Document:

ex10x6.htm

    Exhibit
10.6 

     

    SHARE
EXCHANGE AGREEMENT

     

     

    THIS
AGREEMENT is made effective as of the 19th day
of October 2009.

     

    AMONG:

     

    Wind Works Power Corp., a
Nevada corporation, located at 346 Waverley Street Ottawa,
Ontario  K2P 0W5,

     

    (“Wind
Works”)

     

    AND

     

    Wind Works Power Canada Inc.,
an Ontario Corporation located at 346 Waverley Street Ottawa,
Ontario  K2P 0W5

     

    (“Wind
Works Power”)

     

    AND:

     

    Skyway 126 Wind Energy Inc., a
corporation existing under the laws of Ontario and having its head office at
3042 Concession Road 3 Adjala, RR 1, Hockley Valley, Palgrave, Ontario, L0N
1P0

     

    (“Skyway
126”),

     

    AND:

     

    Derek
Tenant

     

    (“Selling Shareholder”)

     

    WHEREAS:

     

    
      	
              A.  

            	
              Wind
      Works Power is a wholly owned subsidiary of Wind
  Works.

            

    

     

    
      	
              B.  

            	
              Wind
      Works Power will acquire 70% of the issued and outstanding shares of
      common stock of  Skyway
126.

            

    

     

    
      	
              C.  

            	
              The
      Selling Shareholder is the registered and beneficial owner
      of  70% of the  Class B Common  flow through
      voting shares of the capital of Skyway (the “ Class B Common
      Stock”);

            

    

     

    
      	
              D.  

            	
              Wind
      Works has agreed to issue   2,000,000  common
      shares in the capital of Wind Works  as of the Closing
      Date, in  consideration for the purchase by Wind Works
      Power  of 70%  of the issued and outstanding Class B
      Common Stock of Skyway 126.

            

    

     

    
      	
              E.  

            	
              Skyway
      126 is the registered and beneficial owner of an existing 10 Megawatt (MW)
      wind energy project under development in Clearview Township in the
      Province of Ontario.  See attached Schedule
  3.

            

    

     

    
      	
              F.  

            	
              Skyway
      126 has a HydroOne queue position (IFA #929), land
      leases for a 10MW project, and one year of wind
  data.

            

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    NOW 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:

     

    
      	
               
      

            	
              DEFINITIONS

            

    

     

    
      	
               
      

            	
              Definitions

            

    

     

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

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              “Closing Date” shall mean
      a date mutually agreed upon by the parties hereto in writing and subject
      to the satisfaction or waiver by Wind Works and Skyway of the conditions
      precedent set out in Sections 0 and 0
    respectively;

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              “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;

            

    

     

    
      	
               
      

            	
              “Selling Shareholders”
      are those shareholders set forth on Schedule 2 executing this
      Agreement as may be amended time to time prior to
  Closing

            

    

     

    
      	
               
      

            	
              “Shareholders” are those
      shareholders set forth on Schedule 1 owning 70%  of the
      outstanding equity securities of
Skyway.

            

    

     

    
      	
               
      

            	
              “Skyway Shares” shall
      mean the Class B Common Stock held  by the Selling
      Shareholders.

            

    

     

    
      	
               
      

            	
              “SEC” shall mean the
      Securities and Exchange Commission;

            

    

     

    
      	
               
      

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

            

    

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              “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

            

    

     

    
      	
               
      

            	
              “Transaction” shall mean
      the purchase of the Skyway Shares by Wind Works Power from the Selling
      Shareholders in consideration for the issuance of the Wind Works
      Shares.

            

    

     

    
      	
               
      

            	
              “Wind Works Shares” shall
      mean 2 million fully paid and non-assessable common shares of Wind Works,
      to be issued to the Selling Shareholders on the Closing
    Date.

            

    

     

    
      	
              1.2

            	
              Schedules

            

    

     

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

     

    
      	 
      	 
      	 
      
	
              Schedule
      1

               

            	 
      	
              Property
      Map

               

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

    

     

    
      	
              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 Shareholder hereby
covenants and agrees to sell, assign and transfer to Wind Works Power, and Wind
Works Power hereby covenants and agrees to purchase from the Selling Shareholder
the Skyway Shares held by the Selling Shareholder.

     

    
      	 	
              2.2

            	
              Consideration

            

    

     

    As
consideration for the sale of the Skyway Shares by the Selling Shareholder to
Wind Works Power, Wind Works Power shall allot and issue the Wind Works Shares
to the Selling Shareholder. The Selling Shareholder acknowledges and agrees that
the Wind Works Shares are being issued pursuant to an exemption from the
prospectus and registration requirements of the Securities Act.  As
required by applicable securities law, the Selling Shareholder agrees to abide
by all applicable resale restrictions and hold periods imposed by all applicable
securities legislation.  All certificates representing the Wind Works
Shares issued on Closing will be endorsed with a restrictive legend similar in
form and substance to the following:

     

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    
      	
               
      

            	 

    

     

    
      	
              2.3

            	
              Share
      Exchange Procedure and
Representations

            

    

     

    The
Selling Shareholder may exchange his certificate representing the Skyway Shares
by delivering such certificate to Wind Works Power duly executed and endorsed in
blank (or accompanied by duly executed stock powers duly endorsed in blank), 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 Wind Works Shares to the holder
thereof.

     

    
      	
              2.4

            	
              Closing
      Date

            

    

     

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

     

    
      	
              2.5

            	
              Restricted
      Shares

            

    

     

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

     

    
      	
              2.6

            	
              Exemptions

            

    

     

    The
Selling Shareholder acknowledges that Wind Works Power has advised such Selling
Shareholder that Wind Works Power is relying upon the representations and
warranties of the Selling Shareholder and, as a consequence, certain
protections, rights and remedies provided by the  Securities Act will
not be available to the Selling Shareholder.

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              2.8

            	
              Canadian
      Resale Restrictions

            

    

     

    The
Selling Shareholder acknowledges that Wind Works   is not a
reporting issuer in any province or territory of Canada and accordingly, any
applicable hold periods in any Canadian jurisdiction will be applicable and the
Wind Works Shares may be subject to resale restrictions in Canada for an
indefinite period of time.  Additionally, the Selling Shareholder
acknowledges that resale of any of the Wind Works Shares by the Selling
Shareholder resident in Canada is restricted except pursuant to an exemption
from applicable securities legislation.

     

    
      	
              3.

            	
              REPRESENTATIONS
      AND WARRANTIES OF SKYWAY AND THE  SELLING
      SHAREHOLDER

            

    

     

    As of the
Closing, Skyway and the Selling Shareholder, jointly and severally, represent
and warrant to Wind Works, and acknowledge that Wind Works 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 Wind Works, as follows:

     

    
      	 	
              3.1

            	
              Organization
      and Good Standing

            

    

     

    Skyway is
a corporation duly organized, validly existing and in good standing under the
laws of the province of Ontario and has the requisite corporate power and
authority to own, lease and to carry on its business as now being
conducted.  Skyway is duly qualified to do business and is in good
standing as a corporation in each of the jurisdictions in which Skyway 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 Skyway taken as a whole.

     

    
      	 	
              3.2

            	
              Authority

            

    

     

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

            

    

     

    As of the
date of this Agreement, and as of the Closing Date, all of the issued and
outstanding Class B Common Stock, the Class A Preferred Shares, or
other  securities of Skyway  will 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 province of
Ontario.  There are no agreements purporting to restrict the transfer
of the Skyway Shares,  no voting agreements, shareholders’ agreements,
voting trusts, or other arrangements restricting or affecting the voting of the
Skyway Shares.  In addition, there will not be at Closing, any equity
securities issued or issuable or other securities or agreements in which the
holder  can  exercise and  convert into any class
of  equity securities of Skyway.

    
       

      
        	
                3.4

              	
                      
                  Title
      and Authority of Selling
  Shareholder

                

              

      

    

     

    The
Selling Shareholder is and will be as of the Closing, the registered and
beneficial owner of and will have good and marketable title to the Skyway Shares
held by it and will hold such free and clear of all liens, charges and
encumbrances whatsoever; and such Skyway Shares held by such Selling Shareholder
have been duly and validly issued and are outstanding as fully paid and
non-assessable equity shares in the capital of Skyway.  The Selling
Shareholder 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 Skyway
Shares  held by it.

     

    
      	
              3.5

            	
              Shareholders
      of Skyway

            

    

     

    As of the
Closing Date, Derek Tennant will be the sole holder of 70% of the shares of
Skyway, and he will receive all of the common stock of Wind Works to be issued
as part of this Agreement. There is no person or entity entitled to receive any
equity securities, warrants, options or other instruments that may be converted
into equity securities of Skyway and that there are no outstanding options,
warrants or other securities as of the date hereof and as of the Closing
Date.

     

    The
Selling Shareholder is either an accredited or sophisticated
investor.  He has received satisfactory answers to any questions
submitted to Wind Works Power or Wind Works. He has reviewed the Wind Works
filings as submitted to the United States Securities and Exchange
Commission.

     

    
      	
              3.6

            	
              Corporate
      Records of Skyway

            

    

     

    The
corporate records of Skyway, 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 Skyway 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 Skyway.

     

    
      	
              3.7

            	
              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 Skyway 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 Skyway or any of its subsidiaries, or any of
      their respective material property or
  assets;

                  

                

        

         

      

    

    
      
        	
                 
      

              	
                (b  
      

              	
                      
                  violate
      any provision of the Constitution, Articles of Incorporation or bylaws of
      Skyway, any of its subsidiaries (if applicable) 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 Skyway, any of
      its subsidiaries or any of their respective material property or
      assets.

            

    

     

    
      	
               
      

            	
              (d)  
      

            	
              Until
      the Closing Date but in no event later than
      October  31,  2009, unless extended by mutual consent
      of Skyway and Wind Works Power, no officer, director, affiliate or
      principal shareholder of either Company will solicit or entertain offers
      for the possible sale, acquisition, merger or similar transaction in
      connection with the operations of each party’s respective business or
      assets.

            

    

     

    
      	3.8	
              Actions
      and Proceedings

            

    

     

    To the
best knowledge of Skyway, there is no basis for and there is no action, suit,
judgment, claim, demand or proceeding outstanding or pending, or threatened
against or affecting Skyway or which involves any of the business, or the
properties or assets of Skyway that, if adversely resolved or determined, would
have a material adverse effect on the business, operations, assets, properties,
prospects, or conditions of Skyway taken as a whole (a “Skyway 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 Skyway Material Adverse Effect.

     

    
      	
              3.9

            	
              Compliance

            

    

     

    
      	
               
      

            	
              (a)

            	
              To
      the best knowledge of Skyway, Skyway 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
    Skyway;

            

    

     

    
      	
               
      

            	
              (b)

            	
              To
      the best knowledge of Skyway, Skyway 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 Skyway Material Adverse
      Effect;

            

    

     

    
      	
               
      

            	
              (c)

            	
              Skyway
      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 Skyway, threatened, and none of them will be
      adversely affected by the consummation of the Transaction;
    and

            

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
              3.10

            	
              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 Skyway  or the Selling
Shareholder of the Transaction contemplated by this Agreement or to enable Wind
Works to continue to conduct Skyway’s business after the Closing Date in a
manner which is consistent with that in which the business is presently
conducted.

     

    
      	
              3.11

            	
              Financial
      Representations

            

    

     

    The
consolidated balance sheets for Skyway for its last fiscal year (the “Skyway Accounting Date”),
together with related statements of income, cash flows, and changes in
shareholder’s equity for such fiscal year and interim period then ended
(collectively, the “Skyway
Financial Statements”) to be supplied on or before the Closing Date will
be:

    
       

      
        	
                 
      

              	
                (A)

              	
                      
                  in
      accordance with the books and records of Skyway;
      and

                

              

      

    

     

    
      	
               
      

            	
              (B)

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

            

    

     

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

     

    
      	3.12	
              Absence
      of Undisclosed Liabilities

            

    

     

    Skyway
does not have any material Liabilities or obligations either direct or indirect,
matured or unmatured, absolute, contingent or otherwise that exceed $1,000,
which:

    
      
         

        
          	
                   
      

                	
                  (a)

                	
                        
                          
                      are
      not set forth in the Skyway 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 Wind Works;
  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 Skyway Financial
      Statements

                    

                  

                

        

      

       

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    
      	
              3.13

            	
              Tax
      Matters

            

    

     

    
      	
               
      

            	
              (a)

            	
              As
      of the date hereof:

            

    

     

    
      	
              (i)  

            	
              Skyway
      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
      Skyway, and

            

    

     

    
      	
              (ii)  

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

            

    

    
       

      
        	
                 
      

              	
                (b)

              	
                      
                  Skyway
      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 Skyway Material Adverse
  Effect;

                

              

      

    

     

    
      
        	
                 
      

              	
                (c)

              	
                      
                  Skyway
      is not presently under or has not received notice of, any contemplated
      investigation or audit by regulatory or governmental agency of body or any
      foreign or state taxing authority concerning any fiscal year or period
      ended prior to the date
hereof;

                

              

      

    

     

    
      
        	
                 
      

              	
                (d)

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

                

              

      

    

     

    
      
        	
                 
      

              	
                (e)

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

                

              

      

    

     

    
      	
              3.14

            	
              Absence
      of Changes

            

    

     

    Since the
Skyway Accounting Date, Skyway has not:

    
       

      
        	
                 
      

              	
                (a)

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

                

              

      

       

    

    
      
        	
                 
      

              	
                (b)

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

                

              

      

       

    

    
      	
               
      

            	
              (c)

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

            

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

    
      	
               
      

            	
              (g)

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

            

    

     

    
      	
               
      

            	
              (h)

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

            

    

     

    
      	
               
      

            	
              (i)

            	
              made
      commitments or agreements for capital expenditures or capital additions or
      betterments exceeding in the aggregate $2,500;

            

    

     

    
      	
               
      

            	
              (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.

            

    

     

    
      	
              3.15

            	
              Absence
      of Certain Changes or Events

            

    

     

    Since the
date of the financial statements,  there has not been:

    
       

      
        	
                 
      

              	
                (a)

              	
                any
      material change in the financial condition of
      Skyway;  or

              

      

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
              3.16

            	
              Subsidiaries

            

    

     

    Skyway
does not have any subsidiaries or agreements of any nature to acquire any
subsidiary or to acquire or lease any other business operations.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              3.17

            	
              Personal
      and Property

            

    

     

    Skyway
possesses, and has good and marketable title of all property necessary for the
continued operation of the business of Skyway as presently conducted and as
represented to Wind Works Power.  All such property is used in the
business of Skyway.  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 Skyway is owned by Skyway free and clear of all liens,
security interests, charges, encumbrances, and other adverse claims, except as
set forth herein:

     

    There are
no outstanding agreements or options to acquire or purchase the Skyway 126
project, or any interest in or any portion thereof and no person, firm or
corporation has any proprietary or possessory or royalty interest in Skyway 126
other than Skyway 126 Energy Inc.;

     

    Skyway
126 is free and clear of all Liens, defects in title and third party interests
other than the interests of Skyway 126 Energy Inc.;

     

    
      	
              3.18

            	
              Intellectual
      Property

            

    

     

    
      	
               
      

            	
              (a)

            	
              Intellectual
      Property Assets

            

    

     

    Skyway
owns or holds an interest in all intellectual property assets necessary for the
operation of the business of Skyway as it is currently conducted (collectively,
the “Intellectual Property
Assets”), including:

     

    
      	
              (1)  

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

            

    

     

    
      	
              (2)  

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

            

    

     

    
      	
              (3)  

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

            

    

     

    
      	
              (4)  

            	
              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 Skyway as licensee
      or licensor (collectively, the “Trade
      Secrets”).

            

    

    
       

      
        	
                 
      

              	
                (b)

              	
                Intellectual
      Property and Know-How Necessary for the
Business

              

      

    

     

    Skyway 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.  All former
and current employees and contractors of Skyway have executed written contracts,
agreements or other undertakings with Skyway that assign all rights to any
inventions, improvements, discoveries, or information relating to the business
of Skyway.  No employee, director, officer or shareholder of Skyway
owns directly or indirectly in whole or in part, any Intellectual Property Asset
which Skyway is presently using or which is necessary for the conduct of its
business.  To the best knowledge of Skyway, no employee or contractor
of Skyway 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 Skyway.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Patents

            

    

     

    Skyway
does not hold any right, title or interest in and to any Patent and Skyway has
not filed any patent application with any third party.  To the best
knowledge of Skyway, none of the products manufactured and sold, nor any process
or know-how used, by Skyway infringes or is alleged to infringe any patent or
other proprietary night of any other person or entity.

     

    
      	
               
      

            	
              Trademarks

            

    

     

    Skyway
does not hold any right, title or interest in and to any Mark and Skyway has not
registered or filed any application to register any Mark with any third
party.  To the best knowledge of Skyway, none of the Marks, if any,
used by Skyway infringes or is alleged to infringe any trade name, trademark, or
service mark of any third party.

     

    
      	
               
      

            	
              Copyrights

            

    

     

    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 Skyway, 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.

     

    
      	
               
      

            	
              Trade
      Secrets

            

    

     

    Skyway
has taken all reasonable precautions to protect the secrecy, confidentiality,
and value of its Trade Secrets.  Skyway 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 Skyway, have not
been used, divulged, or appropriated either for the benefit of any person or
entity or to the detriment of Skyway.  No Trade Secret is subject to
any adverse claim or has been challenged or threatened in any way.

     

    
      	
              3.19

            	
              Insurance

            

    

     

    The
assets owned by Skyway 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 Skyway, 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.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              3.20

            	
              Employees
      and Consultants

            

    

     

    All
employees and consultants of Skyway have been paid all salaries, wages, income
and any other sum due and owing to them by Skyway, as at the end of the most
recent completed pay period.  Skyway is not aware of any labor
conflict with any employees that might reasonably be expected to have a Skyway
Material Adverse Effect.  To the best knowledge of Skyway, no employee
of Skyway 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 Skyway or any other nature of the
business conducted or to be conducted by Skyway.

     

    
      	
              3.20

            	
              Real
      Property

            

    

     

    Skyway
does not own any real property.  Each of the leases, subleases, claims
or other real property interests (collectively, the “Leases”) to which Skyway is a
party or is bound 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 Skyway 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.  Skyway has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the Leases or the
leasehold property pursuant thereto.

     

    
      	
              3.21

            	
              Material
      Contracts and Transactions

            

    

     

    Schedule
3 attached hereto lists each material contract, agreement, license, permit,
arrangement, commitment, instrument or contract to which Skyway 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 Skyway 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 Skyway.  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.

     

    
      	
              3.22

            	
              Certain
      Transactions

            

    

     

    Skyway is
not a guarantor or indemnitor of any indebtedness of any third party, including
any person, firm or corporation.

     

    
      	
              3.23

            	
              No
      Brokers

            

    

     

    Skyway
has not incurred any independent obligation or liability to any party for any
brokerage fees, agent’s commissions, or finder’s fees in connection with the
Transaction contemplated by this Agreement.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	
              3.24

            	
              Completeness
      of Disclosure

            

    

     

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

     

    
      	
              4.

            	
              REPRESENTATIONS
      AND WARRANTIES OF WIND WORKS AND WIND
    WORKS  POWER

            

    

     

    As of the
Closing, Wind Works  and Wind Works Power represent and warrant to
Skyway and the Selling Shareholder and acknowledge that Skyway and the Selling
Shareholder 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 Skyway or the Selling Shareholder, as
follows:

     

    
      	
              4.1

            	
              Organization
      and Good Standing

            

    

     

    Wind
Works and Wind Works Power are duly incorporated, organized, validly existing
and in good standing under the laws of the state or province of their
incorporation.  Each has all requisite corporate power and authority
to own, lease and to carry on its business as now being
conducted.  Each is qualified to do business and is in good standing
in each of the jurisdictions in which it owns property, leases property, does
business, or is otherwise required to do so, where the failure to be so
qualified would have a material adverse effect on the businesses, operations, or
financial condition of Wind Works or Wind Works Power.

     

    
      	
              4.2

            	
              Authority

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

            	
              as
      limited by public policy.

            

    

     

    
      	
              4.3

            	
              Capitalization
      of Wind Works

            

    

     

    As of the
date of this Agreement and as of the Closing Date, all of the issued and
outstanding shares of Wind Works Common Stock will be 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.

     

    
      	
              4.4

            	
              Corporate
      books and records

            

    

     

    
      	
               
      

            	
              The
      corporate records of Wind Works, 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 Wind Works 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
      Wind Works.

            

    

     

    
      	
              4.5

            	
              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 Wind Works 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 Wind
Works or any of its material property or assets;

     

    
      (B)
violate any provision of the applicable incorporation or charter documents of
Wind Works; or

    

     

    (C)violate
any order, writ, injunction, decree, statute, rule, or regulation of any court
or governmental or regulatory authority applicable to Wind Works or any of its
material property or assets.

     

    
      	
              4.6

            	
              Validity
      of Wind Works Common Stock Issuable upon the
  Transaction

            

    

     

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

     

    
      	
              4.7

            	
              Actions
      and Proceedings

            

    

     

    To the
best knowledge of Wind Works, 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 Wind Works, threatened against Wind Works which involves any
of the business, or the properties or assets of Wind Works that, if adversely
resolved or determined, would have a material adverse effect on the business,
operations, assets, properties, prospects or conditions of Wind Works taken as a
whole (a “Wind Works 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 Wind Works Material Adverse Effect.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              4.8

            	
              Compliance

            

    

     

    
      	
               
      

            	
              (A)

            	
              To
      the best knowledge of Wind Works, Wind Works 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 Wind
      Works;

            

    

     

    
      	
               
      

            	
              (B)

            	
              To
      the best knowledge of Wind Works, Wind Works 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 Wind Works Material
      Adverse Effect;

            

    

     

    
      	
               
      

            	
              (C)

            	
              Wind
      Works 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 Wind Works, threatened, and none of
      them will be affected in a material adverse manner by the consummation of
      the Transaction; and

            

    

     

    
      	
               
      

            	
              (D)

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

            

    

     

    
      	
              4.9

            	
              Filings,
      Consents and Approvals

            

    

     

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

     

    
      	
              4.10

            	
              SEC
      Filings

            

    

     

    Wind
Works has furnished or made available to Skyway and the Selling Shareholders a
true and complete copy of each report, schedule, registration statement and
proxy statement filed by Wind Works with the SEC (collectively, and as such
documents have since the time of their filing been amended, the “Wind Works SEC Documents”). As
of their respective dates, the Wind Works 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 Wind Works SEC Documents.  Financial
Representations

     

    Included
with the Wind Works SEC Documents are true, correct, and complete copies of
audited balance sheets for Wind Works dated as of June 30, 2008, and unaudited
balance sheets for Wind Works dated as of March 31, 2009 (the “Wind Works 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 “Wind Works
Financial Statements”).  The Wind Works Financial
Statements:

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (a) are
in accordance with the books and records of Wind Works;

     

    (b)
present fairly the financial condition of Wind Works as of the respective dates
indicated and the results of operations for such periods; and

     

    (c)  have
been prepared in accordance with GAAP.

     

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

     

    
      	
              4.11

            	
              Absence
      of Undisclosed Liabilities

            

    

     

    As of the
date of the financial statements, Wind Works 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 Wind Works 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
Skyway;

     

    (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 Wind Works Financial Statements;
or

     

    (D) have
any material affect on the operations of the Company.

     

    
      	
              4.12

            	
              Tax
      Matters

            

    

     

    
      	
               
      

            	
              As
      of the date hereof:

            

    

     

    (A) Wind
Works 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

     

    (B)  All
such returns are true and correct in all material respects;

     

    (C) Wind
Works has paid all Taxes that have become or are due with respect to any period
ended on or prior to the date hereof;

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    (E)  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

     

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

     

    
      	
              4.13

            	
              Absence
      of Changes

            

    

     

    Since the
date of the Financial Statements, , except as disclosed in the Public SEC
Documents and except as contemplated in this Agreement, Wind Works 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 Wind
Works to any mortgage, lien, pledge, security interest, conditional sales
contract or other encumbrance of any nature whatsoever;

     

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

     

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

     

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

     

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

     

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

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

             (I)   Made
commitments or agreements for capital expenditures or capital additions or
betterments exceeding in the aggregate $5,000;

     

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

     

      
     (K) Agreed, whether in writing or orally, to do
any of the foregoing.

     

    
      	
              4.14

            	
              Absence
      of Certain Changes or Events

            

    

     

    Since the
date of the financial statements,  except as and to the extent
disclosed in the Wind Works SEC Documents, there has not been:

     

               (a)
a Wind Works Material Adverse Effect; or

     

    
      	
               
      

            	
              (b)any
      material change by Wind Works in its accounting methods, principles or
      practices.

            

    

     

    
      	
              4.15

            	
              Subsidiaries

            

    

     

    Except as
disclosed in this Agreement, Wind Works 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 Wind Works SEC
Documents.

     

    
      	
              4.16

            	
              Personal
      Property

            

    

     

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

     

    
      	
              4.17

            	
              Employees

            

    

     

    Wind
Works does not have any employees  except as disclosed in the Wind
Works SEC Documents.

     

    
      	
              4.18

            	
              No
      Brokers

            

    

     

    Wind
Works 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.

     

    
      	
              4.19

            	
              Internal
      Accounting Controls

            

    

     

    Wind
Works maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.  Wind Works’s certifying officers have evaluated the
effectiveness of Wind Works’s controls and procedures as of end of the filing
period prior to the filing date of the Form 10-Q for the quarter ended March 31,
2009 (such date, the “Evaluation Date”).  Wind Works presented in its
most recently filed Form 10-Q the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.  Since the Evaluation Date,
there have been no significant changes in Wind Works’s internal controls or, to
Wind Works’s knowledge, in other factors that could significantly affect Wind
Works’s internal controls.

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              4.20

            	
              Listing
      and Maintenance Requirements

            

    

     

    Wind
Works is currently quoted on the OTC Bulletin Board and has not, in the 12
months preceding the date hereof, received any notice from the OTC Bulletin
Board to the effect that Wind Works is not in compliance with the quoting,
listing or maintenance requirements of the OTCBB or such other trading
market.

     

    
      	
              4.21

            	
              Completeness
      of Disclosure

            

    

     

    No
representation or warranty by Wind Works in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be furnished to
Skyway 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 Wind Works

            

    

     

    The
obligation of Wind Works to consummate the Transaction is subject to the
satisfaction or written waiver of the conditions set forth herein on a date
mutually agreed upon by the parties hereto in writing.  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 Wind Works and may be waived by Wind Works in its sole
discretion.

     

    (a)  
Representations
and Warranties

     

    The
representations and warranties of Skyway 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 Skyway will have
delivered to Wind Works a certificate dated as of the Closing Date, to the
effect that the representations and warranties made by Skyway in this Agreement
are true and correct.

     

    
      (b)  
Performance

    

     

    All of
the covenants and obligations that Skyway 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 Skyway Documents, the Skyway Financial Statements and all other
documents necessary or reasonably required to consummate the Transaction, all in
form and substance reasonably satisfactory to Wind Works, will have been
executed and delivered to Wind Works.

     

    
      (d)  
Third
Party Consents

    

     

    Wind
Works will have received from Skyway duly executed copies of any
required  third-party consents, permits, authorizations and approvals
of any public, regulatory  or governmental body or authority or person
or entity contemplated by this Agreement (if any), in the form and substance
reasonably satisfactory to Wind Works.

     

    
      (e)  
No
Material Adverse Change

    

     

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

     

    
      (f)   
No
Action

    

     

     

    
      	
              (1)  

            	
              No
      suit, action, or proceeding will be pending or threatened which
      would:

            

    

     

    
      	
              (2)  

            	
              prevent
      the consummation of any of the transactions contemplated by this
      Agreement; or

            

    

     

    
      	
               
      (3)   

            	
              cause
      the Transaction to be rescinded following
  consummation.

            

    

     

    
      (g)
 Delivery
of Financial Statements

    

     

    On or
before October  31, 2009, Skyway will have delivered to Wind Works the
Skyway Financial Statements within the time frame prescribed by this Agreement,
which financial statements will include financial statements for Skyway’s two
fiscal years, and financials for the three month period ended June
30,  2009.

     

    
      (h) 
Due
Diligence Review of Financial Statements

    

     

    Wind
Works and its accountants will be reasonably satisfied with their due diligence
investigation and review of the Skyway Financial Statements.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      (i)  
Minimum
Equity Interest

    

     

    The
acquisition of no less than 70% of the outstanding Class B Common
Stock.

     

    
      (j)  
Due
Diligence Generally

    

     

    Wind
Works and its duly authorized representatives will be reasonably satisfied with
their due diligence investigation of Skyway 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
      Skyway and the Selling Shareholders which are reasonably germane to the
      Transaction;

            

    

     

    
      	
               
      

            	
              (ii)
      a physical inspection of the assets of Skyway by Wind Works or its
      representatives; and

            

    

     

    
      	
               
      

            	
              (iii)
      title to the material assets of
Skyway.

            

    

     

    
      	
              5.2

            	
              Conditions
      Precedent to Closing by Skyway

            

    

     

    The
obligation of Skyway and the Selling Shareholder 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.  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 Skyway and
the Selling Shareholder and may be waived by Skyway and the Selling Shareholder
in their discretion.

     

    
      	
               
      

            	
              (a)

            

    

     

    
      	
               
      

            	
              Representations
      and Warranties

            

    

     

    The
representations and warranties of Wind Works 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 Wind Works will have delivered to Skyway
a certificate dated the Closing Date, to the effect that the representations and
warranties made by Wind Works in this Agreement are true and
correct.

     

    
      	
               
      

            	
              (b)

            

    

     

    
      	
               
      

            	
              Performance

            

    

     

    All of
the covenants and obligations that Wind Works 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.  Wind Works must
have delivered each of the documents required to be delivered by it pursuant to
this Agreement.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (c)

            

    

     

    
      	
               
      

            	
              Transaction
      Documents

            

    

     

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

     

    
      	
               
      

            	
              (d)

            

    

     

    
      	
               
      

            	
              Third
      Party Consents

            

    

     

    Skyway
will have received from Wind Works duly executed copies of any
required  third-party consents, permits, authorizations and approvals
of any public, regulatory (including the SEC) or governmental body or authority
or person or entity contemplated by this Agreement (if any), in the form and
substance reasonably satisfactory to Skyway.

    
       

      
        	
                 
      

              	
                (e)

              

      

      
         

        
           

          
            	
                     
      

                  	
                    No
      Material Adverse
Change

                  

          

        

         

      

    

    No Wind
Works Material Adverse Effect will have occurred since the date of this
Agreement.

     

    
      	
               
      

            	
              (f)

            

    

     

    
      	
               
      

            	
              No
      Action

            

    

     

    No suit,
action, or proceeding will be pending or threatened before any governmental or
regulatory authority wherein an unfavorable judgment, order, decree,
stipulation, injunction or charge would result in and/or:

     

    (i)prevent
the consummation of any of the transactions contemplated by this
Agreement; 

     

    or

     

    
      (ii)
cause the Transaction to be rescinded following consummation.

    

     

    
      	
               
      

            	
              (g)

            

    

     

    
      	
               
      

            	
              Public
      Market

            

    

     

    On the
Closing Date, the shares of Wind Works Common Stock will be quoted on the
Over-The-Counter Bulletin Board.

     

    
      	
               
      

            	
              (h)

            

    

     

    
      	
               
      

            	
              Due
      Diligence Review of Financial
Statements

            

    

     

    Skyway
and its accountants will be reasonably satisfied with their due diligence
investigation and review of the Wind Works Financial Statements, the Wind Works
SEC Documents, and the contents thereof, prepared in accordance with
GAAP.

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
       

      
        	
                 
      

              	
                (i)

              

      

       

      
        	
                 
      

              	
                      
                  Due
      Diligence
Generally

                

              

      

    

     

    Skyway
will be reasonably satisfied with their due diligence investigation of Wind
Works 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

            

    

     

    Skyway
will immediately notify Wind Works  if Skyway receives any advice or
notification from its independent certified public accounts that Skyway has used
any improper accounting practice that would have the effect of not reflecting or
incorrectly reflecting in the books, records, and accounts of Skyway, 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, Skyway, on the one hand, and
Wind Works, on the other hand, will, and will cause each of their respective
representatives to:

     

    
      	
               
      

            	
              (1)
      afford the other and its representatives full and free access to its
      personnel, properties, assets, contracts, books and records, and other
      documents and data;

            

    

     

    
      	
               
      

            	
              (2)
      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

            

    

     

    
      	
               
      

            	
              (3)
      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 Skyway including, without limitation,
financial information that Skyway provides to Wind Works during the Wind Works
due diligence investigation of Skyway will be kept in strict confidence by Wind
Works and will not be used (except in connection with due diligence), dealt
with, exploited or commercialized by Wind Works or disclosed to any third party
(other than the Wind Works professional accounting and legal advisors) without
the prior written consent of Skyway.  If the Transaction contemplated
by this Agreement does not proceed for any reason, then upon receipt of a
written request from Skyway, Wind Works will immediately return to Skyway (or as
directed by Skyway) any information received regarding Skyway’s
business.  Likewise, all information regarding the business of Wind
Works including, without limitation, financial information that Wind Works
provides to Skyway during its due diligence investigation of Wind Works will be
kept in strict confidence by Skyway and will not be used (except in connection
with due diligence), dealt with, exploited or commercialized by Skyway or
disclosed to any third party (other than Skyway’s professional accounting and
legal advisors) without the prior written consent of Wind Works.  If
the Transaction contemplated by this Agreement does not proceed for any reason,
then upon receipt of a written request from Wind Works, Skyway will immediately
return to Wind Works (or as directed by Wind Works) any information received
regarding Wind Works’s business.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              6.4

            	
              Notification

            

    

     

    Between
the date of this Agreement and the Closing Date, each of the parties to this
Agreement will promptly notify the other parties in writing if it becomes aware
of any fact or condition that causes or constitutes a material breach of any of
its representations and warranties as of the date of this Agreement, if it
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would cause or constitute a material breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition.  Should
any such fact or condition require any change in the Schedules relating to such
party, 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,
Skyway and Wind Works 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 Skyway or Wind Works, as
applicable, or any merger, consolidation, business combination, or similar
transaction other than as contemplated by this Agreement.

     

    
      	
              6.6

            	
              Conduct
      of Skyway and Wind Works Business Prior to
  Closing

            

    

     

    From the
date of this Agreement to the Closing Date, and except to the extent that Wind
Works otherwise consents in writing, Skyway 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 Skyway otherwise consents in writing, Wind Works
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 – Skyway

            

    

     

    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, Skyway will
not, without the prior written consent of Wind Works:

     

    
      	
              (1)  

            	
              amend
      its Articles of  Incorporation or other incorporation
      documents;

            

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (2)  

            	
              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
      Skyway except in the ordinary course of
  business;

            

    

     

    
      	
              (3)  

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

            

    

     

    
      	
              (4)  

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

            

    

     

    
      	
              (5)  

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

            

    

     

    
      	
              (6)  

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

            

    

     

    
      	
              (7)  

            	
              not
      materially increase benefits or compensation expenses of Skyway, 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 – Wind Works

            

    

     

    Except as
expressly contemplated by this Agreement, between the date of this Agreement and
the Closing Date, Wind Works will not, without the prior written consent of
Skyway:

     

    
      	
              (1)  

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

            

    

     

    
      	
              (2)  

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

            

    

     

    
      	
              (3)  

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

            

    

     

    
      	
              (4)  

            	
              materially
      increase benefits or compensation expenses of Wind Works, 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

            

    

     

    Wind
Works and Skyway each agree that they will not release or issue any reports or
statements or make any public announcements relating to this Agreement or the
Transaction contemplated herein without the prior written consent of the other
party, except as may be required by the disclosure obligation imposed on Wind
Works or Skyway or their respective affiliates under rules or regulations of any
stock exchange or laws of any jurisdiction.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              7.

            	
              CLOSING

            

    

     

    7.1           The
Closing shall take place on the Closing Date at the offices of the lawyers for
Wind Works or at such other location as agreed to by the
parties.  Closing shall occur no later than October 31, 2009 unless
extended by the mutual consent of the parties.

     

    
      	
               

            	
              7.2        
       Closing Deliveries of Skyway and the Selling
      Shareholders

            

    

     

    (1)           At
Closing, Skyway and the Selling Shareholder will deliver or cause to be
delivered the following, fully executed and in the form and substance reasonably
satisfactory to Wind Works:

     

    
      (2)         
copies of all resolutions and/or consent actions adopted by or on behalf of the
board of directors of Skyway evidencing approval of this Agreement and the
Transaction;

    

     

    (3)         
if
the Selling Shareholder appoints 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;

     

    (4)        
share
certificates representing the Skyway Shares as required pursuant
to  this Agreement, if such have been issued;

     

    (5)        
certificates
and other documents required by Sections 0 and 0 of this Agreement;
and

     

    (6)        
the
Skyway Documents, the Skyway Financial Statements and any other necessary
documents, each duly executed by Skyway, as required to give effect to the
Transaction.

     

    (7)         a
certificate of an officer of Skyway, dated as of Closing, certifying
that:

     

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

     

    
      	
              7.3

            	
              Closing
      Deliveries of Wind Works

            

    

     

    At
Closing, Wind Works will deliver or cause to be delivered the following, fully
executed and in the form and substance reasonably satisfactory to
Skyway:

     

    
      	
              (1)  

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

            

    

     

    
      	
              (2)  

            	
              all
      certificates and other documents required by this
    Agreement;

            

    

     

    
      	
              (3)  

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

            

    

     

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

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (4)  

            	
              the
      share certificates representing the Wind Works Shares will be delivered
      within 15 days of closing.

            

    

     

    
      	
              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 Wind Works and Skyway;

     

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

     

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

     

    (D) 
Wind Works or Skyway 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,  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 10 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 Wind Works or Skyway including damages for lost profits or lost
business opportunities.

     

    
      	
              9.2

            	
              Agreement
      of Skyway to Indemnify

            

    

     

    Skyway
will indemnify, defend, and hold harmless, to the full extent of the law, Wind
Works and its shareholders from, against, and in respect of any and all Losses
asserted against, relating to, imposed upon, or incurred by Wind Works and its
shareholders by reason of, resulting from, based upon or arising out
of:

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (A)

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

            

    

     

    
      	
               
      

            	
              (B)

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

            

    

     

    
      	
              9.3

            	
              Agreement
      of the Selling Shareholder to
Indemnify

            

    

     

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

     

    
      	
               
      

            	
              (A)

            	
              any
      breach by the Selling Shareholder of this Agreement;
      or

            

    

     

    
      	
               
      

            	
              (B)

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

            

    

     

    
      	
              9.4

            	
              Agreement
      of Wind Works to Indemnify

            

    

     

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

     

    
      	
               
      

            	
              (A)
      the breach by Wind Works of any representation or warranty of Wind Works
      contained in or made pursuant to this Agreement, any Wind Works Document
      or any certificate or other instrument delivered pursuant to this
      Agreement; or

            

    

     

    
      	
               
      

            	
              (B)
      the breach or partial breach by Wind Works of any covenant or agreement of
      Wind Works made in or pursuant to this Agreement, any Wind Works 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 three (3) years 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

            

    

     

    Wind
Works 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 Wind Works and Skyway will bear its respective legal and
accounting costs incurred in connection with the preparation, execution and
performance of this Agreement and the Transaction contemplated
hereby.

     

    
      	
              10.5

            	
              Entire
      Agreement

            

    

     

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

     

    
      	
              10.6

            	
              Notices

            

    

     

    All
notices and other communications required or permitted under this Agreement must
be in writing and will be deemed given if sent by personal delivery, faxed with
electronic confirmation of delivery, internationally-recognized express courier
or registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following addresses (or at such other address for a party as
will be specified by like notice):

     

    If the
Skyway or any of the Selling Shareholders:

     

    Skyway 126
Wind Energy Inc.,

     

    Derek
Tennant

     

    President

     

    Skyway Wind
Group

     

    51 St. Lawrence
St.,

     

    Collingwood,

     

    Ontario,
L9Y4Y3

     

    705 446 2004
O

     

    705 888 4110
C

     

    If to Wind
Works:

     

    Wind Works Power
Corp.

     

    346 Waverly
Street

     

    Ottawa,
Ontario  K2P 0W5

     

    Attn:  Greg
Wilson

     

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

     

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

     

    
      	
               
      

            	
              in
      the case of a fax or electronic mail, on the date of such
      delivery;

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              10.8

            	
              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.

     

    
      	
              10.9

            	
              Benefits

            

    

     

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

     

    
      	
              10.10

            	
              Assignment

            

    

     

    This
Agreement may not be assigned (except by operation of law) by any party without
the consent of the other parties.

     

    
      	
              10.11

            	
              Governing
      Law

            

    

     

    This
Agreement will be governed by and construed in accordance with the laws of the
State of Nevada applicable to contracts made and to be performed
therein.   In the event of any dispute arising under this
Agreement,   the parties consent to the jurisdiction of the
courts located in the province of Ontario, Canada.

     

    
      	
              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.

     

    
      	
              12.

            	
              Gender

            

    

     

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

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              13.

            	
              Business
      Days

            

    

     

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

     

    
      	
              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.

     

    
      	
              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.

     

    
      	
              16.

            	
              Schedules
      and Exhibits

            

    

     

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

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

     

    Wind
Works Power  Corp.

     

     

    By:    /s/ Ingo Stuckmann

    Authorized
Signatory

    Name:
Ingo Stuckmann

    Title:   President

     

     

    Wind
Works Power Canada Inc

    
 

     

    By:   /s. W. Campbell
Birge

    W.
Campbell Birge, pres

     

     

     

    Skyway 126 Wind Energy
Inc.,

     

     

    By:    /s/ Derek Tennant

    AuthorizedSignatory

    Name:DerekTennant

    Title:   President

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    SCHEDULE  1

     

    

     

    PROPERTY
LOCATIONex10x1.htm

    Exhibit
10.1

     

    SECURITIES PURCHASE
AGREEMENT

     

    THIS SECURITIES PURCHASE
AGREEMENT (this "Agreement") is made
and entered into as of the 23rd day of March, 2010 (the "Effective Date") by
and between PepperBall Technologies, Inc., a Colorado corporation with its
principal place of business in California (the "Company"), and the
investors set forth on Schedule I
attached hereto (each, an "Investor" and
collectively, the "Investors").

     

    RECITAL

     

    WHEREAS, the Company desires
to sell to the Investors, and the Investors desire to purchase from the Company,
(i) an aggregate amount of up to $750,000 of Convertible Promissory Notes (the
"Notes") which
are convertible at the rate of $0.10 per share into approximately 1,000,000
shares of the Company's Common Stock, no par value per share (the "Common Stock") per
$100,000 outstanding under the Notes, (ii) or at the option of the Investor
shall be convertible into approximately 1,000,000 shares of the Company's
non-voting Series C Preferred Stock Common Stock, no par value per share
(the "Preferred
Stock") per $100,000 outstanding under the Notes (collectively, the
"Securities").

     

    AGREEMENT

     

    NOW, THEREFORE, in
consideration of the foregoing, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

     

    1.  AUTHORIZATION AND SALE
OF SECURITIES.

     

    1.1  Purchase and Sale
of Securities.  At the Closing, the Company shall sell to the
Investors, and the Investors shall purchase from the Company, the Securities, in
the denominations set forth on Schedule I, in
minimum increments of $25,000, which may be reduced at the Company’s discretion,
for aggregate proceeds to the Company of up to $750,000 (the "Purchase
Price").

     

    1.2  Closing.  The
closing of the purchase and sale of the Securities (the "Closing") will take
place at the offices of the Company on the Effective Date, or such other time
and location determined by the Company and the Investors (the "Closing
Date").  At the Closing: (i) the Company shall issue and
deliver to the Investors duly executed Notes in the denominations set forth on
Schedule I and
in the form attached hereto as Exhibit A; and (ii)
each Investor shall pay to the Company the applicable Purchase Price for the
Securities to be purchased by such Investor in the amounts set forth on Schedule I by payment
of check or wire transfer of same day funds to the Company.

     

    2.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The
Company hereby makes the following representations and warranties to the
Investors as of the date hereof and as of the Closing Date:

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.1  Organization and
Qualification.  The Company is an entity duly incorporated,
validly existing and in good standing under the laws of the State of Colorado,
with the requisite corporate power and authority to own and use its properties
and assets and to carry on its business as currently conducted.  The
Company is not in violation of any of the provisions of its Articles of
Incorporation or Bylaws.  The Company is duly qualified to conduct
business and is in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not have or result in (i) a material adverse
effect on the legality, validity or enforceability of this Agreement and the
Notes, (collectively, the "Transaction
Documents"), (ii) a material adverse effect on the business or financial
condition of the Company or (iii) a material adverse effect on the Company's
ability to perform in any material respect on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a "Material Adverse
Effect").  The Company owns 100% of the outstanding capital
stock of PepperBall – CA, Inc., a Delaware corporation, Vizer Group, Inc., a
Colorado corporation ("Vizer").  Vizer
owns 100% of the outstanding capital stock of Veritas Tactical, Inc. ("Veritas").

     

    2.2  Authorization;
Enforceability.  The execution, delivery and performance by the
Company of the Transaction Documents, and the consummation of the transactions
contemplated thereby (including, but not limited to, the sale and delivery of
the Notes and Warrants, and the subsequent issuance of the Common Stock (or
Preferred Stock, as applicable) upon conversion of the Notes, the Common Stock
upon conversion of the Preferred Stock have been duly authorized, and no
additional corporate or stockholder action is required for the approval
thereof.  The Common Stock underlying the Notes, and the Common Stock
underlying the Preferred Stock, as applicable (collectively, the "Conversion Shares")
have been duly reserved for issuance by the Company.  This Agreement
and the other Transaction Documents have been or, to the extent contemplated
hereby or by the Transaction Documents, will be duly executed and delivered and
constitute, or will constitute (as applicable), the legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with
their terms, except as may be limited by bankruptcy, reorganization, insolvency,
moratorium and similar laws of general application relating to or affecting the
enforcement of rights of creditors, and except as enforceability of its
obligations hereunder are subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).  The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations
thereunder.

     

    2.3  No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's Articles of Incorporation or Bylaws, or
(ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the Company is
bound or affected, result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected, except, in the cases of clauses (ii) and (iii),
where such conflict, default or violation would not have or result in a Material
Adverse Effect.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.4  Issuance of the
Securities.  The Securities and the Conversion Shares are duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens, other than any Liens created by or imposed on the
holders thereof through no action of the Company.  The Company has
reserved from its duly authorized capital stock the maximum number of shares of
Common Stock issuable pursuant to the Securities and the Conversion
Shares.

     

    2.5  Capitalization.

     

    (a)  The
authorized and outstanding capitalization of the Company is as described on
Schedule II
attached hereto.  The Company has not issued any capital stock since
such filing.  All shares of the Company's issued and outstanding
capital stock have been duly authorized, are validly issued and outstanding, and
are fully paid and nonassessable.  No securities issued by the Company
from the date of its incorporation to the date hereof were issued in violation
of any statutory or common law preemptive rights.  There are no
dividends which have accrued or been declared but are unpaid on the capital
stock of the Company.  All taxes required to be paid by the Company in
connection with the issuance and any transfers of the Company's capital stock
have been paid.  All securities of the Company have been issued in all
material respects in accordance with the provisions of all applicable securities
and other laws.

     

    (b)  No Person
has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents.  Except as a result of the purchase and sale of the
Securities and except for outstanding Series A and Series B Preferred Shares
and  employee and director stock options under the Company's equity
compensation plans and other options and warrants totaling approximately the
right to 7,740,000 common shares which would be issued upon their exercise, (ii)
approximately 1,492,600 shares of Common Stock reserved for options that have
not yet been granted, but have been authorized under the Company’s Plans, and
(iii) such number of Common Shares issuable under the Existing Notes as herein
defined, there are no outstanding options, warrants, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any Person
any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock ("Common Stock
Equivalents").  Except as provided  under the terms
of the Merger Agreement dated as of May 27, 2008 between the Company and
PepperBall – CA, for the issuance of up to approximately 12,000,000 shares of
Common Stock that would be issued to the common stockholders of pre-merger
PepperBall – CA under an anti-dilution provision of the merger agreement between
the two companies, the issue and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other
than the Investors) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.6  Litigation.  Except
as disclosed in the Company’s public filings, specifically the Vahe’ matter,
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the Knowledge of the Company, threatened against
the Company or any of its properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an "Action") which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or result in a Material Adverse
Effect.  Neither the Company nor to the Knowledge of the Company, any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty.  To the Knowledge of the Company,
there has not been and there is not pending or contemplated, any investigation
by the Securities and Exchange Commission involving the Company or any current
or former director or officer of the Company.

     

    2.7  Labor
Relations.  No material labor dispute exists or, to the
Knowledge of the Company, is imminent with respect to any of the employees of
the Company which could have or result in a Material Adverse
Effect.

     

    2.8  Compliance.  The
Company (i) is not in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company), nor has the Company received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is not in violation of any
order of any court, arbitrator or governmental body, or (iii) is not or has not
been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws applicable to its business, except in the case of clauses (i) and (iii) as
would not have or reasonably be expected to result in a Material Adverse
Effect.

     

    2.9  Intellectual
Property.

     

    (a)  The
Company, as further described in its public filings, to the best of its
Knowledge has the right to use or is the sole and exclusive owner of all right,
title and interest in and to all foreign and domestic patents, patent rights,
trademarks, service marks, trade names, brands and copyrights (whether or not
registered and, if applicable, including pending applications for registration)
owned, used or controlled by the Company (collectively, the "Rights") and in and
to each material invention, software, trade secret, technology, product,
composition, formula and method of process used by the Company (the Rights and
such other items, the "Intellectual
Property"), and, to the Knowledge of the Company, has the right to use
the same, free and clear of any claim or conflict with the rights of
others.

     

    (b)  Except as
disclosed in its public filings, no royalties or fees (license or otherwise) are
payable by the Company to any Person by reason of the ownership or use of any of
the Intellectual Property.

     

    (c)  Except as
disclosed in its public filings, there have been no claims made against the
Company asserting the invalidity, abuse, misuse, or unenforceability of any of
the Intellectual Property, and, to the best of the Knowledge of the Company,
there are no reasonable grounds for any such claims.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)  Except as
disclosed in its public filings, the Company has not made any claim of any
violation or infringement by others of its rights in the Intellectual Property,
and to the best of the Knowledge of the Company, no reasonable grounds for such
claims exist.

     

    (e)  Except as
disclosed in its public filings the Company has not received notice that it is
in conflict with or infringing upon the asserted rights of others in connection
with the Intellectual Property.

     

    3.  REPRESENTATIONS
AND WARRANTIES OF THE INVESTORS.  Each Investor, severally
and not jointly, hereby represents and warrants to the Company
that:

     

    3.1  Authorization.  The
Investor is duly authorized to execute the Transaction Documents including this
Agreement and when executed and delivered by the Investor, the Transaction
Documents will constitute legal, valid, and binding obligations enforceable
against the Investor in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization or others laws of general
application relating to or affecting the enforcement of creditors' rights
generally.  The execution, delivery, and performance of the
Transaction Documents and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate or other necessary
action on the part of the Investor.

     

    3.2  Investor
Suitability.

     

    (a)  The
Securities subscribed for hereby are being acquired by the Investor for his, her
or its own account and for investment purposes only and not with a view to any
resale or distribution thereof, in whole or in part, to others, and the Investor
is not participating, directly or indirectly, in a distribution of such
Securities and will not take, or cause to be taken, any action that would cause
the Investor to be deemed an "underwriter" of such Securities as defined in
Section 2(11) of the Securities Act of 1933, as amended (the "Act").

     

    (b)  The
Investor acknowledges that he, she or it has had the opportunity to seek
business, financial, and legal advice as the Investor deems necessary in order
to evaluate the merits and risks of purchasing the Securities.

     

    (c)  The
Investor has had an opportunity to ask questions of, and receive satisfactory
answers from, representatives of the Company concerning the terms and conditions
pursuant to which the offering of the Securities is being made and all material
aspects of the Company and its proposed business, and any request for such
information has been fully complied with to the extent the Company possesses
such information or can acquire it without unreasonable effort or
expense.

     

    (d)  The
Investor is an "accredited investor" within the meaning of Rule 501 of the
Act.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)  The
Investor is an investor who has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Company based upon (i) the information furnished to him, her
or it by the Company; (ii) his, her or its personal knowledge of the business
and affairs of the Company; (iii) such additional information as he, she or it
may have requested and has received from the Company; and (iv) the independent
inquiries and investigations undertaken by him, her or it.

     

    (f)  No person
has given any information or made any representation not contained in any
disclosure documents referred to above or otherwise provided to the Investor in
writing by a person employed or authorized in writing by the
Company.  The Investor understands and agrees that any information or
representation not contained therein must not, and will not, be relied upon and
that nothing contained therein should be construed as legal or tax advice to the
Investor.

     

    (g)  No person
has made any direct or indirect representation or warranty of any kind to the
Investor with respect to the economic return which may accrue to the
Investor.  The Investor has consulted with his, her or its own
advisors with respect to an investment in the Company.

     

    (h)  All
information, representations and warranties contained herein or otherwise given
or made to the Company by the Investor in any other written statement or
document delivered in connection with the transactions contemplated hereby are
correct and complete as of the date of this Agreement and may be relied upon by
the Company, and, if there should be any material change in such information
prior to the Closing Date, the Investor will immediately furnish such revised or
corrected information to the Company.

     

    4.  CONDITIONS TO CLOSING.

     

    4.1  Payment of Purchase Price.  On
or before the Closing Date, the Investors shall deliver to the Company the
Purchase Price in accordance with the provisions of Section 1 against delivery
by the Company of the Securities.

     

    4.2  Issuance and Delivery of the
Notes.  On the Closing Date, the Company shall issue and
deliver to the Investors duly executed Notes in the denominations set forth on
Schedule
I.

     

    4.3  Proceedings and Documents.  All
actions and other proceedings in connection with the transactions contemplated
at the Closing and all documents and instruments incident thereto shall be
reasonably satisfactory in form and substance to the Company, the Investors and
their respective legal counsel, and the Company and the Investors shall have
received all such counterpart originals and certified or other copies of such
documents as they may reasonably request.

     

    5.  ADDITIONAL
AGREEMENTS OF THE PARTIES.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.1  No Material Non-Public
Information.  Neither the Company nor any other Person acting
on its behalf has provided the Investor or its agents or counsel with any
information that will constitute material non-public information following the
public announcement of this Closing and the related Common Stock
financing.  The Company understands and confirms that each Investor
shall be relying on the foregoing representation in effecting transactions in
securities of the Company in accordance with applicable law following the public
announcement of this Closing and the related Common Stock
financing.

     

    5.2  Cooperation in Issuance of
Securities. The parties agree and acknowledge that it is the desire of
the Investors that to the extent possible under the then Rule 144 provisions,
that the certificates to be issued in the event of a conversion of principal or
interest under the Notes as provided for under Section 8 of the Note, would be
issued as unrestricted, if then allowable for such a cashless conversion, or the
Company would cooperate with the Investor to assist in securing such
unrestricted (“freely tradable”) common shares as quickly as reasonably
possible.

     

    5.3 Indemnification.

     

    (a)            Company
Indemnification.  The Company agrees to indemnify and hold
harmless the Investors, their affiliates, each of their officers, directors,
partners, employees and agents and their respective successors and assigns, from
and against any losses, damages, or expenses which are caused by or arise out of
(i) any breach or default in the performance by the Company of any covenant or
agreement made by the Company in this Agreement or in any of the Transaction
Documents; (ii) any breach of warranty or representation made by the Company in
this Agreement or in any of the Transaction Documents (iii) any and all third
party actions, suits, proceedings, claims, demands, judgments, costs and
expenses (including reasonable legal fees and expenses) incident to any of the
foregoing.

     

    (b)           Investor
Indemnification.  Each Investor, severally and not jointly,
agree to indemnify and hold harmless the Company, its affiliates, each of their
officers, directors, employees and agents and their respective successors and
assigns, from and against any losses, damages, or expenses which are caused by
or arise out of (i) any breach or default in the performance by the Investor of
any covenant or agreement made by the Investor in this Agreement or in any of
the Transaction Documents; (ii) any breach of warranty or representation made by
the Investor in this Agreement or in any of the Transaction Documents; and (iii)
any and all third party actions, suits, proceedings, claims, demands, judgments,
costs and expenses (including reasonable legal fees and expenses) incident to
any of the foregoing.

     

    6.  MISCELLANEOUS.

     

    6.1  Survival of Representations
and Warranties.  The representations, warranties of the Company
and the Investors contained in or made pursuant to this Agreement shall survive
the Closing Date for a period of one year.

     

    6.2  Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each
Investor.  Any Investor may assign any or all of its rights under this
Agreement to any Person to whom such Investor assigns or transfers any
Securities or Conversion Shares, provided that such transferee agrees in writing
to be bound, with respect to the transferred Securities or Conversion Shares, by
the provisions hereof that apply to the "Investors."

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.3  Governing
Law.  This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of California or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of California.

     

    6.4  Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.

     

    6.5  Headings.  The
headings and captions used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.  All references in this Agreement to sections, paragraphs,
exhibits and schedules shall, unless otherwise provided, refer to sections and
paragraphs hereof and exhibits and schedules attached hereto, all of which
exhibits and schedules are incorporated herein by this reference.

     

    6.6  Notices.  Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified or upon deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed as
follows:

     

    
      	If to the Investors,
      at: 	The addresses set
      forth on Schedule I.
	 	 
	If to the Company,
      at:   	
              PepperBall
      Technologies, Inc.

              6142
      Nancy Ridge Drive, Suite 101

              San
      Diego, CA 92121

              Attn:  President

            

    

     

    or at
such other address as any Investor or the Company may designate by giving 10
days advance written notice to all other parties.

     

    6.7  Finder's
Fees.  Except for up to a 6% consulting fee payable by the
Company to certain finder’s, including some who are Directors of the Company
(other than Directors shall not be compensated for investments made directly or
indirectly by themselves), each party represents that it neither is nor will be
obligated for any finder's or broker's fee or commission in connection with this
transaction.  The Investors agree to indemnify and to hold harmless
the Company from any liability for any commission or compensation in the nature
of a finders' or broker's fee (and any asserted liability) for which the
Investors or any of their officers, partners, employees, or representatives is
responsible.  The Company agrees to indemnify and hold harmless the
Investors from any liability for any commission or compensation in the nature of
a finders' or broker's fee (and any asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.8  Attorneys'
Fees.  If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

     

    6.9  Costs and
Expenses.  Each party to this Agreement shall be responsible
for its own fees and expenses in connection with this transaction.

     

    6.10  Amendments and
Waivers.  Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of (i) the Company and (ii) Investors holding a majority of the
principal amount of all outstanding Notes.

     

    6.11  Severability.  If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision(s) shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision(s) were so
excluded and shall be enforceable in accordance with its terms.

     

    6.12  Entire
Agreement.  This Agreement, together with all exhibits and
schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings duties or
obligations between the parties with respect to the subject matter
hereof.

     

    6.13  Further
Assurances.  From and after the date of this Agreement, upon
the request of a majority of the Investors or the Company, the Company and the
Investors shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.

     

    6.14  Defined
Terms.  The following terms shall have the following assigned
meanings:

     

    (a)  "Knowledge", with
respect to the Company, means the actual knowledge of any director or executive
officer of the Company without the requirement for inquiry or
investigation.

     

    (b)  "Lien" means a lien,
charge, security interest, encumbrance, right of first refusal or other
restriction, except for a lien for current taxes not yet due and payable and a
minor imperfection of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)  "Person" means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

     

    6.15  Mutual
Drafting.  This Agreement is the result of the joint efforts of
the Company and the Investors, and each provision hereof has been subject to the
mutual consultation, negotiation and agreement of the parties and there shall be
no construction against any party based on any presumption of that party's
involvement in the drafting thereof.

     

     

    [Signature
Page Follows]

     

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Securities Purchase
Agreement as of the Effective Date.

     

    
      
        	 	THE COMPANY:
      PEPPERBALL TECHNOLOGIES, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Christin
      Lewis	 
	 	 	Name: 
      Christin Lewis	 
	 	 	Title: 
      Assistant Secretary	 
	 	 	 	 

      

    

     

     

    
      
        	 	
                INVESTORS:

              	 
	 	
                 

                Investor name: Sherman
      Family Trust

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

      

    

     

    
      
        
          	 	
                   

                  Investor name: James Mashburn
      IRA

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

        

      

      
         

        
          
            	 	
                     

                    Investor name: Conner Family
      Trust

                  	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

          

           

           

        

      

    

    
      
        
          	 	
                  Investor
      name: Michael
      Bell

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

        

         

        
          
            
              	 	
                       

                      Investor name: Garry Ridge
      Trust

                    	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

               

              
                
                  	 	
                           

                          Investor name: Thomas A. Page, Trustee of Page
      Survivor’s Trust UTA

                        	 
	 	 	 	 
	
                           

                        	
                          By:
      

                        	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

                

              

            

          

        

      

    

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
I

    

    Investor
names, addresses and Securities purchased

    

    

    
      	
               

              Investor
      Names

               

            	
               

              Principal
      Amount  of Promissory Notes

               

            
	
              Name:  Sherman
      Family Trust

              Address

              Address

              City,
      State, Zip

              Tax
      ID #:________________

              Fax
      #: ____________________

            	
              $25,000

            
	
              Name:  James
      Mashburn IRA

              Address

              Address

              City,
      State, Zip

              Tax
      ID #:________________

              Fax
      #: ____________________

            	
              $50,000

            
	
              Name:  Conner
      Family Trust

              Address

              Address

              City,
      State, Zip

              Tax
      ID #:________________

              Fax
      #: ____________________

            	
              $50,000

            
	
              Name:  Michael
      Bell

              Address

              Address

              City,
      State, Zip

              Tax
      ID #:________________

              Fax
      #: ____________________

            	
              $50,000

            
	
              Name:  Garry
      Ridge Trust

              Address

              Address

              City,
      State, Zip

              Tax
      ID #:________________

              Fax
      #: ____________________

            	
              $50,000

            
	
              Name:  Thomas
      A. Page, Trustee of Page Survivor’s Trust UTA

              Address

              Address

              City,
      State, Zip

              Tax
      ID #:________________

              Fax
      #: ____________________

            	
              $30,000

            
	 
      	 
      
	
              Totals

            	
              $255,000

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    Schedule
II

    

    Capitalization

    

    

    
      	 
      	 
      	
              PepperBall
      Technologies, Inc.

            	 
      	 
      	 	 
      	 	 
      	 
      	 
      
	 
      	 
      	
              Cap
      Table

               

            	 
      	 
      	 	 
      	 	 
      	 
      	 
      
	 
      	 
      	
              Jan 2010

            	 
      	
              Common Shares

            	 	
              Preferred Shares (1)

            	 	
               Convertible Notes (2)

            	 
      	
              Totals (3)

            
	
              Current:

            	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      
	 
      	
              Common
      shares

            	 
      	
                    12,950,000

            	 	 
      	 	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      
	 
      	
              Preferred
      shares

            	 
      	 
      	 	 
      	 	 
      	 
      	 
      
	 
      	 
      	
              Equivalent
      common shares

            	 
      	 
      	 	
                4,270,000

            	 	 
      	 
      	 
      
	
              Pro Forma:

            	 
      	 
      	 	 
      	 	 
      	 
      	 
      
	 
      	
              Convertible
      Notes - Equiv Common Shs.:

            	 
      	 
      	 	 
      	 	 
      	 
      	 
      
	 
      	 
      	
              Prior
      (@ $0.10 per share)

            	 
      	 
      	 	 
      	 	
                 25,666,000

            	 
      	 
      
	 
      	 
      	
              2009
      Offering (@ $ 0.10 per share)

            	 
      	 
      	 	 
      	 	
                   9,750,000

            	 
      	 
      
	 
      	 
      	
              Dilutive
      C/S match to PTI S/H (4)

            	 
      	
                    11,600,000

            	 	 
      	 	 
      	 
      	 
      
	 
      	 
      	
              2010
      Offering (@ $ 0.10 per share)(5)

            	 
      	 
      	 	 
      	 	
                   7,500,000

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      
	 
      	 
      	    Totals	 
      	
                    24,550,000

            	 	
                4,270,000

            	 	
                 42,916,000

            	 
      	
                71,736,000

            
	 
      	 
      	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      

    

     

    Notes:

     

    
      	
              
                1

              

            	
              
                
                
Preferred
      shares have no preferences or dividends and are convertible into common
      shares at the option of each
holder.

            

    

     

    
      	
              
                2

              

            	
              
                
                
Convertible
      note amounts exclude ongoing accrued interest on notes accruing at 10%,
      annually.

            

    

     

    
      	
              
                3

              

            	
              
                
                
Total
      excludes approximately 5.6 million options and warrants that are
      exercisable into common shares at average exercise prices well above
      current market prices.

            

    

     

    
      	
              
                4

              

            	
              
                
                
As
      provided under the Merger Agreement between PepperBall and the former
      SWAT,additional
      shares of common stock were issuable to the common stockholders of
      pre-merger PepperBall - CA under an anti-dilution provision of the merger
      agreement between the two
companies.

            

    

     

    
      	
              5

            	
              Assumes current offering is
      fully closed.

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