.
                Except as set out in Schedule 7, neither Priveco nor any of its
                subsidiaries holds any right, title or interest in and to any Mark
                and
                Priveco has not registered or filed any application to register any
                Mark
                with any third party.  To the best knowledge of Priveco, none of
                the Marks, if any, used by Priveco or any of its subsidiaries infringes
                or
                is alleged to infringe any trade name, trademark, or service mark
                of any
                third party.

            


    

     

    
      	
               

            	
              (f)

            	
              Copyrights.
                Schedule 7 contains a complete and accurate list and summary
                description of all Copyrights.  Priveco and its subsidiaries is
                the owner of all right, title, and interest in and to each of the
                Copyrights, free and clear of all liens, security interests, charges,
                encumbrances, and other adverse claims.  If applicable, all
                registered Copyrights are currently in compliance with formal legal
                requirements, are valid and enforceable, and are not subject to any
                maintenance fees or taxes or actions falling due within ninety days
                after
                the Closing Date.  To the best knowledge of Priveco, no
                Copyright is infringed or has been challenged or threatened in any
                way and
                none of the subject matter of any of the Copyrights infringes or
                is
                alleged to infringe any copyright of any third party or is a derivative
                work based on the work of a third party.  All works encompassed
                by the Copyrights have been marked with the proper copyright
                notice.

            


    

     

    
      	
               

            	
              (g)

            	
              Trade
                Secrets.  Each of Priveco and its subsidiaries has taken all
                reasonable precautions to protect the secrecy, confidentiality, and
                value
                of its Trade Secrets.  Each of Priveco and its subsidiaries has
                good title and an absolute right to use the Trade Secrets.  The
                Trade Secrets are not part of the public knowledge or literature,
                and to
                the best knowledge of Priveco, have not been used, divulged, or
                appropriated either for the benefit of any person or entity or to
                the
                detriment of Priveco or any of its subsidiaries.  No Trade
                Secret is subject to any adverse claim or has been challenged or
                threatened in any way.

            


    

     

    
 

    
      
        
          
          

        

        
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    3.20                 Insurance.  The
      products sold by and the assets owned by Priveco and its subsidiaries are
      insured under various policies of general product liability and other forms
      of
      insurance consistent with prudent business practices.  All such
      policies are in full force and effect in accordance with their terms, no notice
      of cancellation has been received, and there is no existing default by Priveco,
      its subsidiaries or any event which, with the giving of notice, the lapse of
      time or both, would constitute a default thereunder.  All premiums to
      date have been paid in full.

     

    3.21                 Employees
      and Consultants.  All employees and consultants of Priveco and its
      subsidiaries have been paid all salaries, wages, income and any other sum due
      and owing to them by Priveco or its subsidiaries, as at the end of the most
      recent completed pay period.  Neither Priveco nor any of its
      subsidiaries is aware of any labor conflict with any employees that might
      reasonably be expected to have a Priveco Material Adverse Effect.  To
      the best knowledge of Priveco, no employee of Priveco or any of its subsidiaries
      is in violation of any term of any employment contract, non-disclosure
      agreement, non-competition agreement or any other contract or agreement relating
      to the relationship of such employee with Priveco or its subsidiaries or any
      other nature of the business conducted or to be conducted by Priveco its
      subsidiaries.

     

    3.22                 Real
      Property. Neither Priveco nor any of its subsidiaries owns any real
      property.  Each of the leases, subleases, claims or other real
      property interests (collectively, the “Leases”) to which
      Priveco or any of its subsidiaries is a party or is bound, as set out in
      Schedule 6, is legal, valid, binding, enforceable and in full force and
      effect in all material respects.  All rental and other payments
      required to be paid by Priveco and its subsidiaries 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.  Neither Priveco nor any of its subsidiaries has
      assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered
      any
      interest in the Leases or the leasehold property pursuant thereto.

     

    3.23                 Material
      Contracts and Transactions. Schedule 8 attached hereto lists each
      material contract, agreement, license, permit, arrangement, commitment,
      instrument or contract to which Priveco or any of its subsidiaries is a party
      (each, a “Contract”).  Each Contract is in full force
      and effect, and there exists no material breach or violation of or default
      by
      Priveco or any of its subsidiaries under any Contract, or any event that with
      notice or the lapse of time, or both, will create a material breach or violation
      thereof or default under any Contract by Priveco or any of its
      subsidiaries.  The continuation, validity, and effectiveness of each
      Contract will in no way be affected by the consummation of the Transaction
      contemplated by this Agreement.  There exists no actual or threatened
      termination, cancellation, or limitation of, or any amendment, modification,
      or
      change to any Contract.

     

    3.24                 Certain
      Transactions.  Neither Priveco nor any of its subsidiaries is a
      guarantor or indemnitor of any indebtedness of any third party, including any
      person, firm or corporation.

     

    3.25                 No
      Brokers.  Neither Priveco nor any of its subsidiaries has incurred
      any independent obligation or liability to any party for any brokerage fees,
      agent’s commissions, or finder’s fees in connection with the Transaction
      contemplated by this Agreement.

     

    
 

    
      
        
          
          

        

        
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            13
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    3.26                 Completeness
      of Disclosure.  No representation or warranty by Priveco in this
      Agreement nor any certificate, schedule, statement, document or instrument
      furnished or to be furnished to Pubco pursuant hereto contains or will contain
      any untrue statement of a material fact or omits or will omit to state a
      material fact required to be stated herein or therein or necessary to make
      any
      statement herein or therein not materially misleading.

     

    Notwithstanding
      section 10.1 hereof, the representations and warranties contained in this
      section shall survive Closing indefinitely.

     

    
      	
              4.

            	
              REPRESENTATIONS
                AND WARRANTIES OF
                PUBCO

            


    

     

    Pubco
      represents and warrants to Priveco and the Selling Shareholders and acknowledges
      that Priveco and the Selling Shareholders are relying upon such representations
      and warranties in connection with the execution, delivery and performance of
      this Agreement, notwithstanding any investigation made by or on behalf of
      Priveco or the Selling Shareholders, as follows:

     

    4.1                   Organization
      and Good Standing.  Pubco is duly incorporated, organized, validly
      existing and in good standing under the laws of the State of Nevada and has
      all
      requisite corporate power and authority to own, lease and to carry on its
      business as now being conducted.  Pubco is qualified to do business
      and is in good standing as a foreign corporation in each of the jurisdictions
      in
      which it owns property, leases property, does business, or is otherwise required
      to do so, where the failure to be so qualified would have a material adverse
      effect on the businesses, operations, or financial condition of
      Pubco.

     

    4.2                   Authority.  Pubco
      has all requisite corporate power and authority to execute and deliver this
      Agreement and any other document contemplated by this Agreement (collectively,
      the “Pubco Documents”) to be signed by Pubco and to perform its
      obligations hereunder and to consummate the transactions contemplated
      hereby.  The execution and delivery of each of the Pubco Documents by
      Pubco and the consummation by Pubco of the transactions contemplated hereby
      have
      been duly authorized by its board of directors and no other corporate or
      shareholder proceedings on the part of Pubco is necessary to authorize such
      documents or to consummate the transactions contemplated hereby.  This
      Agreement has been, and the other Pubco Documents when executed and delivered
      by
      Pubco as contemplated by this Agreement will be, duly executed and delivered
      by
      Pubco and this Agreement is, and the other Pubco Documents when executed and
      delivered by Pubco, as contemplated hereby will be, valid and binding
      obligations of Pubco enforceable in accordance with their respective terms,
      except:

     

    
      	
               

            	
              (a)

            	
              as
                limited by applicable bankruptcy, insolvency, reorganization, moratorium,
                and other laws of general application affecting enforcement of creditors’
                rights generally;

            


    

     

    
      	
               

            	
              (b)

            	
              as
                limited by laws relating to the availability of specific performance,
                injunctive relief, or other equitable remedies;
                and

            


    

     

    
      	
               

            	
              (c)

            	
              as
                limited by public policy.

            


    

     

    
 

    
      
        
          
          

        

        
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            14
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    4.3                   Capitalization
      of Pubco.  The entire authorized capital stock and other equity
      securities of Pubco consists of 75,000,000 shares of common stock with a par
      value of $0.001 (the “Pubco Common Stock”).  As of
      the date of this Agreement, there are 71,266,667 shares of Pubco Common Stock
      issued and outstanding.  All of the issued and outstanding shares of
      Pubco Common Stock have been duly authorized, are validly issued, were not
      issued in violation of any pre-emptive rights and are fully paid and
      non-assessable, are not subject to pre-emptive rights and were issued in full
      compliance with all federal, state, and local laws, rules and
      regulations.  Except as contemplated by this Agreement, there are no
      outstanding options, warrants, subscriptions, phantom shares, conversion rights,
      or other rights, agreements, or commitments obligating Pubco to issue any
      additional shares of Pubco Common Stock, or any other securities convertible
      into, exchangeable for, or evidencing the right to subscribe for or acquire
      from
      Pubco any shares of Pubco Common Stock as of the date of this
      Agreement.  There are no agreements purporting to restrict the
      transfer of the Pubco Common Stock, no voting agreements, voting trusts, or
      other arrangements restricting or affecting the voting of the Pubco Common
      Stock.

     

    4.4                   Directors
      and Officers of Pubco.  The duly elected or appointed directors
      and the duly appointed officers of Pubco are as listed on
      Schedule 5.

     

    4.5                   Corporate
      Records of Pubco.  The corporate records of Pubco, as required to
      be maintained by it pursuant to the laws of the State of Nevada, are accurate,
      complete and current in all material respects, and the minute book of Pubco
      is,
      in all material respects, correct and contains all material records required
      by
      the law of the State of Nevada in regards to all proceedings, consents, actions
      and meetings of the shareholders and the board of directors of
      Pubco.

     

    4.6                   Non-Contravention.  Neither
      the execution, delivery and performance of this Agreement, nor the consummation
      of the Transaction, will:

     

    
      	
               

            	
              (a)

            	
              conflict
                with, result in a violation of, cause a default under (with or without
                notice, lapse of time or both) or give rise to a right of termination,
                amendment, cancellation or acceleration of any obligation contained
                in or
                the loss of any material benefit under, or result in the creation
                of any
                lien, security interest, charge or encumbrance upon any of the material
                properties or assets of Pubco under any term, condition or provision
                of
                any loan or credit agreement, note, debenture, bond, mortgage, indenture,
                lease or other agreement, instrument, permit, license, judgment,
                order,
                decree, statute, law, ordinance, rule or regulation applicable to
                Pubco or
                any of its material property or
                assets;

            


    

     

    
      	
               

            	
              (b)

            	
              violate
                any provision of the applicable incorporation or charter documents
                of
                Pubco; or

            


    

     

    
      	
               

            	
              (c)

            	
              violate
                any order, writ, injunction, decree, statute, rule, or regulation
                of any
                court or governmental or regulatory authority applicable to Pubco
                or any
                of its material property or assets.

            


    

     

    4.7                   Validity
      of Pubco Common Stock Issuable upon the Transaction.  The Pubco
      Shares to be issued to the Selling Shareholders upon consummation of the
      Transaction in accordance with this Agreement will, upon issuance, have been
      duly and validly authorized and, when so issued in accordance with the terms
      of
      this Agreement, will be duly and validly issued, fully paid and
      non-assessable.

     

    
 

    
      
        
          
          

        

        
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    4.8                   Actions
      and Proceedings.  To the best knowledge of Pubco, there is no
      claim, charge, arbitration, grievance, action, suit, investigation or proceeding
      by or before any court, arbiter, administrative agency or other governmental
      authority now pending or, to the best knowledge of Pubco, threatened against
      Pubco which involves any of the business, or the properties or assets of Pubco
      that, if adversely resolved or determined, would have a material adverse effect
      on the business, operations, assets, properties, prospects or conditions of
      Pubco taken as a whole (a “Pubco Material Adverse
      Effect”).  There is no reasonable basis for any claim or
      action that, based upon the likelihood of its being asserted and its success
      if
      asserted, would have such a Pubco Material Adverse Effect.

     

    4.9                   Compliance.

     

    
      	
               

            	
              (a)

            	
              To
                the best knowledge of Pubco, Pubco is in compliance with, is not
                in
                default or violation in any material respect under, and has not been
                charged with or received any notice at any time of any material violation
                of any statute, law, ordinance, regulation, rule, decree or other
                applicable regulation to the business or operations of
                Pubco;

            


    

     

    
      	
               

            	
              (b)

            	
              To
                the best knowledge of Pubco, Pubco is not subject to any judgment,
                order
                or decree entered in any lawsuit or proceeding applicable to its
                business
                and operations that would constitute a Pubco Material Adverse
                Effect;

            


    

     

    
      	
               

            	
              (c)

            	
              Pubco
                has duly filed all reports and returns required to be filed by it
                with
                governmental authorities and has obtained all governmental permits
                and
                other governmental consents, except as may be required after the
                execution
                of this Agreement.  All of such permits and consents are in full
                force and effect, and no proceedings for the suspension or cancellation
                of
                any of them, and no investigation relating to any of them, is pending
                or
                to the best knowledge of Pubco, threatened, and none of them will
                be
                affected in a material adverse manner by the consummation of the
                Transaction; and

            


    

     

    
      	
               

            	
              (d)

            	
              Pubco
                has operated in material compliance with all laws, rules, statutes,
                ordinances, orders and regulations applicable to its
                business.  Pubco has not received any notice of any violation
                thereof, nor is Pubco aware of any valid basis
                therefore.

            


    

     

    4.10                 Filings,
      Consents and Approvals.  No filing or registration with, no notice
      to and no permit, authorization, consent, or approval of any public or
      governmental body or authority or other person or entity is necessary for the
      consummation by Pubco of the Transaction contemplated by this Agreement to
      continue to conduct its business after the Closing Date in a manner which is
      consistent with that in which it is presently conducted.

     

    4.11                 SEC
      Filings.  Pubco has furnished or made available to Priveco and the
      Selling Shareholders a true and complete copy of each report, schedule,
      registration statement and proxy statement filed by Pubco with the SEC
      (collectively, and as such documents have since the time of their filing been
      amended, the “Pubco SEC Documents”). As of their respective
      dates, the Pubco SEC Documents complied in all material respects with the
      requirements of the Securities Act, or the Exchange Act, as the case may be,
      and
      the rules and regulations of the SEC thereunder applicable to such Pubco SEC
      Documents.

     

    
 

    
      
        
          
          

        

        
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            16
            -

          
            

          

        

        
          
          

        

      

    

     

    4.12                 Financial
      Representations.  Included with the Pubco SEC Documents are true,
      correct, and complete copy of the audited balance sheet for Pubco dated as
      of
      June 30, 2006 and an unaudited balance sheet for Pubco dated as of March 31,
      2007 (the “Pubco Accounting Date”), together with related
      statements of income, cash flows, and changes in shareholder’s equity for the
      fiscal year and interim period then ended (collectively, the “Pubco
      Financial Statements”).  The Pubco Financial
      Statements:

     

    
      	
               

            	
              (a)

            	
              are
                in accordance with the books and records of
                Pubco;

            


    

     

    
      	
               

            	
              (b)

            	
              present
                fairly the financial condition of Pubco as of the respective dates
                indicated and the results of operations for such periods;
                and

            


    

     

    
      	
               

            	
              (c)

            	
              have
                been prepared in accordance with
                GAAP.

            


    

     

    Pubco
      has
      not received any advice or notification from its independent certified public
      accountants that Pubco has used any improper accounting practice that would
      have
      the effect of not reflecting or incorrectly reflecting in the Pubco Financial
      Statements or the books and records of Pubco, any properties, assets,
      Liabilities, revenues, or expenses.  The books, records, and accounts
      of Pubco accurately and fairly reflect, in reasonable detail, the assets, and
      Liabilities of Pubco.  Pubco has not engaged in any transaction,
      maintained any bank account, or used any funds of Pubco, except for
      transactions, bank accounts, and funds which have been and are reflected in
      the
      normally maintained books and records of Pubco.

     

    4.13                 Absence
      of Undisclosed Liabilities.  Pubco has no material Liabilities or
      obligations either direct or indirect, matured or unmatured, absolute,
      contingent or otherwise, which:

     

    
      	
               

            	
              (a)

            	
              are
                not set forth in the Pubco Financial Statements or have not heretofore
                been paid or discharged;

            


    

     

    
      	
               

            	
              (b)

            	
              did
                not arise in the regular and ordinary course of business under any
                agreement, contract, commitment, lease or plan specifically disclosed
                in
                writing to Priveco; or

            


    

     

    
      	
               

            	
              (c)

            	
              have
                not been incurred in amounts and pursuant to practices consistent
                with
                past business practice, in or as a result of the regular and ordinary
                course of its business since the date of the last Pubco Financial
                Statements.

            


    

     

    4.14                 Tax
      Matters.

     

    
      	
               

            	
              (a)

            	
              As
                of the date hereof:

            


    

     

    
      	
               

            	
              (i)

            	
              Pubco
                has timely filed all tax returns in connection with any Taxes which
                are
                required to be filed on or prior to the date hereof, taking into
                account
                any extensions of the filing deadlines which have been validly granted
                to
                them, and

            


    

     

    
 

    
      
        
          
          

        

        
          -
            17
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (ii)

            	
              all
                such returns are true and correct in all material
                respects;

            


    

     

    
      	
               

            	
              (b)

            	
              Pubco
                has paid all Taxes that have become or are due with respect to any
                period
                ended on or prior to the date
                hereof;

            


    

     

    
      	
               

            	
              (c)

            	
              Pubco
                is not presently under and has not received notice of, any contemplated
                investigation or audit by the Canada Revenue Agency or the Internal
                Revenue Service or any foreign or state taxing authority concerning
                any
                fiscal year or period ended prior to the date
                hereof;

            


    

     

    
      	
               

            	
              (d)

            	
              All
                Taxes required to be withheld on or prior to the date hereof from
                employees for income Taxes, social security Taxes, unemployment Taxes
                and
                other similar withholding Taxes have been properly withheld and,
                if
                required on or prior to the date hereof, have been deposited with
                the
                appropriate governmental agency;
                and

            


    

     

    
      	
               

            	
              (e)

            	
              To
                the best knowledge of Pubco, the Pubco Financial Statements contain
                full
                provision for all Taxes including any deferred Taxes that may be
                assessed
                to Pubco for the accounting period ended on the Pubco Accounting
                Date or
                for any prior period in respect of any transaction, event or omission
                occurring, or any profit earned, on or prior to the Pubco Accounting
                Date
                or for any profit earned by Pubco on or prior to the Pubco Accounting
                Date
                or for which Pubco is accountable up to such date and all contingent
                Liabilities for Taxes have been provided for or disclosed in the
                Pubco
                Financial Statements.

            


    

     

    4.15                 Absence
      of Changes.  Since the Pubco Accounting Date, except as disclosed
      in the Public SEC Documents and except as contemplated in this Agreement, Pubco
      has not:

     

    
      	
               

            	
              (a)

            	
              incurred
                any Liabilities, other than Liabilities incurred in the ordinary
                course of
                business consistent with past practice, or discharged or satisfied
                any
                lien or encumbrance, or paid any Liabilities, other than in the ordinary
                course of business consistent with past practice, or failed to pay
                or
                discharge when due any Liabilities of which the failure to pay or
                discharge has caused or will cause any material damage or risk of
                material
                loss to it or any of its assets or
                properties;

            


    

     

    
      	
               

            	
              (b)

            	
              sold,
                encumbered, assigned or transferred any material fixed assets or
                properties;

            


    

     

    
      	
               

            	
              (c)

            	
              created,
                incurred, assumed or guaranteed any indebtedness for money borrowed,
                or
                mortgaged, pledged or subjected any of the material assets or properties
                of Pubco to any mortgage, lien, pledge, security interest, conditional
                sales contract or other encumbrance of any nature
                whatsoever;

            


    

     

    
      	
               

            	
              (d)

            	
              made
                or suffered any amendment or termination of any material agreement,
                contract, commitment, lease or plan to which it is a party or by
                which it
                is bound, or cancelled, modified or waived any substantial debts
                or claims
                held by it or waived any rights of substantial value, other than
                in the
                ordinary course of business;

            


    

     

    
 

    
      
        
          
          

        

        
          -
            18
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (e)

            	
              declared,
                set aside or paid any dividend or made or agreed to make any other
                distribution or payment in respect of its capital shares or redeemed,
                purchased or otherwise acquired or agreed to redeem, purchase or
                acquire
                any of its capital shares or equity
                securities;

            


    

     

    
      	
               

            	
              (f)

            	
              suffered
                any damage, destruction or loss, whether or not covered by insurance,
                that
                materially and adversely effects its business, operations, assets,
                properties or prospects;

            


    

     

    
      	
               

            	
              (g)

            	
              suffered
                any material adverse change in its business, operations, assets,
                properties, prospects or condition (financial or
                otherwise);

            


    

     

    
      	
               

            	
              (h)

            	
              received
                notice or had knowledge of any actual or threatened labor trouble,
                termination, resignation, strike or other occurrence, event or condition
                of any similar character which has had or might have an adverse effect
                on
                its business, operations, assets, properties or
                prospects;

            


    

     

    
      	
               

            	
              (i)

            	
              made
                commitments or agreements for capital expenditures or capital additions
                or
                betterments exceeding in the aggregate
                $5,000;

            


    

     

    
      	
               

            	
              (j)

            	
              other
                than in the ordinary course of business, increased the salaries or
                other
                compensation of, or made any advance (excluding advances for ordinary
                and
                necessary business expenses) or loan to, any of its employees or
                directors
                or made any increase in, or any addition to, other benefits to which
                any
                of its employees or directors may be
                entitled;

            


    

     

    
      	
               

            	
              (k)

            	
              entered
                into any transaction other than in the ordinary course of business
                consistent with past practice; or

            


    

     

    
      	
               

            	
              (l)

            	
              agreed,
                whether in writing or orally, to do any of the
                foregoing.

            


    

     

    4.16                 Absence
      of Certain Changes or Events.  Since the Pubco Accounting Date,
      except as and to the extent disclosed in the Pubco SEC Documents, there has
      not
      been:

     

    
      	
               

            	
              (a)

            	
              a
                Pubco Material Adverse Effect; or

            


    

     

    
      	
               

            	
              (b)

            	
              any
                material change by Pubco in its accounting methods, principles or
                practices.

            


    

     

    4.17                 Subsidiaries.  Pubco
      does not have any subsidiaries or agreements of any nature to acquire any
      subsidiary or to acquire or lease any other business operations, except as
      disclosed in the Pubco SEC Documents.

     

    4.18                 Personal
      Property.  There are no material equipment, furniture, fixtures
      and other tangible personal property and assets owned or leased by Pubco, except
      as disclosed in the Pubco SEC Documents.

     

    


    


    
      
        
          
          

        

        
          -
            19
            -

          
            

          

        

        
          
          

        

      

    

     

    4.19                 Employees
      and Consultants.  Pubco does not have any employees or
      consultants, except as disclosed in the Pubco SEC Documents.

     

    4.20                 Material
      Contracts and Transactions.  Other than as expressly contemplated
      by this Agreement, there are no material contracts, agreements, licenses,
      permits, arrangements, commitments, instruments, understandings or contracts,
      whether written or oral, express or implied, contingent, fixed or otherwise,
      to
      which Pubco is a party except as disclosed in writing to Priveco or as disclosed
      in the Pubco SEC Documents.

     

    4.21                 No
      Brokers.  Pubco has not incurred any obligation or liability to
      any party for any brokerage fees, agent’s commissions, or finder’s fees in
      connection with the Transaction contemplated by this Agreement.

     

    4.22                 Completeness
      of Disclosure.  No representation or warranty by Pubco in this
      Agreement nor any certificate, schedule, statement, document or instrument
      furnished or to be furnished to Priveco pursuant hereto contains or will contain
      any untrue statement of a material fact or omits or will omit to state a
      material fact required to be stated herein or therein or necessary to make
      any
      statement herein or therein not materially misleading.

     

    
      	
              5.

            	
              CLOSING
                CONDITIONS

            


    

     

    5.1                   Conditions
      Precedent to Closing by Pubco.  The obligation of Pubco to
      consummate the Transaction is subject to the satisfaction or written waiver
      of
      the conditions set forth below by a date mutually agreed upon by the parties
      hereto in writing and in accordance with Section 10.6.  The Closing of
      the Transaction contemplated by this Agreement will be deemed to mean a waiver
      of all conditions to Closing.  These conditions precedent are for the
      benefit of Pubco and may be waived by Pubco in its sole discretion.

     

    
      	
               

            	
              (a)

            	
              Representations
                and Warranties.  The representations and warranties of
                Priveco and the Selling Shareholders set forth in this Agreement
                will be
                true, correct and complete in all respects as of the Closing Date,
                as
                though made on and as of the Closing Date and Priveco will have delivered
                to Pubco a certificate dated as of the Closing Date, to the effect
                that
                the representations and warranties made by Priveco in this Agreement
                are
                true and correct.

            


    

     

    
      	
               

            	
              (b)

            	
              Performance.  All
                of the covenants and obligations that Priveco and the Selling Shareholders
                are required to perform or to comply with pursuant to this Agreement
                at or
                prior to the Closing must have been performed and complied with in
                all
                material respects.

            


    

     

    
      	
               

            	
              (c)

            	
              Transaction
                Documents.  This Agreement, the Priveco Documents, the
                Priveco Financial Statements and all other documents necessary or
                reasonably required to consummate the Transaction, all in form and
                substance reasonably satisfactory to Pubco, will have been executed
                and
                delivered to Pubco.

            


    

     

    
      	
               

            	
              (d)

            	
              Secretary’s
                Certificate – Priveco.  Pubco will have received a
                certificate from the Secretary of Priveco
                attaching:

            


    

     

    
 

    
      
        
          
          

        

        
          -
            20
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (i)

            	
              a
                copy of Priveco’s Certificate of Incorporation, Articles of Incorporation
                and all other incorporation documents, as amended through the Closing
                Date; and

            


    

     

    
      	
               

            	
              (ii)

            	
              copies
                of resolutions duly adopted by the board of directors of Priveco
                approving
                the execution and delivery of this Agreement and the consummation
                of the
                transactions contemplated herein.

            


    

     

    
      	
               

            	
              (e)

            	
              Legal
                Opinion – Priveco.  Pubco will have received an opinion,
                dated as of the Closing Date, from counsel for Priveco, and such
                other
                local or special counsel as is appropriate, all of which opinion
                will be
                in the form and substance reasonably satisfactory to Pubco and its
                counsel.

            


    

     

    
      	
               

            	
              (f)

            	
              Third
                Party Consents.  Pubco will have received duly executed
                copies of all third party consents and approvals contemplated by
                this
                Agreement, in form and substance reasonably satisfactory to
                Pubco.

            


    

     

    
      	
               

            	
              (g)

            	
              Employment
                Agreements.  Pubco will have received from Priveco copies of
                all agreements or arrangements that evidence the employment of all
                of the
                hourly and salaried employees of Priveco as set out on Schedule 9
                attached hereto, which constitute all of the employees reasonably
                necessary to operate the business of Priveco substantially as presently
                operated.

            


    

     

    
      	
               

            	
              (h)

            	
              No
                Material Adverse Change.  No Priveco Material Adverse Effect
                will have occurred since the date of this
                Agreement.

            


    

     

    
      	
               

            	
              (i)

            	
              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.

            


    

     

    
      	
               

            	
              (j)

            	
              Outstanding
                Shares. Priveco will have no more than 1,000 shares of Priveco Common
                Stock issued and outstanding on the Closing
                Date.

            


    

     

    
      	
               

            	
              (k)

            	
              Delivery
                of Financial Statements. Priveco will have delivered to Pubco the
                Priveco Financial Statements, which financial statements will include
                audited financial statements for the fiscal year ended March 31,
                2007,
                prepared in accordance with GAAP and audited by an independent auditor
                registered with the Public Company Accounting Oversight Board in
                the
                United States.

            


    

     

    
      	
               

            	
              (l)

            	
              Due
                Diligence Review of Financial Statements.  Pubco and its
                accountants will be reasonably satisfied with their due diligence
                investigation and review of the Priveco Financial
                Statements.

            


    

     

    
 

    
      
        
          
          

        

        
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            21
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              (m)

            	
              Due
                Diligence Generally.  Pubco and its solicitors will be
                reasonably satisfied with their due diligence investigation of Priveco
                that is reasonable and customary in a transaction of a similar nature
                to
                that contemplated by the Transaction,
                including:

            


    

     

    
      	
               

            	
              (i)

            	
              materials,
                documents and information in the possession and control of Priveco
                and the
                Selling Shareholders which are reasonably germane to the
                Transaction;

            


    

     

    
      	
               

            	
              (ii)

            	
              a
                physical inspection of the assets of Priveco by Pubco or its
                representatives; and

            


    

     

    
      	
               

            	
              (iii)

            	
              title
                to the material assets of Priveco.

            


    

     

    
      	
               

            	
              (n)

            	
              Compliance
                with Securities Laws.  Pubco will have received evidence
                satisfactory to Pubco that the Pubco Securities issuable in the
                Transaction will be issuable without registration pursuant to the
                Securities Act in reliance on a safe harbor from the registration
                requirements of the Securities Act provided by Regulation
                S.

            


    

     

    In
      order
      to establish the availability of the safe harbor from the registration
      requirements of the Securities Act for the issuance of Pubco Securities to
      each
      Selling Shareholder or their nominees, Priveco will deliver to Pubco on Closing,
      a Certificate duly executed by each Selling Shareholder.

     

    5.2                   Conditions
      Precedent to Closing by Priveco.  The obligation of Priveco and
      the Selling Shareholders to consummate the Transaction is subject to the
      satisfaction or written waiver of the conditions set forth below by a date
      mutually agreed upon by the parties hereto in writing and in accordance with
      Section 10.6.  The Closing of the Transaction will be deemed to mean a
      waiver of all conditions to Closing.  These conditions precedent are
      for the benefit of Priveco and the Selling Shareholders and may be waived by
      Priveco and the Selling Shareholders in their discretion.

     

    
      	
               

            	
              (a)

            	
              Representations
                and Warranties.  The representations and warranties of Pubco
                set forth in this Agreement will be true, correct and complete in
                all
                respects as of the Closing Date, as though made on and as of the
                Closing
                Date and Pubco will have delivered to Priveco a certificate dated
                the
                Closing Date, to the effect that the representations and warranties
                made
                by Pubco in this Agreement are true and
                correct.

            


    

     

    
      	
               

            	
              (b)

            	
              Performance.  All
                of the covenants and obligations that Pubco are required to perform
                or to
                comply with pursuant to this Agreement at or prior to the Closing
                must
                have been performed and complied with in all material
                respects.  Pubco must have delivered each of the documents
                required to be delivered by it pursuant to this
                Agreement.

            


    

     

    
      	
               

            	
              (c)

            	
              Transaction
                Documents.  This Agreement, the Pubco Documents and all
                other documents necessary or reasonably required to consummate the
                Transaction, all in form and substance reasonably satisfactory to
                Priveco,
                will have been executed and delivered by
                Pubco.

            


    

     

    
 

    
      
        
          
          

        

        
          -
            22
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (d)

            	
              Secretary’s
                Certificate - Pubco. Priveco will have received a certificate from the
                Secretary of Pubco attaching:

            


    

     

    
      	
               

            	
              (i)

            	
              a
                copy of Pubco’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 Pubco approving
                the execution and delivery of this Agreement and the consummation
                of the
                transactions contemplated herein.

            


    

     

    
      	
               

            	
              (e)

            	
              Legal
                Opinion – Pubco. Priveco will have received a legal opinion, dated as
                of the Closing Date, from counsel for Pubco, 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 Priveco and its
                counsel.

            


    

     

    
      	
               

            	
              (f)

            	
              Third
                Party Consents.  Priveco will have received from Pubco duly
                executed copies of all third-party consents, permits, authorisations
                and
                approvals of any public, regulatory (including the SEC) or governmental
                body or authority or person or entity contemplated by this Agreement,
                in
                the form and substance reasonably satisfactory to
                Priveco.

            


    

     

    
      	
               

            	
              (g)

            	
              No
                Material Adverse Change.  No Pubco 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)

            	
              Outstanding
                Shares.  On the Closing Date, Pubco will have 99,533,333
                common shares issued and outstanding in the capital of
                Pubco.

            


    

     

    
      	
               

            	
              (j)

            	
              Public
                Market.  On the Closing Date, the shares of Pubco Common
                Stock will be quoted on the National Association of Securities Dealers,
                Inc.’s OTC Bulletin Board.

            


    

     

    
      	
               

            	
              (k)

            	
              Due
                Diligence Review of Financial Statements.  Priveco and its
                accountants will be reasonably satisfied with their due diligence
                investigation and review of the Pubco Financial Statements, the Pubco
                SEC
                Documents, and the contents thereof, prepared in accordance with
                GAAP.

            


    

     

    


    


    
      
        
          
          

        

        
          -
            23
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (l)

            	
              Due
                Diligence Generally.  Priveco will be reasonably satisfied
                with their due diligence investigation of Pubco that is reasonable
                and
                customary in a transaction of a similar nature to that contemplated
                by the
                Transaction.

            


    

     

    
      	
              6.

            	
              ADDITIONAL
                COVENANTS OF THE
                PARTIES

            


    

     

    6.1                   Notification
      of Financial Liabilities.  Priveco will immediately notify Pubco
      in accordance with Section 10.6 hereof, if Priveco receives any advice or
      notification from its independent certified public accounts that Priveco has
      used any improper accounting practice that would have the effect of not
      reflecting or incorrectly reflecting in the books, records, and accounts of
      Priveco, any properties, assets, Liabilities, revenues, or expenses.
      Notwithstanding any statement to the contrary in this Agreement, this covenant
      will survive Closing and continue in full force and effect.

     

    6.2                   Access
      and Investigation.  Between the date of this Agreement and the
      Closing Date, Priveco, on the one hand, and Pubco, on the other hand, will,
      and
      will cause each of their respective representatives to:

     

    
      	
               

            	
              (a)

            	
              afford
                the other and its representatives full and free access to its personnel,
                properties, assets, contracts, books and records, and other documents
                and
                data;

            


    

     

    
      	
               

            	
              (b)

            	
              furnish
                the other and its representatives with copies of all such contracts,
                books
                and records, and other existing documents and data as required by
                this
                Agreement and as the other may otherwise reasonably request;
                and

            


    

     

    
      	
               

            	
              (c)

            	
              furnish
                the other and its representatives with such additional financial,
                operating, and other data and information as the other may reasonably
                request.

            


    

     

    All
      of
      such access, investigation and communication by a party and its representatives
      will be conducted during normal business hours and in a manner designed not
      to
      interfere unduly with the normal business operations of the other
      party.  Each party will instruct its auditors to co-operate with the
      other party and its representatives in connection with such
      investigations.

     

    6.3                   Confidentiality.  All
      information regarding the business of Priveco including, without limitation,
      financial information that Priveco provides to Pubco during Pubco’s due
      diligence investigation of Priveco will be kept in strict confidence by Pubco
      and will not be used (except in connection with due diligence), dealt with,
      exploited or commercialized by Pubco or disclosed to any third party (other
      than
      Pubco’s professional accounting and legal advisors) without the prior written
      consent of Priveco.  If the Transaction contemplated by this Agreement
      does not proceed for any reason, then upon receipt of a written request from
      Priveco, Pubco will immediately return to Priveco (or as directed by Priveco)
      any information received regarding Priveco’s business.  Likewise, all
      information regarding the business of Pubco including, without limitation,
      financial information that Pubco provides to Priveco during its due diligence
      investigation of Pubco will be kept in strict confidence by Priveco and will
      not
      be used (except in connection with due diligence), dealt with, exploited or
      commercialized by Priveco or disclosed to any third party (other than Priveco’s
      professional accounting and legal advisors) without Pubco’s prior written
      consent.  If the Transaction contemplated by this Agreement does not
      proceed for any reason, then upon receipt of a written request from Pubco,
      Priveco will immediately return to Pubco (or as directed by Pubco) any
      information received regarding Pubco’s business.

     

    
 

    
      
        
          
          

        

        
          -
            24
            -

          
            

          

        

        
          
          

        

      

    

     

    6.4                   Notification.  Between
      the date of this Agreement and the Closing Date, each of the parties to this
      Agreement will promptly notify the other parties in writing if it becomes aware
      of any fact or condition that causes or constitutes a material breach of any
      of
      its representations and warranties as of the date of this Agreement, if it
      becomes aware of the occurrence after the date of this Agreement of any fact
      or
      condition that would cause or constitute a material breach of any such
      representation or warranty had such representation or warranty been made as
      of
      the time of occurrence or discovery of such fact or condition.  Should
      any such fact or condition require any change in the Schedules relating to
      such
      party, such party will promptly deliver to the other parties a supplement to
      the
      Schedules specifying such change.  During the same period, each party
      will promptly notify the other parties of the occurrence of any material breach
      of any of its covenants in this Agreement or of the occurrence of any event
      that
      may make the satisfaction of such conditions impossible or
      unlikely.

     

    6.5                   Exclusivity.  Until
      such time, if any, as this Agreement is terminated pursuant to this Agreement,
      Priveco and Pubco will not, directly or indirectly, solicit, initiate, entertain
      or accept any inquiries or proposals from, discuss or negotiate with, provide
      any non-public information to, or consider the merits of any unsolicited
      inquiries or proposals from, any person or entity relating to any transaction
      involving the sale of the business or assets (other than in the ordinary course
      of business), or any of the capital stock of Priveco or Pubco, as applicable,
      or
      any merger, consolidation, business combination, or similar transaction other
      than as contemplated by this Agreement.

     

    6.6                   Conduct
      of Priveco and Pubco Business Prior to Closing.  From the date of
      this Agreement to the Closing Date, and except to the extent that Pubco
      otherwise consents in writing, Priveco will operate its business substantially
      as presently operated and only in the ordinary course and in compliance with
      all
      applicable laws, and use its best efforts to preserve intact its good reputation
      and present business organization and to preserve its relationships with persons
      having business dealings with it.  Likewise, from the date of this
      Agreement to the Closing Date, and except to the extent that Priveco otherwise
      consents in writing, Pubco will operate its business substantially as presently
      operated and only in the ordinary course and in compliance with all applicable
      laws, and use its best efforts to preserve intact its good reputation and
      present business organization and to preserve its relationships with persons
      having business dealings with it.

     

    6.7                   Certain
      Acts Prohibited – Priveco.  Except as expressly contemplated by
      this Agreement or for purposes in furtherance of this Agreement, between the
      date of this Agreement and the Closing Date, Priveco will not, without the
      prior
      written consent of Pubco:

     

    
      	
               

            	
              (a)

            	
              amend
                its Certificate of Incorporation, Articles of Incorporation or other
                incorporation documents;

            


    

     

    
      	
               

            	
              (b)

            	
              incur
                any liability or obligation other than in the ordinary course of
                business
                or encumber or permit the encumbrance of any properties or assets
                of
                Priveco except in the ordinary course of
                business;

            


    

     

    
 

    
      
        
          
          

        

        
          -
            25
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (c)

            	
              dispose
                of or contract to dispose of any Priveco property or assets, including
                the
                Intellectual Property Assets, except in the ordinary course of business
                consistent with past practice;

            


    

     

    
      	
               

            	
              (d)

            	
              issue,
                deliver, sell, pledge or otherwise encumber or subject to any lien
                any
                shares of the Priveco Common Stock, or any rights, warrants or options
                to
                acquire, any such shares, voting securities or convertible
                securities;

            


    

     

    
      	
               

            	
              (e)

            	
              not:

            


    

     

    
      	
               

            	
              (i)

            	
              declare,
                set aside or pay any dividends on, or make any other distributions
                in
                respect of the Priveco Common Stock,
                or

            


    

     

    
      	
               

            	
              (ii)

            	
              split,
                combine or reclassify any Priveco Common Stock or issue or authorize
                the
                issuance of any other securities in respect of, in lieu of or in
                substitution for shares of Priveco Common Stock;
                or

            


    

     

    
      	
               

            	
              (f)

            	
              not
                materially increase benefits or compensation expenses of Priveco,
                other
                than as contemplated by the terms of any employment agreement in
                existence
                on the date of this Agreement, increase the cash compensation of
                any
                director, executive officer or other key employee or pay any benefit
                or
                amount not required by a plan or arrangement as in effect on the
                date of
                this Agreement to any such person.

            


    

     

    6.8                   Certain
      Acts Prohibited - Pubco.  Except as expressly contemplated by this
      Agreement, between the date of this Agreement and the Closing Date, Pubco will
      not, without the prior written consent of Priveco:

     

    
      	
               

            	
              (a)

            	
              incur
                any liability or obligation or encumber or permit the encumbrance
                of any
                properties or assets of Pubco except in the ordinary course of business
                consistent with past practice;

            


    

     

    
      	
               

            	
              (b)

            	
              dispose
                of or contract to dispose of any Pubco property or assets except
                in the
                ordinary course of business consistent with past
                practice;

            


    

     

    
      	
               

            	
              (c)

            	
              declare,
                set aside or pay any dividends on, or make any other distributions
                in
                respect of the Pubco Common Stock;
                or

            


    

     

    
      	
               

            	
              (d)

            	
              materially
                increase benefits or compensation expenses of Pubco, increase the
                cash
                compensation of any director, executive officer or other key employee
                or
                pay any benefit or amount to any such
                person.

            


    

     

    6.9                   Public
      Announcements.  Pubco and Priveco each agree that they will not
      release or issue any reports or statements or make any public announcements
      relating to this Agreement or the Transaction contemplated herein without the
      prior written consent of the other party, except as may be required 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.

     

    
 

    
      
        
          
          

        

        
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            26
            -

          
            

          

        

        
          
          

        

      

    

     

    6.10                 Employment
      Agreements.  Between the date of this Agreement and the Closing
      Date, Priveco will have made necessary arrangements to employ all of the hourly
      and salaried employees of Priveco reasonably necessary to operate such business
      substantially as presently operated.  Priveco  agrees to
      provide copies of all such agreements and arrangements that evidence such
      employment at or prior to Closing.

     

    
      	
              7.

            	
              CLOSING

            


    

     

    7.1                   Closing.  The
      Closing shall take place on the Closing Date at the offices of the lawyers
      for
      Pubco or at such other location as agreed to by the
      parties.  Notwithstanding the location of the Closing, each party
      agrees that the Closing may be completed by the exchange of undertakings between
      the respective legal counsel for Priveco and Pubco, provided such undertakings
      are satisfactory to each party’s respective legal counsel.

     

    7.2                   Closing
      Deliveries of Priveco and the Selling Shareholders.  At Closing,
      Priveco and the Selling Shareholders will deliver or cause to be delivered
      the
      following, fully executed and in the form and substance reasonably satisfactory
      to Pubco:

     

    
      	
               

            	
              (a)

            	
              copies
                of all resolutions and/or consent actions adopted by or on behalf
                of the
                board of directors of Priveco evidencing approval of this Agreement
                and
                the Transaction;

            


    

     

    
      	
               

            	
              (b)

            	
              if
                any of the Selling Shareholders appoint any person, by power of attorney
                or equivalent, to execute this Agreement or any other agreement,
                document,
                instrument or certificate contemplated by this agreement, on behalf
                of the
                Selling Shareholder, a valid and binding power of attorney or equivalent
                from such Selling Shareholder;

            


    

     

    
      	
               

            	
              (c)

            	
              share
                certificates representing the Priveco Shares as required by Section
                2.3 of
                this Agreement;

            


    

     

    
      	
               

            	
              (d)

            	
              all
                certificates and other documents required by Sections 2.3 and 5.1
                of this
                Agreement;

            


    

     

    
      	
               

            	
              (e)

            	
              a
                certificate of an officer of Priveco, dated as of Closing, certifying
                that:

            


    

     

    
      	
               

            	
              (i)

            	
              each
                covenant and obligation of Priveco has been complied with;
                and

            


    

     

    
      	
               

            	
              (ii)

            	
              each
                representation, warranty and covenant of Priveco is true and correct
                at
                the Closing as if made on and as of the
                Closing;

            


    

     

    
      	
               

            	
              (f)

            	
              the
                Priveco Documents, the Priveco Financial Statements and any other
                necessary documents, each duly executed by Priveco, as required to
                give
                effect to the Transaction;

            


    

     

    
      	
               

            	
              (g)

            	
              copies
                of all agreements and arrangements required by Section 6.10 of this
                Agreement.

            


    

     

    
 

    
      
        
          
          

        

        
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            27
            -

          
            

          

        

        
          
          

        

      

    

     

    7.3                   Closing
      Deliveries of Pubco.  At Closing, Pubco will deliver or cause to
      be delivered the following, fully executed and in the form and substance
      reasonably satisfactory to Priveco:

     

    
      	
               

            	
              (a)

            	
              copies
                of all resolutions and/or consent actions adopted by or on behalf
                of the
                board of directors of Pubco evidencing approval of this Agreement
                and the
                Transaction;

            


    

     

    
      	
               

            	
              (b)

            	
              all
                certificates and other documents required by Section 5.2 of this
                Agreement;

            


    

     

    
      	
               

            	
              (c)

            	
              a
                certificate of an officer of Pubco, dated as of Closing, certifying
                that:

            


    

     

    
      	
               

            	
              (i)

            	
              each
                covenant and obligation of Pubco has been complied with;
                and

            


    

     

    
      	
               

            	
              (ii)

            	
              each
                representation, warranty and covenant of Pubco is true and correct
                at the
                Closing as if made on and as of the Closing;
                and

            


    

     

    
      	
               

            	
              (d)

            	
              the
                Pubco Documents and any other necessary documents, each duly executed
                by
                Pubco, as required to give effect to the
                Transaction.

            


    

     

    7.4                   Additional
      Closing Delivery of Pubco.  At Closing, Pubco will deliver or
      cause to be delivered the share certificates representing the Pubco
      Securities.

     

    
      	
              8.

            	
              TERMINATION

            


    

     

    8.1                   Termination.  This
      Agreement may be terminated at any time prior to the Closing Date contemplated
      hereby by:

     

    
      	
               

            	
              (a)

            	
              mutual
                agreement of Pubco and Priveco;

            


    

     

    
      	
               

            	
              (b)

            	
              Pubco,
                if there has been a material breach by Priveco or any of the Selling
                Shareholders of any material representation, warranty, covenant or
                agreement set forth in this Agreement on the part of Priveco or the
                Selling Shareholders that is not cured, to the reasonable satisfaction
                of
                Pubco, within ten business days after notice of such breach is given
                by
                Pubco (except that no cure period will be provided for a breach by
                Priveco
                or the Selling Shareholders that by its nature cannot be
                cured);

            


    

     

    
      	
               

            	
              (c)

            	
              Priveco,
                if there has been a material breach by Pubco of any material
                representation, warranty, covenant or agreement set forth in this
                Agreement on the part of Pubco that is not cured by the breaching
                party,
                to the reasonable satisfaction of Priveco, within ten business days
                after
                notice of such breach is given by Priveco (except that no cure period
                will
                be provided for a breach by Pubco that by its nature cannot be
                cured);

            


    

     

    
      	
               

            	
              (d)

            	
              Pubco
                or Priveco, if the Transaction contemplated by this Agreement has
                not been
                consummated prior to December 31, 2007, unless the parties hereto
                agree to
                extend such date in writing; or

            


    

     

    
 

    
      
        
          
          

        

        
          -
            28
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (e)

            	
              Pubco
                or Priveco if any permanent injunction or other order of a governmental
                entity of competent authority preventing the consummation of the
                Transaction contemplated by this Agreement has become final and
                non-appealable.

            


    

     

    8.2                   Effect
      of Termination.  In the event of the termination of this Agreement
      as provided in Section 8.1, 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.

     

    
      	
              9.

            	
              INDEMNIFICATION,
                REMEDIES, SURVIVAL

            


    

     

    9.1                   Certain
      Definitions.  For the purposes of
      this Article 9, the terms “Loss” and
“Losses” mean any and all demands,
      claims, actions or causes of
      action, assessments, losses, damages, Liabilities, costs, and expenses,
      including without limitation, interest, penalties, fines and reasonable
      attorneys, accountants and other professional fees and expenses, but excluding
      any indirect, consequential or punitive damages suffered by Pubco or Priveco
      including damages for lost profits or lost business opportunities.

     

    9.2                   Agreement
      of Priveco to Indemnify. Priveco will indemnify, defend, and hold harmless,
      to the full extent of the law, Pubco and its shareholders from, against, and
      in
      respect of any and all Losses asserted against, relating to, imposed upon,
      or
      incurred by Pubco and its shareholders by reason of, resulting from, based
      upon
      or arising out of:

     

    
      	
               

            	
              (a)

            	
              the
                breach by Priveco of any representation or warranty of Priveco contained
                in or made pursuant to this Agreement, any Priveco Document or any
                certificate or other instrument delivered pursuant to this Agreement;
                or

            


    

     

    
      	
               

            	
              (b)

            	
              the
                breach or partial breach by Priveco of any covenant or agreement
                of
                Priveco made in or pursuant to this Agreement, any Priveco Document
                or any
                certificate or other instrument delivered pursuant to this
                Agreement.

            


    

     

    9.3                   Agreement
      of the Selling Shareholders to Indemnify.  The Selling
      Shareholders will indemnify, defend, and hold harmless, to the full extent
      of
      the law, Pubco and its shareholders from, against, and in respect of any and
      all
      Losses asserted against, relating to, imposed upon, or incurred by Pubco and
      its
      shareholders by reason of, resulting from, based upon or arising out
      of:

     

    
      	
               

            	
              (a)

            	
              any
                breach by the Selling Shareholders of Section 2.2 of
                this Agreement; or

            


    

     

    
      	
               

            	
              (b)

            	
              any
                misstatement, misrepresentation or breach of the representations
                and
                warranties made by the Selling Shareholders contained in or made
                pursuant
                to the Certificate executed by each Selling Shareholder or their
                nominee
                as part of the share exchange procedure detailed in Section 2.3 of
                this
                Agreement.

            


    

     

    9.4                   Agreement
      of Pubco to Indemnify.  Pubco will indemnify, defend, and hold
      harmless, to the full extent of the law, Priveco and the Selling Shareholders
      from, against, for, and in respect of any and all Losses asserted against,
      relating to, imposed upon, or incurred by Priveco and the Selling Shareholders
      by reason of, resulting from, based upon or arising out of:

     

    
 

    
      
        
          
          

        

        
          -
            29
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (a)

            	
              the
                breach by Pubco of any representation or warranty of Pubco contained
                in or
                made pursuant to this Agreement, any Pubco Document or any certificate
                or
                other instrument delivered pursuant to this Agreement;
                or

            


    

     

    
      	
               

            	
              (b)

            	
              the
                breach or partial breach by Pubco of any covenant or agreement of
                Pubco
                made in or pursuant to this Agreement, any Pubco Document or any
                certificate or other instrument delivered pursuant to this
                Agreement.

            


    

     

    
      	
              10.

            	
              MISCELLANEOUS
                PROVISIONS

            


    

     

    10.1                 Effectiveness
      of Representations; Survival.  Each party is entitled to rely on
      the representations, warranties and agreements of each of the other parties
      and
      all such representation, warranties and agreement will be effective regardless
      of any investigation that any party has undertaken or failed to
      undertake.  Unless otherwise stated in this Agreement, and except for
      instances of fraud, the representations, warranties and agreements will survive
      the Closing Date and continue in full force and effect until one (1) year after
      the Closing Date.

     

    10.2                 Further
      Assurances.  Each of the parties hereto will co-operate with the
      others and execute and deliver to the other parties hereto such other
      instruments and documents and take such other actions as may be reasonably
      requested from time to time by any other party hereto as necessary to carry
      out,
      evidence, and confirm the intended purposes of this Agreement.

     

    10.3                 Amendment.  This
      Agreement may not be amended except by an instrument in writing signed by each
      of the parties.

     

    10.4                 Expenses.  Pubco
      will bear all costs incurred in connection with the preparation, execution
      and
      performance of this Agreement and the Transaction contemplated hereby, including
      all fees and expenses of agents, representatives and accountants; provided
      that
      Pubco and Priveco will bear its respective legal costs incurred in connection
      with the preparation, execution and performance of this Agreement and the
      Transaction contemplated hereby.

     

    10.5                 Entire
      Agreement.  This Agreement, the schedules attached hereto and the
      other documents in connection with this transaction contain the entire agreement
      between the parties with respect to the subject matter hereof and supersede
      all
      prior arrangements and understandings, both written and oral, expressed or
      implied, with respect thereto.  Any preceding correspondence or offers
      are expressly superseded and terminated by this Agreement.

     

    10.6                 Notices.  All
      notices and other communications required or permitted under 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):

     

    
 

    
      
        
          
          

        

        
          -
            30
            -

          
            

          

        

        
          
          

        

      

    

     

    If
      to
      Priveco or any of the Selling Shareholders:

     

    PetroSouth
      Energy Corp. (BVI)

    20333
      State Highway 249, Suite 200-113

    Houston,
      Texas 77070

     

    Attention:                               Fred
      B. Zaziski

    Telephone:                             281-378-1563

    Facsimile:                               281-271-8600

     

    If
      to
      Pubco

     

    PetroSouth
      Energy Corp. (BVI)

    20333
      State Highway 249, Suite 200-113

    Houston,
      Texas 77070


     

    Attention:                               Fred
      B. Zaziski

    Telephone:                             281-378-1563

    Facsimile:                               281-271-8600

     

    With
      a
      copy (which will not constitute notice) to:

     

    Clark
      Wilson LLP, Barristers & Solicitors

    Suite
      800
– 885 West Georgia Street

    Vancouver,
      British Columbia

    Canada  V6C
      3H1


     

    Attention:                               Bill
      Macdonald

    Telephone:                             (604)
      687-5700

    Facsimile:                               (604)
      687-6314

     

    All
      such
      notices and other communications will be deemed to have been
      received:

     

    
      	
               

            	
              (a)

            	
              in
                the case of personal delivery, on the date of such
                delivery;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                the case of a fax, when the party sending such fax has received electronic
                confirmation of its delivery;

            


    

     

    
      	
               

            	
              (c)

            	
              in
                the case of delivery by internationally-recognized express courier,
                on the
                business day following dispatch;
                and

            


    

     

    
      	
               

            	
              (d)

            	
              in
                the case of mailing, on the fifth business day following
                mailing.

            


    

     

    10.7                 Headings.  The
      headings contained in this Agreement are for convenience purposes only and
      will
      not affect in any way the meaning or interpretation of this
      Agreement.

     

    10.8                 Benefits.  This
      Agreement is and will only be construed as for the benefit of or enforceable
      by
      those persons party to this Agreement.

     

    
 

    
      
        
          
          

        

        
          -
            31
            -

          
            

          

        

        
          
          

        

      

    

     

    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 Province of British Columbia applicable to
      contracts made and to be performed therein.

     

    10.11               Construction.  The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rule of strict construction
      will
      be applied against any party.

     

    10.12               Gender.  All
      references to any party will be read with such changes in number and gender
      as
      the context or reference requires.

     

    10.13               Business
      Days.  If the last or appointed day for the taking of any action
      required or the expiration of any rights granted herein shall be a Saturday,
      Sunday or a legal holiday in the Province of British Columbia, then such action
      may be taken or right may be exercised on the next succeeding day which is
      not a
      Saturday, Sunday or such a legal holiday.

     

    10.14               Counterparts.  This
      Agreement may be executed in one or more counterparts, all of which will be
      considered one and the same agreement and will become effective when one or
      more
      counterparts have been signed by each of the parties and delivered to the other
      parties, it being understood that all parties need not sign the same
      counterpart.

     

    10.15               Fax
      Execution.  This Agreement may be executed by delivery of executed
      signature pages by fax and such fax execution will be effective for all
      purposes.

     

    10.16               Schedules
      and Exhibits.  The schedules and exhibits are attached to this
      Agreement and incorporated herein.

     

    


     

    [Signatures
      on following page]

     

     

    
 

    
      
        
          
          

        

        
          -
            32
            -

          
            

          

        

        
          
          

        

      

    

    
       

      IN
        WITNESS WHEREOF the parties hereto have executed this Agreement as of the
        day
        and year first above written.

       

      PETROSOUTH
        ENERGY CORP. (NEVADA)

       

      
        	
                Per:

              	
                /s/
                  Felipe
                  Pimienta                                      
                  

              


      

      Authorized
        Signatory

      Name:
        Felipe Pimienta

      Title:  Chief
        Financial Officer

       

       

      PETROSOUTH
        ENERGY CORP. (BVI)

       

      
        	
                Per:

              	
                /s/
                  Felipe
                  Pimienta                                       

              


      

      Authorized
        Signatory

      Name:
        Felipe Pimienta

      Title:  Chief
        Financial Officer

       

    

    


    
      	
              WITNESSED
                BY:

              
                                                                                                                           
                  

              

              Name

                                                                                                                         
                

              Address

                                                                                                                         
                

               

                                                                                                                         
                

              Occupation

            	
              )

              )

              )

              )

              )

              )

              )

              )

              )

              )

            	
                                                                                                                         
                

            


    

     

    


    
      	
              WITNESSED
                BY:

                                                                                                                         
                

              Name

                                                                                                                         
                

              Address

                                                                                                                         
                

               

                                                                                                                         
                

              Occupation

            	
              )

              )

              )

              )

              )

              )

              )

              )

              )

              )

            	
              
                                                                                                                           
                  

              

            


    

     

     

     

     

    
      
        
        

      

      
        -
          33
          -

        
          

        

      

      
        
        

      

    

     

    
      	
              WITNESSED
                BY:

                                                                                                                         
                

              Name

                                                                                                                         
                

              Address

                                                                                                                         
                

               

                                                                                                                         
                

              Occupation

            	
              )

              )

              )

              )

              )

              )

              )

              )

              )

              )

            	
              
                                                                                                                           
                  

              

            


    

     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

     

     

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