SHARE EXCHANGE AGREEMENT
Exhibit
10
THIS
AGREEMENT, dated as of September 25th,
2006
(the “Agreement”), is between
| (1) |
China
World Trade Corporation, a Nevada corporation
(“CWTD”);
|
| (2) |
Rainbow
Wish Limited, a company organized and existing under the laws of
the
British Virgin Islands (“Rainbow
Wish”);
|
| (3) |
CWT
International Excursion Investment Limited., a company organized
and
existing under the laws of the British Virgin Islands (“CWT Excursion”);
and
|
| (4) |
Chi
Xxxx Xxxxx, the Chairman of CWTD and holder of sixty percent (60%)
of the
capital stock of CWT Excursion, and also a citizen and resident of
the
People’s Republic of China
(“Xxxxx”).
|
WHEREAS,
Rainbow Wish is a direct wholly owned subsidiary of CWTD.
WHEREAS,
Rainbow Wish desires to acquire a 25% equity interest in CWT Excursion from
Xxxxx through an issue by CWTD of shares of its restricted common stock having
an agreed upon value in a transaction that is intended to qualify as a tax-free
exchange pursuant to Section 368(a)(1)(B) of the Internal Revenue Code of 1982,
as amended.
WHEREAS,
to facilitate the proposed exchange, CWT Excursion is willing to agree to the
representations, warranties and indemnification provisions of this
Agreement.
WHEREAS,
CWT Excursion is the owner of 51% of the equity interest in a joint venture
company known as Suzhou Tongli (International) Excursion Development Limited,
which is a company organized and existing under the laws of the People’s
Republic of China (“Suzhou Tongli”), and is in the business of operating tourist
concessions in Tongli Town, Suzhou City, Jiangsu Province, People’s Republic of
China.
WHEREAS,
in furtherance of the exchange by CWTD of restricted common stock of CWTD for
a
25% equity interest in CWT Excursion, CWTD intends to issue 9,000,000 shares
of
common stock (the "CWTD Shares") to Xxxxx in exchange for twenty-five (25)
common shares in the aggregate of CWT Excursion (the “CWT Excursion
Shares”);
WHEREAS,
the fair market value of the CWTD Shares to be issued to Xxxxx, based on the
closing bid price for the common stock of CWTD in the last five trading days,
equals $0.712;
WHEREAS,
Xxxxx also desires to grant Rainbow Wish an option to purchase an additional
35%
of the capital stock of CWT Excursion within the next twelve months as
hereinafter set forth;
WHEREAS,
neither party is seeking tax counsel or legal or accounting opinions on whether
the transaction qualifies for tax free treatment.
NOW,
THEREFORE, the parties agree as follows:
1
Section
1. Exchange
of Shares.
| 1.1 |
Issuance
and Exchange of the CWTD Shares.
Upon the terms and subject to the conditions of this Agreement, at
the
Closing (as hereinafter defined) CWTD will issue to Xxxxx the CWTD
Shares,
subject to the conditions in Section 5
hereof.
|
| 1.2 |
Exchange
of the CWT Excursion Shares.
Upon the terms and subject to the conditions of this Agreement, at
the
Closing Xxxxx will transfer to Rainbow Wish the CWT Excursion Shares,
subject to the conditions in Section 5
hereof.
|
| 1.3 |
Closing.
The closing (the "Closing") of the exchange of shares shall take
place
at 12:00 Noon, local time on or before September 29, 2006, or as
soon
thereafter as practicable (the “Closing Date”)
after:
|
| (i) |
The
approval of the execution, delivery and performance of this Agreement
by
the Boards of Director of CWTD, Rainbow Wish and CWT
Excursion.
|
| (ii) |
Compliance
with any requirements by any commission or government agency applicable
to
the exchange of the shares.
|
The
Closing shall occur at the offices of China World Trade Corporation in
Guangzhou, People’s Republic of China, or at such other place as the parties
shall agree. At the Closing, CWTD will deliver, or cause to be delivered, to
Xxxxx, the share certificates for the CWTD Shares, and Xxxxx will deliver,
or
cause to be delivered, to Rainbow Wish the share certificates for the CWT
Excursion Shares, including a stock certificate endorsed in blank with a stock
power.
Section
2. Representations
and Warranties of CWT Excursion and Xxxxx.
CWT
Excursion and Xxxxx, jointly and severally, hereby represent and warrant to
CWTD
and Rainbow Wish, as follows:
| 2.1 |
Organization.
CWT Excursion is a corporation duly organized, validly existing and
in
good standing under the laws of the British Virgin Islands, and has
the
corporate power to own its properties and to conduct its business
as
presently conducted. Suzhou Tongli is a company duly organized and
validly
existing under the laws of the People’s Republic of
China.
|
| 2.2 |
Authority.
CWT Excursion has all requisite corporate power and authority to
enter
into and perform its obligations under this Agreement. Subject to
the
approval of the Board of Directors of CWT Excursion, the execution,
delivery and performance of this Agreement by CWT Excursion have
been duly
authorized and approved by all requisite corporate authority, and
will not
require any further authorization or consent of CWT Excursion or
its
shareholders. This Agreement constitutes the legal, valid and binding
agreement of Xxxxx and CWT Excursion, enforceable in accordance with
its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting
the
enforcement of creditors’ rights generally, and subject to usual equity
principles in the event that equitable remedies are
sought.
|
| 2.3 |
No
Conflicts.
Neither the execution and delivery of this Agreement nor the consummation
of the exchange of shares will conflict with, result in a breach
of the
terms, conditions or provisions of, or constitute a default or an
event of
default under: the Articles of Incorporation or By-laws of CWT
Excursion; any contractual restriction contained in any instrument,
agreement or mortgage (which
is, individually, or in the aggregate, material to the consolidated
financial condition of CWT
Excursion), to which CWT Excursion is a party or any of its properties
is
subject or by which
CWT Excursion is bound; or any statute, other law or regulatory provision
presently in effect
and having applicability to
it.
|
2
| 2.4 |
Ownership
of Shares.
Xxxxx has good and marketable title to the CWT Excursion Shares,
free and
clear of any lien, claim, encumbrance, option, right or other restriction
of any kind, and, upon the Closing, Rainbow Wish shall have good
and
marketable title to the CWT Excursion Shares, free and clear of any
lien,
claim, encumbrance, option right or other restriction of any
kind.
|
| 2.5 |
Distribution.
Xxxxx is acquiring the CWTD Shares for his own own
account for the purpose of investment and not with a view to or for
sale
in connection with any distribution
thereof.
|
| 2.6 |
Regulation
S Compliance.
|
| (a) |
Xxxxx
is not a U.S. person and is not acquiring the shares of common
stock of CWTD for the account or for the benefit of any U.S.
person and is not a U.S. person who purchased the shares of common
stock in a transaction that did not require registration under
the Act.
|
| (b) |
Xxxxx
agrees to resell such common stock only in accordance with the
provisions of Regulation S, pursuant to registration under the
Act,
or pursuant to an available exemption from
registration.
|
| (c) |
Xxxxx
agrees not to engage in hedging transactions with regard to such
securities unless in compliance with the
Act.
|
| (d) |
Xxxxx
consents to the certificate for the shares of common stock of CWTD
to contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to
registration under the Act, or pursuant to an available exemption
from registration, and that hedging transactions involving
the shares of common stock may not be conducted unless
in compliance with the Act.
|
| (e) |
Xxxxx
acknowledges that CWTD has agreed to refuse to register any
transfer of the shares of common stock not made in accordance with
the provisions of Regulation S, pursuant to registration under
the
Act, or pursuant to an available exemption from
registration.
|
| 2.7 |
CWT
Excursion Share Percentage.
The CWT Excursion Shares represent twenty-five percent (25%) of all
of the
issued and outstanding common shares of CWT
Excursion.
|
| 2.8 |
Due
Diligence Information.
The due diligence information presented to CWTD by Xxxxx and CWT
Excursion
in connection with its due diligence investigation of CWT Excursion
is
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
|
| 2.9 |
Financial
Statements.
CWT Excursion and Xxxxx have presented CWTD with financial statements
of
Suzhou Tongli (International) Excursion Development Limited for the
period
from its inception to the date hereof.Such financial statements have
been
prepared in accordance with generally
accepted accounting principles in China, consistently applied, and
fairly
present the balance
sheet and results of operations of Suzhou Tongli for the periods
then
presented.
|
3
| 2.10 |
Absence
of Certain Changes or Events.
Except as set forth in this Agreement, since the date of the most
recent
balance sheet of Suzhou Tongli included in the financial statements
delivered pursuant to Section 2.9
hereof:
|
(a)
There
has not been: (i) any material adverse change in the business, operations,
properties, level of inventory, assets, or condition of Suzhou Tongli, or (ii)
any damage, destruction, or loss to Suzhou Tongli materially and adversely
affecting the business, operations, properties, assets, or condition of Suzhou
Tongli;
(b)
Suzhou Tongli and CWT Excursion have not: (i) amended their organizational
documents; (ii) declared or made, or agreed to declare or make, any payment
of
dividends or distributions of any assets of any kind whatsoever to stockholders
or purchased or redeemed, or agreed to purchase or redeem, any of their capital
stock; (iii) waived any rights of value which in the aggregate are extraordinary
and material considering the business of Suzhou Tongli; (iv) made any material
change in their method of accounting; (v) entered into any other material
transactions other than those contemplated by this Agreement; (vi) made any
material accrual or material arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any present
or
former officer or employee; or (vii) made any material increase in any
profit-sharing, bonus, deferred compensation, insurance, pension, retirement,
or
other employee benefit plan, payment, or arrangement made to, for, or with
their
officers, directors, or employees;
(c)
Suzhou Tongli and CWT Excursion have not (i) granted or agreed to grant any
rights to purchase their registered capital; (ii) borrowed or agreed to borrow
any funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the ordinary
course of business; (iii) paid any material obligation or liability (absolute
or
contingent) other than current liabilities reflected in or shown on the most
recent balance sheet and current liabilities incurred since that date in the
ordinary course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of their material assets, properties, or rights, or agreed to
cancel any material debts or claims; (v) made or permitted any amendment or
termination of any contract, agreement, or license to which they are a party
if
such amendment or termination is material, considering the business of Suzhou
Tongli; or (vi) issued, delivered, or agreed to issue or deliver any stock,
bonds, or other corporate securities including debentures (whether authorized
and unissued or held as treasury stock); and
(d)
To
the best knowledge of CWT Excursion, neither CWT Excursion nor Suzhou Tongli
have become subject to any law or regulation which materially and adversely
affects, or in the future would be reasonably expected to adversely affect,
the
business, operations, properties, assets, or condition of either of
them.
| 2.11 |
Title
and Related Matters.
Except as provided herein or disclosed in the most recent Suzhou
Tongli
financial statements and the notes thereto, Suzhou Tongli and CWT
Excursion have good and marketable title to all of their properties,
inventory, interests in properties, technology, whether patented
or
unpatented (except properties, interests in properties, and assets
sold or
otherwise disposed of since such date in the ordinary course of business),
free and clear of all mortgages, liens, pledges, charges, or encumbrances,
except (i) statutory liens, mortgages, loans or claims not yet delinquent;
and (ii) such imperfections of title and easements as do not, and
will
not, materially detract from, or interfere with, the present or proposed
use of the properties subject thereto or affected thereby or otherwise
materially impair present business operations on such properties.
To the
best knowledge of CWT Excursion, neither Suzhou Tongli’s nor CWT
Excursion’s technology infringes on the copyright, patent, trade secret,
know-how, or other proprietary right of any other person or entity
and
comprises all such rights necessary to permit the operation of their
businesses as now being conducted or as
contemplated.
|
4
| 2.12 |
Litigation
and Proceedings.
There are no material actions, suits, or proceedings pending or,
to the
knowledge of CWT Excursion, threatened by or against Suzhou Tongli
or CWT
Excursion or adversely affecting either or them, at law or in equity,
before any court or other governmental agency or instrumentality,
domestic
or foreign, or before any arbitrator of any kind. Neither Suzhou
Tongli
not CWT Excursion has any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award,
rule, or
regulation of any court, arbitrator, or governmental agency or
instrumentality.
|
| 2.13 |
Material
Contract Defaults.
Suzhou Tongli and CWT Excursion are not in default in any material
respect
under the terms of any outstanding contract, agreement, lease, or
other
commitment which is material to the business, operations, properties,
assets, or financial condition of either of them, 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 in respect of which Suzhou
Tongli or
CWT Excursion has not taken adequate steps to prevent such a default
from
occurring.
|
| 2.14 |
No
Conflict With Other Instruments.
The execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any
term
or provision of, or constitute an event of default under, any material
indenture, mortgage, deed of trust or other material contract, agreement,
or instrument to which either Suzhou Tongli or CWT Excursion is a
party or
to which any of their properties or operations are
subject.
|
| 2.15 |
Government
Authorizations.
Suzhou Tongli and CWT Excursion have all licenses, franchises, permits,
and other governmental authorizations that are legally required to
enable
them to conduct their business in all material respects as conducted
on
the date of this Agreement. No authorization, approval, consent,
or order
of, or registration, declaration, or filing with, any court or other
governmental body is required in connection with the execution and
delivery by CWT Excursion of this Agreement and the consummation
by CWT
Excursion of the transactions contemplated
hereby.
|
| 2.16 |
Compliance
With Laws and Regulations.
Suzhou Tongli and CWT Excursion have complied with all applicable
statutes
and regulations of any governmental entity or agency thereof having
jurisdiction over them, except to the extent that noncompliance would
not
materially and adversely affect the business, operations, properties,
assets, or condition of either of them, or except to the extent that
noncompliance would not result in the occurrence of any material
liability
for Suzhou Tongli or CWT Excursion. To the best knowledge of CWT
Excursion, the consummation of this transaction will comply with
all
applicable statutes and regulations, subject to the preparation and
filing
of any forms required by state and federal U.S. securities laws,
and the
filing of any applications or approvals with governmental entities
of the
People’s Republic of China.
|
| 2.17 |
Subsidiaries.
CWT Excursion beneficially owns 51% of the equity interest of Suzhou
Tongli (International) Excursion Development Limited, and has no
other
subsidiaries.
|
5
Section 3. Representations
and Warranties of CWTD and Rainbow Wish.
CWTD and Rainbow Wish, jointly and severally, hereby represent and warrant
to
Xxxxx, as follows:
| 3.1 |
Organization.
CWTD and Rainbow Wish are, and will be on the Closing Date, corporations
duly organized, validly existing, and in good standing under the
laws of
the State of Nevada and the British Virgin Islands, respectively,
and have
the corporate power and are and will be duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of their
properties and assets and to carry on their business in all material
respects as it is now being conducted, and there are no other
jurisdictions in which they are not so qualified in which the character
and location of the assets owned by them or the nature of the material
business transacted by them requires qualification, except where
failure
to do so would not have a material adverse effect on their business,
operations, properties, assets or condition of CWTD and Rainbow Wish,
respectively. The execution and delivery of this Agreement does not,
and
the consummation of the transactions contemplated by this Agreement
in
accordance with the terms hereof will not, violate any provision
of CWTD’s
or Rainbow Wish’s organizational documents, or other material agreement to
which they are a party or by which they are
bound.
|
| 3.2 |
Approval
of Agreement.
CWTD and Rainbow Wish have full power, authority, and legal right
and have
taken, or will take, all action required by law, their organizational
documents, or otherwise to execute and deliver this Agreement and
to
consummate the transactions herein contemplated. The board of directors
of
CWTD and Rainbow Wish have authorized and approved the execution,
delivery, and performance of this Agreement and the transactions
contemplated hereby, subject to compliance with all laws existing
under
the Peoples’ Republic of China.
|
| 3.3 |
Capitalization.
There were 34,065,923 issued and outstanding shares of common stock
of
CWTD as of June 30, 2006. All of the issued and outstanding common
stock
is validly issued, fully paid, and nonassessable and not issued in
violation of any rights of any other person.
|
| 3.4 |
Financial
Statements.
(a) CWTD has previously delivered to Xxxxx copies of its financial
statements and statements of account for the year ended December
31, 2005,
together with interim financial statements for the periods ended
March 31,
2006 and June 30, 2006, which have
been prepared in accordance with U.S. generally accepted accounting
principles consistently applied, including the notes thereto which
contain
all adjustments necessary to present fairly the results of operations
and
financial position for the periods indicated and as of the dates
indicated.
|
Section
4. Further
Agreements.
| 4.1 |
Further
Assurances.
Each party hereby agrees that it shall take or cause to be taken
such
other actions as may reasonably be required in order to consummate
the
transactions contemplated by this
Agreement.
|
| 4.2 |
Governmental
Approvals.
Each party hereby agrees that it shall take all steps reasonably
necessary
to obtain the written consent or approval of each and every other
governmental agency, if any, whose consent or approval shall be required
in order to permit the consummation of the transactions contemplated
by this Agreement.
|
| 4.4 |
Grant
of Option.
Xxxxx hereby grants Rainbow Wish the option to purchase an additional
35%
of the
capital stock of CWT Excursion within twelve months from the date
hereof,
at a price that will be
agreed by both parties at the time of exercise of said option in
a
separate agreement.
|
6
Section 5. Certain
Conditions.
| 5.1 |
Conditions
to Closing.
The obligations of the parties to consummate the exchange of shares
and
the other transactions contemplated by this Agreement shall be subject
to
the following conditions.
|
| (a) |
Representations
and Warranties.
The representations and warranties of the parties shall be true and
complete in all material respects when made, and shall be true and
complete on and as of the Closing.
|
| (b) |
Board
of Directors' Approvals.
The Board of Directors of the parties, as required, shall have approved
the transactions contemplated by this
Agreement.
|
| (c) |
No
Injunction.
There shall not be in effect any order or injunction of any court
of
competent jurisdiction
prohibiting the exchange of the shares.
|
Section 6. Indemnification.
| (a) |
Indemnification
by CWT Excursion and Xxxxx.
CWT Excursion and Xxxxx, jointly and severally, will indemnify, defend,
protect and hold harmless CWTD and Rainbow Wish and their officers,
directors, employees, stockholders, agents, representatives and
affiliates, from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments costs and expenses
(including specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) incurred by any of such indemnified
persons as a result of or arising from (i) any breach of the
representations and warranties of CWT Excursion and Xxxxx set forth
herein, or (ii) any breach or nonfulfillment of any covenant or agreement
on the part of CWT Excursion and Xxxxx under this
Agreement.
|
| (b) |
Indemnification
by CWTD and Rainbow Wish.
CWTD and Rainbow Wish, jointly and severally, will indemnify, defend,
protect and hold harmless CWT Excursion and Xxxxx, and their officers,
directors, employees, stockholders, agents, representatives and
affiliates, from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments costs and expenses
(including specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) incurred by any of such indemnified
persons as a result of or arising from (i) any breach of the
representations and warranties of CWTD and Rainbow Wish set forth
herein,
or (ii) any breach or nonfulfillment of any covenant or agreement
on the
part of CWTD and Rainbow Wish under this Agreement.
|
Section 6. Miscellaneous.
| 6.1 |
Termination.
This Agreement may be terminated at any time prior to Closing by
any party
if Closing has not occurred on or prior to September 30, 2006. In
the
event of any termination of this Agreement as provided above, this
Agreement shall forthwith become void and there shall be no liability
on
the part of any party to any other
party.
|
| 6.2 |
Survival.
The representations, warranties and agreements in this Agreement
shall
survive the Closing.
|
7
| 6.3 |
Expenses.
Each party will pay its own expenses regardless of whether the exchange
of
shares hereunder
is consummated.
|
| 6.4 |
Amendments.
This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed
by
the parties.
|
| 6.5 |
Notices.
Any notices and other communications hereunder shall be in writing
and
shall be deemed given
if delivered personally or mailed by registered or certified mail
(return
receipt requested) to the
parties at the following addresses (or at such other address for
a party
as shall be specified by like
notice):
|
| (a) |
If
to CWTD:
|
China
World Trade Corporation
000 Xxxx Xxxx Xxxx, Xxxxxx
Guangzhou, People’s Republic of
China
| (b) |
If
to Xxxxx:
|
Chi
Xxxx
Xxxxx
Chairman
China
World Trade Corporation
000
Xxxx
Xxxx Xxxx, Xxxxxx
Guangzhou,
People’s Republic of China
| (c) |
If
to CWT Excursion:
|
CWT
International Excursion Investment Limited
Unit
A,
5th Floor, Goldlion Holdings Centre
13-15
Xxxx Xxxx Circuit, Siu Xxx Xxxx
Shatin,
N.T.
Hong
Kong
| (d) |
If
to Rainbow Wish:
|
Xxxx
X,
0xx Xxxxx, Xxxxxxxx Xxxxxxxx Xxxxxx
13-15
Xxxx Xxxx Circuit, Siu Xxx Xxxx
Shatin,
N.T.
Hong
Kong
| 6.6 |
Other.
This Agreement (i) constitutes the entire agreement and supersedes
all
other prior agreements
and understandings, both written and oral, among the parties, or
any of
them, with respect
to the subject matter hereof; (ii) is not intended to confer upon
any
other person any rights or
remedies hereunder; (iii) shall not be assigned by operation of law
or
otherwise; (iv) shall be governed
in all respects, including validity, interpretation and effect, by
the
laws of the State of Nevada,
without giving effect to the principles of conflict of laws thereof.
This
Agreement may be executed
in two or more counterparts which together shall constitute a single
agreement. The headings
contained in this Agreement are for reference purposes only and shall
not
effect in any way
the meaning or interpretation of this Agreement.
|
| 6.7 |
Currency.
All dollar amounts in this Agreement are expressed in U.S.
dollars.
|
8
IN
WITNESS
WHEREOF, the parties have caused this Agreement to be executed as of the
date
first above written by their respective officers thereunto duly
authorized.
CHINA
WORLD TRADE CORPORATION
By
/s/
Chi Xxxx Xxxx
Chi
Xxxx Xxxx
Chief
Executive Officer
RAINBOW
WISH LIMITED
By
/s/
Chi Xxxx Xxxx
Chi Xxxx Xxxx
China Chance Enterprises LimitedDirector
CWT INTERNATIONAL EXCURSION INVESTMENT LTD.
By
/s/
Man Ha
Name:
Man
Ha
Title:
Chief
Financial Officer
CHI XXXX XXXXX
/s/
Chi Xxxx Xxxxx
(In
His
Individual Capacity)
9
