EXHIBIT 10.7
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is made on this January 30, 1999
BETWEEN :-
(1) PHILEO MANAGEMENT COMPANY INC. ("Purchaser")
AND :-
(2) The SHAREHOLDERS set out in the Schedule hereto (the "Shareholders").
WHEREAS :-
(A) By the Closing Date, the Shareholders shall collectively be the ultimate
registered and beneficial shareholders of the Shares in the Target Co.
(B) Target Co. collectively hold the Relevant Percentage of the Chinese Joint
Venture.
(C) The Chinese Joint Venture holds relevant approvals to build and operate
the Project in three Phases comprising a five (5) trunk fiber optic
network in the Guangdong Province as follows:-
Phase Location Length Completion No. of Cores
Phase I Guangzhou 168 km 01.1997 36
-Shenzhen
Phase II Xxxxxxxxx 000 xx 00.0000 00
-Xxxxxx
Xxxxx III Guangzhou 2,451km 08.1999 00
-Xxxxxxx (xxxxxxxxx)
-Zhangjiang
-Shaoguan
(circular loop)
(D) The Purchaser desires to acquire and the Shareholders desires to sell all
the Shares for a purchase price of $60,000,000 (the "Purchase Price")
subject to and on terms and conditions of this Agreement;
(E) The Purchaser is non-reporting company whose shares of common stock are
traded on the NASD OTC Bulletin Board.
NOW, THEREFORE :-
In consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.
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ARTICLE I
Definitions
1.1
Definitions.
(a) As used in this Agreement, the following defined terms shall have the
meanings indicated below unless the context otherwise requires :
"Actions or Proceedings" means any action, suit, proceeding, arbitration
or Governmental or Regulatory Authority investigation or audit.
"Affiliate" means, as applied to any Person, (i) any other Person
directly or indirectly controlling, controlled by or under common control
with, that Person, (ii) any other Person that owns or controls five
percent (5%) or more of any class of equity securities (including any
equity securities issuable upon the exercise of any Option) of that
Person or any of its Affiliates, or (iii) any member, director, partner,
officer, agent, employee or relative of such Person. For the purposes of
this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by", and "under common control with") as
applied to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies
of that Person, whether through ownership of voting securities or by
contract or otherwise.
"Agreement" means this Share Exchange Agreement, the Exhibits and the
Schedule and the certificates delivered in connection herewith, as the
same may be amended, modified or restated from time to time in accordance
with the terms hereof.
"Assets and Properties" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the
goodwill related thereto, operated, owned or leased by such Person,
including, without limitation, cash, cash equivalents, accounts and notes
receivable, chattel paper, documents, instruments, general intangibles,
real estate, equipment, inventory, goods and Intellectual Property.
"Books and Records" means all files, documents, instruments, papers,
books and records relating to the Business, Target Co. or the
Subsidiaries, including without limitation financial statements, Tax
Returns and related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, deeds, title policies, minute
books, stock certificates and books, stock transfer ledgers, Contracts,
Permits, customer lists, computer files and programs, retrieval programs,
operating data and plans and environmental studies and plans.
"Business Combination" means with respect to any Person any (i) merger,
consolidation or combination to which such Person is a party, (ii) any
sale, issuance dividend, split or other disposition of any capital stock
or other equity interests (or any security or loan convertible into or
exchangeable for such capital stock or other equity interests) of such
Person, (iii) any tender offer (including without limitation a
self-tender), exchange offer, recapitalization, liquidation, dissolution
or similar transaction, (iv) any sale, dividend or other disposition of
all or a material portion of the Assets and Properties of such Person or
(v) the entering into of any agreement or understanding, or the granting
of any rights or options, with respect to any of the foregoing.
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"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of California and Guangzhou, China are
authorized or obligated to close.
"Business and/or Condition of Target Co. " means the Business, condition
(financial or otherwise), results of operations, Assets and Properties of
Target Co. and the Subsidiaries taken as a whole.
"China" means the People Republic of China.
"Chinese Joint Venture" means the sino-foreign joint venture to be
established in accordance with PRC laws owning the Project.
"Closing Date" means 31st March 1999 or such earlier or later date
acceptable to the Purchasers and the Shareholders.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Contract" means any agreement, lease, license, evidence of Indebtedness,
mortgage, indenture, security agreement or other contract or other
commitment (whether written or oral).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and in all prior
comparable periods.
"Governmental or Regulatory Authority" means any court, tribunal,
authority, agency, commission, official or other instrumentality of the
United States, any foreign country or any domestic or foreign state,
county, city or other political subdivision, any arbitrator, tribunal or
panel of arbitrators and, shall include, without limitation, any stock
exchange, quotation service and the National Association of Securities
Dealers.
"Indebtedness" means, as to any Person: (i) all obligations, whether or
not contingent, of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured), (ii) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments, (iii) all obligations of such Person
representing the balance of deferred purchase price of property or
services, except trade accounts payable and accrued commercial or trade
liabilities arising in the ordinary course of business, (iv) all interest
rate and currency swaps, caps, collars and similar agreements or hedging
devices under which payments are obligated to be made by such Person,
whether periodically or upon the happening of a contingency, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property), (vi) all obligations of such Person under leases which
have been or should be, in accordance with GAAP, recorded as capital
leases, (vii) all indebtedness secured by any Lien (other than Liens in
favor of lessors under leases other than leases included in clause (vii))
on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by
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that Person or is non-recourse to the credit of that Person, and (viii)
all Indebtedness of any other Person referred to in clauses (i) through
(vii) above, guaranteed, directly or indirectly, by that Person.
"Intellectual Property" means all patents and patent rights, trademarks
and trademark rights, trade names and trade name rights, service marks
and service xxxx rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights,
trade dress, business and product names, logos, slogans, trade secrets,
industrial models, processes, designs, methodologies, computer programs
(including all source codes) and related documentation, technical
information, manufacturing, engineering and technical drawings, know-how
and all pending applications for and registrations of patents,
trademarks, service marks and copyrights.
"IRS" means the United States Internal Revenue Service.
"Laws" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other liabilities
of a Person (whether absolute, accrued, contingent, known or unknown,
fixed or otherwise, or whether due or to become due).
"Liens" means any mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or Contract
committing to grant any of the foregoing.
"Loss" means any and all damages, fines, fees, penalties, deficiencies,
losses and expenses, including, without limitation, interest, reasonable
expenses of investigation, court costs, reasonable fees and expenses of
attorneys, accountants and other experts or other expenses of litigation
or other proceedings or of any claim, default or assessment (such fees
and expenses to include without limitation, all fees and expenses,
including, without limitation, fees and expenses of attorneys, incurred
in connection with (i) the investigation or defense of any third party
claims or (ii) asserting or disputing any rights under this Agreement
against any party hereto or otherwise).
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract
that gives the right to (i) purchase or otherwise receive or be issued
any shares of capital stock or other equity interests of such Person or
any security of any kind convertible into or exchangeable or exercisable
for any shares of capital stock or other equity interest of such Person
or (ii) receive any benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock or other equity
interest of such Person, including, without limitation, any rights to
participate in the equity, income or election of directors, management
committee members or officers of such Person.
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
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"Permits" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Permitted Lien" means (i) any Lien for Taxes, governmental, charges or
levies not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established
in accordance with GAAP, (ii) the Liens set forth in any Disclosure
Schedule, (iii) any minor imperfection of title, easements, rights of way
or similar Lien as normally exist with respect to property similar in
character to the property affected thereby and which individually or in
the aggregate with other such Liens does not impair the value or
marketability of the property subject to such Lien or interfere with the
use of such property in the conduct of the business of the Company or any
Subsidiary and which do not secure obligations for money borrowed and
(iv) Liens imposed by any law, such as mechanic's, materialman's,
landlord's, warehouseman's and carrier's Liens, securing obligations
incurred in the ordinary course of business which are not yet overdue or
which are being diligently contested in good faith by appropriate
proceedings and, with respect to such obligations which are being
contested, for which the Company has set aside adequate reserves.
"Person" means any individual, corporation, joint stock corporation,
limited liability company or partnership, general partnership, limited
partnership, proprietorship, joint venture, other business
organization, trust, union, association or Governmental or Regulatory
Authority.
"Project" means the Project as referred to in Recital (C) hereof, which
Project is valued with RMB1,100,000,000 in accordance with the Valuation
Report.
"Projections" means the projections for the Chinese Joint Venture assets,
results of operations, assets, liabilities, cash flow and other
information supplied by the Shareholders.
"Purchase Price" has the meaning ascribed to it in Section 2.1.
"Purchaser" has the meaning ascribed to it in the forepart of this
Agreement.
"Relevant Percentage" means sixty-six per cent (66%)
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Shares" means the entire issued and paid up share capital of Target Co.
owned by the respective Shareholders as registered and beneficial
shareholder as set out in the Schedule hereto.
"Subsidiary" means any Person in which Target Co., directly or indirectly
through Subsidiaries or otherwise, beneficially owns more than fifteen
percent (15%) of either the equity interests in, or the voting control
of, such Person.
"Target Co." means collectively New Communication International
Enterprises Ltd. and Magnum Enterprises Group Limited, both companies
incorporated under the laws of the British Virgin Islands with limited
liability and where the context requires any of them.
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"Tax" or "Taxes" means all federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, bank shares, withholding, payroll, employment, excise,
property, alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any
nature whatever, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"Tax Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular
Tax.
"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States Federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to
exercise jurisdiction with respect to any Tax.
"Transfer Taxes" means sales, use, transfer, real property transfer,
recording, gains, stock transfer and other similar taxes and fees.
"Valuation Report means the Valuation Report prepared subject to terms
and conditions set out therein by Xxxxxx Xxxxxxxx dated as of April 3rd,
1998
(b) Unless the context of this Agreement otherwise requires, (i) words of any
gender include each other gender, (ii) words using the singular or plural
number also include the plural or singular number, respectively, (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words
refer to this entire Agreement, (iv) the terms "Article" or "Section"
refer to the specified Article or Section of this Agreement, and (v) the
phrases "ordinary course of business" and "ordinary course of business
consistent with past practice" refer to the business and practice of
Target Co. or a Subsidiary. All accounting terms used herein and not
expressly defined herein shall have the meanings given to them under
GAAP.
(c) When used herein, the phrase "to the knowledge of " any Person, "to the
best knowledge of " any Person or any similar phrase, means (i) with
respect to any Person who is an individual, the actual knowledge of such
Person, and (ii) with respect to any other Person, the actual knowledge
of the directors, officers, members, general partners and other similar
Person in a similar position or having similar powers and duties; and, in
the case of each of (i) and (ii), the knowledge of facts that such
individuals should have after reasonable inquiry.
ARTICLE II
Sale of Purchased Interests; Closing
2.1 Sale and Purchase. On the terms and subject to the conditions of this
Agreement,
(a) At the Closing, Purchaser shall purchase from the Shareholders, free and
clear of all Liens, all of the Shares.
(b) The Purchase Price shall be Sixty Million Dollars (US$ 60,000,000)
payable at the Closing as set forth below.
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(c) The Purchase Price shall consist of the following payments to the
Shareholders distributed in accordance with the Schedule hereto :-
(i) Forty-Two Million (42,000,000) shares of Purchaser common stock;
and
(ii) Eighteen Million (18,000,000) shares of Purchaser preferred stock.
(d) The details of the preferred stocks are as follows :-
(i) The preferred stocks shall carry no voting rights and no dividend or
other rights. It shall only carry rights of conversion to common
stocks to rank pari passu to other common stocks detailed below.
(ii) The conversion of preferred stocks may take place by written notice
at the option of the persons entitled to the preferred stocks at any
time during the period commencing 1st January 2000 (or such later
date as the audited financial statements of the Purchaser for year
1999 shall have been prepared) to 31st March 2003 (or 30 days after
such later date as the audited financial statements of the Purchaser
for year 2002 shall have been prepared);
(iii)The conversion ratio of the preferred stocks to common stocks shall
be based on the gross income (i.e. performance) of the Purchaser as
set out in the latest audited financial statements prior to the
exercise of the right of conversion. The conversion ratio is as
follows :-
(A) for gross income of the Purchaser of over US$10 million but
under US$15 million
: 1 preferred stock may be converted to 1 common stock;
(B) for gross income of the Purchaser of over US$15 million but
under US$20 million
: 1 preferred stock may be converted to 2 common stocks; and
(C) for gross income of the Purchaser of over US$20 million : 1
preferred stock may be converted to 3 common stocks
In case the performance of US$10 million is not met or the
conversion right is not exercised by 31st March 2003 (or 30 days
after such later date as the audited financial statements of the
Purchaser for year 2002 shall have been prepared), the preferred
stocks shall expire and have no further effect.
(iv) The Purchaser shall issue the converted common stocks requested for
under the written notice to the persons entitled as soon as
practicable and subject to and in accordance with applicable rules
and regulations.
2.2 Closings. The Closing will take place at Room 1501, Xxxxxxx Xxxxx, 00
Xxxxx Xxxx Xxxxxxx, Xxxx Xxxx on the Closing Date in accordance with the terms
of this Agreement, or at such other place or time as Purchaser and the
Shareholders mutually agree. At the Closing, Purchaser shall pay to the
Shareholders the Purchase Price pursuant to Section 2.1. Simultaneously, the
Shareholders shall deliver to Purchaser the certificates representing the Shares
together with all necessary instruments of transfer, in form and substance
reasonably satisfactory to Purchaser. At the Closing, there shall also be
delivered to Purchaser and Target
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Co. the opinions, certificates and other Contracts, documents and instruments
required to be delivered under the terms of this Agreement.
ARTICLE III
Representations and Warranties of Shareholders
The Shareholders represent and warrant to Purchaser that the statements
contained in this Article III are true and correct as of the date of this
Agreement unless stated otherwise, and will be true and correct as of the
Closing Date (as though made then and as though such Closing Date was
substituted for the date of this Agreement throughout this Article III).
3.1 Organization and Relationship of Parties. Each Shareholder, Target Co.,
Chinese Joint Venture (the elevant Parties prior to the Closing Date shall be a
corporation duly incorporated, validly existing and in good standing under the
laws of its place of incorporation. On or prior to the Closing Date, the
Shareholders shall own 100% of Target Co., Target Co. shall own the Relevant
Percentage of the Chinese Joint Venture and the Chinese Joint Venture shall own
the Project. Each of the Relevant Parties is duly qualified, licensed or
admitted to do business and is in good standing in its place of incorporation .
3.2 Power and Authority. Each Shareholder has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery by each Shareholder of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action. This Agreement has been duly and validly executed
and delivered by each Shareholder and constitutes a legal, valid and binding
obligation of each Shareholder enforceable against each Shareholder in
accordance with its terms.
3.3 Capitalization. As of the date hereof, and immediately prior to the
consummation of the transactions contemplated hereby and before giving effect to
such transactions, the authorized capital stock of the Target Co. consists
50,000 shares of par value of US$1.00, of which 100 shares are issued and
outstanding in accordance with the Schedule hereto. As of the date hereof, there
are no preemptive or similar rights to purchase or otherwise acquire shares of
the capital stock of Target Co. pursuant to any provision of law, the Charter or
memorandum and articles of association (in each case, as amended and in effect
on the date hereof), or any agreement to which Target Co. is a party. All of the
outstanding shares of capital stock of Target Co. have been duly authorized and
validly issued, are fully paid and non-assessable.
3.4 Business. The Shareholders agree, prior to the Closing Date, to deliver
to Purchaser true and complete copies of the certificate or articles of
incorporation and by-laws (or other comparable charter documents) of the Target
Co. and the Chinese Joint Venture. The Target Co. has no other Subsidiary nor
carry on any business except the holding of the Relevant Percentage of the
Chinese Joint Venture and the Chinese Joint Venture has no other Subsidiary or
business except the Project. Except for aforesaid, the Target Co. nor Chinese
Joint Venture hold no equity, partnership, limited liability company, joint
venture or other interest in any Person.
3.5 No Conflicts. The execution and delivery by the Shareholders of this
Agreement, the performance by the Shareholders of their obligations hereunder
and the consummation of the transactions contemplated hereby does not and will
not:
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(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the Charter or the certificate or articles of
incorporation or organization or by-laws (or other comparable charter
documents) of the Shareholders, or any Subsidiary;
(b) conflict with or result in a violation or breach of any term or provision
of any Law or Order applicable to the Shareholders, or any Subsidiary or
any of their respective Assets and Properties; or
(c) (i) conflict with or result in a violation or breach of, (ii) constitute
(with or without notice or lapse of time or both) a default under, (iii)
require the Shareholders, or any Subsidiary to obtain any consent or
approval, make any filing with or give any notice to any Person as a
result or under the terms of, (iv) result in or give to any Person any
right of termination, cancellation, acceleration or modification in or
with respect to, (v) result in or give to any Person any additional
rights or entitlement to increased, additional, accelerated or guaranteed
payments under, (vi) result in the creation of any new additional or
increased liability of the Company or any Subsidiary under or (vii)
result in the creation or imposition of any Lien upon, the Shareholders
or any Subsidiary or any of their respective Assets and Properties under,
any Contract or Permit to which the Shareholders or any Subsidiary is a
party or by which any of their respective Assets and Properties are
bound.
3.6 Governmental Approvals and Filings. No consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
the Shareholders, or any Subsidiary is required in connection with the
execution, delivery and performance of this Agreement, or the consummation of
the transactions contemplated hereby or shall have been obtained by the Closing
Date.
3.7 Corporate Formalities; Books and Records.
(a) Target Co. has complied in all material respects with al corporate
formalities required to be complied with under applicable laws.
(b) The minute books and other similar records of Target Co. and each
Subsidiary as made available to Purchaser prior to the Closing Date under
this Agreement contain a true and complete record, in all material
respects, of all action taken at all meetings and by all written consents
in lieu of meetings of directors, members, stockholders, the management
committee or boards of directors, subcommittees and committees of the
boards of directors of Target Co. and each Subsidiary.
3.8 Projections. The Projections constitute a reasonable forecast of the
Chinese Joint Venture and business operations for the periods set forth therein.
The Projections have been prepared based on the estimates and assumptions set
forth therein, which assumptions and estimates are all of the assumptions and
estimates used in formulating such Projections and are reasonable and fair in
light of current conditions and reflect the reasonable estimate of Shareholders
of the results of operations, assets, liabilities, cash flow and other
information projected therein. To the knowledge of the Shareholders, no facts
exist which would result in any material change in any such Projections, save
the adjustments set forth above.
3.9 Absence of Changes. Since the transactions contemplated by this
Agreement, there has not been any event or development which, individually or
together with other such events, could reasonably be expected to have a material
adverse effect on the Target Co. In addition, without limiting the foregoing and
except for the transactions contemplated by this Agreement neither Target Co.
nor any Subsidiary:
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(a) has (i) declared, set aside or paid any dividend or othe distribution in
respect of the capital stock of Target Co. or any Subsidiary or (ii)
directly or indirectly redeemed, purchased or otherwise acquired any such
capital stock or other equity interests; (b) authorized, issued, sold or
otherwise disposed of, or granted any Option with respect to any shares
of capital stock or other equity interests of Target Co. or any
Subsidiary, or modified or amended any right of any holder of any
outstanding shares of capital stock or other equity interests of Target
Co. or any Subsidiary or Option with respect thereto;
(c) (i) increased salary, wages or other compensation (including, without
limitation, any bonuses, commissions and any other payments) of any
officer, employee or consultant of Target Co. or any Subsidiary whose
annual salary, wages and such other compensation is, or after giving
effect to such change would be, in the aggregate, $1,000 or more per
annum; (ii) established or modified (A) targets, goals, pools or similar
provisions under any benefit plan, employment contract or other employee
compensation arrangement or (B) salary ranges, increase guidelines or
similar provisions in respect of any benefit plan, employment Contract or
other employee compensation arrangement; or (iii) adopted, entered into,
amended, modified or terminated (in whole or in part) any benefit plan;
(d) (i) incurred any Indebtedness, (ii) made or agreed to make any loans to
any Person or (iii) made or agreed to make any voluntary purchase,
cancellation, prepayment or complete or partial discharge in advance of a
scheduled payment date with respect to, or waiver of any right of Target
Co. or any Subsidiary under, any Indebtedness of or owing to Target Co.
or any Subsidiary;
(e) suffered any physical damage, destruction or other casualty loss (whether
or not covered by insurance) adversely affecting any of the real or
personal property or equipment of the material Assets and Properties of
Target Co. or any Subsidiary;
(f) failed to pay or satisfy when due any obligation of Target Co. or any
Subsidiary, except when the failure would not have a material adverse
effect on the Business or Condition of Target Co. or its Subsidiaries;
(g) acquired any business or Assets and Properties of any Person (whether by
merger, consolidation or otherwise) or disposed or leased, or incurred a
Lien (other than a Permitted Lien) on, any Assets and Properties of
Target Co. or any Subsidiary, in each case, other than acquisitions or
dispositions of products in the ordinary course of business of Target Co.
or such Subsidiary consistent with past practice;
(h) entered into, amended, modified, terminated (in whole or in part) or
granted a waiver under or given any consent with respect to any
Intellectual Property;
(i) commenced, terminated or changed any line of the Business;
(j) entered into any transaction with any stockholder or Affiliate of Target
Co. or any Subsidiary, other than pursuant to any Contract in effect on
the Audited Financial Statement Date;
(k) made any change in the accounting methods or procedures of Target Co. or
any Subsidiary or became subject to any conditions or event which has or
could reasonably be expected to have a material adverse effect on the
Business or Condition of Target Co.; or
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(l) entered into any agreement to do any of the things described in the
preceding paragraphs, including, without limitation, with respect to any
Business Combination not otherwise restricted by the preceding
paragraphs.
3.10 No Undisclosed Liabilities. At Closing, Target Co. will have no
Liabilities of, relating to or affecting the Target Co. Assets or any Subsidiary
or any of their respective Assets and Properties except Liabilities incurred in
the ordinary course of business in accordance with the provisions of this
Agreement.
3.11 Taxes.
(a) All Taxes which could constitute a lien on the Assets an Properties of
Target Co. or the Subsidiaries and which were due and payable by Target
Co. or the Subsidiaries with respect to the Closing Date and all periods
beginning and ending prior thereto have been or will be paid by Target
Co. prior to delinquency. All Tax Returns that have been filed by or with
respect to Target Co. or any Subsidiary, or any affiliated, combined,
consolidated, unitary or similar group of which Target Co. is or was a
member with any Taxing Authority correctly and completely reflects the
income, franchise or other Tax liability and all other information
required to be reported thereon. Target Co. and the Subsidiaries have
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or due and payable to any employee,
creditor, independent contractor or other third party.
(b) Target Co. does not expect any Taxing Authority to asses any additional
Taxes against or in respect of it or any Subsidiary for any past period.
There is no dispute or claim concerning any Tax liability of Target Co.
or any Subsidiary either (i) claimed or raised by any Taxing Authority or
(ii) otherwise known to Target Co., or any Subsidiary. Target Co. has
delivered to Purchaser, with respect to Target Co. and each Subsidiary,
complete and correct copies of all federal, state, local and foreign
income Tax Returns filed by, and all correspondence, agreements, notices,
reports or statements of deficiencies with, from or to any Taxing
Authority in each case since the date of its incorporation.
3.12 Legal Proceedings.
(a) Neither Target Co. nor any Subsidiary has knowledge of any Orders
outstanding against Target Co. or any Subsidiary; and
(b) there are no Actions or Proceedings pending or, to the knowledge of
Target Co., or any Subsidiary, threatened against, relating to or
affecting Target Co. or any Subsidiary or any of their respective Assets
and Properties. Neither Target Co. nor any Subsidiary is in default with
respect to any Order of any court or Governmental or Regulatory Authority
and there are no unsatisfied judgments against Target Co., or any
Subsidiary.
3.13 Compliance With Laws and Orders. Target Co. and the Subsidiaries and the
conduct of the Business are in compliance with all applicable Laws and Orders,
except where the failure to comply would not have a material adverse effect on
the Business or Condition of Target Co. or the Shares. None of Target Co., or
any Subsidiary has any knowledge that it is not in compliance with any of such
Laws or Orders where the failure to comply would have a material adverse effect
on the Business or Condition of Target Co. or the Shares. None of Target Co.,
or any Subsidiary has any reasonable basis to anticipate that any presently
existing circumstances are likely to result in violations of any such Laws or
Orders which would, individually or in the aggregate, have a material adverse
effect on the Business or Condition of Target Co.
11
3.14 Permits.
(a) Target Co. and each Subsidiary own or validly hold all Permits that are
material to the Business; and
(b) neither Target Co. nor any Subsidiary is, or has receive any notice that
it is, in default (or with the giving of notice or lapse of time or both,
would be in default) under any such Permit.
3.15 Affiliate Transactions.
(a) there are no Liabilities owed to Target Co. or any Subsidiary, on the one
hand, by any current or former equity holder or Affiliate of Target Co.,
on the other hand,
(b) there are no liabilities owed by Target Co. or any Subsidiary on the one
hand, to any such current or former stockholder or Affiliate of Target
Co. or any Affiliate of any such stockholder or Affiliate, on the other
hand,
(c) neither Target Co., nor any such current or former stockholder or
Affiliate provides or causes to be provided any Assets and Properties,
services or facilities to Target Co. or any Subsidiary, and
(d) neither Target Co. nor any Subsidiary provides or causes to be provided
any assets, services or facilities to any such current or former
stockholder or Affiliate.
3.16 Business Relationships. Since the date of its incorporation, no business
relationship of Target Co. or any Subsidiary with any customer, supplier or any
group of customers or suppliers whose purchases or sales, as the case may be,
are individually or in the aggregate material to the Business or Condition of
Target Co. has been, or to the knowledge of Target Co., or any Subsidiary, has
been threatened to be, terminated, canceled, limited or changed or modified
adversely, and, to the knowledge of Target Co., or any Subsidiary, there exists
no present condition or state of facts or circumstances with respect to such
business relationship that would materially adversely affect the Business or
Condition of Target Co., or prevent Target Co. from conducting the Business
after the consummation of the transactions contemplated by this Agreement, in
substantially the same manner in which it has heretofore been conducted.
3.17 Other Negotiations; Brokers. Neither Target Co., nor any of their
respective Affiliates (nor any investment banker, financial advisor, attorney,
accountant or other Person retained by or acting for or on behalf of Target Co.,
any Subsidiary, or any such Affiliate) (i) has entered into any agreement that
conflicts with any of the transactions contemplated by this Agreement or (ii)
has entered into any agreement or had any discussions with any third party
regarding any transaction involving the Company or any Subsidiary which could
result in Purchaser or its members, officers, director, employee, agent or
Affiliate of any of them being subject to any claim for liability to said third
party as a result of entering into this Agreement or consummating the
transactions contemplated hereby or thereby.
3.18 Disclosure. This Agreement does not, and the documents and certificates
executed by Target Co. or otherwise furnished by Target Co. to Purchaser do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading.
12
ARTICLE IX
Representations and Warranties of Purchaser
Purchaser represents and warrants to Shareholders that:
4.1 Organization and Authority. Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation , with the corporate power and authority to carry on its business
as now being conducted. The execution and delivery of this Agreement and the
consummation of the transactions contemplated in this Agreement have been, or
will be prior to closing, duly authorized by all requisite corporate actions on
the part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and constitutes the valid, binding, and enforceable obligation of
Purchaser.
4.2 Ability to Carry Out Agreement. To the best of Purchaser's knowledge and
belief, the execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in, any provisions of applicable
law, any agreement, instrument, judgment, order or decree to which Purchaser is
a party or to which Purchaser is subject. No consents of any persons under any
contract or agreement required to be disclosed pursuant to this Agreement are
required for the execution, delivery, and performance by Purchaser of this
Agreement.
4.3 The Consideration Shares. The Consideration Shares to be issued pursuant
to this Agreement will be issued at Closing, free and clear of liens, claims,
and encumbrances, and Purchaser has all necessary right and power to issue the
consideration Shares to the Shareholders as provided in this Agreement without
the consent or approval of any person, firm, corporation, or governmental
authority.
4.4 Capitalization of Purchaser. The capitalization of Purchaser is, as of
the Closing Date, comprises of one hundred million (100,000,000) shares of
US$0.001 par value common stock of which, as of the Closing Date, not more than
Six Million (6,000,000) shares will be issued and outstanding. All issued and
outstanding shares are legally issued, fully paid, and non-assessable, and are
not issued in violation of the preemptive or other right of any person. In
addition to the shares outstanding, there will be, if mutually agreeable between
the Purchaser and the Shareholders as of the Closing Date, certain outstanding
shares, warrants and/or option to raise financing for such purpose mutually
agreeable between the Purchaser and the Shareholders.
4.5 Financial Information. Purchaser has provided to the Shareholders, or
will provide prior to Closing, the Information and Disclosure Statement filed
with NASD on or about March 28, 1998 which with all other information included
in such statement, shall be referred to as the "Purchaser Financials." Purchaser
has no obligations or liabilities (whether accrued, absolute, contingent,
liquidated or otherwise, including without limitation any tax liabilities due or
to become due) which are not fully disclosed and adequately provided for in
Purchaser Financials, excepting current liabilities incurred and obligations
under agreements entered into in the usual and ordinary course of business since
the date of Purchaser Financials, none of which (individually or in the
aggregate) are material except as expressly indicated in Purchaser Financials.
Purchaser is not a guarantor or otherwise contingently liable for any material
amount of such indebtedness. Except as indicated in Purchaser Financials or
Purchaser Disclosure Documents, there exists no default under the provisions of
any instrument evidencing such indebtedness or of any agreement relating thereto
in excess of an aggregate of US$1,000.
13
4.6 Litigation. To the best knowledge and belief of Purchaser, except as
disclosed pursuant to this Agreement, there is neither pending nor threatened,
any action, suit or arbitration to which its property, assets or business is or
is likely to be subject and in which an unfavorable outcome, ruling or finding
will or is likely to have a material adverse effect on the condition, financial
or otherwise, or properties, assets, business or operations, which would create
a material liability on the part of Purchaser, or which would conflict with this
Agreement or any action taken or to be taken in connection with it.
4.7 Tax Matters. Purchaser has filed or will file all federal, state, and
local income, excise, property, and other tax returns, forms, or reports, which
are due or required to be filed by it and has paid, or made adequate provision
for payment of all taxes, interest, penalty fees, assessments, or deficiencies
shown to be due or claimed to be due or which have or may become due on or in
respect to such returns or reports.
4.8 Contracts. Except as disclosed pursuant to this Agreement, there are no
contracts, actual or contingent obligations, agreements, franchises, license
agreements, or other commitments between Purchaser and other third parties which
are material to the business, financial condition, or results of operation of
Purchaser, taken as a whole. For purposes of the preceding sentence, the term
"material" refers to any obligation or liability which by its terms calls for
aggregate payments of more than US$1,000.
4.9 Material Contract Breaches; Defaults. To the best of Purchaser's
knowledge and belief, except as disclosed in Purchaser Financials, it has not
materially breached, nor has it any knowledge of any pending or threatened
claims or any legal basis for a claim that it has materially breached, any of
the terms or conditions of any agreements, contracts, or commitments to which it
is a party or is bound and which might give rise to a claim by anyone against
Purchaser. To the best of its knowledge and belief, Purchaser is not in default
in any material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which might give rise to a claim against Purchaser,
and there is no event of default or other event which, with notice or lapse of
time or both, would constitute a default in any material respect under any such
contract, agreement, lease, or other commitment which might give rise to a claim
against Purchaser in respect of which Purchaser has not taken adequate steps to
prevent such a default from occurring.
4.10 Securities Laws. Purchaser is a public company and represents that,
except as disclosed in Purchaser Disclosure Documents and in Purchaser
Financials, it has no existing or threatened liabilities, claims, lawsuits, or
basis for the same with respect to its original stock issuance to its founders,
its initial public offering, any other issuance of stock, or any dealings with
its stockholders, the public, the brokerage community, the SEC, any state
regulatory agencies, or other persons.
4.11 Brokers. Purchaser has not agreed to pay any brokerage fees, finder's
fees, or other fees or commissions with respect to the transactions contemplated
in this Agreement which could give rise to a claim against the Shares except as
set out in section 2.1(d). To the best of Purchaser's knowledge, no person or
entity, is entitled, or intends to claim that it is entitled, to receive any
such fees or commissions in connection with such transactions. Purchaser further
agrees to indemnify and hold harmless the other parties to this Agreement
against liability to any other broker claiming to act on behalf of Purchaser.
4.12 Corporate Records. Copies of all corporate books and records, including,
but not limited to, any other documents and records of Purchaser relating to the
proceeding of its shareholders and directors will be provided to the
Shareholders prior to Closing at the request of the Shareholders. All such
records and documents are and will be complete, true, and correct.
14
4.13 _____ Approvals. Except as otherwise provided in this Agreement, no
authorization, consent, or approval of, or registration or filing with, any
governmental authority or any other person is required to be obtained or made by
Purchaser in connection with the execution, delivery, or performance of this
Agreement.
4.14 _____ Full Disclosure. The information concerning Purchaser, set forth in
this Agreement, and in Purchaser Disclosure Documents, is, to the best of
Purchaser's knowledge and belief, complete and accurate in all material respects
and does not contain any untrue statement 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.
4.15 _____ Date of Representations and Warranties. Each of the representations
and warranties of Purchaser set forth in this Agreement is true and correct at
and as of the Closing Date, with the same force and effect as though made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement. Without limiting the generality of the foregoing, Company represents
and warrants that as of the Closing Date, its payables will be US$1,000 or less.
ARTICLE V
Conditions Precedent to Obligations of the Shareholders
All obligations of the Shareholders under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
5.1 ______ Representations and Warranties. The representations and warranties by
Purchaser set forth in this Agreement shall be true and correct at and as of the
Closing Date, with the same force and effect as though made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement.
Purchaser shall deliver on the Closing Date a certificate to this effect,
referred to as Purchaser Certificate of Representations and Warranties.
5.2 No Breach or Default. Purchaser shall have performed and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
5.3 Action to Pay Purchase Price. Purchaser shall have taken all corporate
and other action necessary to issue and deliver the Consideration Shares
representing the Purchase Price to the Shareholders pursuant to this Agreement
at Closing.
5.4 Company Disclosure Documents. Before Closing, Purchaser will have
delivered to the Shareholders, or caused the delivery of, Purchaser Disclosure
Documents.
5.5 Approval of Other Instruments and Documents by the Shareholders. All
instruments and documents delivered to the Shareholders pursuant to the
provisions of this Agreement shall be reasonably satisfactory to their legal
counsel.
5.6 Opinion of Counsel. Purchaser shall have delivered to the Shareholders an
opinion of counsel dated the Closing Date or thereabouts to the effect that:
15
(a) Purchaser is duly organized, validly existing, and in good standing under
the laws of the United States and its state of incorporation.
(b) Purchaser has the corporate power to conduct business and, specifically,
to carry on its business as now being conducted and is duly qualified to
do business in the United States and its state of incorporation.
(c) All corporate actions and director approvals have been properly obtained
and completed by Purchaser, to the extent, if any, that they are
necessary, for all actions required under this Agreement prior to
Closing.
(d) This Agreement has been duly authorized, executed, and delivered by
Purchaser and is a valid and binding obligation of Purchaser and, in this
regard, Purchaser shall provide the Shareholders at Closing with a
certified copy of the resolution or resolutions of the Board of Directors
of Purchaser, approving and authorizing the issuance by Purchaser of the
Shares upon the terms and conditions herein set forth.
ARTICLE VI
Conditions Precedent to Obligations of Purchaser
All obligations of Purchaser under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
6.1 Representations and Warranties. The representations and warranties
executed by and on behalf the Shareholders set forth in this Agreement shall be
true and correct at and as of the Closing Date, with the same force and effect
as though made at and as of the Closing Date, except for changes permitted or
contemplated by this Agreement. The Shareholders shall cause to be delivered on
the Closing Date the certificate to this effect, referred to in this Agreement
as the Certificate of Representations and Warranties executed by the Director of
the Shareholders.
6.2 No Breach or Default. The Shareholders shall have performed and complied
with all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
6.3 Action to Transfer the Shares. The Shareholders shall have taken all
action necessary to transfer the Shares to Purchaser pursuant to this Agreement.
In this regard, the conveyance(s) of the Shares shall contain such good and
sufficient instruments of transfer and bought and sold notes in form and
substance reasonably satisfactory to Purchaser's counsel and with all requisite
documentary stamps, if any, affixed, as shall be required or as may be
appropriate in order effectively to vest in Purchaser's good, indefeasible, and
marketable title to the Shares free and clear of all liens, mortgages,
conditional sales, and other title retention agreements, pledges, assessments,
covenants, restrictions, reservations, easements, and all other encumbrances of
every nature.
In addition to the conveyance and delivery of the Shares , the Shareholders
shall have taken all action necessary to deliver all of Target Co.'s corporate
books and records, including but not limited to its files, documents, papers,
agreements, formulas, books of account, and records pertaining to its business,
and evidence of compliance with applicable securities laws, if required and
requested by Purchaser's counsel.
16
6.4 Approval of Other Instruments and Documents by Purchaser. All instruments
and documents delivered to Purchaser pursuant to the provisions of this
Agreement shall be reasonably satisfactory to Purchaser and its legal counsel.
6.5 Opinions, Affidavits and Declarations of the Shareholders. The
Shareholders shall have delivered to Purchaser an opinion :-
(a) of qualified legal counsel reasonably satisfactory to Purchaser dated as
at the Closing Date or thereabouts, that:
(i) each Shareholder and Target Co. is duly organized, validly existing,
and in good standing under the laws of British Virgin Islands and
that the Shares are based on the information provided from the
Shareholders free from encumbrances except as disclosed pursuant to
this Agreement.
(ii) each Shareholder and Target Co. has the corporate power to carry on
its business as now being conducted and is duly qualified to do
business.
(iii)All action and approvals required in connection to the transfer of
the Shares to Purchaser have been properly taken, completed or
obtained by the Shareholders and the Target Co. respectively, to the
extent, if any, that they are necessary.
(iv) This Agreement has been duly authorized, executed, and delivered by
the Shareholders and is a valid and binding obligation of the
Shareholders.
(b) of qualified legal counsel reasonably satisfactory to Purchaser, dated as
at the Closing Date or thereabouts, that:
(i) the Chinese Joint Venture is duly organized, validly existing, in
China.
(ii) the Chinese Joint Venture has the corporate power to carry on its
business as now being conducted and is duly qualified to do
business.
(iii)All action and approvals required in connection to the establishment
of the Joint Venture Company and entry into the Project have been
properly taken, completed or obtained by the Chinese Joint Venture,
to the extent, if any, that they are necessary.
ARTICLE VII
Covenants and Agreements of the Shareholders
Up to and including the Closing Date, the Shareholders covenant that:
7.1 ______ Access and Information. After the execution of this Agreement, the
Shareholders will permit Purchaser to have reasonable access to all information
necessary to verify the representations and warranties made herein. After the
Closing, the Shareholders will continue to permit Purchaser access to such
additional documentation and information as is reasonably necessary to
completion of the transactions contemplated under this Agreement.
17
7.2 Conduct of Business as Usual. Up until the Closing Date, the Shareholders
shall insure that the Shareholder's operations shall be conducted only in the
usual and ordinary course, and that no change will be made to such operations
which might adversely affect the value of the Shares to be transferred to
Purchaser.
7.3 Best Efforts. The Shareholders shall use its best efforts to fulfill all
conditions of the Closing including the timely solicitation of affirmative
consent of all third parties necessary to effect a Closing under this Agreement.
7.4 Assent to Sale of Shares. In the event the sale of the Shares is
consummated, then the shareholders of the Shareholders agree to such sale and
waive, surrender, and agree not to exercise any rights which such shareholders
might have concerning the sale of the Shares.
ARTICLE VIII
Covenants and Agreements of Purchaser
Up to and including the Closing Date, Purchaser covenants that:
8.1 Change in Purchaser Directors. Purchaser's Board of Directors shall
immediately subsequent to Closing comprise a new board with five (5) seats and
the Purchaser shall render all assistance for appointment of the new board
required by the Shareholders including resignation of all existing directors
with confirmation by such resigning directors of no claims against the
Purchaser.
8.2 Maintenance of Capital Structure. Up until the Closing Date, or
termination hereof, whichever is the earlier, except as disclosed herein or
required under the terms of this Agreement, no change shall be made in the
Articles of Incorporation or By laws of Purchaser, or the authorized capital
stock of Purchaser.
8.3 Avoidance of Distributions. Up until the Closing Date, Purchaser shall
not declare any dividends, make any payments or distributions to its
stockholders or purchase for cash or redeem any of its shares of capital stock.
8.4 Conduct of Business as Usual. Up until the Closing Date, Purchaser shall
conduct its operations only in the usual and ordinary course, and that no change
will be made to such operations which might adversely affect the value of
Purchaser.
8.5 Access and Information. After the execution of this Agreement, Purchaser
will permit the Shareholders to have reasonable access to all information
necessary to verify the representations and warranties of Purchaser. After the
Closing, Purchaser will continue to permit the Shareholders access to such
additional documentation and information regarding Purchaser as is reasonably
necessary to completion of the transactions contemplated under this Agreement.
8.6 Best Efforts. Purchaser shall use its best efforts to fulfill or obtain
the fulfillment of all conditions of the Closing, including the timely
solicitation of affirmative consent of all third parties necessary to effect a
Closing under this Agreement.
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ARTICLE IX
Termination
9.1 Termination Without Cause. This Agreement may be terminated at any time
prior to the Closing Date without cost or penalty to either party:
(a) Mutual Consent. By mutual consent of the Shareholders and Purchaser.
(b) Actions or Proceedings. By the Shareholders or Purchaser (unless the
action or proceeding referred to is caused by a breach or default on the
part of the Shareholders or Purchaser of any of their representations,
warranties, or obligations under this Agreement), if there shall be any
actual or threatened action or proceeding by or before any court or any
other governmental body which shall seek to restrain, prohibit, or
invalidate the transactions contemplated by this Agreement and which, in
the judgment of the Shareholders or Purchaser, made in good faith and
based upon the advice of legal counsel, makes it inadvisable to proceed
with the transactions contemplated by this Agreement.
9.2 Termination with Cause. This Agreement may be terminated, with the
terminating party to be reimbursed by the other party of all expenses and costs
related to this Agreement, if:
(a) Breach or Noncompliance by Shareholders. The Shareholders shall fail to
comply in any material aspect with any of their representations,
warranties, or obligations under this Agreement, or if any of the
representations or warranties made by the Shareholders under this
Agreement shall be inaccurate in any material respect and is not cured
within ten (10) business days of notice of such breach.
(b) Breach or Noncompliance by Purchaser. Purchaser shall fail to comply in
any material aspect with any of its representations, warranties, or
obligations under this Agreement, or if any of the representations or
warranties made by Purchaser under this Agreement shall be inaccurate in
any material respect and is not cured within ten (10) business days of
notice of such breach.
ARTICLE X
Securities
10.1 Private Transaction. The Shareholders understand that the Shares issued
pursuant to this Agreement, have not been nor will they be registered under the
Securities Act of 1933 as amended ("'33 Act"), but are issued pursuant to
exemptions from registration of the '33 Act, and Purchaser's reliance on such
exemptions in issuing the Shares is predicated in part on the representations of
the Shareholders, to be executed by the Shareholders and delivered to Purchaser
at Closing.
10.2 Shareholders Restrictions. The Shareholders acknowledge and agree that
there may be certain restrictions under applicable legislation restricting sale
and/or disposal of the Consideration Shares under applicable state or federal
laws or other applicable directives.
19
ARTICLE XI
Indemnification
11.1 Indemnification. As provided herein, the Shareholders and Purchaser shall
each indemnify and hold harmless the other for one (1) year following the date
of Closing under this Agreement against and in respect of any liability, damage,
or deficiency, all actions, suits, proceedings, demands, assessments, judgments,
costs and expenses resulting from any misrepresentations, breach of covenant or
warranty, or from any misrepresentation contained in any certificate furnished
hereunder. In this regard, the Shareholders agree that Purchaser is held
harmless from and indemnified against any loss, damage, or expense resulting
from the falsity or breach of any of the representations, warranties, or
agreements of the Shareholders contained herein under which the Shares hereunder
are transferred to the Shareholders.
ARTICLE XII
Confidential Information
12.1 Confidential Information. Notwithstanding any termination of this
Agreement, Purchaser, the Shareholders and their representatives, agree to hold
in confidence any information not generally available to the public received by
them from the other party pursuant to the terms of this Agreement. If this
Agreement is terminated for any reason, Purchaser, the Shareholders. and their
representatives will continue to hold such information in confidence and will,
to the extent requested by any party, promptly return to the requesting party
all written material and all copies or abstracts thereof previously furnished.
ARTICLE XIII
Miscellaneous Provisions
13.1 Survival of Representations and Warranties. All representations,
warranties, and covenants made by any party in this Agreement shall survive the
Closing hereunder and the consummation of the transactions contemplated hereby
for three (3) years from the Closing Date. The Shareholders and Purchaser are
executing and carrying out the provisions of this Agreement in reliance on the
representations, warranties, and covenants and agreements contained in this
Agreement or at the Closing of the transactions herein provided for including
any investigation upon which they might have made or any representations,
warranty, agreement, promise, or information, written or oral, made by the other
party or any other person other than as specifically set forth herein.
13.2 Costs and Expenses. Subject to paragraph 9 herein, all costs and expenses
in the proposed sale and transfer described in this Agreement shall be borne by
the Shareholders and Purchaser in the following manner:
(a) Attorneys Fees and Costs. Each party has been represente by its own
attorney(s) in this transaction, shall pay the fees of its own
attorney(s), except as may be expressly set forth herein to the contrary.
(b) Costs of Closing. Each party shall bear its reasonable share of all other
Closing costs and expenses arising from this Agreement.
20
13.3 Further Assurances. At any time and from time to time, after the
effective date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of this Agreement.
13.4 Waiver. Any failure of any party to this Agreement to comply with any of
its obligations, agreements, or conditions hereunder may be waived in writing by
the party to whom such compliance is owed. The failure of any party to this
Agreement to enforce at any time any of the provisions of this Agreement shall
in no way be construed to be a waiver of any such provision or a waiver of the
right of such party thereafter to enforce each and every such provision. No
waiver of any breach of or non-compliance with this Agreement shall be held to
be a waiver of any other or subsequent breach or non-compliance.
13.5 Notices. All notices and other communications hereunder shall either be
in writing and shall be deemed to have been given if delivered in person, sent
by overnight delivery service or sent by facsimile transmission, to the parties
hereto, or their designees, as follows: To Shareholders:
c/o Xx. Xxxxxxxx Xxx
Room 1501, Central Tower
00 Xxxxx Xxxx Xxxxxxx
Xxxx Xxxx
Telephone (000) 0000 0000
Facsimile (000) 0000 0000
To Purchaser:
x/x Xxxxxxx X. Xxx, XXX, Xxx
Xxxxx 000, 0000 Xxxxxx Xxx Xxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Xxxxxx Xxxxxx of America
Telephone (000) 000 0000
Facsimile (000) 000 0000
13.6 Headings. The paragraph and subparagraph headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.7 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.8 Governing Law. This Agreement shall be governed by the laws of the United
States, State of Nevada.
13.9 Binding Effect. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties, their respective heirs, administrators,
executors, successors, and assigns.
21
13.10 Entire Agreement. This Agreement contains the entire agreement between
the parties hereto and supersedes any and all prior agreements, arrangements, or
understandings between the parties relating to the subject matter of this
Agreement. No oral understandings, statements, promises, or inducements contrary
to the terms of this Agreement exist. No representations, warranties, covenants,
or conditions, express or implied, other than as set forth herein, have been
made by any party.
13.11 Severability. If any part of this Agreement is deemed to be unenforceable
the balance of the Agreement shall remain in full force and effect.
13.12 Amendment. This Agreement may be amended only by a written instrument
executed by the parties or their respective successors or assigns.
13.13 Facsimile Counterparts. A facsimile, telecopy or other reproduction of
this Agreement may be executed by one or more parties hereto and such executed
copy may be delivered by facsimile of similar instantaneous electronic
transmission device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party hereto, all
parties agree to execute an original of this Agreement as well as any facsimile,
telecopy or other reproduction hereof.
13.14 Time is of the Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
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SCHEDULE
Shareholders Shares in Target Co. Consideration Shares
Common Stock
---------------
CSI Telecoms Limited 60 (XxxXxx) 19,500,000 (common stock)
5 (Magnum)
Actionville Assets Limited 10 (XxxXxx) 3,000,000 (common stock)
Goldwell Agents Limited 10 (Magnum) 3,000,000 (common stock)
Xxxxxx Xxx Agents Limited 10 (Magnum) 3,000,000 (common stock)
Dragon Winner Limited 10 (Magnum) 3,000,000 (common stock)
Healthy Choice Assets Limited 9 (Magnum) 2,700,000 (common stock)
Xxxx Star Developments Limited 9 (Magnum) 2,700,000 (common stock)
Xxx Xxx Xxxxx, Xxxxx 9 (Magnum) 2,700,000 (common stock)
Xxxxxx Xxxx 8 (Magnum) 2,400,000 (common stock)
Preferred Stock
Good Wisdom Industries Limited 15 (XxxXxx) 4,500,000 (preferred stock)
Kind Planet Assets Limited 15 (XxxXxx) 4,500,000 (preferred stock)
Busywell Trading Limited 11 (Magnum) 3,300,000 (preferred stock)
Gold Accessories Limited 11 (Magnum) 3,300,000 (preferred stock)
Prosperous Choice Limited 8 (Magnum) 2,400,000 (preferred stock)
23
Purchaser
Phileo Management Company Inc.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
Title: President
Shareholders
CSI Telecoms Limited
By: /s/ Xxx Xx
-----------------------------
Name: Xxx Xx
Title: Director
Actionville Assets Limited
By: /s/ Xxxx Xxxxxx
-----------------------------
Name: Xxxx Xxxxxx
Title: Director
Xxxx Star Developments Limited
By: /s/ Xxxxx Xxx
-----------------------------
Name: Xxxxx Xxx
Title: Director
Busywell Trading Limited
By: /s/ East Asia Corporate Services (Nominees) Ltd.
----------------------------------------------
Name: East Asia Corporate Services (Nominees) Ltd.
Title: Director
24
Dragon Winner Limited
By: /s/ Holistic Secretaries Limited
---------------------------------
Name: Holistic Secretaries Limited
Title: Director
Gold Accessories Limited
By: /s/ Lok Wien Xxxx Xxxxxxxx
-----------------------------
Name: Lok Wien Xxxx Xxxxxxxx
Title: Director
Xxxxxx Xxx Agents Limited
By: /s/ Lie San Xxx Xxxxxxx
-----------------------------
Name: Lie San Xxx Xxxxxxx
Title: Director
Goldwell Agents Limited
By: /s/ Xxxx Wing Koseng
-----------------------------
Name: Xxxx Wing Koseng
Title: Director
Good Wisdom Industries Limited
By: /s/ Xxxx Xxxxxx
-----------------------------
Name: Xxxx Xxxxxx
Title: Director
25
Healthy Choice Assets Limited
By: /s/ Chan Xxxxx Xxxx
-----------------------------
Name: Chan Xxxxx Xxxx
Title: Director
Kind Planet Assets Limited
By: /s/ Xxxx Xxxxx Ling
-----------------------------
Name: Xxxx Xxxxx Ling
Title: Director
Prosperous Choice Limited
By: /s/ Chen Xxx Xxx
-----------------------------
Name: Chen Xxx Xxx
Title: Director
Xxxxxx Xxxx
/s/ Xxxxxx Xxxx
-----------------------------
Xxx Xxx Xxxxx, Xxxxx
/s/ Xxx Xxx Xxxxx, Xxxxx
-----------------------------
26
