Current Report — Form 8-K Filing Table of Contents
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2: EX-2.01 Plan of Acquisition, Reorganization, Arrangement, HTML 78K Liquidation or Succession
EX-2.01 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
THIS
SHARE EXCHANGE AGREEMENT (the "Agreement") is made and entered into as of this
22nd day of October, 2008 (the "Effective Date") by and between Cavitation
Technologies, Inc., a Nevada corporation (the "Company") and the shareholders
listed on Exhibit A to this Agreement (each the "Shareholder").
NOW
THEREFORE, in consideration of the mutual promises and the covenants and
promises hereinafter contained, and other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
SECTION
1. EXCHANGE OF SHARES.
------------------
1.1
Exchange.
On the terms and subject to the conditions set forth in this Agreement, at
the
Closing the Shareholder will sell, convey, transfer and assign to the Company,
and the Company will purchase and accept from the Shareholder all right, title
and interest in and to the issued and outstanding shares of common stock of
Hydro Dynamic Technology, inc. owned by Shareholder in exchange for the number
of shares of restricted common stock of the Company set forth opposite such
Shareholders name.
1.2
Closing
Date. The closing ("Closing") shall occur on or before October 24, 2008 (the
"Closing Date"). The Closing will take place at 10:00 a.m. at the offices of
new
Venture Attorneys, P.C. 5 Sierra Gate Plaza #330, Roseville, CA95678, or,
at
such other date, time and place or manner, as may be agreed upon by the
parties.
SECTION
2. PURCHASE PRICE.
--------------
2.1
Purchase
Price. The Company shall convey, transfer, assign the number of unregistered
shares of common stock of the Company ("Common Stock") set forth on Exhibit
A
opposite the name of each purchaser in exchange for all of the issued and
outstanding shares of common stock of Hydro Dynamic Technology, Inc.. held
by
Shareholder as set forth opposite the shareholders name. The shares of Common
Stock may resold in the future under Rules 144 under the Securities Act of
1933
(the "Securities Act"), subject to compliance with all of the provisions of
the
Rules.
2.2 Assumption
of Options and Warrants. The Company shall also assume the options and warrants
of Hydro Dynamic Technology, Inc. and shall exchange them for warrants of the
Company with identical exercise prices but at a .6824 conversion ratio. For
example, if a Shareholder possessed a warrant to purchase 100,000 shares of
Hydro Dynamic Technology, Inc. Common Stock exercisable at $0.75 per share,
he
would instead receive a warrant to purchase 68,700 shares of Common Stock of
the
Company at a purchase price of $0.75 per share.
SECTION
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
3.1
Shareholder's Representations and Warranties. The Shareholder hereby represents
and warrants to the Company, all of which representations and warranties are
true, complete, and correct in all respects as of the date hereof and will
be as
of the Closing Date, as follows:
(a)
Organization and
Qualification. Hydro Dynamic Technology, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
Hydro Dynamic Technology, Inc. has all requisite power and authority to own
those properties and conduct those businesses presently owned or conducted
by
it, and is duly qualified to do business as it is now being conducted and is
in
good standing as a foreign corporation in each other jurisdiction where the
property owned, leased or used by it or the conduct of its business makes such
qualification necessary.
(b)
Authorization; No
Restrictions, Consents or Approvals. The Shareholder has full power and
authority to enter into and perform this Agreement. This Agreement has been
duly
executed by the Shareholder and constitutes the legal, valid, binding and
enforceable obligation of the Shareholder, enforceable against the Shareholder
in accordance with its terms. The execution and delivery of this Agreement,
the
exchange of Shares and the consummation by Hydro Dynamic Technology, Inc. of
the
transactions contemplated herein, do not and will not on the Closing Date (i)
conflict with or violate any of the terms of the articles of incorporation
and
bylaws of Hydro Dynamic Technology, Inc. or any applicable law relating to
the
Shareholder or Hydro Dynamic Technology, Inc., (ii) conflict with, or result
in
a breach of any of the terms of, or result in the acceleration of any
indebtedness or obligations under, any agreement, obligation or instrument
by
which the Shareholder Hydro Dynamic Technology, Inc. is bound or to which any
property of the Shareholder or Hydro Dynamic Technology, Inc. is subject, or
constitute a default thereunder, (iii) result in the creation or imposition
of
any lien on any of the assets of the Shareholder or Hydro Dynamic Technology,
Inc., (iv) constitute an event permitting termination of any agreement or
instrument to which the Shareholder or Hydro Dynamic Technology, Inc. is a
party
or by which any property or asset of the Shareholder or Hydro Dynamic
Technology, Inc. is bound or affected, pursuant to the terms of such agreement
or instrument, or (v) conflict with, or result in or constitute a default under
or breach or violation of or grounds for termination of, any license, permit
or
other governmental authorization to which the Shareholder or Hydro Dynamic
Technology, Inc. is a party or by which the Shareholder or Hydro Dynamic
Technology, Inc. may be bound, or result in the violation by the Shareholder
or
Hydro Dynamic Technology, Inc. of any laws to which the Shareholder or Hydro
Dynamic Technology, Inc. may be subject, which would materially adversely affect
the transactions contemplated herein. No authorization, consent or approval
of,
notice to, or filing with, any public body or governmental authority or any
other person is necessary or required in connection with the execution and
delivery by the Shareholder of this Agreement or the performance by the
Shareholder of his obligations hereunder.
2
(c)
Capitalization.
The authorized capitalization of Hydro Dynamic Technology, Inc. consists of
50,000,000 shares of common stock, par value $0.001, and 10,000,000 shares
of
Preferred Stock, par value $0.001. Of the Common Stock, 25,575,000 shares of
Common Stock are issued and outstanding. Of the Preferred Stock, 2,050,000
shares of Series A-1 Preferred Stock are issued and outstanding. There are
warrants outstanding to purchase 410,000 shares of Common Stock and stock
options outstanding to purchase 675,000 shares of Common Stock
(d)
Subsidiaries.
Hydro Dynamic Technology, Inc. has no subsidiaries and does not own any interest
in any corporation, partnership, joint venture, limited liability company,
association, trust or entity.
(e)
Brokers' Fees.
Hydro Dynamic Technology, Inc. has no liability or obligation to pay any fees
or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Company could become liable or
obligated.
(f)
Intellectual
Property and Tangible and Intangible Assets. Hydro Dynamic Technology, Inc.
owns
or possesses all right, title and interest (or holds valid licenses) to use,
whether or not registered, all Intellectual Property and Tangible and Intangible
Assets . Schedules 1.2 (b) and (c) set forth a complete and accurate list of
all
such Intellectual Property and Tangible and Intangible Assets (identifying
those
owned and those licensed), including all United States, state and foreign
registrations or applications for registration thereof and all agreements
(including, without limitation, agreements pursuant to which the Shareholder
has
granted licenses to third parties to use any Intellectual Property or Intangible
Asset) relating thereto. All actions reasonably necessary to maintain the
registered Intellectual Property and Tangible and Intangible Assets have been
taken by Hydro Dynamic Technology, Inc. Hydro Dynamic Technology, Inc. is not
required to pay any royalty, license fee or similar compensation with respect
to
the Assets in connection with the current or prior conduct of its business.
The
use by Hydro Dynamic Technology, Inc. of any of the Intellectual Property or
Tangible and Intangible Assets does not violate the proprietary rights of any
other person and no claims have been asserted by any person with respect to
the
use of the Assets by Hydro Dynamic Technology, Inc. No person is infringing
upon
the Assets. Hydro Dynamic Technology, Inc. has taken reasonable security
measures to protect the secrecy, confidentiality and value of the Intellectual
Property. Except as set forth in Schedule 3.1(i), no person, other than Hydro
Dynamic Technology, Inc., owns or has any proprietary, financial or other
interest, direct or indirect, in whole or in part, in the Assets. Hydro Dynamic
Technology, Inc. is not a party to any confidentiality, secrecy or similar
agreements with third parties.
3.2
Company's
Representations and Warranties. The Company hereby represents and warrants
to
the Shareholder, all of which representations and warranties are true, complete,
and correct in all respects as of the date hereof and will be as of the Closing
Date, as follows:
3
(a)
Organization and
Qualification. The Company is a corporation duly organized, validly existing
and
in good standing under the laws of the State of Nevada. The Company has all
requisite power and authority to own those properties and conduct those
businesses presently owned or conducted by it, and is duly qualified to do
business as it is now being conducted and is in good standing as a foreign
corporation in each other jurisdiction where the property owned, leased or
used
by it or the conduct of its business makes such qualification necessary, except
in any case where a failure so to qualify would not have a material adverse
effect on the Company. The copies of the articles of incorporation and bylaws
of
the Company, which have been delivered to the Shareholder, are complete and
correct and are in full force and effect at the date hereof.
(b)
Authorization; No
Restrictions, Consents or Approvals. The Company has full power and authority
to
enter into and perform this Agreement and all corporate action necessary to
authorize the execution and delivery of this Agreement and the performance
its
obligations hereunder has been duly taken. This Agreement has been duly executed
by the Company and constitutes the legal, valid, binding and enforceable
obligation of the Company, enforceable against the Company in accordance with
its terms.
(c)
Disclosure. No
statement by the Company in the documents described in the receipt attached
hereto, contains any untrue statement of a material fact, or omits to state
any
material fact, necessary to make such statements, in the light of the
circumstances under which they were made, not misleading. The Company knows
of
no material fact which specifically applies to the Company and (so far as the
Company can reasonably foresee) materially threatens the Company or its
business, which has not been disclosed in such documents, or disclosed to the
shareholder.
(d)
No Broker. The
Company has used no broker, and knows of no broker, which may have a claim
against Shareholder for brokerage of this transaction.
SECTION
4. CLOSING.
-------
4.1
Conditions to the Company's Obligations. The obligations of the Company under
this Agreement, (including, without limitation, the obligation to consummate
and
effect the exchange of shares), shall be subject to satisfaction of the
following conditions, unless waived by the Company:
(a)
The Shareholder
shall have performed in all material respects all agreements, and satisfied
in
all material respects all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date.
(b)
All
representations and warranties of the Shareholder herein shall have been true
and correct in all material respects when made (or will have been made true
and
correct by the Closing Date), shall have continued to have been true and correct
in all material respects at all times subsequent thereto, and shall be true
and
correct in all material respects on and as of the Closing Date as though made
on, as of and with reference to such Closing Date.
4
(c)
There shall not
have occurred any material adverse change with respect to Hydro Dynamic
Technology, Inc.
(d)
The Shareholder
shall have executed and delivered to the Company all documents necessary to
transfer all issued and outstanding shares of common stock of Hydro Dynamic
Technology, Inc. owned by the Shareholder to the Company, as contemplated by
this Agreement.
4.2
Conditions to the Shareholder's Obligations. The obligations of the Shareholder
under this Agreement, (including, without limitation, the obligation to
consummate and effect the share exchange) shall be subject to satisfaction
of
the following conditions, unless waived by the Shareholder:
(a)
The Company shall
have performed in all material respects all agreements, and satisfied in all
material respects all conditions on its part to be performed or satisfied
hereunder, at or prior to the Closing Date.
(b)
All of the
representations and warranties of the Company herein shall have been true and
correct in all material respects when made, shall have continued to have been
true and correct in all material respects at all times subsequent thereto,
and
shall be true and correct in all material respects on and as of the Closing
Date
as though made on, as of, and with reference to such Closing Date.
4.3
The
Shareholder's Closing Documents. At the Closing, the Shareholder shall deliver
to the Company, in form and substance reasonably satisfactory to the Company,
all appropriate documents to effect or evidence the sale, conveyance, assignment
and transfer to the Company of the issued and outstanding shares of common
stock
of Hydro Dynamic Technology, Inc. as contemplated hereby and necessary to place
the Company, in full possession and enjoyment of all issued of outstanding
shares of common stock of Hydro Dynamic Technology, Inc owned by the
Shareholder. as contemplated hereby, including the following:
A
certificate
evidencing the issued Hydro Dynamic Technology, Inc. outstanding shares of
common stock of Hydro Dynamic Technology, Inc., registered in the name of the
Company.
SECTION
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
5.1
Survival
of Representations and Warranties and Covenants. The representations,
warranties, covenants, and obligations of the Company and the Shareholder set
forth in this Agreement and in any certificate, agreement, or instrument
delivered in connection with the transactions contemplated hereby, shall survive
the Closing for a period of one year.
5
5.2
Indemnification by the Shareholder. In addition to and not in limitation of
the
Shareholder's indemnification obligations set forth elsewhere in this Agreement,
Shareholder shall, defend, indemnify, and hold harmless the Company and its
affiliates and its respective officers, directors, shareholders, agents and
employees (individually, a "Company Indemnitee" and collectively the "Company
Indemnitees"), from and against any and all claims, losses, deficiencies,
liabilities, obligations, damages, penalties, punitive damages, costs, and
expenses (including, without limitation, reasonable legal, accounting and
consulting fees), whether or not resulting from third party claims
(collectively, "Losses"), suffered by a Company Indemnitee, which arise out
of
or result from:
(a)
any inaccuracy or
misrepresentation in or breach of any of the representations, warranties,
covenants or agreements made by the Shareholder in this Agreement or in any
document, certificate or affidavit delivered by the Shareholder pursuant to
the
provisions of this Agreement;
(b)
any obligation,
liability, debt or commitment of Hydro Dynamic Technology, Inc. which is not
disclosed herein, whether or not paid by the Company; and
(c)
any other matter
related to the use or ownership of the Assets prior to the Closing (including,
but not limited to, all acts, omissions and conditions existing or occurring
prior to the Closing for which any of the Company Indemnitees is alleged to
be
liable pursuant to any successor or similar theory of liability).
5.3
Indemnification By The Company. The Company shall defend, indemnify and hold
harmless, the Shareholder from and against any and all Losses, suffered by
the
Shareholder, which arise out of or result from any inaccuracy or
misrepresentation in or breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in any
document, certificate or affidavit delivered by the Company pursuant to the
provisions of this Agreement.
5.4
Indemnification Payments. All indemnity payments, whether by the Company or
the
Shareholder, to be made under this Agreement, shall be made in immediately
available funds.
5.5
Procedure
for Third Party Claims.
(a)
Notice to the
indemnifying party shall be given promptly after receipt by the Shareholder
or
the Company Indemnitee of actual knowledge of the commencement of any action
or
the assertion of any claim that will likely result in a claim by it for
indemnity pursuant to this Agreement. Such notice shall set forth in reasonable
detail the nature of such action or claim to the extent known, and include
copies of any written correspondence or pleadings from the party asserting
such
claim or initiating such action. The indemnified party shall be entitled, at
its
own expense, to assume or participate in the defense of such action or claim.
If
the indemnifying party assumes the defense of such action or claim, it shall
be
conducted by counsel chosen by such party and approved by the party seeking
indemnification, which approval shall not be unreasonably withheld.
6
(b)
For actions where
the indemnifying party does not exercise its right to assume the defense, the
party seeking indemnification shall assume and control the defense of and
contest such action with counsel chosen by it and approved by the indemnifying
party, which approval shall not be unreasonably withheld. The indemnifying
party
shall be entitled to participate in the defense of such action, the cost of
such
participation to be at its own expense. The indemnifying party shall pay the
reasonable attorneys' fees and expenses of the party seeking indemnification
to
the extent that such fees and expenses relate to claims as to which
indemnification is payable under Sections 5.2 or 5.3, as such expenses are
incurred.
(c)
Both the
indemnifying party and the indemnified party shall cooperate fully with one
another in connection with the defense, compromise, or settlement of any such
claim or action, including, without limitation, by making available to the
other
all pertinent information and witnesses within its control.
(d)
No indemnified
party shall have the right to settle any action brought against it without
the
consent of the indemnifying party. The indemnifying party shall have the right
to settle any action brought against an indemnified party as long as the
indemnified party has been delivered a complete release as a condition of the
settlement.
5.6
Remedies
Cumulative. The remedies provided for herein shall be cumulative and shall
not
preclude assertion by any party of any other rights or the seeking of any other
remedies against any other party. Section 5.6 shall not limit, impair or modify
any provisions of this Agreement or otherwise impose any additional liability
or
obligation on the Company for any liability or obligation of the Shareholder,
other than the Company's obligation to indemnify the Shareholder
hereunder.
5.7
Successors. The merger, consolidation, liquidation, dissolution or winding
up
of, or any similar transaction with respect to the parties hereto, shall not
affect in any manner the obligations of the parties pursuant to Section 6 or
any
other term or provision of this Agreement, and the parties covenant and agree
to
make adequate provision for their liabilities and obligations hereunder in
the
event of any such transaction.
SECTION
6. GENERAL PROVISIONS.
------------------
6.1
No Third
Party Beneficiaries. Nothing in this Agreement shall it be construed, to confer
any rights or benefits upon any person (including, but not limited to, any
employee or former employee of the Shareholder) other than the parties hereto,
and solely to the extent provided in Section 6, the Shareholder and the Company
Indemnitees, and no other person ,shall have any rights or remedies
hereunder.
7
6.2
Specific
Performance. Each of the parties acknowledges and agrees that the other parties
would be damaged irreparably if any of the provisions of this Agreement are
not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each party agrees that the other party shall be entitled, without
the necessity of pleading or proving irreparable harm or lack of an adequate
remedy at law or posting any bond or other security, to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof. Any
such claim for specific performance shall be brought and determined in the
appropriate federal or state court, in the State of California and in no other
forum. The parties hereby irrevocably submit to the jurisdiction of any such
California state court or federal court in California, in connection with such
claim for a specific performance.
6.3
Severability. If any parts of this Agreement are found to be void, the remaining
provisions of this Agreement shall nevertheless be binding with the same effect
as though the void parts were deleted.
6.4
Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument. The execution of this Agreement may be by actual
or
facsimile signature.
6.5
Benefit.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their legal representatives, successors, heirs and permitted
assigns.
6.6
Notices.
Any notice, report, demand, waiver, consent or other communication given by
a
party under this Agreement shall be in writing, may be given by a party or
its
legal counsel, and shall deemed to be duly given upon delivery by Federal
Express or similar overnight courier service which provides evidence of
delivery, or when delivered by facsimile transmission if a copy thereof is
also
delivered in person or by overnight courier. Notices of address change shall
be
effective only upon receipt notwithstanding the provisions of the foregoing
sentence.
6.7
Oral
Evidence. This Agreement constitutes the entire agreement between the parties
and supersedes all prior oral and written agreements between the parties hereto
with respect to the subject matter hereof.
6.8
Governing
Law. This Agreement and any dispute, disagreement, or issue of construction
or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided herein or performance shall be governed
or
interpreted according to the internal laws of the State of California without
regard to choice of law considerations.
6.9
Arbitration. Any controversy, dispute or claim arising out of or relating to
this Agreement, or its interpretation, application, implementation, breach
or
enforcement which the parties are unable to resolve by mutual agreement, shall
be settled by submission by either party of the controversy, claim or dispute
to
binding arbitration in Los Angeles County, California (unless the parties agree
in writing to a different location), before a single arbitrator in accordance
with the rules of the American Arbitration Association then in effect. In any
such arbitration proceeding the parties agree to provide all discovery deemed
necessary by the arbitrator. The decision and award made by the arbitrator
shall
be final, binding and conclusive on all parties hereto for all purposes, and
judgment may be entered thereon in any court having jurisdiction
thereof.
8
IN
WITNESS WHEREOF, each of the parties has caused this Agreement to be duly
executed under seal as of the date first above written.
CAVITATION
TECHNOLOGIES, Inc.
By:
/s/
Roman Gordon,
CEO
Roman
Gordon CEO
SHAREHOLDERS
Name of Shareholder
Number of Shares
9
EXHIBIT
A
SHAREHOLDER
LIST
NAME
#
OF HYDRO SHARES
#
OF COMPANY SHARES
Roman
Gordon
8,950,000
6,107,825
Igor
Gorodnitsky
8,950,000
6,107,825
Star
Tech Electric
2,075,000
1,416,060
BioWorld
Management Technology
2,000,000
1,364,877
Tatiana
Tessmer
1,650,000
Series A
1,126,024
Boris
Zheleznyak
750,000
511,829
Suzhanna
Tepper
750,000
511,829
Anna
Mosk
500,000
341,219
Lymilla
Yeschenko
400,000
Series A
272,975
Teresa
Jobs
275,000
187,671
Natalie
Gorodnitsky
275,000
187,671
Sergie
Chernov
250,000
170,610
Victor
Flek
150,000
102,366
Jeffrey
B. Neustadt
125,000
85,305
Alex
Lvovsky
125,000
85,305
Lenny
Rodgame
100,000
68,244
R.L.
Hartshorn
50,000
34,122
Leonid
Kaykov
50,000
34,122
Maxim
A. Promtov
25,000
17,061
Varvara
Grichko
25,000
17,061
Total
27,325,000
18,750,000
10
EXHIBIT
A
- CONTINUED
Warrants
and Stock Options Assumed
Name
Security
#
of Hydro Shrs
#
Cmpny Shrs
Exercise
Price
Tatiana
Tessmer
Common
Stock Warrant
330,000
225,205
$0.75
Lymilla
Yeschenko
Common
Stock Warrant
80,000
54,595
$0.75
R.L.
Hartshorn
Stock
Option
35,000
23,855
$1.00
R.L.
Hartshorn
Stock
Option
50,000
34,122
$2.00
Damon
Germain
Stock
Option
35,000
23,855
$1.00
Damon
Germain
Stock
Option
50,000
34,122
$2.00
Paul
D. Kneer
Stock
Option
35,000
23,855
$1.00
Paul
D. Kneer
Stock
Option
50,000
34,122
$2.00
Dennis
Wright
Stock
Option
35,000
23,855
$1.00
Dennis
Wright
Stock
Option
50,000
34,122
$2.00
Sergei
Chernov
Stock
Option
35,000
23,855
$1.00
Sergei
Chernov
Stock
Option
100,000
68,244
$2.00
Todd
Strickland
Stock
Option
35,000
23,855
$1.00
Todd
Strickland
Stock
Option
50,000
34,122
$2.00
Maxim
A. Promtov
Stock
Option
50,000
34,122
$2.00
Victor
Flek
Stock
Option
50,000
34,122
$2.00
Shannon
Stokes
Stock
Option
15,000
10,237
$1.00
Dates Referenced Herein and Documents Incorporated by Reference
