SHARE EXCHANGE AGREEMENT by and among ECO BUILDING INTERNATIONAL, a Nevada Company and CITY ZONE HOLDINGS LIMITED, a British Virgin Islands Company and THE SHAREHOLDERS OF CITY ZONE HOLDINGS LIMITED LISTED ON EXHIBIT A Dated as of April 27, 2010
Exhibit 2.1
by
and among
ECO
BUILDING INTERNATIONAL,
a Nevada
Company
and
CITY
ZONE HOLDINGS LIMITED,
a British
Virgin Islands Company
and
THE
SHAREHOLDERS OF CITY ZONE HOLDINGS LIMITED
LISTED
ON EXHIBIT A
Dated
as of April 27, 2010
1
THIS SHARE EXCHANGE AGREEMENT
(this “Agreement”), dated as
of April 27, 2010, is by and among Eco Building International, a Nevada
corporation (“Eco
Building”), City Zone Holdings Limited, a British Virgin Islands company
(“City Zone”),
and the shareholders of City Zone identified on Exhibit A hereto
(together referred to herein as the “City Zone
Shareholders,” each a “City Zone
Shareholder”). Each party to this Agreement is individually referred to
herein as a “Party” and
collectively, as the “Parties.”
PREMISES
WHEREAS, Eco Building is a
publicly held corporation organized under the laws of the state of Nevada with
no significant operations;
WHEREAS, Xxxxxxxxxxx
Kidney (the “Principal
Shareholder”) is currently the Principal Shareholder of Eco Building
owning, directly or indirectly, 3,000,000 shares of Eco Building Common Stock
(as defined in Section
2.2 below), representing approximately 60.9% of the issued and
outstanding Eco Building Common Stock as of the date hereof;
WHEREAS, City Zone is a
limited liability company organized under the laws of the British Virgin Islands
with 10,000 shares of common stock issued and outstanding (the “City Zone Shares”),
all of which are owned, directly or indirectly, by City Zone Shareholders set
forth on Exhibit
A. City Zone owns 100% of the issued and outstanding capital
stock of Most Smart International Limited (“Most Smart”), a Hong
Kong company. Most Smart is the holder of 100% of the issued and outstanding
capital stock of Redsun Technology (Shenzhen) Co. Limited (“Red Sun”), a wholly
foreign owned enterprise with limited liability incorporated under the People’s
Republic of China (the “PRC”). Red
Sun is the sole shareholder of Shenzhen JiRuHai Technology Co. Limited (“Jiruhai”) which was
incorporated in the PRC on August 20, 2009. Jiruhai is the 100% owner of the
issued and outstanding capital stock of Xxxxxx Xx. Xxxxxx Xx was incorporated
under the PRC laws on November 30, 2006 and is the sole shareholder of Jinzhong
Deyu Agriculture Trading Co. Limited (“Jinzhong Deyu”),
Jinzhong Yongcheng Agriculture Trading Co. Limited (“Yongcheng”) and
Jinzhong Yuliang Agriculture Trading Co. Limited (“Yuliang”), all of
which were also incorporated under the PRC laws on April 22, 2004, May 30, 2006,
and March 17, 2008, respectively;
WHEREAS, Eco Building agrees
to acquire 100% of the issued and outstanding capital stock of City Zone in
exchange for the issuance of 8,736,932 shares of Eco Building Common Stock (the
“Exchange”),
representing approximately 87.4% of the shares outstanding of Eco Building at
the Closing of the Share Exchange and each City Zone Shareholder agrees to
exchange its shares of City Zone on the terms described herein; and
WHEREAS, such Exchange shall
close simultaneously with an offering (the “Offering”) pursuant
to a Securities Purchase Agreement (the “Purchase Agreement”)
by and among Eco Building and named Investors (the “Investors”) therein
in connection with a private placement of an amount up to $10,000,000 (the
“Offering
Amount”), provided, however, the Offering may close at the Company’s and
Placement Agent’s mutual consent (the “Initial Closing”)
upon receipt of $7,000,000 (the “Minimum Closing
Amount”). In the event that we receive subscriptions for amounts in
excess of the Offering Amount, we may continue to accept additional
subscriptions for up to an additional $2,500,000, for a total Offering Amount of
up to $12,500,000, to cover over-allotments (the “Over-Allotment”). In
the event that the Closing occurs with an amount less than the full Offering
Amount plus the Over-Allotment, the Company and the Placement Agent can hold
subsequent closings for all or any portion of the remaining amount of the
Offering not sold at the time of the Closing, provided, however, that such
subsequent closings must occur no later than forty-five (45) days following the
Initial Closing. Each Unit shall consist of: (a) one (1) share of 5% Series A
convertible preferred stock of the Company (the “Series A Preferred Share”),
convertible into one (1) share (the “Share” or “Shares”) of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), at
a conversion price of $4.40 per share subject to certain adjustments
from time to time (the “Conversion Price”), and (b)
one (1) five-year Series A Warrant (the “Series A Warrant”) to purchase
0.4 shares of the Company’s Common Stock, at an exercise price of $5.06 per
share, subject to certain adjustments from time to time as shall result from the
adjustments specified in the Warrants (the “Warrant Price”). The Offering
will continue until such date that the Company and the Placement Agent mutually
agree, not beyond 45 days following the Initial Closing. If 2,272,727 Units are
sold, an aggregate of 2,272,727 Series A Preferred Shares, and Series A Warrants
to purchase up to 909,091 shares of Common Stock will be issued to investors,
for a purchase price of approximately $10,000,000.
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WHEREAS, the parties hereto
intend for this transaction to constitute a tax-free reorganization pursuant to
the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended.
AGREEMENT
NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the Parties agree as follows:
ARTICLE
I
REPRESENTATIONS
AND WARRANTIES
OF
CITY ZONE
As an
inducement to, and to obtain the reliance of, Eco Building, and except as set
forth in the corresponding disclosure schedules delivered by City Zone in
connection with this Agreement (the “City Zone
Schedules”), City Zone represents and warrants, as of the date hereof and
as of the Closing Date (defined in Section 4.2”), as
defined below, as follows:
1.1
Organization.
City Zone is a corporation duly organized, validly existing, and in good
standing under the laws of British Virgin Islands and has the corporate power
and is duly authorized under all applicable laws, regulations, ordinances, and
orders of public authorities to carry on its business in all material respects
as it is now being conducted. Included in Schedule 1.1 of the
City Zone Schedules are complete and correct copies of the articles of
association (such documents, or other equivalent corporate organizational
documents, the “Organizational
Documents”) of City Zone as in effect on the date hereof. The execution
and delivery of this Agreement does not, and the consummation of the
Transactions (as defined in Section 1.4) will
not, violate any provision of City Zone’s Organizational Documents. City Zone
has full power, authority, and legal right and has taken all action required by
law, its Organizational Documents, or otherwise to authorize the execution and
delivery of this Agreement and to consummate the Transactions.
1.2
Capitalization.
City Zone has authorized capital stock consisting of 50,000 ordinary shares with
no par value (the “City Zone Common
Stock”), 10,000 shares of which are currently issued and outstanding, and
have not been or, with respect to City Zone Shares, will not be transferred in
violation of any rights of third parties. The City Zone Shares are not subject
to any preemptive or subscription right, any voting trust agreement or other
contract, agreement, arrangement, option, warrant, call, commitment or other
right of any character obligating or entitling City Zone to issue, sell, redeem
or purchase any of its securities, and there is no outstanding security of any
kind convertible into or exchangeable for City Zone Common Stock. All of the
City Zone Shares are owned of record and beneficially by the City Zone
Shareholders free and clear of any liens, claims, encumbrances, or restrictions
of any kind.
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1.3
Subsidiaries and Predecessor
Corporations. Except as set forth in Schedule 1.3 of the
City Zone Schedules, City Zone does not have any predecessor corporation(s) or
subsidiaries, and does not own, beneficially or of record, any shares of any
other corporation. Hereinafter, the term “City Zone” also includes
those subsidiaries set forth in Schedule 1.3 of the
City Zone Schedules.
1.4 Authority; Execution and
Delivery; Enforceability of Agreement. City Zone has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby (the “Transactions”). The
execution and delivery by City Zone of this Agreement and the consummation by
City Zone of the Transactions have been duly authorized and approved by the
board of directors of City Zone and no other corporate proceedings on the part
of City Zone are necessary to authorize this Agreement and the Transactions.
When executed and delivered, this Agreement will be enforceable against City
Zone in accordance with its terms.
1.5
No Conflict with Other
Instruments. The execution of this Agreement and the consummation
of the Transactions will not result in the material breach of any term or
provision of, constitute a default under, or terminate, accelerate or modify the
terms of, any indenture, mortgage, deed of trust, or other material agreement,
or instrument to which City Zone is a party or to which any of its assets,
properties or operations are subject.
1.6
Taxes.
(a)
City Zone
has timely filed, or has caused to be timely filed on its behalf, all tax
returns required to be filed by it, and all such tax returns are true, complete
and accurate, except to the extent any failure to file or any inaccuracies in
any filed tax returns, individually or in the aggregate, have not had and would
not reasonably be expected to have a material adverse effect on City Zone. All
taxes shown to be due on such tax returns, or otherwise owed, have been timely
paid, except to the extent that any failure to pay, individually or in the
aggregate, has not had and would not reasonably be expected to have a material
adverse effect on City Zone. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of City Zone know of no basis for any such claim.
(b)
The City
Zone Financial Statements (as defined in Section 1.15 hereof)
reflect an adequate reserve for all taxes payable by City Zone and its
Subsidiaries (in addition to any reserve for deferred taxes to reflect timing
differences between book and tax items) for all taxable periods and portions
thereof through the date of such financial statements. No deficiency with
respect to any taxes has been proposed, asserted or assessed against City Zone
or any of its subsidiaries, and no requests for waivers of the time to assess
any such taxes are pending, except to the extent any such deficiency or request
for waiver, individually or in the aggregate, has not had and would not
reasonably be expected to have a material adverse effect on City
Zone.
1.7 Absence of Certain Changes
or Events. Since the date of the most recent City Zone Balance Sheet
(defined in Section
1.15):
(a) There
has not been any material adverse change in the business, operations,
properties, assets or condition (financial or otherwise) of City
Zone;
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(b)
Except as required by this Agreement, City Zone has not (i) amended its
Organizational Documents; (ii) declared or made, or agreed to declare or make
any payment of dividends or distributions of any assets of any kind whatsoever
to stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) made any material change in its method of
management, operation or accounting; (iv) entered into any transactions or
agreements; or (v) made any increase in or adoption of any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement, made to, for or with its officers,
directors, or employees; and
(c)
Except as required by this Agreement, City Zone has not (i) granted or agreed to
grant any options, warrants, or other rights for its stock, bonds, or other
corporate securities calling for the issuance thereof; (ii) borrowed or agreed
to borrow any funds or incurred, or become subject to, any material obligation
or liability (absolute or contingent); (iii) sold or transferred, or agreed to
sell or transfer, any of its assets, properties, or rights, or canceled, or
agreed to cancel, any debts or claims; or (iv) issued, delivered or agreed to
issue or deliver, any stocks, bonds or other corporate securities including
debentures (whether authorized and unissued or held as treasury
stock).
1.8
Litigation. There is
no claim, dispute, action, suit, proceeding or investigation pending or to the
knowledge of City Zone after reasonable investigation, threatened by or against
City Zone or any of its properties, at law or in equity, before any court or
other governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. City Zone does not have any knowledge of any material
default on its part with respect to any judgment, order, injunction, decree,
award, rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality or of any circumstances which, after reasonable investigation,
would result in the discovery of such a default.
1.9
Compliance with Applicable
Laws. To the best of its knowledge, City Zone has conducted its business
and operations in compliance with all applicable laws, including those relating
to occupational health and safety and the environment, except for instances of
noncompliance that, individually and in the aggregate, have not had and would
not reasonably be expected to have a material adverse effect on City
Zone. City Zone has not received any written communication during the
past two years from a governmental entity that alleges that City Zone is not in
compliance in any material respect with any applicable law.
1.10
Brokers’ Fees.
Except as set forth in Schedule 1.10, no
broker, investment banker, financial advisor or other person is entitled to any
broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
City Zone.
1.11
Contracts.
(a)
All
“material” contracts, agreements, franchises, license agreements, debt
instruments or other commitments to which City Zone is a party or by which it or
any of its assets, products, technology, or properties are bound other than
those incurred in the ordinary course of business are set forth in Schedule 1.11 of the
City Zone Schedules. A “material” contract, agreement, franchise, license
agreement, debt instrument or commitment is one which would be required to be
disclosed in connection with a current report on Form 8-K by City Zone if City
Zone were a registrant subject to Rule 13a-1 and Rule 13a-11 of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”);
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(b)
All
contracts, agreements, franchises, license agreements, and other commitments to
which City Zone is a party or by which its properties are bound and which are
material to the operations of City Zone taken as a whole are valid and
enforceable by City Zone in all respects, except as limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally and subject to the
qualification that the availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefore may be brought
(collectively, “Bankruptcy and Equity
Exceptions”); and
(c)
Except as
included or described in Schedule 1.11 of the
City Zone Schedules, City Zone is not a party to any oral or written (i)
contract for the employment of any officer or employee; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay, pension benefit or
retirement plan, (iii) agreement, contract, or indenture relating to the
borrowing of money, (iv) guaranty of any obligation; (vi) collective bargaining
agreement; or (vii) agreement with any present or former officer or director of
City Zone.
1.12
Title to
Properties. Except as disclosed in Schedule 1.12, City
Zone does not own any real property.
1.13
Intellectual
Property.
Except as
disclosed in Schedule
1.13, City Zone does not own, nor is validly licensed nor otherwise has
the right to use, any City Zone property rights. No claims are pending or, to
the knowledge of City Zone, threatened that City Zone is infringing or otherwise
adversely affecting the rights of any person with regard to any Intellectual
Property Right.
1.14
Insurance. Except as
disclosed in Schedule
1.14, City Zone does not currently maintain any form of
insurance.
1.15
Financial
Statements.
(a)
Included
in Schedule
1.15 of the City Zone Schedules are the audited balance sheets of City
Zone, as of December 31, 2009 (the “City Zone Balance
Sheets”) and the related audited statements of operations, stockholders’
equity and cash flows for the fiscal years ended December 31, 2008 and December
31, 2009, together with the notes to such financial statements and the opinion
of KCCW Accountancy, CPA, independent certified public accountants (the
financial statements referred to herein collectively, the “City Zone Financial
Statements”).
(b)
The City
Zone Financial Statements have been prepared in accordance with United States
Generally Accepted Accounting Principles (“GAAP”) consistently applied
throughout the periods involved. The City Zone Balance Sheets are true and
accurate and fairly present, as of their respective dates, the financial
condition of City Zone. As of the date of the City Zone Balance Sheets, except
as and to the extent reflected or reserved against therein, City Zone had no
liabilities or obligations (absolute or contingent) which should be reflected in
the City Zone Balance Sheets or the notes thereto prepared in accordance with
GAAP, and all assets reflected therein are properly reported and fairly present
the value of the assets of City Zone, in accordance with GAAP. The statements of
operations, stockholders’ equity and cash flows included in the City Zone
Financial Statements reflect fairly the information required to be set forth
therein by GAAP.
(c)
City Zone
has no liabilities with respect to the payment of any federal, state, county,
local or other taxes (including any deficiencies, interest or penalties), except
for taxes accrued but not yet due and payable.
(d)
City Zone
has timely filed all state, federal or local income and/or franchise tax returns
required to be filed by it from inception to the date hereof. Each
such income tax return reflects the taxes due for the period covered thereby,
except for amounts which, in the aggregate, are immaterial.
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(e)
All of
City Zone’s assets are reflected on the City Zone Financial Statements, and,
except as set forth in the City Zone Schedules or the City Zone Financial
Statements, City Zone has no material liabilities, direct or indirect, matured
or unmatured, contingent or otherwise.
1.16
Transactions with Affiliates
and Employees. Except as
set forth in Schedule
1.16 of the City Zone Schedules, none of the officers or directors of
City Zone and, to the knowledge of City Zone, none of the employees of City Zone
is presently a party to any transaction with City Zone or any of its
subsidiaries (other than for services as employees, officers and directors),
including any Contract or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of City Zone, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
1.17
Investment
Company. City Zone
is not, and is not an affiliate of, and immediately following the Closing will
not have become, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
1.18
Foreign Corrupt
Practices. Neither
City Zone, nor, to City Zone’s knowledge, any director, officer, agent, employee
or other person acting on behalf of City Zone, in the course of its actions for,
or on behalf of, City Zone (a) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (b) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (c)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (d) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
1.19 Xxxxxxxx-Xxxxx; Disclose
Controls. City Zone will be in compliance in all material respects
with all of the provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are
applicable to it after the Exchange. City Zone shall establish disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15(d)-15(e)) for City Zone and design such disclosure controls and procedure to
ensure that material information relating to City Zone is made known to the
certifying officers by others within those entities.
1.20
Approval of
Agreement. The board of directors of City Zone has authorized the
execution and delivery of this Agreement by City Zone and has approved this
Agreement and the Transactions.
1.21
Valid
Obligation. This Agreement and all agreements and other documents
executed by City Zone in connection herewith constitute valid and binding
obligations of City Zone, enforceable in accordance with their respective terms,
except as may be limited by Bankruptcy and Equity Exceptions.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
OF
ECO BUILDING
As an
inducement to, and to obtain the reliance of City Zone, and except as set forth
in the corresponding disclosure schedules delivered by Eco Building in
connection with this Agreement (the “Eco Building
Schedules”), Eco Building represents and warrants, as of the date hereof
and as of the Closing Date (defined in Section 4.2 ”), as
defined below, as follows:
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2.1
Organization.
Eco Building is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Nevada and has the corporate power and
is duly authorized under all applicable laws, regulations, ordinances, and
orders of public authorities to carry on its business in all material respects
as it is now being conducted. Included in Schedule 2.1 of the
Eco Building Disclosure Schedules are complete and correct copies of the
Organizational Documents of Eco Building as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
Transactions will not, violate any provision of Eco Building’s Organizational
Documents. Eco Building has full power, authority, and legal right and has taken
all action required by law, its Organizational Documents, or otherwise to
authorize the execution and delivery of this Agreement and to consummate the
Transactions.
2.2
Capitalization. The
authorized capital stock of Eco Building consists of 75,000,000 shares of common
stock, par value $0.001 per share (“Eco Building Common
Stock”), of which 4,930,000 shares are issued and outstanding immediately
prior to the consummation of the Transactions, 1,930,000 shares of which have
been registered for resale with the U.S. Securities and Exchange Commission
(“SEC”)
pursuant to an effective registration statement. All issued and
outstanding shares of Eco Building Common Stock are legally issued, fully paid,
non-assessable and not issued in violation of the preemptive or other rights of
any person. Prior to the Closing, Eco Building will obtain the required consents
and file an Amendment to its Articles of Incorporation with the Secretary of the
State for the State of Nevada to increase the number of authorized shares to
85,000,000 to provide for 10,000,000 shares of preferred stock, par value
$0.001, that can be designated by a majority vote of the Board of
Directors.
2.3 Subsidiaries and Predecessor
Corporations. Except as set forth in Schedule 2.3 of the
Eco Building Schedules, Eco Building does not have any predecessor
corporation(s), no subsidiaries, and does not own, beneficially or of record,
any shares of any other corporation.
2.4
Financial
Statements.
(a) Copies of (a) the audited
balance sheet of Eco Building as of May 31, 2009 and the related audited
statements of operations, stockholders’ equity and cash flows for the fiscal
year ended May 31, 2009, together with the notes to such statements and the
opinion of Xxxxxx Xxxxxxx, CPA, independent certified public accountants, and
(b) the unaudited balance sheet of Eco Building as of February 28, 2010
(together with the balance sheets of Eco Building as of February 28, 2010, the
“Eco Building Balance
Sheets”) and the related unaudited statements of operations,
stockholders’ equity and cash flows for the six-month period ended February 28,
2010 (the financial statements referred to in (a) and (b) collectively, the
“Eco Building
Financial Statements”) have been filed with the SEC.
(b) The Eco Building
Financial Statements have been prepared in accordance with GAAP consistently
applied throughout the periods involved. The Eco Building Balance Sheets are
true and accurate and fairly present as of their respective dates the financial
condition of Eco Building. As of the respective dates of the Eco
Building Balance Sheets, except as and to the extent reflected or reserved
against therein, Eco Building had no liabilities or obligations (absolute or
contingent) which should be reflected in the Eco Building Balance Sheets or the
notes thereto prepared in accordance with GAAP, and all assets reflected therein
are properly reported and fairly present the value of the assets of Eco
Building, in accordance with GAAP. The statements of operations, stockholders’
equity and cash flows in the Eco Building Financial Statements reflect fairly
the information required to be set forth therein by GAAP.
(c) Eco Building has no
liabilities with respect to the payment of any federal, state, county, local or
other taxes (including any deficiencies, interest or penalties), except for
taxes accrued but not yet due and payable.
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(d) Eco Building has timely
filed all state, federal or local income and/or franchise tax returns required
to be filed by it from inception to the date hereof. Each such income
tax return reflects the taxes due for the period covered thereby, except for
amounts which, in the aggregate, are immaterial.
(e) All of Eco Building’s assets
are reflected on the Eco Building Financial Statements, and, except as set forth
in the Eco Building Schedules or the Eco Building Financial Statements, Eco
Building has no material liabilities, direct or indirect, matured or unmatured,
contingent or otherwise.
(f) Eco Building shall have no
liabilities on the Closing Date (as defined in Section
4.2).
2.5
Information. The
information concerning Eco Building set forth in this Agreement and the Eco
Building Schedules is complete and accurate in all material respects and does
not contain any untrue statements of a material fact or omit to state a material
fact required to make the statements made, in light of the circumstances under
which they were made, not misleading.
2.6
Options or
Warrants. There are no existing options, warrants, calls, or
commitments of any character relating to the authorized and unissued capital
stock of Eco Building (including, but not limited to, the Eco Building Common
Stock).
2.7 Absence of Certain Changes
or Events. Since the date of the most recent Eco Building
Balance Sheet:
(a) There
has not been any material adverse change in the business, operations,
properties, assets or condition (financial or otherwise) of Eco
Building;
(b)
Except as required by this Agreement, Eco Building has not (i) amended its
Organizational Documents; (ii) declared or made, or agreed to declare or make
any payment of dividends or distributions of any assets of any kind whatsoever
to stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) made any material change in its method of
management, operation or accounting; (iv) entered into any transactions or
agreements; or (v) made any increase in or adoption of any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement, made to, for or with its officers,
directors, or employees; and
(c)
Except as required by this Agreement, Eco Building has not (i) granted or agreed
to grant any options, warrants, or other rights for its stock, bonds, or other
corporate securities calling for the issuance thereof; (ii) borrowed or agreed
to borrow any funds or incurred, or become subject to, any material obligation
or liability (absolute or contingent); (iii) sold or transferred, or agreed to
sell or transfer, any of its assets, properties, or rights, or canceled, or
agreed to cancel, any debts or claims; or (iv) issued, delivered or agreed to
issue or deliver, any stock, bonds or other corporate securities including
debentures (whether authorized and unissued or held as treasury
stock).
2.8
Litigation and
Proceedings. There
are no actions, suits, proceedings or investigations pending or, to the
knowledge of Eco Building after reasonable investigation, threatened by or
against Eco Building or affecting Eco Building or its properties, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. Eco
Building does not have any knowledge of any default on its part with respect to
any judgment, order, writ, injunction, decree, award, rule or regulation of any
court, arbitrator, or governmental agency or instrumentality or any circumstance
which after reasonable investigation would result in the discovery of such
default.
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2.9
Contracts. Except
as set forth in Schedule 2.9 of the
Eco Building Schedules, Eco Building is not a party to, and neither it nor any
of its assets, products, technology and properties are bound by:
(a) any
contract, agreement, franchise, license, debt instrument, or other commitment,
whether such agreement is in writing or oral;
(b) any
charter or other corporate restriction, except as set forth in the
Organizational Documents of Eco Building;
(c) any
judgment, order, writ, injunction, decree, or award; or
(d) any oral
or written (i) contract for the employment of any officer or employee; (ii)
profit sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, (iii) agreement, contract, or indenture
relating to the borrowing of money, (iv) guaranty of any obligation, (vi)
collective bargaining agreement; or (vii) agreement with any present or former
officer or director of Eco Building.
2.10
No Conflict With Other
Instruments. The
execution of this Agreement and the consummation of the Transactions will not
result in the breach of any term or provision of, constitute a default under, or
terminate, accelerate or modify the terms of, any indenture, mortgage, deed of
trust, or other material agreement or instrument to which Eco Building is a
party or to which any of its assets, properties or operations are
subject.
2.11
Compliance With Laws
and Regulations.
To the best of its knowledge, Eco Building has complied with all
applicable statutes and regulations of any federal, state, or other applicable
governmental entity or agency thereof. This compliance includes, but
is not limited to, the filing of all reports to date with federal and state
securities authorities.
2.12
Approval of
Agreement. The
board of directors of Eco Building has authorized the execution and delivery of
this Agreement by Eco Building and has approved this Agreement and the
Transactions.
2.13
Material Transactions
or Affiliations. Except
for this Agreement and the Contemplated Transactions, there exists no contract,
agreement or arrangement between Eco Building and any predecessor and any person
who was at the time of such contract, agreement or arrangement an officer,
director, or person owning of record or known by Eco Building to own
beneficially, five percent (5%) or more of the issued and outstanding Eco
Building Common Stock and which is to be performed in whole or in part after the
date hereof or was entered into not more than three (3) years prior to the date
hereof. Neither any officer, director, nor five percent (5%)
stockholder of Eco Building has, or has had since inception of Eco Building, any
known interest, direct or indirect, in any such transaction with Eco Building
which was material to the business of Eco Building. Eco Building has
no commitment, whether written or oral, to lend any funds to, borrow any money
from, or enter into any other transaction with, any such affiliated
person.
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2.14
Bank Accounts; Power
of Attorney. Set forth in Schedule 2.14
of the Eco Building Schedules is a true and complete list of (a) all
accounts with banks, money market mutual funds or securities or other financial
institutions maintained by Eco Building within the past twelve (12) months, the
account numbers thereof, and all persons authorized to sign or act on behalf of
Eco Building, (b) all safe deposit boxes and other similar custodial
arrangements maintained by Eco Building within the past twelve (12) months, (c)
the check ledger for the last twelve (12) months, (d) the names of all persons
holding powers of attorney from Eco Building or who are otherwise authorized to
act on behalf of Eco Building with respect to any matter, other than its
officers and directors, and a summary of the terms of such powers or
authorizations, and (e) a list of all the current officers and directors of Eco
Building.
2.15
Valid
Obligation.
This Agreement and all agreements and other documents executed by Eco Building
in connection herewith constitute the valid and binding obligations of Eco
Building, enforceable in accordance with their respective terms, except as may
be limited by Bankruptcy and Equity Exceptions.
2.16
Exchange Act
Compliance. Eco Building has timely filed all reports,
statements, and other information required to be filed by it under the Exchange
Act, the common shares have been registered under Section 12(g) of the Exchange
Act, and Eco Building is in compliance with all of the requirements under, and
imposed by, Section 12(g) of the Exchange Act, except were a failure to so
comply is not reasonably likely to have a Material Adverse Effect on Eco
Building.
2.17
Shell
Company. Eco Building has at all times been a “shell company”
as defined in Rule 12b-2 of the Exchange Act.
2.18
OTCBB. Eco
Building is currently quoted on the Over-The-Counter Bulletin Board (“OTCBB”) and meets all requirements
to be listed on the OTCBB.
2.19 SEC Filings; Financial
Statements.
(a) Eco
Building has made available to City Zone a correct and complete copy, or there
has been available on XXXXX, copies of each report, registration statement and
definitive proxy statement filed by Eco Building with the SEC for the 36 months
prior to the date of this Agreement (the “Eco Building SEC
Reports”), which, to Eco Building’s knowledge, are all the forms, reports
and documents filed by Eco Building with the SEC for the 36 months prior to the
date of this Agreement. As of their respective dates, to Eco Building’s
knowledge, the Eco Building SEC Reports: (i) were prepared in accordance and
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 Eco Building SEC Reports, and (ii) did not at the
time they were filed (and if amended or superseded by a filing prior to the date
of this Agreement then on the date of such filing and as so amended or
superceded) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Each
set of financial statements (including, in each case, any related notes thereto)
contained in the Eco Building SEC Reports comply as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with U.S. GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited statements, do not contain footnotes as
permitted by Form 10-Q promulgated under the Exchange Act) and each fairly
presents in all material respects the financial position of Eco Building at the
respective dates thereof and the results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal adjustments which were not or are not expected to
have a Material Adverse Effect on Eco Building taken as a whole.
11
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF
THE
CITY ZONE SHAREHOLDERS
Each City
Zone Shareholder hereby represents and warrants, severally and not jointly, to
Eco Building as follows:
3.1
Good
Title. The City
Zone Shareholders are the record and beneficial owners, and have good title to
their City Zone Common Stock, with the right and authority to sell and deliver
such City Zone Common Stock, and upon consummation of the transactions
contemplated herein, Eco Building will acquire from the City Zone Shareholders
good and marketable title of such City Zone Common Stock, free and clear of all
liens expecting only such restrictions upon future transfers by Eco Building, if
any, as may be imposed by applicable law.
3.2
Power and
Authority. The City Zone Shareholders have the legal power,
capacity and authority to execute and deliver this Agreement to consummate the
transactions contemplated by this Agreement, and to perform their obligations
under this Agreement. All acts required to be taken by the City Zone
Shareholders to enter into this Agreement and to carry out the Transactions have
been properly taken. This Agreement constitutes a legal, valid and
binding obligation of the City Zone Shareholders, enforceable against the City
Zone Shareholders in accordance with the terms hereof.
3.3
No
Conflicts. The execution and delivery of this Agreement by the
City Zone Shareholders and the performance by the City Zone Shareholders of
their obligations hereunder in accordance with the terms hereof: (a) will not
require the consent of any third party or governmental entity under any laws;
(b) will not violate any laws applicable to the City Zone Shareholders and (c)
will not violate or breach any contractual obligation to which the City Zone
Shareholders are a party.
3.4
Finder’s Fee.
The City Zone Shareholders represents and warrants that it has not created any
obligation for any finder’s, investment banker’s or broker’s fee in connection
with the Transactions.
3.5
Purchase Entirely for Own
Account. The Exchange Shares (as defined in Section 4.1) proposed
to be acquired by the City Zone Shareholders hereunder will be acquired for
investment for their own accounts, and not with a view to the resale or
distribution of any part thereof, and the City Zone Shareholders have no present
intention of selling or otherwise distributing the Eco Building Shares, except
in compliance with applicable securities laws.
3.6
Sophistication. Each
City Zone Shareholder is a sophisticated investor, as described in Rule
506(b)(2)(ii) promulgated under the Securities Act and has such experience in
business and financial matters such that each is capable of evaluating the
merits and risks of an investment in Eco Building.
3.7 Information.
Each City Zone Shareholder has carefully reviewed such information as such City
Zone Shareholder deemed necessary to evaluate an investment in Eco Building
Common Stock. To the full satisfaction of each City Zone Shareholder, it has
been furnished with all materials that it has requested relating to Eco Building
and the issuance of Eco Building Shares hereunder, and each Eco Building
Shareholder has been afforded the opportunity to ask questions of
representatives of Eco Building to obtain any information necessary to verify
the accuracy of any representations or information made or given to such City
Zone Shareholder. Notwithstanding the following, nothing herein shall derogate
from or otherwise modify the representations and warranties of Eco Building set
forth in this Agreement, on which each City Zone Shareholder has relied in
making an exchange of the City Zone Common Stock for Eco Building
Shares.
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3.8
Restricted
Securities. Each City
Zone Shareholder understands that the Exchange Shares are characterized as
“restricted securities” under the Securities Act inasmuch as this Agreement
contemplates that, if acquired by a City Zone Shareholder pursuant hereto,
Exchange Shares would be acquired in a transaction not involving a public
offering. The issuance of Exchange Shares hereunder have not been registered
under the Securities Act or the securities laws of any state of the U.S. and
that the issuance of the Exchange Shares is being effected in reliance upon an
exemption from registration afforded either under Section 4(2) of the Securities
Act for transactions by an issuer not involving a public offering or Regulation
S for offers and sales of securities outside the United States. Each City Zone
Shareholder further acknowledges that if the Exchange Shares are issued to such
City Zone Shareholder in accordance with the provisions of this Agreement, such
Exchange Shares may not be resold without registration under the Securities Act
or the existence of an exemption therefrom. Each City Zone Shareholder
represents that it is familiar with Rule 144 promulgated under the Securities
Act, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.
3.9 Acquisition of Exchange
Shares for Investment.
(a)
Each City
Zone Shareholder is acquiring the Exchange Shares for investment for such City
Zone Shareholder’s own account and not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and each City Zone
Shareholder has no present intention of selling, granting any participation in,
or otherwise distributing the same. Each City Zone Shareholder
further represents that he or she does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Exchange Shares.
(b)
Each City
Zone Shareholder represents and warrants that it: (i) can bear the economic risk
of its respective investments, and (ii) possesses such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of the investment in Eco Building and its securities.
(c)
Each City
Zone Shareholder who is not a “U.S. Person” as defined in Rule 902(k) of
Regulation S of the Securities Act (“Regulation S”) (each
a “Non-U.S.
Shareholder”) understands that the Exchange Shares are not registered
under the Securities Act and that the issuance thereof to such City Zone
Shareholders is intended to be exempt from registration under the Securities Act
pursuant to Regulation S. Each Non-U.S. Shareholder has no intention
of becoming a U.S. Person. At the time of the origination of contact
concerning this Agreement and the date of the execution and delivery of this
Agreement, each Non-U.S. Shareholder was outside of the United
States. Each certificate representing the Exchange Shares shall be
endorsed with the following legends, in addition to any other legend required to
be placed thereon by applicable federal or state securities laws:
“THE
SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED
IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”))
AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED
UNDER THE SECURITIES ACT.”
“TRANSFER
OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT
BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
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(d)
Each City
Zone Shareholder who is a “U.S. Person” as defined in Rule 902(k) of Regulation
S (each a “U.S.
Shareholder”) understands that the Exchange Shares are not registered
under the Securities Act and that the issuance thereof to such City Zone
Shareholders is intended to be exempt from registration under the Securities Act
pursuant to Regulation D promulgated thereunder (“Regulation
D”). Each U.S. Shareholder represents and warrants that he is
an “accredited investor” as such term is defined in Rule 501 of Regulation D or,
if not an accredited investor, that such City Zone Shareholders otherwise meets
the suitability requirements of Regulation D and Section 4(2) of the Securities
Act (“Section
4(2)”). Each
U.S. Shareholder agrees to provide documentation to Eco Building prior to
Closing as may be requested by Eco Building to confirm compliance with
Regulation D and/or Section 4(2), including, without limitation, a letter of
investment intent or similar representation letter and a completed investor
questionnaire. Each
certificate representing the Exchange Shares issued to such City Zone
Shareholders shall be endorsed with the following legends, in addition to any
other legend required to be placed thereon by applicable federal or state
securities laws:
“THIS
SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR APPLICABLE STATE
SECURITIES OR “BLUE SKY” LAWS.”
“TRANSFER
OF THESE SECURITIES IS PROHIBITED UNLESS A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT WITH RESPECT TO SUCH SECURITY SHALL THEN BE IN EFFECT AND SUCH
TRANSFER HAS BEEN QUALIFIED UNDER ALL APPLICABLE STATE SECURITIES OR “BLUE SKY”
LAWS, OR AN EXEMPTION THEREFROM SHALL BE AVAILABLE UNDER THE ACT AND SUCH
LAWS.”
(e)
Each City
Zone Shareholder acknowledges that neither the SEC, nor the securities
regulatory body of any state or other jurisdiction, has received, considered or
passed upon the accuracy or adequacy of the information and representations made
in this Agreement.
(f)
Each City
Zone Shareholder acknowledges that it has carefully reviewed such information as
it has deemed necessary to evaluate an investment in Eco Building and its
securities, and with respect to each U.S. Shareholder, that all information
required to be disclosed to such City Zone Shareholder under Regulation D has
been furnished to such City Zone Shareholder by Eco Building. To the
full satisfaction of each City Zone Shareholder, he has been furnished all
materials that he has requested relating to Eco Building and the issuance of the
Exchange Shares hereunder, and each City Zone Shareholder has been afforded the
opportunity to ask questions of Eco Building’s representatives to obtain any
information necessary to verify the accuracy of any representations or
information made or given to the City Zone Shareholders. Notwithstanding the
foregoing, nothing herein shall derogate from or otherwise modify the
representations and warranties of Eco Building set forth in this Agreement, on
which each of the City Zone Shareholders have relied in making an exchange of
its shares City Zone for the Exchange Shares.
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(g)
Each City
Zone Shareholder understands that the Exchange Shares may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Exchange Shares or any available exemption
from registration under the Securities Act, the Exchange Shares may have to be
held indefinitely. Each City Zone Shareholder further acknowledges
that the Exchange Shares may not be sold pursuant to Rule 144 promulgated under
the Securities Act unless all of the conditions of Rule 144 are satisfied
(including, without limitation, Eco Building’s compliance with the reporting
requirements under the Securities Exchange Act of 1934, as amended (“Exchange
Act”)).
(h)
Each City Zone Shareholder agrees that, notwithstanding anything contained
herein to the contrary, the warranties, representations, agreements and
covenants of such City Zone Shareholder under this Section 3.10 shall survive
the Closing.
3.10
Additional Legend;
Consent. Additionally, the Exchange Shares will bear any legend
required by the “blue sky” laws of any state to the extent such laws are
applicable to the securities represented by the certificate so legended. Each
City Zone Shareholder consents to Eco Building making a notation on its records
or giving instructions to any transfer agent of Exchange Shares in order to
implement the restrictions on transfer of the Exchange Shares.
ARTICLE
IV
PLAN
OF EXCHANGE
4.1
Exchange City Zone Common
Stock for Eco Building Common Stock. On the
terms and subject to the conditions set forth in this Agreement, on the Closing
Date and after the consummation of the transaction contemplated herein, the City
Zone Shareholders shall assign, transfer and deliver to Eco Building, free and
clear of all liens, pledges, encumbrances, charges, restrictions or known claims
of any kind, nature, or description, all of the shares of City Zone Shares held
by the City Zone Shareholders; the objective of such Exchange being the
acquisition by Eco Building of not less than 100% of the issued and outstanding
City Zone Common Stock. In exchange for the transfer of such
securities by the City Zone Shareholders, Eco Building shall issue to the City
Zone Shareholders 8,736,932 shares of Eco Building Common Stock, representing
approximately 87.4% of the total issued and outstanding Eco Building Common
Stock (the “Exchange
Shares”). At the closing of the transactions described in this
Section 4.1
(the “Closing”), the City
Zone Shareholders shall, upon surrender of their certificates representing the
City Zone Common Stock to Eco Building or its registrar or transfer agent, be
entitled to receive a certificate or certificates evidencing its interest in the
Eco Building Shares. Upon consummation of the Transactions, all of
the shares of capital stock of City Zone shall be held by Eco
Building.
4.2
Closing and Actions at
Closing. The closing of the Transactions shall take place at
the offices of Xxxxxx & Xxxxxx, LLP, 000 Xxxxx 0 Xxxxx, Xxxxx 000,
Xxxxxxxxx, XX, 00000 commencing at 9:00 a.m. local time on the second business
day following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the Exchange (other than conditions with respect to
actions that the respective parties will take at Closing) or such other date and
time as the Parties may mutually determine (the “Closing
Date”).
4.3
Cancellation of Certain
Shares of Eco Building Common Stock. At the Closing, the Principal
Shareholder of Eco Building shall, deliver to Eco Building, and Eco Building
shall be caused to be cancelled, 3,000,000 shares of Eco Building restricted
Common Stock held by the Principal Shareholder.
4.4
Anti-Dilution.
The Eco Building Shares issuable upon exchange pursuant to Section 4.1 shall be
appropriately adjusted to take into account any other stock split, stock
dividend, reverse stock split, recapitalization, or similar change in the Eco
Building Common Stock which may occur, other than share cancellation described
in Section 4.3,
between the date of the execution of this Agreement and the Closing Date, as to
the Eco Building Shares.
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4.5 Termination. This
Agreement may be terminated by the board of directors of Eco Building or City
Zone only in the event that Eco Building or City Zone do not meet the conditions
precedent set forth in Articles VI and VII
hereof. If this Agreement is terminated pursuant this Section 4.5, this
Agreement shall be of no further force or effect, and no obligation, right or
liability shall arise hereunder.
4.6 Increase of Authorized
Shares. Prior
to the Closing, Eco Building will obtain the required consents and file an
Amendment to its Articles of Incorporation with the Secretary of the State for
the State of Nevada to increase the number of authorized shares to 85,000,000 to
provide for 10,000,000 shares of preferred stock, par value $0.001, that can be
designated by a majority vote of the Board of Directors.
ARTICLE
V
SPECIAL
COVENANTS
5.1 Access to Properties and
Records. Eco
Building and City Zone will each afford to the officers and authorized
representatives of the other party full access to the properties, books and
records of Eco Building or City Zone, as the case may be, in order that each
party may have a full opportunity to make such reasonable investigation as it
shall desire to make of the affairs of the other party, and each party will
furnish to the other party such additional financial and operating data and
other information as to the business and properties of Eco Building or City
Zone, as the case may be, as the other party shall from time to time reasonably
request. Without limiting the foregoing, as soon as practicable after
the end of each fiscal quarter (and in any event through the last fiscal quarter
prior to the Closing Date), each party shall provide the other party with
quarterly internally prepared and unaudited financial statements.
5.2
Delivery of Books and
Records. At the Closing, City Zone shall deliver to Eco
Building the originals of the corporate minute books, books of account,
contracts, records, and all other books or documents of City Zone now or then in
the possession of City Zone or its representatives. Eco Building shall deliver
to City Zone the originals of the corporate minute books, books of account,
contracts, records, and all other books or documents of Eco Building now or then
in the possession of Eco Building or its representatives.
5.3
Third Party Consents
and Certificates. Eco Building and City Zone agree to
cooperate with each other in order to obtain any required third party consents
to this Agreement and the Transactions.
5.4
Eco Building
Shareholder Meeting.
Eco Building shall promptly call a special meeting of stockholders to be held on
or prior to the Closing Date, at which meeting the shareholders of Eco Building
shall be requested to approve, and the board of directors of Eco Building shall
recommend the approval of, the terms of this Agreement, the Transactions, and
such other matters as shall require stockholder approval
hereunder. In addition, Eco Building shall promptly file with the SEC
all necessary disclosure statements required by federal securities
laws.
5.5
Change of Fiscal
Year-End. Eco Building shall amend its articles of
incorporation to change the Company’s fiscal year end to December
31.
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5.6
Designation of
Officers and Directors. On the
Closing Date, and in compliance with Rule 14F-1 of the General Rules and
Regulations promulgated under the Exchange Act, Eco Building shall accept the
resignation of the Principal Shareholder from the board of directors of Eco
Building (the “Eco
Building Board”) and appoint Xxxxxxxx Xxx as Chairman of Eco Building
Board of Directors. In addition, effective on the Closing Date, Eco Building
shall accept the resignation of the Principal Shareholder from all officer
positions he holds at Eco Building and shall appoint Xxxxxxxx Xxx as the Chief
Executive Officer effective as of the date hereof.
5.7
Change of Company
Name. Within 30
days following the Closing Date, Eco Building shall give approval to change the
company name from Eco Building International to China Agriculture Products
Holdings Corp, or such other name as City Zone requests.
5.8 Change of
Auditor. On the Closing Date, Eco Building shall dismiss
Xxxxxx Xxxxxxx, CPA as its certified independent auditor (“Auditor”) and appoint
KCCW Accountancy Corp. as its new Auditor.
5.9
Actions Prior to
Closing.
(a) From and
after the date of this Agreement until the Closing Date and except as set forth
in the Eco Building Schedules or City Zone Schedules or as permitted or
contemplated by this Agreement, Eco Building (subject to paragraph (b) below)
and City Zone respectively, will each:
(i)
|
carry
on its business in substantially the same manner as it has
heretofore;
|
(ii)
|
maintain
and keep its properties in states of good repair and condition as at
present, except for depreciation due to ordinary wear and tear and damage
due to casualty;
|
(iii)
|
maintain
in full force and effect insurance comparable in amount and in scope of
coverage to that now maintained by
it;
|
(iv)
|
perform
in all material respects all of its obligations under any material
contracts, leases, and instruments relating to or affecting its assets,
properties, and business;
|
(v)
|
use
its best efforts to maintain and preserve intact its business
organization, to retain its key employees, and to maintain its
relationship with its material suppliers and customers;
and
|
(vi)
|
fully
comply with and perform in all material respects all obligations and
duties imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by federal or state governmental
authorities.
|
(b) From and
after the date of this Agreement until the Closing Date, neither Eco Building
nor City Zone will:
(i)
|
make
any changes in their Organizational Documents, including any change of
name, except as contemplated by this
Agreement;
|
(ii)
|
take
any action described in Section 1.07,
in the case of City Zone, or in Section 2.07,
in the case of Eco Building (all except as permitted therein or as
disclosed in the City Zone Schedules or Eco Building Schedules, as
applicable);
|
17
(iii)
|
enter
into or amend any contract, agreement, or other instrument of any of the
types described in the City Zone Schedules or Eco Building Schedules,
except that a party may enter into or amend any contract, agreement, or
other instrument in the ordinary course of business involving the sale of
goods or services; or
|
(iv)
|
sell
any assets or discontinue any operations, sell any shares of capital stock
or conduct any similar transactions other than in the ordinary course of
business.
|
5.10 The Acquisition of Eco
Building Common Stock. Eco
Building and City Zone understand and agree that the consummation of the
Transactions, including the issuance of the Eco Building Common Stock to City
Zone Shareholders in exchange for the City Zone Common Stock as contemplated
herein, constitutes the offer and sale of securities under the Securities Act of
1933, as amended (the “Securities Act”) and
applicable state statutes. Eco Building and City Zone agree that such
transactions shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes, which
depend, among other items, on the circumstances under which such securities are
acquired.
(a)
In
connection with the Transactions, Eco Building and City Zone shall each file,
with the assistance of the other party and their respective legal counsel, such
notices, applications, reports, or other instruments as may be deemed by them to
be necessary or appropriate in an effort to document reliance on such
exemptions, and the appropriate regulatory authority in the states where the
stockholders of City Zone reside unless an exemption requiring no filing is
available in such jurisdiction, all to the extent and in the manner as may be
deemed by such party to be appropriate.
(b)
In order
to more fully document reliance on the exemptions from registration as provided
herein, City Zone, the City Zone Shareholders, and Eco Building shall execute
and deliver to the other party, at or prior to the Closing, such further letters
of representation, acknowledgment, suitability, or the like as City Zone or Eco
Building and their respective counsel may reasonably request in connection with
reliance on exemptions from registration under such securities
laws.
(c)
The City
Zone Shareholders acknowledge that the basis for relying on exemptions from
registration or qualifications are factual, depending on the conduct of the
various parties, and that no legal opinion or other assurance will be required
or given to the effect that the Transactions are in fact exempt from
registration or qualification.
5.11
Sales of Securities
Under Rule 144, If Applicable.
(a) Eco
Building will use its best efforts to at all times satisfy the current public
information requirements of Rule 144 promulgated under the Securities Act so
that its stockholders can sell restricted securities that have been held for one
(1) year or more or such other restricted period as required by Rule 144 as it
is from time to time amended.
(b) Upon
being informed in writing by any person holding restricted stock of Eco Building
that such person intends to sell any shares under Rule 144 promulgated under the
Securities Act (including any rule adopted in substitution or replacement
thereof), Eco Building will certify in writing to such person that it is
compliance with Rule 144 current public information requirement to enable such
person to sell such person’s restricted stock under Rule 144, as may be
applicable under the circumstances.
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(c) If
any certificate representing any such restricted stock is presented to Eco
Building’s transfer agent for registration or transfer in connection with any
sales theretofore made under Rule 144, provided such certificate is
duly endorsed for transfer by the appropriate person(s) or accompanied by a
separate stock power duly executed by the appropriate person(s), in each case
with reasonable assurances that such endorsements are genuine and effective and
is accompanied by a legal opinion that such transfer has complied with the
requirements of Rule 144, as the case may be, Eco Building will promptly
instruct its transfer agent to register such transfer and to issue one or more
new certificates representing such shares to the transferee and, if appropriate
under the provisions of Rule 144, as the case may be, free of any stop transfer
order or restrictive legend.
(d)
This Section
5.10 shall survive the Closing of this Agreement for a period of two (2)
years.
5.12
Indemnification.
(a) City
Zone hereby agrees to indemnify Eco Building and each of the officers, agents
and directors of Eco Building as of the date of execution of this Agreement
against any loss, liability, claim, damage, or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever) (“Loss”), to which it
or they may become subject arising out of or based on any inaccuracy appearing
in or misrepresentations made under Article
I. The indemnification provided for in this paragraph shall
survive the Closing and consummation of Transactions and termination of this
Agreement for one (1) year following the Closing.
(b) The
City Zone Shareholders, agree to indemnify Eco Building and each of the
officers, agents and directors of Eco Building as of the date of execution of
this Agreement against any Loss, to which it or they may become subject arising
out of or based on any inaccuracy appearing in or misrepresentations made under
Article
III. The indemnification provided for in this paragraph shall
survive the Closing and consummation of the Contemplated Transactions and
termination of this Agreement for one (1) year following the
Closing.
(c) Eco
Building hereby agrees to indemnify City Zone and each of the officers, agents,
and directors of City Zone and the City Zone Shareholders as of the date of
execution of this Agreement against any Loss to which it or they may become
subject arising out of or based on any inaccuracy appearing in or
misrepresentation made under Article
II. The indemnification provided for in this paragraph shall
survive the Closing and consummation of the Contemplated Transactions and
termination of this Agreement for one (1) year following the
Closing.
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS
OF
ECO BUILDING
The
obligations of Eco Building under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following
conditions:
6.1
Accuracy of
Representations and Performance of Covenants. The
representations and warranties made by City Zone and the City Zone Shareholders
in this Agreement were true when made and shall be true on the Closing Date with
the same force and effect as if such representations and warranties were made on
and as of the Closing Date. City Zone shall have performed or
complied with all covenants and conditions required by this Agreement to be
performed or complied with by City Zone prior to or at the Closing.
19
6.2
Officer’s
Certificate. Eco Building shall have been furnished with a
certificate dated the Closing Date and signed by a director of City Zone,
certifying that: (a) no litigation, proceeding, investigation, or inquiry is
pending, or to the best knowledge of City Zone, threatened, which might result
in an action to enjoin or prevent the consummation of the Contemplated
Transactions, or, to the extent not disclosed in the City Zone Schedules, by or
against City Zone, which might result in any material adverse change in any of
the assets, properties, business, or operations of City Zone, and (b) the
conditions set forth in Sections 6.1, 6.4 and 6.5 have been
satisfied.
6.3
Good
Standing. Eco
Building shall have received a certificate of good standing from a qualified
attorney in the British Virgin Islands, dated as of a date prior to the Closing
Date certifying that City Zone is in good standing as a corporation in the
British Virgin Islands.
6.4 No Governmental
Prohibition. No
order, statute, rule, regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted, entered, promulgated or
enforced by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the Transactions.
6.5 Consents. All
consents, approvals, waivers or amendments pursuant to all contracts, licenses,
permits, trademarks and other intangibles in connection with the Transactions,
or for the continued operation of City Zone after the Closing Date on the basis
as presently operated shall have been obtained.
6.6
Other
Items. Eco Building shall have received such further
opinions, documents, certificates or instruments relating to the Transactions as
Eco Building may reasonably request.
ARTICLE
VII
CONDITIONS
PRECEDENT TO OBLIGATIONS OF CITY ZONE
AND
THE CITY ZONE STOCKHOLDERS
The
obligations of City Zone and the City Zone Shareholders under this Agreement are
subject to the satisfaction, at or before the Closing Date, of the following
conditions:
7.1
Accuracy of
Representations and Performance of Covenants.
The representations and warranties made by Eco Building in this Agreement and by
the Principal Shareholder in the Indemnity Agreement to be delivered on the
Closing Date (the “Indemnity Agreement”)
were true when made and shall be true on the Closing Date with the same force
and effect as if such representations and warranties were made on and as of the
Closing Date. Each of Eco Building and the Principal Shareholder
shall have performed and complied with all covenants and conditions required by
this Agreement and the Indemnity Agreement to be performed or complied with by
Eco Building and the Principal Shareholder (as the case may be) prior to or at
the Closing.
7.2
Officer’s
Certificate. City
Zone shall have been furnished with a certificate dated the Closing Date and
signed by a duly authorized officer of Eco Building, certifying that: (a) no
litigation, proceeding, investigation or inquiry is pending, or to the best
knowledge of Eco Building threatened, which might result in an action to enjoin
or prevent the consummation of the Transactions, or, to the extent not disclosed
in the Eco Building Schedules, by or against Eco Building, which might result in
any material adverse change in any of the assets, properties or operations of
Eco Building, and (b) the conditions set forth in Sections 7.1, 7.4, and 7.5 have been
satisfied.
20
7.3
Good
Standing. City
Zone shall have received a certificate of good standing from the Secretary of
State of the State of Nevada, dated as of a date within ten (10) days prior to
the Closing Date, certifying that Eco Building is in good standing as a
corporation in the State of Nevada and has filed all tax returns required to
have been filed by it to date and has paid all taxes reported as due
thereon.
7.4
No Governmental
Prohibition. No
order, statute, rule, regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted, entered, promulgated or
enforced by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the Transactions.
7.5
Consents. All
consents, approvals, waivers or amendments pursuant to all contracts, licenses,
permits, trademarks and other intangibles in connection with the Transactions,
or for the continued operation of Eco Building after the Closing Date on the
basis as presently operated shall have been obtained.
7.6
Other
Items.
City Zone and the City Zone Shareholders shall have received further opinions,
documents, certificates, or instruments relating to the Transactions as City
Zone and the City Zone Shareholders may reasonably request.
ARTICLE
VIII
MISCELLANEOUS
8.1
Brokers.
Except as set forth in the Eco Building Schedules and City Zone Schedules, Eco
Building and City Zone agree that there were no finders or brokers involved in
bringing the parties together or who were instrumental in the negotiation or
execution of this Agreement or consummation of the Transactions. Eco
Building and City Zone each agree to indemnify the other party against any claim
by any third person other than those described above for any commission,
brokerage, or finder’s fee arising from the Contemplated Transactions based on
any alleged agreement or understanding between the indemnifying party and such
third person, whether express or implied from the actions of the indemnifying
party.
8.2
Governing
Law. This Agreement shall be governed by, enforced, and
construed under and in accordance with the laws of the United States of America
and, with respect to the matters of state law, with the laws of the State of
Nevada. Venue for all matters shall be in Nevada, without giving
effect to principles of conflicts of law thereunder. Each of the
parties irrevocably consents and agrees that any legal or equitable action or
proceedings arising under or in connection with this Agreement shall be brought
exclusively in the federal courts of the United States. By execution and
delivery of this Agreement, each party hereto irrevocably submits to and
accepts, with respect to any such action or proceeding, generally and
unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives
any and all rights such party may now or hereafter have to object to such
jurisdiction.
21
8.3 Notices. Any
notice or other communications required or permitted hereunder
shall be in writing and shall be sufficiently given if personally
delivered to it or sent by facsimile, overnight courier or registered mail or
certified mail, postage prepaid, addressed as follows:
If to City Zone
or City Zone Shareholders, to:
|
City Zone Holdings
Limited
Attn: Xxxxxxxx
Xxx
Xxxx 000,
Xxxx Xxxxxx
Xxxxx XX,
000 Xxxxx’s Road
Central
Hong Kong
Tel:
00-00000000000
Fax:
000-0000-0000
With
copies (with shall not constitute notices) to:
Xxxxxx
& Jaclin LLP
Attn.:
Xxxxxxx X. Xxxxxx, Esq.
Xxxx
X. Xxxxx, Esq.
000 Xxxxx
0 Xxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Tel: 000-000-0000
Fax:
000-000-0000
If to Eco
Building, to:
|
Eco
Building International
Attn.:
Xxxxxxxxxxx Kidney
0 Xxxxxxx
Xxxxx, Xxxxxxxxxxxx
Xxxx
Xxxxxxx
Tel.:
000-000-00-0000
Fax:
000-000-0000
or such
other addresses as shall be furnished in writing by any party in the manner for
giving notices hereunder, and any such notice or communication shall be deemed
to have been given (a) upon receipt, if personally delivered, (b) on the day
after dispatch, if sent by overnight courier, (c) upon dispatch, if transmitted
by facsimile and receipt is confirmed by telephone, or (d) three (3) days after
mailing, if sent by registered or certified mail.
8.4
Attorney’s
Fees. In
the event that either party institutes any action or suit to enforce this
Agreement or to secure relief from any default hereunder or breach hereof, the
prevailing party shall be reimbursed by the losing party for all costs,
including reasonable attorney’s fees, incurred in connection therewith and in
enforcing or collecting any judgment rendered therein.
8.5
Confidentiality. Each
party hereto agrees with the other parties that, unless and until the
Transactions have been consummated, it and its representatives will hold in
strict confidence all data and information obtained with respect to another
party or any subsidiary thereof from any representative, officer, director or
employee, or from any books or records or from personal inspection, of such
other party, and shall not use such data or information or disclose the same to
others, except (a) to the extent such data or information is published, is a
matter of public knowledge, or is required by law to be published; or (b) to the
extent that such data or information must be used or disclosed in order to
consummate the Transactions. In the event of the termination of this
Agreement, each party shall return to the other parties all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
work papers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth
herein.
22
8.6
Public Announcements
and Filings. Unless
required by applicable law or regulatory authority, none of the parties will
issue any report, statement or press release to the general public, to the
trade, to the general trade or trade press, or to any third party (other than
its advisors and representatives in connection with the Contemplated
Transactions) or file any document, relating to this Agreement and Contemplated
Transactions, except as may be mutually agreed by the parties. Copies
of any such filings, public announcements or disclosures, including any
announcements or disclosures mandated by law or regulatory authorities, shall be
delivered to each party at least one (1) business day prior to the release
thereof.
8.7
Schedules;
Knowledge. The
City Zone Schedules and Eco Building Schedules referred to herein and delivered
pursuant to and attached to this Agreement (collectively, “Schedules”) are
integral parts of this Agreement. Nothing in a Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein, unless the Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail, including
by cross-reference to another Schedule. The inclusion of any
information in the Schedules shall not be deemed to be an admission or
acknowledgment, in and of itself, that such information is required by the terms
hereof to be disclosed, is material to the business of City Zone or Eco
Building, as the case may be, or is outside the ordinary course of
business. City Zone is responsible for preparing the City Zone
Schedules and Eco Building is responsible for preparing the Eco Building
Schedules. Each of the City Zone Schedules and the Eco Building Schedules will
be arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Agreement, and the disclosure in any such numbered and
lettered section of the City Zone Schedules or the Eco Building Schedules, as
the case may be, shall qualify and shall be deemed to qualify such other
paragraphs in this Agreement to the extent such qualification is reasonably
apparent regardless of the absence of any express cross-reference to such other
paragraph. Each party is presumed to have full knowledge of all
information set forth in the other party’s Schedules delivered pursuant to this
Agreement.
8.8
Third Party
Beneficiaries. This
contract is strictly between Eco Building, City Zone and the City Zone
Shareholders, and, except as specifically provided, no director, officer,
stockholder (other than the City Zone Shareholders), employee, agent,
independent contractor or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
8.9
Expenses. Subject
to Articles VI and
VII above, whether or not the Exchange is consummated, each of Eco
Building, the City Zone Shareholders and City Zone will bear their own
respective expenses, including legal, accounting and professional fees, incurred
in connection with the Exchange or any of the other Contemplated
Transactions.
8.10
Entire
Agreement. This
Agreement, together with the Schedules and any certificate or agreements
delivered on the Closing Date, represents the entire agreement between the
parties relating to the subject matter thereof and supersedes all prior
agreements, understandings and negotiations, written or oral, with respect to
such subject matter.
8.11
Survival;
Termination. Except
as otherwise set forth in this Agreement, the representations, warranties, and
covenants of the respective parties shall survive the Closing Date and the
consummation of Transactions for a period of two (2) years.
8.12 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.
23
8.13 Amendment or
Waiver. Every
right and remedy provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance of any
obligation by the other parties shall be construed as a waiver or any other
default then, theretofore, or thereafter occurring or existing. At
any time prior to the Closing Date, this Agreement may by amended by a writing
signed by all parties hereto, with respect to any of the terms contained herein,
and any term or condition of this Agreement may be waived or the time for
performance may be extended by a writing signed by the party or parties for
whose benefit the provision is intended.
8.14 Best
Efforts. Subject
to the terms and conditions herein provided, each party shall use its best
efforts to perform or fulfill all conditions and obligations to be performed or
fulfilled by it under this Agreement so that the Contemplated Transactions shall
be consummated as soon as practicable. Each party also agrees that it
shall use its best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective this Agreement and the
Contemplated Transactions.
8.15 References. References
to Sections, Articles, Schedules or Exhibits in this Agreement shall be to
Sections, Articles, Schedules or Exhibits to this Agreement unless explicitly
provided otherwise.
[Remainder
of Page Intentionally Left Blank]
24
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the date
first-above written.
ECO
BUILDING INTERNATIONAL
|
By:
____
_______________________________
|
|
Name: Xxxxxxxxxxx
Kidney
|
|
Title: President
|
CITY
ZONE HOLDINGS LIMITED
|
By:
____
_______________________________
|
|
Name:
|
|
Title:
|
CITY
ZONE HOLDINGS LIMITED’S SHAREHOLDERS
EXPERT
VENTURE LIMITED
By:
____________________
Name:
Title:
|
SURE
GLORY HOLDINGS LIMITED
By:
___________________
Name:
Title:
|
BRIGHTON
INVESTMENTS LIMITED
By:
__________________
Name:
Title:
|
MAPLELAND
INTERNATIONAL INVESTMENTS LIMITED
By:
_________________
Name:
Title:
|
CHARMING
ACTION MANAGEMENT LIMITED
By:
_____________________
Name:
Title:
|
SHALLOW
GLORY LIMITED
By:
_________________
Name:
Title:
|
[Signature
Page to Share Exchange Agreement]
25
EXHIBIT
A
CITY
ZONE SHAREHOLDERS
Name
|
SHARES
OWNED IN
CITY
ZONE
|
SHARES
RECEIVING IN EXCHANGE OF CITY ZONE SHARES
|
Expert
Venture Limited
|
7,140
|
6,238,205
|
Sure
Glory Holdings Limited
|
857
|
748,636
|
Brighton
Investments Limited
|
84
|
73,636
|
Mapleland
International Investments Limited
|
421
|
368,182
|
Charming
Action Management Limited
|
843
|
736,364
|
Shallow
Glory Limited
|
655
|
571,909
|
Total
Shares
|
10,000
|
8,736,932
|
26