SHARE EXCHANGE AGREEMENT
Exhibit 10.1
This
SHARE EXCHANGE AGREEMENT (this “Agreement”), dated as
of May 13, 2008, is by and among Certified Technologies Corporation, a Nevada
corporation (the “Parent”), Zhaoheng
Investment Limited (BVI), a British Virgin Islands corporation (the “Company”), and
Xxxxxxxx Xx, the sole stockholder of the Company signatory hereto (the “Stockholder”). Each
of the parties to this Agreement are individually referred to herein as a “Party” and
collectively, as the “Parties.”
The
Company has one common share (including any future shares acquired by the
Stockholder and any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right granted to the
Stockholder relating to transactions on or before the date hereof, the “Company Stock”)
issued and outstanding, which is held by the Stockholder. The Stockholder has
agreed to transfer his share of Company Stock in exchange for the issuance of an
aggregate of 69,686,970 shares of the Common Stock, par value $0.001 per share,
of the Parent (the “Parent
Stock”), which Parent Stock shall be issued to Embedded
Internet Solutions Limited, a Cayman Islands company wholly-owned by the
Stockholder (“Embedded
Internet”). The Parent Stock, together with 572,170 shares of
Common Stock acquired by Embedded Internet pursuant to the Stock Purchase
Agreement dated as of May 13, 2008 by and among Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx
and Embedded Internet, constitute approximately 98% of the issued and
outstanding common stock of the Parent on a fully-diluted basis as of and
immediately after the Closing as defined in Section 1.02. The number of shares
of Parent Stock to be received by Embedded Internet, as nominee for the
Stockholder, is listed opposite the Stockholder’s name on Exhibit A attached to
this Agreement. The aggregate number of shares of Parent Stock that is reflected
on Exhibit A is
referred to herein as the “Shares”.
The
exchange of Company Stock for Parent Stock is intended to constitute a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986 (the “Code”), as amended or
such other tax free reorganization exemptions that may be available under the
Code.
The Board
of Directors of the Parent and the Company have determined that it is desirable
to effect this plan of reorganization and share exchange.
AGREEMENT
ARTICLE
I
SECTION
1.02. Closing. The closing
(the “Closing”)
of the transactions contemplated hereby (the “Transactions”) shall
take place at the offices of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP in New
York, NY 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 Transactions contemplated hereby (other than conditions with
respect to actions the respective parties will take at the Closing itself), or
such other date and time as the parties may mutually determine (the “Closing
Date”).
ARTICLE
II
The
Stockholder hereby represents and warrants to the Parent with respect to
himself, as follows:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT SECURED BY SUCH SECURITIES.
ARTICLE
III
The
Company represents and warrants to the Parent that, except as set forth in the
Company Disclosure Letter (as defined below, and regardless of whether or not
the Company Disclosure Letter is referenced below with respect to any particular
representation or warranty), which will be delivered by the Company to the
Parent concurrently herewith (the “Company Disclosure
Letter”):
(a) The
Company Disclosure Letter lists each Company Subsidiary and its jurisdiction of
organization. Except as specified in the Company Disclosure Letter, all the
outstanding shares of capital stock or equity investments of each Company
Subsidiary have been validly issued and are fully paid and nonassessable and are
as of the date of this Agreement owned by the Company, by another Company
Subsidiary or by the Company and another Company Subsidiary, free and clear of
all Liens.
(b) Except
for its interests in the Company Subsidiaries, the Company does not as of the
date of this Agreement own, directly or indirectly, any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any person.
(a) Except
as set forth in the Company Disclosure Letter, the execution and delivery by the
Company of this Agreement does not, and the consummation of the Transactions and
compliance with the terms hereof and thereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Company
or any Company Subsidiary under, any provision of (i) the Company Constituent
Instruments or the comparable charter or organizational documents of any Company
Subsidiary, (ii) any material contract, lease, license, indenture, note, bond,
agreement, permit, concession, franchise or other instrument (a “Contract”) to which
the Company or any Company Subsidiary is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 3.05(b), any material judgment, order or
decree (“Judgment”) or
material Law applicable to the Company or any Company Subsidiary or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii) above, any such items that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse
Effect.
(b) Except
as set forth in the Company Disclosure Letter and except for required filings
with the Securities and Exchange Commission (the “SEC”) and applicable
“Blue Sky” or
state securities commissions, no material consent, approval, license, permit,
order or authorization (“Consent”) of, or
registration, declaration or filing with, or permit from, any Governmental
Entity is required to be obtained or made by or with respect to the Company or
any Company Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the
Transactions.
(a) Each
of the Company and each Company Subsidiary 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
Company Material Adverse Effect. 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 Company Material Adverse Effect. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim.
(b) The
Company Financial Statements (as defined in Section 3.15) reflect an adequate
reserve for all Taxes payable by the Company and the Company 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 the Company or any Company
Subsidiary, 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 Company Material Adverse Effect.
(c) For
purposes of this Agreement:
“Taxes” includes all
forms of taxation, whenever created or imposed, and whether of the United States
or elsewhere, and whether imposed by a local, municipal, governmental, state,
foreign, federal or other Governmental Entity, or in connection with any
agreement with respect to Taxes, including all interest, penalties and additions
imposed with respect to such amounts.
“Tax Return” means all
federal, state, local, provincial and foreign Tax returns, declarations,
statements, reports, schedules, forms and information returns and any amended
Tax return relating to Taxes.
(a) Except
as set forth in the Company Disclosure Letter, the Company does not have or
maintain any collective bargaining agreement or any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of the Company or any Company
Subsidiary (collectively, “Company Benefit
Plans”). Except as set forth in the Company Disclosure Letter, as of the
date of this Agreement there are not any severance or termination agreements or
arrangements between the Company or any Company Subsidiary and any current or
former employee, officer or director of the Company or any Company Subsidiary,
nor does the Company or any Company Subsidiary have any general severance plan
or policy.
(b) Since
December 31, 2007, there has not been any adoption or amendment in any material
respect by the Company or any Company Subsidiary of any Company Benefit
Plan.
SECTION
3.14. Labor Matters.
Except as set forth in the Company Disclosure Letter, there are no collective
bargaining or other labor union agreements to which the Company or any of the
Company Subsidiaries is a party or by which any of them is bound. No material
labor dispute exists or, to the knowledge of the Company, is imminent with
respect to any of the employees of the Company.
SECTION
3.15. Financial
Statements. Prior to the Closing the Company will deliver to the Parent
its audited consolidated financial statements for the fiscal years ended
December 31, 2007, and 2006 (collectively, the “Company Financial
Statements”). Upon delivery, the Company Financial Statements will have
been prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”)
applied on a consistent basis throughout the periods indicated. The Company
Financial Statements will fairly present in all material respects the financial
condition and operating results of the Company, as of the dates, and for the
periods, indicated therein. The Company will not have any material liabilities
or obligations, contingent or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to December 31, 2007, and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in the Company Financial Statements, which, in both cases,
individually and in the aggregate would not be reasonably expected to result in
a Company Material Adverse Effect.
losses
and risks in accordance with any applicable laws under their respective
jurisdictions of organization and in such amounts as are customary in the
businesses in which the Company and its subsidiaries are engaged and in the
geographic areas where they engage in such businesses. The Company has no reason
to believe that it will not be able to renew its and its subsidiaries’ existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business on
terms consistent with market for the Company’s and such subsidiaries’ respective
lines of business.
is or
could become applicable to the Stockholder as a result of the Stockholder and
the Company fulfilling their obligations or exercising their rights under this
Agreement, including, without limitation, the issuance of the Shares and the
Stockholder’s ownership of the Shares.
SECTION
3.25. Absence of Certain Changes
or Events. Except as disclosed in the Company Financial Statements or in
the Company Disclosure Letter, from December 31, 2007 to the date of this
Agreement, the Company has conducted its business only in the ordinary course,
and during such period there has not been:
(a) any
change in the assets, liabilities, financial condition or operating results of
the Company or any Company Subsidiary, except changes in the ordinary course of
business that have not caused, in the aggregate, a Company Material Adverse
Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance, that would
have a Company Material Adverse Effect;
(c) any
waiver or compromise by the Company or any Company Subsidiary of a valuable
right or of a material debt owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of any
obligation by the Company or any Company Subsidiary, except in the ordinary
course of business and the satisfaction or discharge of which would not have a
Company Material Adverse Effect;
(e) any
material change to a material Contract by which the Company or any Company
Subsidiary or any of its respective assets is bound or subject;
(f) any
mortgage, pledge, transfer of a security interest in, or lien, created by the
Company or any Company Subsidiary, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable and liens
that arise in the ordinary course of business and do not materially impair the
Company’s or such Company Subsidiary’s ownership or use of such property or
assets;
(g) any
loans or guarantees made by the Company or any Company Subsidiary to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(h) any
alteration of the Company’s method of accounting or the identity of its
auditors;
(i) any
declaration or payment of dividend or distribution of cash or other property to
Stockholders or any purchase, redemption or agreements to purchase or redeem any
shares of Company Stock;
(j) any
issuance of equity securities to any officer, director or affiliate, except
pursuant to existing Company stock option plans; or
(k) any
arrangement or commitment by the Company or any Company Subsidiary to do any of
the things described in this Section 3.25.
ARTICLE
IV
The
Parent represents and warrants to the Stockholder and the Company that, except
as set forth in the reports, schedules, forms, statements and other documents
filed by Parent with the SEC and publicly available prior to the date of the
Agreement (the “Filed
Parent SEC Documents”) or in the letter,
which will be delivered by the Parent to the Company and the Stockholder
concurrently herewith (the “Parent Disclosure Letter”):
necessary
to enable it to own, lease or otherwise hold its properties and assets and to
conduct its businesses as presently conducted, other than such franchises,
licenses, permits, authorizations and approvals the lack of which, individually
or in the aggregate, has not had and would not reasonably be expected to have a
material adverse effect on Parent, a material adverse effect on the ability of
Parent to perform its obligations under this Agreement or on the ability of
Parent to consummate the Transactions (a “Parent Material Adverse
Effect”). Parent is duly
qualified to do business in each jurisdiction where the nature of its business
or their ownership or leasing of its properties make such qualification
necessary and where the failure to so qualify would reasonably be expected to
have a Parent Material Adverse Effect. Parent has delivered to the Company true
and complete copies of the certificate of incorporation of Parent, as amended to
the date of this Agreement (as so amended, the “Parent Charter”), and the Bylaws of
Parent, as amended to the date of this Agreement (as so amended, the “Parent Bylaws”).
Transactions have been duly authorized and approved by the Board
of Directors of the Parent and no other corporate proceedings on the part of the
Parent are necessary to authorize this Agreement and the Transactions. This
Agreement constitutes a legal, valid and binding obligation of the Parent,
enforceable against the Parent in accordance with the terms hereof.
(a)
Except as set forth in the Parent Disclosure Letter, the
execution and delivery by Parent of this Agreement, does not, and the
consummation of Transactions and compliance with the terms hereof and thereof
will not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any person under, or result in the creation of any
Lien upon any of the properties or assets of Parent under, any provision of (i)
Parent Charter or Parent Bylaws, (ii) any material Contract to which Parent is a
party or by which any of its properties or assets is bound or (iii) subject to
the filings and other matters referred to in Section 4.05(b), any material
Judgment or material Law applicable to Parent or its properties or assets, other
than, in the case of clauses (ii) and (iii) above, any such items that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
(b)
No Consent of, or registration, declaration or filing with, or
permit from, any Governmental Entity is required to be obtained or made by or
with respect to Parent in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions, other
than the (A) filing with the SEC of a 14f-1 Notice and (B) filing with the SEC
of reports under Sections 13 and 16 of the Exchange Act, and (C) filings under
state “blue sky” laws, as may be required in connection with this Agreement and
the Transactions.
(a)
Parent has filed all reports, schedules, forms, statements and
other documents required to be filed by Parent with the SEC since June 30, 2007,
pursuant to Sections 13(a), 14 (a) and 15(d) of the Exchange Act (the “Parent SEC
Documents”).
(b)
As of its respective filing date, each Parent SEC Document
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to such
Parent SEC Document, and did not 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. Except to the extent that information
contained in any Parent SEC Document has been revised or superseded by a later
filed Parent SEC Document, none of the Parent SEC Documents contains any untrue
statement of a material fact or omits to state any 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. The consolidated
financial statements of Parent included in the Parent SEC Documents comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with the GAAP (except, in the case of unaudited
statements, as permitted by the rules and regulations of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of Parent
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods shown (subject, in
the case of unaudited statements, to normal year-end audit
adjustments).
(c)
Except as set forth in the Filed Parent SEC Documents, Parent
has no liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a balance sheet of
Parent or in the notes thereto. The Parent Disclosure Letter sets forth all
financial and contractual obligations and liabilities (including any obligations
to issue capital stock or other securities of the parent) due after the date
hereof. As of the date hereof the Parent has total liabilities of less than
$35,000, all of which liabilities shall be paid off at or prior to the Closing
and shall in no event remain liabilities of the Parent, the Company or the
Stockholder following the Closing.
(a)
any change in the assets, liabilities, financial condition or
operating results of the Parent from that reflected in the Parent SEC Documents,
except changes in the ordinary course of business that have not caused, in the
aggregate, a Parent Material Adverse Effect;
(b)
any damage, destruction or loss, whether or not covered by
insurance, that would have a Parent Material Adverse Effect;
(c)
any waiver or compromise by the Parent of a valuable right or
of a material debt owed to it;
(d)
any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Parent, except in the ordinary
course of business and the satisfaction or discharge of which would not have a
Parent Material Adverse Effect;
(e)
any material change to a material Contract by which the Parent
or any of its assets is bound or subject;
(f)
any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(g)
any resignation or termination of employment of any officer of
the Parent;
(h)
any mortgage, pledge, transfer of a security interest in, or
lien, created by the Parent, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable and liens that arise in
the ordinary course of business and do not materially impair the Parent’s
ownership or use of such property or assets;
(i)
any loans or guarantees made by the Parent to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(j)
any declaration, setting aside or payment or other
distribution in respect of any of the Parent’s capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such stock by the
Parent;
(k)
any alteration of the Parent’s method of accounting or the
identity of its auditors;
(l)
any issuance of equity securities to any officer, director or
affiliate, except pursuant to existing Parent stock option plans;
or
(m)
any arrangement or commitment by the Parent to do any of the
things described in this Section 4.08.
(a)
Except as set forth in Schedule 4.09, Parent 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 Parent Material Adverse Effect. All Taxes shown to be due
on such Tax Returns, or otherwise owed, has 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 Parent Material Adverse
Effect.
(b)
The most recent financial statements contained in the Filed Parent
SEC Documents reflect an adequate reserve for all Taxes payable by Parent (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 Parent, 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 Parent Material Adverse
Effect.
(c) There are no Liens for Taxes (other than
for current Taxes not yet due and payable) on the assets of Parent. Parent is
not bound by any agreement with respect to Taxes.
3(1) of
ERISA) or any other Parent Benefit Plan for the benefit of any current or former
employees, consultants, officers or directors of Parent.
ARTICLE
V
(a)
Concurrently herewith the Stockholder is delivering to the
Parent this Agreement executed by the Stockholder.
(b)
On the Closing Date, the Stockholder shall deliver to the
Parent:
(i)
|
certificates
representing its Company Stock; and
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(ii)
|
duly
executed instruments of transfer by the Stockholder of its Company Stock
to the Parent.
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(a)
Concurrently herewith, the Parent is delivering:
(i)
|
to
Stockholder and to the Company, a copy of this Agreement executed by
Parent;
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(ii)
|
to
the Company, a certificate from the Parent, signed by its Secretary or
Assistant Secretary certifying that the attached copies of the Parent
Charter, Parent Bylaws and resolutions of the Board of Directors of the
Parent approving the Agreement and the Transactions, are all true,
complete and correct and remain in full force and
effect;
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(b)
At or prior to the Closing, the Parent shall
deliver:
(i)
|
to
the Company, a letter of resignation of Xxxxxxx Xxxxxx, Xxxxx XxXxxx and Xxxxxxx Xxxxxxxx
from all offices they hold with the Parent, as applicable,
effective upon the Closing and from their position as a director of the
Parent effective upon the Closing;
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(ii)
|
to
the Company, evidence of the election (A) of the Stockholder as a director
of the Parent and (B) of the Stockholder as the Chief Executive Officer of
the Parent effective upon the
Closing;
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(iii)
|
to
the Company, such pay-off letters and releases relating to liabilities as
the Company shall request and such pay-off letters and releases shall be
in form and substance satisfactory to the Company;
and
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(iv)
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to
the Company the results of UCC, judgment lien and tax lien searches with
respect to the Parent, the results of which indicate no liens on the
assets of the Parent.
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(i)
|
to
Stockholder, certificates representing the new shares of Parent Common
Stock issued to Embedded Internet as set forth on Exhibit A ;
and
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(ii)
|
to
the Company, consent letters of the accounting firms of Parent confirming
each such firm’s respective consent to the use by the Parent of reports
prepared by such firm regarding the financial statements of the Parent in
all future registration statements filed with the
SEC.
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Concurrently
herewith, the Company is delivering to the Parent:
(a)
|
this
Agreement executed by Company; and
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(b)
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a
certificate from the Company, signed by its authorized
officer certifying that the attached copies of the Company
Constituent Instruments and resolutions of the Board of Directors of
the Company approving the Agreement and the Transactions are all true,
complete and correct and remain in full force and
effect.
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ARTICLE
VI
ARTICLE
VII
SECTION
7.07. Filing of 8-K and Press
Release.
As soon as practicable following the Closing Date, the Company shall provide the
Parent and the Stockholder with a draft of the current report on Form 8-K that
is reasonably acceptable to the Parent and the Stockholder that the Parent shall
file, within four business days of the Closing Date and attaching as exhibits
all relevant agreements with the SEC disclosing the terms of this Agreement and
other requisite disclosure regarding the Transactions and including the
requisite audited consolidated financial statements of the Company and the
requisite Form 10 disclosure regarding the Company. In addition, the Parent
shall issue a press release prior to 9:30 a.m. (New York Time) on the business
day following the Closing Date, announcing the closing of the
transaction.
SECTION
7.08. Furnishing of
Information. As long as any
Stockholder owns the Shares, the Parent covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Parent after the date hereof pursuant to the
Exchange Act. As long as any Stockholder owns Shares, if the Parent is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Stockholder and make publicly available in accordance with Rule 144(c)
promulgated by the SEC pursuant to the Securities Act, such information as is
required for the Stockholder to sell the Shares under Rule 144. The Parent
further covenants that it will take such further action as any holder of Shares
may reasonably request, all to the extent required from time to time to enable
such person to sell the Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144.
SECTION
7.10. Preservation of
Business. From the date of
this Agreement until the Closing Date, each of the Company and the Parent shall
operate only in the ordinary and usual course of business consistent with past
practice (provided, however, that Parent shall not issue any securities without
the prior written consent of the Company), and shall use reasonable commercial
efforts to (a) preserve intact its respective business organization, (b)
preserve the good will and advantageous relationships with customers, suppliers,
independent contractors, employees and other Persons material to the operation
of its respective business, and (c) not permit any action or omission which
would cause any of its respective representations or warranties contained herein
to become inaccurate or any of its respective covenants to be breached in any
material respect.
Miscellaneous
SECTION
8.01. Notices. All notices,
requests, claims, demands and other communications under this Agreement shall be
in writing and shall be deemed given upon receipt by the Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice):
If to the
Parent, to:
0000
Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxx Xxxxxx
Facsimile: (000)
000-0000
If to the
Company, to:
Zhaoheng
Investment Limited (BVI)
P.O. Box
957
Offshore
Incorporations Centre
Road
Town, Tortola
British
Virgin Islands
Facsimile: (___)
___-____
If to the
Stockholder at the addresses set forth in Exhibit A hereto.
with a
copy to:
Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
1177
Avenue of the Americas
Attention:
Xxxxxxxxxxx Xxxxxxx
Facsimile: (000)
000-0000
SECTION
8.02. Amendments; Waivers; No Additional
Consideration. No provision of
this Agreement may be waived or amended except in a written instrument signed by
the Company, Parent and the Stockholder holding a majority of the Shares. No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either Party to
exercise any right hereunder in any manner impair the exercise of any such
right. No consideration shall be offered or paid to the Stockholder to amend or
consent to a waiver or modification of any provision of any transaction document
unless the same consideration is also offered to all Stockholders who then hold
Shares.
SECTION
8.03. Termination.
(i)
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The
Company, the Stockholder and the Parent may terminate this Agreement by
mutual written consent at any time prior to the
Closing;
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(ii)
|
The
Parent may terminate this Agreement by giving written notice to the
Company and the Stockholder at any time prior to the Closing (A) in the
event the Company or any of the Stockholder have breached any material
representation, warranty, or covenant contained in this Agreement in any
material respect, the Parent has notified the Company and/or the
Stockholder of the breach, and the breach has continued without cure for a
period of twenty days after the notice of breach, or (B) if the Closing
shall not have occurred on or before May 15, 2008 by reason of the failure
of any condition precedent under Section 6.02 hereof (unless the failure
results primarily from the Parent itself breaching any representation,
warranty, or covenant contained in this Agreement);
and
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(iii)
|
The
Company may terminate this Agreement by giving written notice to the
Parent at any time prior to the Closing (A) in the event the Parent has
breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, the Company has notified the
Parent of the breach, and the breach has continued without cure for a
period of twenty days after the notice of breach or (B) if the Closing
shall not have occurred on or before May 15, 2008, by reason of the
failure of any condition precedent under Section 6.01 hereof (unless the
failure results primarily from the Company or the Stockholder themselves
breaching any representation, warranty, or covenant contained in this
Agreement).
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(b)
Effect of
Termination. If any Party
terminates this Agreement pursuant to Section 8.03(a) above, all rights and
obligations of the Parties hereunder shall terminate without any Liability of
any Party to any other Party to consummate its obligations hereunder or to
complete the transactions contemplated by this Agreement, except for any
Liability of any Party then in breach.
SECTION
8.06. Remedies. In addition to
being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, the Stockholder, Parent and the Company
will
be
entitled to specific performance under this Agreement. The Parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
SECTION
8.07. Indemnification;
Indemnification Procedure.
(a) Indemnification. For
a period of two (2) years following the Closing Date, Xxxxxxx Xxxxxx and Xxxxxxx
Xxxxxxxx (collectively, the “Indemnitor”) hereby
agree to indemnify and hold harmless the Company and the Parent (and their
respective directors, officers, managers, partners, members, shareholders,
affiliates, agents, successors and assigns) (an "indemnified party")
from and against any and all claims, causes of action, losses, liabilities,
deficiencies, costs, damages, and expenses (including, without limitation,
reasonable attorneys’ fees, charges and disbursements) and fees incurred by the
indemnified party as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Parent herein, including,
without limitation, (i) any payment upon any taxes, penalties or interest owed
with respect to such taxes arising from the Parent’s failure to file the tax
returns prior to the Closing Date, and (ii) any amounts owed to
creditors of the Parent which are not covered by the Settlements described in
Section 5.02(k). The obligations of the Indemnitor hereunder
are partially secured by the indemnified party’s interest in the Indemnitors’
shares of Parent Stock (the “Escrow Shares”) being
held pursuant to the terms of the Securities Escrow Agreement dated as of May
13, 2008 (the “Securities Escrow
Agreement”). In the event an Indemnitor defaults on his
obligation to make a payment under this Section 8.07, the indemnified party may
elect to claim the Escrow Shares by providing notice to the escrow agent and the
Indemnitor.
(b)
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Indemnification
Procedure.
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(i)
|
The
indemnified party will give written notice to the Indemnitor of any matter
giving rise to a claim for indemnification; provided, that the
failure of any party entitled to indemnification hereunder to give notice
as provided herein shall not relieve the Indemnitor of its obligations
under this Section 8.07 except to the extent that the Indemnitor is
actually prejudiced by such failure to give
notice.
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(ii)
|
In
case any such action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder,
the Indemnitor shall be entitled to participate in and, unless in the
reasonable judgment of the Indemnitor a conflict of interest between it
and the indemnified party exists with respect to such action, proceeding
or claim (in which case the Indemnitor shall be responsible for the
reasonable fees and expenses of one separate counsel for the indemnified
parties), to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. In the event that the
Indemnitor advises an indemnified party that it will contest such a claim
for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person
of its election to defend, settle or compromise, at its sole cost and
expense, any action, proceeding or claim (or discontinues its defense at
any time after it commences such defense), then the indemnified party may,
at its option, defend, settle or otherwise compromise or pay such action
or claim. In any event, unless and until the Indemnitor elects
in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising
out of the defense, settlement or compromise of any such action, claim or
proceeding shall be losses subject to indemnification
hereunder.
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(iii)
|
The
indemnified party shall cooperate fully with the Indemnitor in connection
with any negotiation or defense of any such action or claim by the
Indemnitor and shall furnish to the Indemnitor all information reasonably
available to the indemnified party which relates to such action or
claim.
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(iv)
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The
Indemnitor shall keep the indemnified party fully apprised at all times as
to the status of the defense or any settlement negotiations with respect
thereto. If the Indemnitor elects to defend any such action or
claim, then the indemnified party shall be entitled to participate in such
defense with counsel of its choice at its sole cost and
expense.
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(v)
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The
Indemnitor shall not be liable for any settlement of any action, claim or
proceeding effected without its prior written
consent. Notwithstanding anything in this Section 8.07 to the
contrary, the Indemnitor shall not, without the indemnified party's prior
written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
indemnified party or which does not include, as an unconditional term
thereof, the giving by the claimant or the plaintiff to the indemnified
party of a release from all liability in respect of such
claim.
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(vi)
|
The
indemnification obligations to defend the indemnified party required by
this Section 8.07 shall be made by periodic payments of the amount thereof
during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
indemnified party shall refund such moneys if it is ultimately determined
by a court of competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein
shall be in addition to (a) any cause of action or similar rights of the
indemnified party against the Indemnitor or others, and (b) any
liabilities the Indemnitor may be subject to pursuant to the
law. No Indemnitor will be liable to the indemnified party
under this Agreement to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to the indemnified party’s
breach of any of the representations, warranties or covenants made by such
party in this Agreement.
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original
intent of the Parties as closely as possible in an acceptable manner to the end
that Transactions contemplated hereby are fulfilled to the extent
possible.
SECTION
8.11. Counterparts; Facsimile
Execution. This Agreement may
be executed in one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or more counterparts
have been signed by each of the Parties and delivered to the other Parties.
Facsimile execution and delivery of this Agreement is legal, valid and binding
for all purposes.
SECTION
8.12. Entire Agreement; Third
Party Beneficiaries. This Agreement,
taken together with the Company Disclosure Letter and the Parent Disclosure
Letter, (a) constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the Parties with respect to the
Transactions and (b) are not intended to confer upon any person other than the
Parties any rights or remedies.
SECTION
8.13. Governing Law. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. Each of the parties hereto hereby
irrevocably and unconditionally agrees (i) that it is and shall continue to be
subject to the jurisdiction of the courts of the State of New York and of the
federal courts sitting in the State of New York, and (ii)(A) to the extent that
such party is not otherwise subject to service of process in the State of New
York, to appoint and maintain an agent in the State of New York as such party’s
agent for acceptance of legal process and notify the other parties hereto of the
name and address of such agent, and (B) to the fullest extent permitted by law,
that service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the U.S. Postal Service
constituting evidence of valid service, and that, to the fullest extent
permitted by applicable law, service made pursuant to (ii)(A) or (B) above shall
have the same legal force and effect as if served upon such party personally
within the State of New York.
[
Signature Page Follows ]
The
Parties hereto have executed and delivered this Share Exchange Agreement as of
the date first above written.
The
Parent:
CERTIFIED
TECHNOLOGIES CORPORATION
By:________________________________
Name:
Title:
The
Company:
ZHAOHENG
INVESTMENT LIMITED (BVI)
By:________________________________
Name:
Title:
The
Stockholder:
__________________________________
Xxxxxxxx Xx
Acknowledged
and Agreed as to Section 8.07:
__________________________________
Xxxxxxx Xxxxxx
__________________________________
Xxxxxxx
Xxxxxxxx
[
Signature Page to Share Exchange Agreement ]
Stockholders of Zhaoheng
Investment Limited (BVI)
Name
and Address of Stockholder
|
Tax
ID Number of
Stockholder
(if Applicable)
|
Number
of Shares
of
Company Stock
Being
Exchanged
|
Percentage
of Total Company
Shares
Represented By Shares
Being
Exchanged
|
Number
of Shares of
Parent
Stock to be Received
by
Embedded Internet,
as
nominee for the Stockholder
|
Xxxxxxxx
Xx
c/o
Zhaoheng BVI
P.O.
Box 957
Offshore
Incorporations Centre
Road
Town, Tortola
British
Virgin Islands
|
[________]
|
1
|
100%
|
69,686,970
issued to Embedded Internet Solutions
Limited
|