SHARE EXCHANGE AGREEMENT
AGREEMENT
dated as of
October 24, 2007 by and between Smooth Global (China) Holdings, Inc., a Nevada
corporation (hereinafter referred to as “Nevada Corp.”) and Xxxxxxxxx Xxxxxx and
Xxxxxxx Xxx Xxxxx, the shareholders of Smooth Global Services Limited, a
British
Virgin Islands corporation (hereinafter referred to as the “BVI
Shareholders”).
WHEREAS,
Smooth Global
Services Limited (“BVI Corp.”) owns one hundred percent (100%) of the registered
equity of Smooth Global (Beijing) Telecom Science Limited, a corporation
organized under the laws of the People’s Republic of China (“China Corp”);
and
WHEREAS,
Beijing Corp.
is the beneficiary of a trust, the corpus of which is all of the registered
equity of Beijing GRT Information Services Limited, a corporation organized
under the laws of the People’s Republic of China (“Beijing GRT”);
and
WHEREAS,
the BVI
Shareholders desires to transfer their ownership of BVI Corp. to Nevada Corp.
and Nevada Corp. desires to acquire the said equity.
NOW,
THEREFORE, it is
agreed:
1.
Definitions. As used herein, the
following terms shall have the meanings set forth below:
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a.
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“Applicable
Law” means any domestic or foreign law, statute, regulation, rule, policy,
guideline or ordinance applicable to the businesses or corporate
existence
of Nevada Corp., BVI Corp., China Corp. or Beijing
GRT.
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b.
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“GAAP”
means generally accepted accounting principles in the United States
of
America as promulgated by the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board or any
successor
institutes concerning the treatment of any accounting
matter.
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c.
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“Lien”
means, with respect to any property or asset, any mortgage, lien,
pledge,
charge, security interest, claim, encumbrance, royalty interest,
any other
adverse claim of any kind in respect of such property or asset,
or any
other restrictions or limitations of any nature
whatsoever.
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d.
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“Tax”
(and, with correlative meaning, “Taxes” and “Taxable”)
means:
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(i)
any income, alternative or add-on
minimum tax, gross receipts tax, sales tax, use tax, ad valorem tax, transfer
tax, franchise tax, profits tax, license tax, withholding tax, payroll tax,
employment tax, excise tax, severance tax, stamp tax, occupation tax, property
tax, environmental or windfall profit tax, custom, duty or other tax, impost,
levy, governmental fee or other like assessment or charge of any kind whatsoever
together with any interest or any penalty, addition to tax or additional
amount
imposed with respect thereto by any governmental or Tax authority responsible
for the imposition of any such tax (domestic or foreign), and
(ii)
any liability for the payment of
any amounts of the type described in clause (i) above as a result of being
a
member of an affiliated, consolidated, combined or unitary group for any
Taxable
period, and
(iii)
any liability for the payment of
any amounts of the type described in clauses (i) or (ii) above as a result
of
any express or implied obligation to indemnify any other person.
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e.
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“Tax
Return” means any return, declaration, form, claim for refund or
information return or statement relating to Taxes, including any
schedule
or attachment thereto, and including any amendment
thereof.
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2. Share
Exchange.
a. On
the Closing Date (defined herein), the BVI Shareholders shall transfer and
assign to Nevada Corp. all of the issued and outstanding capital stock of
BVI
Corp., and shall thereafter assist the Nevada Corp. in registering its ownership
of BVI Corp. with the relevant authorities in the British Virgin
Islands. The BVI Shareholders represent and warrant that upon the
Closing Date, all right, title and interest in said shares will be transferred
to Nevada Corp. free of Liens, claims and encumbrances.
b. On
the Closing Date, Nevada Corp. shall issue in consideration of the assignment
of
BVI Corp. a total of thirty-three million (33,000,000) shares of common
stock. Nevada Corp. warrants that the common stock, when so issued,
will be duly authorized, fully paid and non-assessable. The shares
shall be issued to the designees of the BVI Shareholders. The
designees of the BVI Shareholders are identified on Schedule 2b to this
Agreement.
c. The
parties intend that the exchange of shares described above shall qualify
as a
tax-free exchange under Section 351 of the United States Internal Revenue
Code. The parties further intend that the issuance of the common
stock by Nevada Corp. to the BVI Shareholders shall be exempt from the
provisions of Section 5 of the Securities Act of 1933 pursuant to Section
4(2)
of said Act.
3. Closing. The
Closing of the transactions contemplated by this Agreement ("Closing") shall
take place at the offices of Xxxxxx Xxxxxx, counsel for Nevada Corp.,
simultaneously with the execution of this Agreement (the “Closing
Date”).
4. Warranties
and Representations of BVI Shareholders In order to induce
Nevada Corp. to enter into this Agreement and to complete the transaction
contemplated hereby, the BVI Shareholders warrant and represent to Nevada
Corp.
that:
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a. Organization
and Standing - BVI Corp.. BVI Corp. is a corporation duly
organized, validly existing and in good standing under the laws of the British
Virgin Islands and has full power and authority to carry on its business
as now
conducted. The copies of the Articles of Association and Memorandum of
Association of BVI Corp. previously delivered to Nevada Corp. are true and
complete as of the date hereof.
b. Capitalization
- BVI Corp. BVI Corp.’s entire authorized capital stock consists
of 50,000 ordinary shares, $1.00 par value, of which 1000 shares are issued
and
outstanding. There are no other voting or equity securities
authorized or issued, nor any authorized or issued securities convertible
into
equity securities, and no outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which BVI Corp. or the BVI Shareholders
are
bound, calling for the issuance of any additional equity securities of BVI
Corp.. All of the outstanding BVI Corp. Ordinary Shares have been
duly authorized and validly issued and are fully paid and non-assessable
and
were not issued in violation of any preemptive rights or any Applicable
Law.
c. Ownership
of BVI Corp. Shares. The BVI Shareholders are the sole owners of the
outstanding shares of BVI Corp. Ordinary Stock. By the transfer of
the BVI Corp. Ordinary Stock to Nevada Corp. pursuant to this Agreement,
Nevada
Corp. will acquire good and marketable title to 100% of the capital stock
of BVI
Corp., free and clear of all Liens, encumbrances and restrictions of any
nature
whatsoever, except by reason of the fact that the BVI Corp. Ordinary Shares
will
not have been registered under the Securities Act of 1933, or any applicable
state securities laws.
d. Business
Operations and Liabilities – BVI Corp.. BVI Corp. has conducted no business
operations other than the acquisition of ownership of the capital stock of
China
Corp.
e. Organization,
Standing and Ownership - China Corp.. China Corp. is a
corporation duly organized, validly existing and in good standing under the
laws
of The People’s Republic of China and has full power and authority to carry on
its business as now conducted. All of the registered capital of China Corp.
is
owned by BVI Corp. free of liens, claims or encumbrances.
f. Trust
Agreement. The Trust and Indemnity Agreement dated September 20,
2007 among China Corp., Xxx Xxxxxxx and Xxxx Xxxxxx is in full force and
effect.
g. Organization
and Standing – Beijing GRT. Beijing GRT is a corporation duly
organized, validly existing and in good standing under the laws of the People’s
Republic of China. Beijing GRT has all of the government licenses and
permits necessary to carry on its business as now conducted, to own and operate
its assets, properties and business, and to carry out the transactions
contemplated by this agreement.
h. Capitalization
- Beijing GRT. The registered capital of Beijing GRT is 2,000,000
RMB, all of which is owned by Xxx Xxxxxxx and Xxxx Xxxxxx. Except for
the registered capital that is owned by Xxx Xxxxxxx and Xxxx Xxxxxx, there
are
no voting or equity securities authorized or issued, nor any authorized or
issued securities convertible into equity securities, and no outstanding
subscriptions, warrants, calls, options, rights, commitments or agreements
by
which Beijing GRT or its equity owners are bound, calling for the issuance
of
any additional equity securities of Beijing GRT.
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i. Financial
Statements. The BVI Shareholders has delivered to Nevada Corp.
(i) the financial statements of Beijing GRT for the period ending June 30,
2006
and for the years ended December 31, 2006 and 2005 (the “Beijing GRT Financial
Statements”) and (ii) the financial statements of BVI Corp. for the period from
Inception to December 31, 2006 and for the six months ended June 30, 2007
(the
“BVI Corp. Financial Statements”). The Beijing GRT Financial
Statements and the BVI Corp. Financial Statements have been prepared in
accordance with U.S. GAAP and present fairly in all material respects the
financial condition of Beijing GRT and BVI Corp. as of the dates
thereof. The financial statements of Beijing GRT for the years
ended December 31, 2006 and 2005 and the BVI Corp. Financial Statements for
the
period ended December 31, 2006 have been reported on by an independent
accountant registered with the PCAOB.
j. Absence
Of Certain Changes Or Events. Since June 30, 2007, there has not
been (A) any material adverse change in the business, operations, properties,
assets, or condition of Beijing GRT or (B) any damage, destruction, or loss
to
Beijing GRT (whether or not covered by insurance) materially and adversely
affecting the business, operations, properties, assets, or condition of Beijing
GRT; and Beijing GRT has not become subject to any law or regulation which
materially and adversely affects, or in the future is substantially likely
to
have a material adverse effect on Beijing GRT.
k. Governmental
Consent. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency
or
commission or other non-U.S., U.S., state, county, local or other foreign
governmental authority, instrumentality, agency or commission is required
by or
with respect to BVI Corp., China Corp. or Beijing GRT in connection with
the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
l. Taxes. Each
of BVI Corp., China Corp. and Beijing GRT has filed all tax returns that
it is
required to file with all governmental agencies, wherever situate, and has
paid
or accrued for payment all taxes as shown on such returns except for taxes being
contested in good faith. There is no material claim for taxes that is
a Lien against the property of BVI Corp., China Corp. or Beijing GRT other
than
Liens for taxes not yet due and payable.
m. Pending
Actions. There are no material legal actions, lawsuits,
proceedings or investigations pending or threatened, against or affecting
BVI
Corp., Beijing GRT, or against Beijing GRT’s Officers or Directors or the BVI
Shareholders that arose out of their operation of Beijing
GRT. Neither BVI Corp., Beijing GRT, nor the BVI Shareholders is
subject to any order, writ, judgment, injunction, decree, determination or
award
of any court, arbitrator or administrative, governmental or regulatory authority
or body which would be likely to have a material adverse effect on the business
of Beijing GRT or BVI Corp.
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n. Intellectual
Property And Intangible Assets. To the knowledge of the BVI
Shareholders, Beijing GRT has full legal right, title and interest in and
to all
of the intellectual property utilized in the operation of its
business. Beijing GRT has not received any written notice that the
rights of any other person are violated by the use by Beijing GRT of the
intellectual property. None of the intellectual property has ever
been declared invalid or unenforceable, or is the subject of any pending
or, to
the knowledge of the BVI Shareholders, threatened action for opposition,
cancellation, declaration, infringement, or invalidity, unenforceability
or
misappropriation or like claim, action or proceeding.
o. Compliance
with Laws. Beijing GRT's operations have been conducted in all
material respects in accordance with all applicable statutes, laws, rules
and
regulations. Beijing GRT is not in violation of any law, ordinance or
regulation of the People’s Republic of China or of any other
jurisdiction. Beijing GRT holds all the environmental, health and
safety and other permits, licenses, authorizations, certificates and approvals
of governmental authorities necessary or proper for the current use, occupancy
or operation of its business, all of which are now in full force and
effect.
5. Warranties
and Representations of Nevada Corp.. In order to induce the BVI
Shareholders to enter into this Agreement and to complete the transaction
contemplated hereby, Nevada Corp. warrants and represents to the BVI
Shareholders that:
a. Organization
and Standing. Nevada Corp. is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada
and
has full power and authority to carry on its business as now conducted. The
copies of the Articles of Incorporation and Bylaws of Nevada Corp. previously
delivered to the BVI Shareholders are true and complete as of the date
hereof.
b.
Capitalization. Nevada Corp.'s entire authorized
capital stock consists of 200,000,000 shares of common stock, par value $0.001
per share. At the Closing, prior to the issuance of shares to the BVI
Shareholders, there will be 5,381,335 shares of Nevada Corp. Common Stock
issued
and outstanding. At the Closing, there will be no other voting or
equity securities outstanding, and no outstanding subscriptions, warrants,
calls, options, rights, commitments or agreements by which Nevada Corp. is
bound, calling for the issuance of any additional shares of common stock
or
preferred stock or any other voting or equity security.
c. Corporate
Records. All of Nevada Corp.'s books and records, including,
without limitation, its books of account, corporate records, minute book,
stock
certificate books and other records are up-to-date, complete and reflect
accurately and fairly the conduct of its business in all material respects
since
its date of incorporation.
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d. SEC
Filings. The common stock of Nevada Corp. is registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934. The
filings made by the Nevada Corp. with the Securities and Exchange Commission
during the past twelve months are true and complete, and contain no material
misstatement. All documents required to be filed by the Nevada Corp.
pursuant to the Rules of the Securities and Exchange Commission have been
filed.
e. Taxes. Nevada
Corp. has filed all tax returns that it is required to file with all
governmental agencies, wherever situate, and has paid or accrued for payment
all
taxes as shown on such returns except for taxes being contested in good
faith. There is no material claim for taxes that is a Lien against
the property of Nevada Corp. other than Liens for taxes not yet due and
payable.
g. Pending
Actions. There are no legal actions, lawsuits, proceedings or
investigations, either administrative or judicial, pending or threatened,
against or affecting Nevada Corp. or against Nevada Corp.’s Officers or
Directors that arose out of their operation of Nevada Corp. Nevada
Corp. is not subject to any order, writ, judgment, injunction, decree,
determination or award of any court, arbitrator or administrative, governmental
or regulatory authority or body.
h. Trading
Status. Nevada Corp.’s common
stock is listed for quotation on the OTC Bulletin Board, with the symbol
“SMGH.”
To the knowledge of
Nevada
Corp., Nevada Corp. has not been threatened and is not subject to removal
of its
common stock from the OTC Bulletin Board.
i.
Compliance with laws. Nevada
Corp.’s operations have been conducted in all material respects in accordance
with all applicable statutes, laws, rules and regulations. Nevada
Corp. is not in violation of any Applicable Law.
6. Restriction
on Resale. The Nevada Corp. Common Shares to be issued by Nevada Corp. to
the designees of the BVI Shareholders hereunder at the Closing will not be
registered under the Securities Act of 1933, or the securities laws of any
state, and cannot be transferred, hypothecated, sold or otherwise disposed
of
within the United States of America until: (i) a registration
statement with respect to such securities is declared effective under the
Securities Act of 1933, or (ii) Nevada Corp. receives an opinion of counsel
for
the stockholders, reasonably satisfactory to counsel for Nevada Corp., that
an
exemption from the registration requirements of the Securities Act of 1933
is
available.
The
certificates representing the shares which are being issued to the BVI
Shareholders pursuant to this Agreement shall contain a legend substantially
as
follows:
“THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH
RESPECT THERETO IS DECLARED EFFECTIVE UNDER SUCH ACT, OR SMOOTH GLOBAL (CHINA)
HOLDINGS, INC. RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
SMOOTH
GLOBAL (CHINA) HOLDINGS, INC. THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT IS AVAILABLE.”
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7. Applicable
Law. This Agreement shall be
governed by the laws of the State of Nevada, without giving effect to the
principles of conflicts of laws thereof, as applied to agreements entered
into
and to be performed in such state.
8. Binding
Effect. This Agreement, including both its obligations and
benefits, shall inure to the benefit of, and be binding on the respective
heirs
and successors of the parties and on their respective permitted assignees
and
transferees.
9. Counterparts. This
Agreement may be executed in multiple facsimile
counterparts. Each of the counterparts shall be deemed an
original, and together they shall constitute one and the same binding Agreement,
with one counterpart being delivered to each party hereto.
IN
WITNESS WHEREOF, the parties hereto have set their hands as of the date and
year
written on the first page.
By:
/s/ Xxxxx Xxxxxxx
Xxxxx
Xxxxxxx, Chief Executive Officer
/s/
Xxxxxxxxx Xxxxxx
XXXXXXXXX
XXXXXX
/s/
Xxxxxxx Xxx Xxxxx
XXXXXXX
XXX XXXXX
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