SHARE EXCHANGE AGREEMENT
Exhibit
2.1
This
SHARE EXCHANGE AGREEMENT (this “Agreement”),
dated
as of May 14, 2007, is by and among INTRA-ASIA ENTERTAINMENT CORPORATION,
a
Nevada corporation (the “Parent”),
CABOWISE INTERNATIONAL LTD., a British Virgin Islands company (the “Company”),
the
Stockholders of the Company signatory hereto (the “Stockholders”),
Weicheng International Inc. (“Weicheng”)
and
Xxxxxx Growth Ltd. (“Xxxxxx,”
and
together with Weicheng, the “Selling
Stockholders”
and
the
Selling Stockholders together with the Parent, the “Selling
Parties”).
Each
of the parties to this Agreement is individually referred to herein as
a
“Party”
and
collectively, as the “Parties.”
BACKGROUND
The
Company has 50,000 shares of capital stock (the “Company
Stock”)
outstanding, all of which are all held by the Stockholders. Each of the
Stockholders is the record and beneficial owner of the number of shares
of
Company Stock set forth opposite such Stockholder’s name on Exhibit A. Each of
the Stockholders has agreed to transfer all of his, her or its (hereinafter
“its”)
shares
of Company Stock in exchange for a number of newly issued shares of Common
Stock, $0.001 par value, of the Parent (the “Parent
Stock”)
that
will, in the aggregate, constitute approximately 54.61% of the issued and
outstanding capital stock of the Parent on a fully-diluted basis as of
and
immediately after the Closing, and before giving effect to the Financing
(as
defined in Section 7.11 hereof). The number of shares of the Parent Stock
to be
received by each Stockholder shall be as listed opposite such Stockholder’s name
on Exhibit A to this Agreement. The aggregate number of shares of The Parent
stock that will be reflected on Exhibit A is referred to herein as the
“Shares”.
The
Parent has the following subsidiaries, Intra-Asia Entertainment Corporation,
a
Delaware corporation (“Intra-Asia
Delaware”),
Intra-Asia Entertainment (China) Limited, a Hong Kong Company (“Intra-Asia
HK”),
Intra-Asia Entertainment (Asia-Pacific) Limited, a Samoan Company (“Intra-Asia
Pacific”),
and
ORIENTAL Intra-Asia Entertainment (China) Limited, a Chinese company
(“Oriental
Intra Asia”,
and
collectively with Intra-Asia Delaware, Intra Asia HK, Intra-Asia
Pacific,“the
Intra-Asia Subsidiaries”
and
individually an“Intra-Asia
Subsidiary”,
and
together with the Parent, the “Intra-Asia
Companies”,
and
individually, an“Intra-Asia
Company”).
The
Company is the holder of an option (the “Option”)
to
acquire a 85 percent (85%) interest (the “Interest”)
in
Beijing PKU Chinafront Technology Co., Ltd., a company organized under
the laws
of the People’s Republic of China (“PKU”).
The
Option shall be assigned to one of the Intra Asia-Companies prior to Closing,
and at or prior to the Closing, such Intra-Asia Company shall acquire the
Interest.
The
exchange of Company Stock for the Parent Stock is intended to constitute
a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986 (the “Code”),
as
amended or such other tax free reorganization exemptions that may be available
under the Code.
The
Board
of Directors of the Parent and the Company have determined that it is desirable
to effect this plan of reorganization and share exchange.
AGREEMENT
NOW
THEREFORE, the parties agree as follows:
ARTICLE
I
Exchange
of Shares
SECTION
1.01. Exchange
by Stockholders.
At the
Closing (as defined in Section 1.02), each of the Stockholders shall sell,
transfer, convey, assign and deliver to the Parent its Company Stock free
and
clear of all Liens (as defined below) in exchange for the Parent Stock
listed on
Exhibit A opposite such Stockholder’s name.
SECTION
1.02. Closing.
The
closing (the “Closing”)
of the
transactions contemplated hereby (the “Transactions”)
shall
take place at the offices of Xxxxxx Xxxx Xxxxx Raysman & Xxxxxxx LLP in
Washington, DC commencing at 9:00 a.m. local time on the second business
day
following the satisfaction or waiver of all conditions to the obligations
of the
parties to consummate the Transactions contemplated hereby (other than
conditions with respect to actions the respective parties will take at
the
Closing itself), or such other date and time as the parties may mutually
determine (the “Closing
Date”).
ARTICLE
II
Representations
and Warranties of the Stockholders
Each
of
the Stockholders hereby severally (and not jointly) represents and warrants
to
the Parent with respect to itself, as follows:
SECTION
2.01. Good
Title; Validity of Option; Organization.
The
Stockholder is the record and beneficial owner, and has good title to its
Company Stock, with the right and authority to sell and deliver such Company
Stock. Upon delivery of any certificate or certificates duly assigned,
representing the same as herein contemplated and/or upon registering of
the
Parent as the new owner of such Company Stock in the share register of
the
Company, the Parent will receive good title to such Company Stock, free
and
clear of all liens, security interests, pledges, equities and claims of
any
kind, voting trusts, stockholder agreements and other encumbrances
(collectively, “Liens”).
The
Company is the record and beneficial owner, and has good title to, the
Option,
with right and authority to exercise the Option and acquire the Interest.
No
consents of any person is required for the Company to validly assign all
of its
right, title and interest in the Option to any Intra-Asia Company. Upon
the
exercise of the Option in accordance with the terms thereof, and pursuant
to the
assignment agreement to be entered into by the Company and an Intra-Asia
Company, such Intra-Asia Company will receive good title to the Interest,
free
and clear of all Liens. Each Stockholder that is an entity is duly organized
and
validly existing in its jurisdiction of organization.
2
SECTION
2.02. Power
and Authority.
Each
Stockholder has the legal power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. All acts required to
be
taken by the Stockholder to enter into this Agreement and the Company and
to
carry out the Transactions have been properly taken. This Agreement constitutes
a legal, valid and binding obligation of the Stockholder, enforceable against
such Stockholder in accordance with the terms hereof.
SECTION
2.03. No
Conflicts.
The
execution and delivery of this Agreement by the Stockholder and the performance
by the Stockholder of its obligations hereunder in accordance with the
terms
hereof: (i) will not require the consent of any third party or any federal,
state, local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (“Governmental
Entity”)
under
any statutes, laws, ordinances, rules, regulations, orders, writs, injunctions,
judgments, or decrees (collectively, “Laws”);
(ii)
will not violate any Laws applicable to such Stockholder and (iii) will
not
violate or breach any contractual obligation to which such Stockholder
is a
party.
SECTION
2.04. No
Finder’s Fee.
The
Stockholder has not created any obligation for any finder’s, investment banker’s
or broker’s fee in connection with the Transactions.
SECTION
2.05. Purchase
Entirely for Own Account.
The
Parent Stock proposed to be acquired by the Stockholder hereunder will
be
acquired for investment for its own account, and not with a view to the
resale
or distribution of any part thereof, and the Stockholder has no present
intention of selling or otherwise distributing the Parent Stock, except
in
compliance with applicable securities laws.
SECTION
2.06. Available
Information.
The
Stockholder has such knowledge and experience in financial and business
matters
that it is capable of evaluating the merits and risks of investment in
the
Parent.
SECTION
2.07. Non-Registration.
The
Stockholder understands that the Parent Stock has not been registered under
the
Securities Act of 1933, as amended (the “Securities
Act”)
and,
if issued in accordance with the provisions of this Agreement, will be
issued by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature
of
the investment intent and the accuracy of the Stockholder’s representations as
expressed herein.
SECTION
2.08. Restricted
Securities.
The
Stockholder understands that the Parent Stock is characterized as “restricted
securities” under the Securities Act inasmuch as this Agreement contemplates
that, if acquired by the Stockholder pursuant hereto, the Parent Stock
would be
acquired in a transaction not involving a public offering. The Stockholder
further acknowledges that if the Parent Stock is issued to the Stockholder
in
accordance with the provisions of this Agreement, such Parent Stock may
not be
resold without registration under the Securities Act or the existence of
an
exemption therefrom. The Stockholder represents that it is familiar with
Rule
144 promulgated under the Securities Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities
Act.
3
SECTION
2.09. Legends.
It is
understood that the Parent Stock will bear the following legend or one
that is
substantially similar to the following legend:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) OR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS
FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO THE COMPANY
AN
OPINION OF COUNSEL (WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY)
CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION. THESE SECURITIES MAY BE
PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES
TO THE
EXTENT PERMITTED BY APPLICABLE FEDERAL AND STATE SECURITIES
LAWS.
(a) Any
legend required by the “blue sky” laws of any state to the extent such laws are
applicable to the securities represented by the certificate so
legended.
SECTION
2.10. Accredited
Investor.
The
Stockholder is an “accredited investor” within the meaning of Rule 501
under the Securities Act and was not organized for the specific purpose
of
acquiring the Parent Stock.
ARTICLE
III
Representations
and Warranties of the Company
In
order
to induce the Parent and the Selling Stockholders to enter into this Agreement
and to consummate the transactions contemplated hereby, as of the date
hereof
and as of the Closing Date, the Company hereby represent and warrant to
the
Parent that the statements contained in this Article
III
are true
and correct, subject to those exceptions set forth in the disclosure schedules
attached hereto and delivered to the Parent on the date hereof (the
“Company
Disclosure Schedule”).
The
Company Disclosure Schedule with respect to this Article III will be arranged
in
paragraphs corresponding to the numbered and lettered paragraphs contained
in
this Article III. Any matter disclosed in a numbered and lettered section
of the
Company Disclosure Schedule shall be deemed to be disclosed in other locations
throughout the Company Disclosure Schedule to the extent such disclosure
is
reasonably apparent:
SECTION
3.01. Organization,
Standing and Power.
Each of
the Company, PKU and its and PKU’s subsidiaries (for purposes of this Agreement,
the Company’s subsidiaries, PKU and PKU’s subsidiaries are referred to herein
collectively as the “Company
Subsidiaries”)
is
duly organized, validly existing and in good standing under the laws of
the
jurisdiction in which it is organized and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it
to own,
lease or otherwise hold its properties and assets and to conduct its businesses
as presently conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, has not had and would not reasonably be expected to have a material
adverse effect on the Company or any Company Subsidiaries, a material adverse
effect on the ability of the Company to perform its obligations under this
Agreement or on the ability of the Company to consummate the Transactions
(a
“Company
Material Adverse Effect”).
The
Company and each Company Subsidiary is duly qualified to do business in
each
jurisdiction where the nature of its business or its ownership or leasing
of its
properties make such qualification necessary except where the failure to
so
qualify would not reasonably be expected to have a Company Material Adverse
Effect. The Company has delivered to the Parent true and complete copies
of the
memorandum and articles of association of the Company and such other constituent
instruments of the Company as may exist, each as amended to the date of
this
Agreement (as so amended, the “Company
Constituent Instruments”),
and
the comparable charter, organizational documents and other constituent
instruments of each Company Subsidiary, in each case as amended through
the date
of this Agreement.
4
SECTION
3.02. Company
Subsidiaries; Equity Interests.
(a) Section
3.02 of the Company Disclosure Schedule
lists
each Company Subsidiary and its jurisdiction of organization. Except as
specified in Section
3.02 of the Company Disclosure Schedule
or as
stated below in this Section 3.02(a), all the outstanding shares of capital
stock or equity investments of each Company Subsidiary have been validly
issued
and are fully paid and nonassessable and are as of the date of this Agreement
owned by the Company, by another Company Subsidiary or by the Company and
another Company Subsidiary, free and clear of all Liens.
(b) The
Company is the record and beneficial owner of the Option. The Option can
be
assigned to an Intra-Asia Company without the consent of any person, and
upon
exercise of the Option, such Intra-Asia Company will be the record and
beneficial owner of the Interest and the Interest will be validly issued,
fully
paid and nonassessable.
(c) Except
for its interests in the Company Subsidiaries, the Company does not as
of the
date of this Agreement own, directly or indirectly, any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any person.
SECTION
3.03. Capital
Structure.
The
authorized capital stock of the Company consists of 50,000 ordinary shares,
$1.00 par value, of which 50,000 shares are issued and outstanding. Except
as
set forth above, no shares of capital stock or other voting securities
of the
Company are issued, reserved for issuance or outstanding. Except as specified
in
Section
3.03 of the Company Disclosure Schedule,
the
Company is the sole record and beneficial owner of all of the issued and
outstanding capital stock of each Company Subsidiary. All outstanding shares
of
the capital stock of the Company and each Company Subsidiary are duly
authorized, validly issued, fully paid and nonassessable and not subject
to or
issued in violation of any purchase option, call option, right of first
refusal,
preemptive right, subscription right or any similar right under any provision
of
the applicable corporate laws of the British Virgin Islands, the Company
Constituent Instruments or any Contract (as defined in Section 3.05) to
which
the Company is a party or otherwise bound. Except as set forth in this
Section
3.03 and in Section
3.03 of the Company Disclosure Schedule,
there
are not any bonds, debentures, notes or other indebtedness of Company or
any
Company Subsidiary having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which
holders of Company Stock or the common stock of any Company Subsidiary
may vote
(“Voting
Company Debt”).
Except as set forth above, as of the date of this Agreement, there are
not any
options, warrants, rights, convertible or exchangeable securities, “phantom”
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which
the
Company or any Company Subsidiary is a party or by which any of them is
bound
(i) obligating the Company or any Company Subsidiary to issue, deliver
or sell,
or cause to be issued, delivered or sold, additional shares of capital
stock or
other equity interests in, or any security convertible or exercisable for
or
exchangeable into any capital stock of or other equity interest in, the
Company
or any Company Subsidiary or any Voting Company Debt, (ii) obligating the
Company or any Company Subsidiary to issue, grant, extend or enter into
any such
option, warrant, call, right, security, commitment, Contract, arrangement
or
undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of the capital stock of the Company or of any Company
Subsidiary. Except as set forth in Section
3.03 of the Company Disclosure Schedule,
as of
the date of this Agreement, there are not any outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any
shares
of capital stock of the Parent.
5
SECTION
3.04. Authority;
Execution and Delivery; Enforceability.
The
Company has all requisite corporate power and authority to execute and
deliver
this Agreement and to consummate the Transactions. The execution and delivery
by
the Company of this Agreement and the consummation by the Company of the
Transactions have been duly authorized and approved by the Board of Directors
of
the Company and no other corporate proceedings on the part of the Company
are
necessary to authorize this Agreement and the Transactions. When executed
and
delivered, this Agreement will be enforceable against the Company in accordance
with its terms.
SECTION
3.05. No
Conflicts; Consents.
(a) Except
as
set forth in Section
3.05(a) of the Company Disclosure Schedule,
the
execution and delivery by the Company of this Agreement does not, and the
consummation of the Transactions and compliance with the terms hereof and
thereof will not, conflict with, or result in any violation of or default
(with
or without notice or lapse of time, or both) under, or give rise to a right
of
termination, cancellation or acceleration of any obligation or to loss
of a
material benefit under, or result in the creation of any Lien upon any
of the
properties or assets of the Company or any Company Subsidiary under, any
provision of (i) the Company Constituent Instruments or the comparable
charter
or organizational documents of any Company Subsidiary, (ii) any material
contract, lease, license, indenture, note, bond, agreement, permit, concession,
franchise or other instrument (a “Contract”)
to
which the Company or any Company Subsidiary is a party or by which any
of their
respective properties or assets is bound or (iii) subject to the filings
and
other matters referred to in Section 3.05(b), any material judgment, order
or
decree (“Judgment”)
or
material Law applicable to the Company or any Company Subsidiary or their
respective properties or assets, other than, in the case of clauses (ii)
and
(iii) above, any such items that, individually or in the aggregate, have
not had
and would not reasonably be expected to have a Company Material Adverse
Effect.
6
(b) Except
as
set forth in Section
3.05(b) of the Company Disclosure Schedule and
except for required filings with the Securities and Exchange Commission
(the
“SEC”)
and
applicable “blue sky” or state securities commissions, no
material consent, approval, license, permit, order or authorization
(“Consent”)
of, or
registration, declaration or filing with, or permit from, any Governmental
Entity is required to be obtained or made by or with respect to the Company
or
any Company Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the
Transactions.
SECTION
3.06. Taxes.
(a) Each
of
the Company and each Company Subsidiary has timely filed, or has caused
to be
timely filed on its behalf, all Tax Returns required to be filed by it,
and all
such Tax Returns are true, complete and accurate, except to the extent
any
failure to file or any inaccuracies in any filed Tax Returns, individually
or in
the aggregate, have not had and would not reasonably be expected to have
a
Company Material Adverse Effect. All Taxes shown to be due on such Tax
Returns,
or otherwise owed, have been timely paid, except to the extent that any
failure
to pay, individually or in the aggregate, has not had and would not reasonably
be expected to have a Company Material Adverse Effect. There are no unpaid
taxes
in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such
claim.
(b) The
Company Financial Statements (as defined in Section 3.15) reflect an adequate
reserve for all Taxes payable by the Company and the Company Subsidiaries
(in
addition to any reserve for deferred Taxes to reflect timing differences
between
book and Tax items) for all Taxable periods and portions thereof through
the
date of such financial statements. No deficiency with respect to any Taxes
has
been proposed, asserted or assessed against the Company or any Company
Subsidiary, and no requests for waivers of the time to assess any such
Taxes are
pending, except to the extent any such deficiency or request for waiver,
individually or in the aggregate, has not had and would not reasonably
be
expected to have a Company Material Adverse Effect.
(c) For
purposes of this Agreement:
“Taxes”
includes all forms of taxation, whenever created or imposed, and whether
of the
United States or elsewhere, and whether imposed by a local, municipal,
governmental, state, foreign, federal or other Governmental Entity, or
in
connection with any agreement with respect to Taxes, including all interest,
penalties and additions imposed with respect to such amounts.
“Tax
Return”
means
all federal, state, local, provincial and foreign Tax returns, declarations,
statements, reports, schedules, forms and information returns and any amended
Tax return relating to Taxes.
7
SECTION
3.07. Benefit
Plans.
(a) Except
as
set forth in Section
3.07 of the Company Disclosure Schedule,
neither
the Company nor any Company Subsidiary has or maintains any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of the Company or any Company Subsidiary
(collectively, “Company
Benefit Plans”).
Except as set forth in Section
3.07 of the Company Disclosure Schedule,
as of
the date of this Agreement there are not any severance or termination agreements
or arrangements between the Company or any Company Subsidiary and any current
or
former employee, officer or director of the Company or any Company Subsidiary,
nor does the Company or any Company Subsidiary have any general severance
plan
or policy.
(b) Since
December 31, 2006, there has not been any adoption or amendment in any
material
respect by the Company or any Company Subsidiary of any Company Benefit
Plan.
SECTION
3.08. Litigation.
There
is no action, suit, inquiry, notice of violation, proceeding (including
any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting the Company, any Company Subsidiary or
any of
their respective properties before or by any court, arbitrator, governmental
or
administrative agency, regulatory authority (federal, state, county, local
or
foreign), stock market, stock exchange or trading facility (“Action”)
which
(i) adversely affects or challenges the legality, validity or enforceability
of
any of this Agreement or the Shares or (ii) could, if there were an unfavorable
decision, individually or in the aggregate, have or reasonably be expected
to
result in a Company Material Adverse Effect. Neither the Company nor any
Company
Subsidiary, nor any director or officer thereof (in his or her capacity
as
such), is or has been the subject of any Action involving a claim or violation
of or liability under federal or state securities laws or a claim of breach
of
fiduciary duty.
SECTION
3.09. Compliance
with Applicable Laws.
The
Company and the Company Subsidiaries are in compliance with all applicable
Laws,
including those relating to occupational health and safety and the environment,
except for instances of noncompliance that, individually and in the aggregate,
have not had and would not reasonably be expected to have a Company Material
Adverse Effect. Except as set forth in Section
3.09 of the Company Disclosure Schedule,
the
Company has not received any written communication during the past two
years
from a Governmental Entity that alleges that the Company is not in compliance
in
any material respect with any applicable Law. This Section 3.09 does not
relate
to matters with respect to Taxes, which are the subject of Section
3.06.
SECTION
3.10. Brokers;
Schedule of Fees and Expenses.
No
broker, investment banker, financial advisor or other person is entitled
to any
broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the Transactions based upon arrangements made by or on
behalf of
the Company.
8
SECTION
3.11. Contracts.
Except
as disclosed in Section
3.11 of the Company Disclosure Schedule,
there
are no Contracts that are material to the business, properties, assets,
condition (financial or otherwise), results of operations or prospects
of the
Company and the Company Subsidiaries taken as a whole. Neither the Company
nor
any Company Subsidiary is in violation of or in default under (nor does
there
exist any condition which upon the passage of time or the giving of notice
would
cause such a violation of or default under) any Contract to which it is
a party
or by which it or any of its properties or assets is bound, except for
violations or defaults that would not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse
Effect.
SECTION
3.12. Title
to Properties.
Except
as set forth in Section
3.12 of the Company Disclosure Schedule,
the
Company and the Company Subsidiaries do not own any real property. Each
of the
Company and the Company Subsidiaries has sufficient title to, or valid
leasehold
interests in, all of its properties and assets used in the conduct of its
businesses. All such assets and properties, other than assets and properties
in
which the Company or any of the Company Subsidiaries has leasehold interests,
are free and clear of all Liens other than those set forth in Section
3.12 of the Company Disclosure Schedule
and
except for Liens that, in the aggregate, do not and will not materially
interfere with the ability of the Company and the Company Subsidiaries
to
conduct business as currently conducted.
SECTION
3.13. Intellectual
Property.
The
Company and the Company Subsidiaries own, or are validly licensed or otherwise
have the right to use, all patents, patent rights, trademarks, trademark
rights,
trade names, trade name rights, service marks, service xxxx rights, copyrights
and other proprietary intellectual property rights and computer programs
(collectively, “Intellectual
Property Rights”)
which
are material to the conduct of the business of the Company and the Company
Subsidiaries taken as a whole. Section
3.13 of the Company Disclosure Schedule
sets
forth a description of all Intellectual Property Rights which are material
to
the conduct of the business of the Company and the Company Subsidiaries
taken as
a whole. There are no claims pending or, to the knowledge of the Company,
threatened that the Company or any of the Company Subsidiaries is infringing
or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right. To the knowledge of the Company, no person
is
infringing the rights of the Company or any of the Company Subsidiaries
with
respect to any Intellectual Property Right.
SECTION
3.14. Labor
Matters.
There
are no collective bargaining or other labor union agreements to which the
Company or any of the Company Subsidiaries is a party or by which any of
them is
bound. No material labor dispute exists or, to the knowledge of the Company,
is
imminent with respect to any of the employees of the Company.
SECTION
3.15. Financial
Statements.
Prior
to the Closing the Company will deliver to the Parent its audited consolidated
financial statements for the fiscal years ended December 31, 2005 and 2006
(collectively, the “Company
Financial Statements”)
for
the Company and the Company Subsidiaries. Upon delivery, the Company Financial
Statements will have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and in respect of interim periods subject to year end adjustments.
The
Company Financial Statements will fairly present in all material respects
the
financial condition and operating results of the Company, as of the dates,
and
for the periods, indicated therein. The Company will not have any material
liabilities or obligations, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to
December 31, 2006, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in the Company Financial
Statements, which, in both cases, individually and in the aggregate would
not be
reasonably expected to result in a Company Material Adverse Effect.
9
SECTION
3.16. Insurance.
The
Company and the Company Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
are prudent and customary in the businesses in which the Company and The
Company
Subsidiaries are engaged and in the geographic areas where they engage
in such
businesses. The Company has no reason to believe that it will not be able
to
renew its and the Company Subsidiaries’ existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers
as may
be necessary to continue its business on terms consistent with market for
the
Company’s and such subsidiaries’ respective lines of business.
SECTION
3.17. Transactions
With Affiliates and Employees.
Except
as set forth in Section
3.17 of the Company Disclosure Schedule
and
Company Financial Statements, none of the officers or directors of the
Company
or any Company Subsidiary and, to the knowledge of the Company, none of
the
employees of the Company or any Company Subsidiary is presently a party
to any
transaction with the Company or any Company Subsidiary (other than for
services
as employees, officers and directors), including any contract, agreement
or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such
employee
has a substantial interest or is an officer, director, trustee or
partner.
SECTION
3.18. Internal
Accounting Controls.
The
Company and the Company Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions
are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles
and to
maintain asset accountability, (iii) access to assets is permitted only
in
accordance with management's general or specific authorization, and (iv)
the
recorded accountability for assets is compared with the existing assets
at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures
for
the Company and the Company Subsidiaries and designed such disclosure controls
and procedures to ensure that material information relating to the Company,
including the Company Subsidiaries, is made known to the officers by others
within those entities. The Company's officers have evaluated the effectiveness
of the Company's controls and procedures. Since December 31, 2006, there
have
been no significant changes in the Company’s internal controls or, to the
Company's knowledge, in other factors that could significantly affect the
Company's internal controls.
SECTION
3.19. Solvency.
Based
on the financial condition of the Company and the Company Subsidiaries
as of the
Closing Date (and assuming that the Closing shall have occurred), (i) the
Company's and the Company Subsidiaries’ fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of
the
Company's and the Company’s Subsidiaries’ existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company's
and
the Company’s Subsidiaries’ assets do not constitute unreasonably small capital
to carry on its business for the current fiscal year as now conducted and
as
proposed to be conducted including its capital needs taking into account
the
particular capital requirements of the business conducted by the Company
and the
Company Subsidiaries, and projected capital requirements and capital
availability thereof, and (iii) the current cash flow of the Company and
the
Company Subsidiaries, together with the proceeds the Company and the Company
Subsidiaries would receive, were it to liquidate all of its assets, after
taking
into account all anticipated uses of the cash, would be sufficient to pay
all
amounts on or in respect of its debt when such amounts are required to
be paid.
Neither the Company nor the Company Subsidiaries intends to incur debts
beyond
its ability to pay such debts as they mature (taking into account the timing
and
amounts of cash to be payable on or in respect of its debt).
10
SECTION
3.20. Application
of Takeover Protections.
The
Company and the Company Subsidiaries have taken all necessary action, if
any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company's or the Company’s
Subsidiaries’ charter documents or the laws of its state of incorporation that
is or could become applicable to the Stockholders as a result of the
Stockholders and the Company fulfilling their obligations or exercising
their
rights under this Agreement, including, without limitation, the issuance
of the
Shares and the Stockholders’ ownership of the Shares.
SECTION
3.21. No
Additional Agreements.
Neither
the Company nor any Company Subsidiary has any agreement or understanding
with
any Stockholder with respect to the transactions contemplated by this Agreement
other than as specified in this Agreement.
SECTION
3.22. Investment
Company.
Neither
the Company nor any Company Subsidiary is, and is not an affiliate of,
and
immediately following the Closing will not have become, an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended.
SECTION
3.23. Disclosure.
All
disclosure provided to the Stockholders regarding the Company, its business
and
the transactions contemplated hereby, furnished by or on behalf of the
Company
(including the Company’s representations and warranties set forth in this
Agreement) are true and correct and do not contain any untrue statement
of a
material fact or omit to state any material fact necessary in order to
make the
statements made therein, in light of the circumstances under which they
were
made, not misleading.
SECTION
3.24. Information
Supplied.
None of
the information supplied or to be supplied by the Company for inclusion
or
incorporation by reference in the notice that is required to be sent to
the
stockholders of the Parent pursuant to Rule 14f-1 (the “14f-1
Notice”)
promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”),
will,
at the date it is first mailed to the Parent’s stockholders, contain any untrue
statement of a material fact or omit to state any material fact required
to be
stated therein or necessary in order to make the statements therein, in
light of
the circumstances under which they are made, not misleading.
11
SECTION
3.25. Absence
of Certain Changes or Events.
Except
as disclosed in the Company Financial Statements or in Section
3.25 of the Company Disclosure Schedule,
from
December 31, 2006 to the date of this Agreement, the Company and the Company
Subsidiaries have conducted their business only in the ordinary course,
and
during such period there has not been:
(a) any
change in the assets, liabilities, financial condition or operating results
of
the Company or any Company Subsidiary, except changes in the ordinary course
of
business that have not caused, in the aggregate, a Company Material Adverse
Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance, that
would
have a Company Material Adverse Effect;
(c) any
waiver or compromise by the Company or any Company Subsidiary of a valuable
right or of a material debt owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment
of any
obligation by the Company or any Company Subsidiary, except in the ordinary
course of business and the satisfaction or discharge of which would not
have a
Company Material Adverse Effect;
(e) any
material change to a material Contract by which the Company or any Company
Subsidiary or any of its respective assets is bound or subject;
(f) any
mortgage, pledge, transfer of a security interest in, or lien, created
by the
Company or any Company Subsidiary, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable and
liens
that arise in the ordinary course of business and do not materially impair
the
Company’s or such Company Subsidiary’s ownership or use of such property or
assets;
(g) any
loans
or guarantees made by the Company or any Company Subsidiary to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made
in the
ordinary course of its business;
(h) any
alteration of the Company’s or any Company Subsidiary’s method of accounting or
the identity of its auditors;
(i) any
declaration or payment of dividend or distribution of cash or other property
to
the Stockholders or any purchase, redemption or agreements to purchase
or redeem
any shares of Company Stock;
(j) any
issuance of equity securities to any officer, director or affiliate, except
pursuant to existing Company stock option plans; or
(k) any
arrangement or commitment by the Company or any Company Subsidiary to do
any of
the things described in this Section 3.25.
12
SECTION
3.26. No
Undisclosed Events, Liabilities, Developments or Circumstances.
No
event, liability, development or circumstance has occurred or exists, or
is
contemplated to occur with respect to the Company, the Company Subsidiaries
or
their respective business, properties, prospects, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 (or
any form
substituting therefor or the equivalent thereof) filed with the SEC relating
to
an issuance and sale by the Company of its Common Stock and which has not
been
publicly announced or will not be publicly announced in the current report
on
Form 8-K that will be filed by the Parent at the Closing.
SECTION
3.27. Foreign
Corrupt Practices.
Neither
the Company, nor any Company Subsidiaries, nor, to the Company’s knowledge, any
director, officer, agent, employee or other person acting on behalf of
the
Company or any Company Subsidiary has, in the course of its actions for,
or on
behalf of, the Company or any Company Subsidiary (i) used any corporate
funds
for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of
the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to
any foreign or domestic government official or employee.
ARTICLE
IV
Representations
and Warranties of the Parent and the Selling Stockholders
In
order
to induce the Company to enter into this Agreement and to consummate the
transactions contemplated hereby, as of the date hereof and as of the Closing
Date, the Parent and the Selling Stockholders jointly and severally hereby
represents and warrant to each of the Stockholders and the Company that
the
statements contained in this Article IV are true and correct subject to
those
exceptions set forth in the disclosure schedules attached hereto and delivered
to the Company on the date hereof (the “Parent
Disclosure Schedule”).
The
Parent Disclosure Schedule with respect to this Article IV will be arranged
in
paragraphs corresponding to the numbered and lettered paragraphs contained
in
this Article IV. Any matter disclosed in a numbered and lettered section
of the
Parent Disclosure Schedule shall be deemed to be disclosed in other locations
throughout the Parent Disclosure Schedule to the extent such disclosure
is
reasonably apparent:
SECTION
4.01. Organization,
Standing and Power.
(i) The
Parent is duly organized, validly existing and in good standing under the
laws
of the State of Nevada, (ii) Intra-Asia Delaware is duly organized, validly
existing and in good standing under the laws of the State of Delaware,
(iii)
Intra-Asia HK is duly organized, validly existing and in good standing
under the
laws of Hong Kong, (iv) Intra-Asia Pacific is duly organized, validly existing
and in good standing under the laws of Somoa, (iv) Oriental Intra-Asia
is duly
organized, validly existing and in good standing under the laws of Beijing,
China, (v) Xxxxxx is duly organized, validly existing and in good standing
under
the laws of the British Virgin Islands, and (vi) Weicheng is duly organized,
validly existing and in good standing under the laws of California. Each
of
the Selling Parties and the Intra-Asia Subsidiaries
has full
corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it
to own,
lease or otherwise hold its properties and assets and to conduct its businesses
as presently conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, has not had and would not reasonably be expected to have a material
adverse effect on such company, a material adverse effect on the ability
of such
company to perform its obligations under this Agreement or on the ability
of
such company or the Parent to consummate the Transactions (a “Parent
Material Adverse Effect”).
Each
of the Selling Parties and the Intra-Asia Subsidiaries is duly qualified
to do
business in each jurisdiction where the nature of its business or their
ownership or leasing of its properties make such qualification necessary
and
where the failure to so qualify would reasonably be expected to have a
Parent
Material Adverse Effect. Parent has delivered to the Company (i) true and
complete copies of the certificate or articles of incorporation of the
Parent,
as amended to the date of this Agreement (as so amended, the “Parent
Charter”),
and
the Bylaws of the Parent, as amended to the date of this Agreement (as
so
amended, the “Parent
Bylaws”),
and
(ii) the certificate or articles of incorporation and Bylaws of the Intra-Asia
Subsidiaries, as so amended, (the “Intra-Asia
Subsidiaries Organizational Documents”),
and
each of the Selling Stockholders has delivered to the Company true and
complete
copies of its certificate or articles of incorporation, as amended to the
date
of this Agreement (as so amended, the “Selling
Stockholder Charter”),
and
its Bylaws, as amended to the date of this Agreement (as so amended, the
“Selling
Stockholder Bylaws”).
13
SECTION
4.02. Subsidiaries;
Equity Interests.
Except
for the Intra-Asia Subsidiaries, and except as specified in Section
4.02 of the Parent Disclosure Schedule,
the
Parent does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity
interest
in any person, and except as set forth in Section
4.02 of the Parent Disclosure Schedule
none of
the Intra-Asia Subsidiaries own, directly or indirectly, any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any person.
SECTION
4.03. Capital
Structure.
The
authorized capital stock of the Parent consists of 150,000,000 shares of
the
Parent Common Stock, $0.001 par value per share, and 10,000,000 shares
of
preferred stock, $0.001 par value. As of the date hereof (i) 67,588,021
shares
of the Parent Common Stock are issued and outstanding, (ii) no shares of
preferred stock are outstanding and (iii) no shares of the Parent Common
Stock
or preferred stock are held by the Parent in its treasury. Section
4.03 of the Parent Disclosure Schedules
sets
forth the authorized capital stock of each Intra-Asia Subsidiaries as well
as
the issued and outstanding capital of each of the Intra-Asia Subsidiaries.
Except as set forth above, no shares of capital stock or other voting securities
of any Intra-Asia Company were issued, reserved for issuance or outstanding.
All
outstanding shares of the capital stock of each Intra-Asia Company are,
and all
such shares that may be issued prior to the date hereof will be when issued,
duly authorized, validly issued, fully paid and nonassessable and not subject
to
or issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under
any
provision of (i) as relating to the Parent, the General Corporation Law
of the
State of Nevada, the Parent Charter, the Parent Bylaws or any Contract
to which
the Parent is a party or otherwise bound, and (ii) as relating to each
Intra-Asia Subsidiary, such Intra-Asia Subsidiary Organizational Documents,
applicable law or any Contract to which such Intra-Asia Subsidiary is a
party or
otherwise bound. Except as disclosed in Section
4.03 of the Parent Disclosure Schedule,
there
are not any bonds, debentures, notes or other indebtedness of any Intra-Asia
Company having the right to vote (or convertible into, or exchangeable
for,
securities having the right to vote) on any matters on which holders of
capital
stock of such Intra-Asia Company may vote (“Voting
Debt”).
Except as set forth above or in Section
4.03 of the Parent Disclosure Schedule,
as of
the date of this Agreement, there are not any options, warrants, rights,
convertible or exchangeable securities, “phantom” stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which any Intra-Asia Company
is a
party or by which such Intra-Asia Company is bound (i) obligating such
Intra-Asia Company to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other equity interests in,
or any
security convertible or exercisable for or exchangeable into any capital
stock
of or other equity interest in, such Intra-Asia Company or any Voting Debt,
(ii)
obligating such Intra-Asia Company to issue, grant, extend or enter into
any
such option, warrant, call, right, security, commitment, Contract, arrangement
or undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of the capital stock of the such Intra-Asia Company.
As of
the date of this Agreement, except as disclosed in Section
4.03 of the Parent Disclosure Schedule,
there
are not any outstanding contractual obligations of any Intra-Asia Company
to
repurchase, redeem or otherwise acquire any shares of capital stock of
such
Intra-Asia Company. Except as set forth in Schedule
4.03 of the Parent Disclosure Schedule, no
Intra-Asia Company is a party to any agreement granting any securityholder
of
such Intra-Asia Company the right to cause the such Intra-Asia Company
to
register shares of the capital stock or other securities of the Parent
held by
such securityholder under the Securities Act. The stockholder list to be
provided at closing to the Company shall be a current shareholder list
generated
by its stock transfer agent, and such list shall accurately reflect all
of the
issued and outstanding shares of the Parent’s Common Stock.
14
SECTION
4.04. Authority;
Execution and Delivery; Enforceability.
The
execution and delivery by the Selling Parties of this Agreement and the
consummation by each of the Selling Parties and the Intra-Asia Subsidiaries
of
the Transactions have been duly authorized and approved by the Board of
Directors and the shareholders of the Parent, each Intra-Asia Subsidiary
and the
Selling Shareholders, as applicable, and no other corporate proceedings
on the
part of any of any of the Selling Parties and the Intra-Asia Subsidiaries
is
necessary to authorize this Agreement and the Transactions. This Agreement
constitutes a legal, valid and binding obligation of the Selling Parties,
enforceable against them in accordance with the terms hereof.
SECTION
4.05. No
Conflicts; Consents.
(a) Except
as
set forth in Section
4.05(a) of the Parent Disclosure Schedule,
the
execution and delivery by the Selling Parties of this Agreement, does not,
and
the consummation of the Transactions and compliance with the terms hereof
and
thereof will not, conflict with, or result in any violation of or default
(with
or without notice or lapse of time, or both) under, or give rise to a right
of
termination, cancellation or acceleration of any obligation or to loss
of a
material benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any person under, or result in the creation of
any
Lien upon any of the properties or assets of any of the Intra-Asia Companies
or
the Selling Stockholders under, any provision of (i) Parent Charter, Parent
Bylaws, Intra-Asia Subsidiaries Organizational Documents, or Selling
Stockholders Organizational Documents (ii) any material Contract to which
any of
the Intra-Asia Companies and/or the Selling Stockholders is a party or
by which
any of their properties or assets is bound or (iii) subject to the filings
and
other matters referred to in Section 4.05(b), any material Judgment or
material
Law applicable to any of the Intra-Asia Companies or the Selling Stockholders
or
their properties or assets, other than, in the case of clauses (ii) and
(iii)
above, any such items that, individually or in the aggregate, have not
had and
would not reasonably be expected to have a Parent Material Adverse
Effect.
15
(b) No
Consent of, or registration, declaration or filing with, or permit from,
any
Governmental Entity is required to be obtained or made by or with respect
to any
of the Intra-Asia Companies or Selling Stockholders in connection with
the
execution, delivery and performance of this Agreement or the consummation
of the
Transactions, other than the (A) filing with the SEC of a 14f-1 Notice
and (B)
filing with the SEC of reports under Sections 13 and 16 of the Exchange
Act, and
(C) filings under state “blue sky” laws, as may be required in connection with
this Agreement and the Transactions.
SECTION
4.06. SEC
Documents; Undisclosed Liabilities.
(a) The
Parent has filed all reports, schedules, forms, statements and other documents
required to be filed by The Parent with the SEC since December 31, 2003,
pursuant to Sections 13(a), 14 (a) and 15(d) of the Exchange Act (the
“Parent
SEC Documents”).
(b) As
of its
respective filing date, each Parent SEC Document complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to such Parent SEC Document,
and
did not contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary in order to make
the
statements therein, in light of the circumstances under which they were
made,
not misleading. Except to the extent that information contained in any
Parent
SEC Document has been revised or superseded by a later filed Parent SEC
Document, none of the Parent SEC Documents contains any untrue statement
of a
material fact or omits to state any material fact required to be stated
therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of The Parent included in the Parent SEC Documents
comply
as to form in all material respects with applicable accounting requirements
and
the published rules and regulations of the SEC with respect thereto, have
been
prepared in accordance with the U.S. generally accepted accounting principals
(“GAAP”)
(except, in the case of unaudited statements, as permitted by the rules
and
regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of The Parent and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods shown (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
16
(c) Except
as
set forth in the Filed Parent SEC Documents, the Parent has no liabilities
or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a balance sheet of the Parent or in
the
notes thereto. Section
4.06(c) of the Parent Disclosure Schedule,
sets
forth all financial and contractual obligations and liabilities (including
any
obligations to issue capital stock or other securities of the Parent) due
after
the date hereof. As of the date hereof the Parent has total liabilities
of less
than $10,000, all of which liabilities shall be paid off at or prior to
the
Closing and shall in no event remain liabilities of the Parent, the Company
or
the Stockholders following the Closing.
(d) Since
the
date of the latest audited financial statements included within the SEC
Reports,
except as specifically disclosed in the Filed Parent SEC Documents or in
Section
4.06(d) of the Parent Disclosure Schedule,
the
Parent has not changed its auditors and the Parent does not have pending
before
the SEC any request for confidential treatment of information.
SECTION
4.07. Information
Supplied.
None of
the information supplied or to be supplied by The Parent for inclusion
or
incorporation by reference in the 14f-1 Notice will, at the date it is
first
mailed to the Parent’s stockholders, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
SECTION
4.08. Absence
of Certain Changes or Events.
Except
as disclosed in the Filed Parent SEC Documents or in Section
4.08 of the Parent Disclosure Schedule,
from
the date of the most recent audited financial statements included in the
Filed
Parent SEC Documents to the date of this Agreement, each of the Intra-Asia
Companies has conducted its business only in the ordinary course, and during
such period there has not been:
(a) any
change in the assets, liabilities, financial condition or operating results
of
the Parent or any Intra-Asia Subsidiary from that reflected in the Parent
SEC
Documents, except changes in the ordinary course of business that have
not
caused, in the aggregate, a Parent Material Adverse Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance, that
would
have a Parent Material Adverse Effect;
(c) any
waiver or compromise by the Parent or any Intra-Asia Subsidiary of a valuable
right or of a material debt owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment
of any
obligation by the Parent or any Intra-Asia Subsidiary, except in the ordinary
course of business and the satisfaction or discharge of which would not
have a
Parent Material Adverse Effect;
(e) any
material change to a material Contract by which the Parent or any Intra-Asia
Subsidiary or any of their assets is bound or subject;
17
(f) any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder;
(g) any
resignation or termination of employment of any officer of the Parent or
any
Intra-Asia Subsidiary;
(h) any
mortgage, pledge, transfer of a security interest in, or lien, created
by the
Parent or any Intra-Asia Subsidiary, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable and
liens
that arise in the ordinary course of business and do not materially impair
the
Parent’s or any Intra-Asia Subsidiary’s ownership or use of such property or
assets;
(i) any
loans
or guarantees made by the Parent or any Intra-Asia Subsidiary to or for
the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made
in the
ordinary course of its business;
(j) any
declaration, setting aside or payment or other distribution in respect
of any of
the Parent’s or any Intra-Asia Subsidiary’s capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such stock
by the
Parent or any Intra-Asia Subsidiary;
(k) any
alteration of the Parent’s or any Intra-Asia Subsidiary’s method of accounting
or the identity of its auditors;
(l) any
issuance of equity securities to any officer, director or affiliate, except
pursuant to existing Parent stock option plans or existing stock option
plans of
any Intra-Asia Subsidiary; or
(m) any
arrangement or commitment by the Parent or any Intra-Asia Subsidiary to
do any
of the things described in this Section 4.08.
SECTION
4.09. Taxes.
(a) Each
Intra-Asia Company has timely filed, or has caused to be timely filed on
its
behalf, all Tax Returns required to be filed by it, and all such Tax Returns
are
true, complete and accurate, except to the extent any failure to file or
any
inaccuracies in any filed Tax Returns, individually or in the aggregate,
have
not had and would not reasonably be expected to have a Parent Material
Adverse
Effect. All Taxes shown to be due on such Tax Returns, or otherwise owed,
has
been timely paid, except to the extent that any failure to pay, individually
or
in the aggregate, has not had and would not reasonably be expected to have
a
Parent Material Adverse Effect.
(b) The
most
recent financial statements contained in the Filed Parent SEC Documents
reflect
an adequate reserve for all Taxes payable by each Intra-Asia Company (in
addition to any reserve for deferred Taxes to reflect timing differences
between
book and Tax items) for all Taxable periods and portions thereof through
the
date of such financial statements. No deficiency with respect to any Taxes
has
been proposed, asserted or assessed against any Intra-Asia Company, and
no
requests for waivers of the time to assess any such Taxes are pending,
except to
the extent any such deficiency or request for waiver, individually or in
the
aggregate, has not had and would not reasonably be expected to have a Parent
Material Adverse Effect.
18
(c) There
are
no Liens for Taxes (other than for current Taxes not yet due and payable)
on the
assets of any Intra-Asia Company. No Intra-Asia Company is bound by any
agreement with respect to Taxes.
SECTION
4.10. Absence
of Changes in Benefit Plans.
From
the date of the most recent audited financial statements included in the
Filed
Parent SEC Documents to the date of this Agreement, there has not been
any
adoption or amendment in any material respect by any Intra-Asia Company
of any
collective bargaining agreement or any bonus, pension, profit sharing,
deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of any Intra-Asia Company (collectively,
“Parent
Benefit Plans”).
As of
the date of this Agreement there are not any employment, consulting,
indemnification, severance or termination agreements or arrangements between
any
Intra-Asia Company and any current or former employee, officer or director
of
any Intra-Asia Company, nor does any Intra-Asia Company have any general
severance plan or policy.
SECTION
4.11. ERISA
Compliance; Excess Parachute Payments.
No
Intra-Asia Company has, and since their inception has never had, maintained,
or
contributed to any “employee pension benefit plans” (as defined in Section 3(2)
of ERISA), “employee welfare benefit plans” (as defined in Section 3(1) of
ERISA) or any other Parent Benefit Plan for the benefit of any current
or former
employees, consultants, officers or directors of The Parent.
SECTION
4.12. Litigation.
Except
as disclosed in the Filed Parent SEC Documents or in Section
4.12 of the Parent Disclosure Schedule,
there
is no Action which (i) adversely affects or challenges the legality, validity
or
enforceability of any of this Agreement or the Shares or (ii) could, if
there
were an unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Parent Material Adverse Effect. There
has
not been, and to the knowledge of the Parent, there is not pending any
investigation by the SEC involving the Parent or any current or former
director
or officer of the Parent (in his or her capacity as such). The SEC has
not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Parent under the Exchange Act or the
Securities Act. Neither the Parent nor any subsidiary, nor any director
or
officer thereof (in his or her capacity as such), is or has been the subject
of
any Action involving a claim or violation of or liability under federal
or state
securities laws or a claim of breach of fiduciary duty.
SECTION
4.13. Compliance
with Applicable Laws.
Except
as disclosed in the Filed Parent SEC Documents or in Section
4.13 of the Parent Disclosure Schedule,
each
Intra-Asia Company is in compliance with all applicable Laws, including
those
relating to occupational health and safety and the environment, except
for
instances of noncompliance that, individually and in the aggregate, have
not had
and would not reasonably be expected to have a Parent Material Adverse
Effect.
Except as set forth in the Filed Parent SEC Documents or in Section
4.13 of the Parent Disclosure Schedule,
no
Intra-Asia Company has received any written communication during the past
two
years from a Governmental Entity that alleges that such Company is not
in
compliance in any material respect with any applicable Law. The Parent
is in
compliance with all effective requirements of the Xxxxxxxx-Xxxxx Act of
2002, as
amended, and the rules and regulations thereunder, that are applicable
to it,
except where such noncompliance could not have or reasonably be expected
to
result in a Parent Material Adverse Effect. This Section 4.13 does not
relate to
matters with respect to Taxes, which are the subject of Section
4.09.
19
SECTION
4.14. Contracts.
Except
as disclosed in the Parent Filed SEC Documents, there are no Contracts
that are
material to the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of any of the Intra-Asia
Companies taken as a whole. No Intra-Asia Company is in violation of or
in
default under (nor does there exist any condition which upon the passage
of time
or the giving of notice would cause such a violation of or default under)
any
Contract to which it is a party or by which it or any of its properties
or
assets is bound, except for violations or defaults that would not, individually
or in the aggregate, reasonably be expected to result in a Parent Material
Adverse Effect.
SECTION
4.15. Title
to Properties.
Each
Intra-Asia Company has good title to, or valid leasehold interests in,
all of
its properties and assets used in the conduct of its businesses. All such
assets
and properties, other than assets and properties in which each Intra-Asia
Company has leasehold interests, are free and clear of all Liens other
than
those set forth in Section
4.15 of the Parent Disclosure Schedule,
and
except for Liens that, in the aggregate, do not and will not materially
interfere with the ability of such Intra-Asia Company to conduct business
as
currently conducted. Each Intra-Asia Company has complied in all material
respects with the terms of all material leases to which it is a party and
under
which it is in occupancy, and all such leases are in full force and effect.
Each
Intra-Asia Company enjoys peaceful and undisturbed possession under all
such
material leases.
SECTION
4.16. Intellectual
Property.
Each
Intra-Asia Company owns, or is validly licensed or otherwise has the right
to
use, all Intellectual Property Rights which are material to the conduct
of its
business taken as a whole. Section
4.16 of the Parent Disclosure Schedule,
sets
forth a description of all Intellectual Property Rights which are material
to
the conduct of the business of each Intra-Asia Company taken as a whole.
Except
as set forth in Section
4.16 of the Parent Disclosure Schedule,
no
claims are pending or, to the knowledge of each Intra-Asia Company, threatened
that the such Intra-Asia Company is infringing or otherwise adversely affecting
the rights of any person with regard to any Intellectual Property Right.
To the
knowledge of each Intra-Asia Company, no person is infringing the rights
of such
Intra-Asia Company with respect to any Intellectual Property Right.
SECTION
4.17. Labor
Matters.
There
are no collective bargaining or other labor union agreements to which any
Intra-Asia Company is a party or by which it is bound. No material labor
dispute
exists or, to the knowledge of each Intra-Asia Company, is imminent with
respect
to any of the employees of such Intra-Asia Company.
20
SECTION
4.18. Market
Makers.
The
Parent has at least two market makers for its common shares and such market
makers have obtained all permits and made all filings necessary in order
for
such market makers to continue as market makers of the Parent.
SECTION
4.19. Transactions
With Affiliates and Employees.
Except
as set forth in the Filed Parent SEC Documents and in Section
4.19 of the Parent Disclosure Schedule,
none of
the officers or directors of the Parent and, to the knowledge of the Parent,
none of the employees of the Parent is presently a party to any transaction
with
the Parent or any Intra-Asia Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental
of real
or personal property to or from, or otherwise requiring payments to or
from any
officer, director or such employee or, to the knowledge of the Parent,
any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
SECTION
4.20. Internal
Accounting Controls.
Each
Intra-Asia Company maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions
are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset
accountability, (iii) access to assets is permitted only in accordance
with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
The
Parent has established disclosure controls and procedures for each Intra-Asia
Company and designed such disclosure controls and procedures to ensure
that
material information relating to such Intra-Asia Company is made known
to the
officers by others within those entities. The Parent's officers have evaluated
the effectiveness of the controls and procedures. Since December 31, 2004,
there
have been no significant changes in the internal controls or, to the Parent's
knowledge, in other factors that could significantly affect the internal
controls.
SECTION
4.21. Solvency.
Based
on the financial condition of the each
Intra-Asia Company as
of the
closing date (and assuming that the closing shall have occurred), (i) each
Intra-Asia Company's fair saleable value of its assets exceeds the amount
that
will be required to be paid on or in respect of such company’s existing debts
and other liabilities (including known contingent liabilities) as they
mature,
(ii) each Intra-Asia Company’s assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into
account
the particular capital requirements of the business conducted by such company,
and projected capital requirements and capital availability thereof, and
(iii)
the current cash flow of each Intra-Asia Company, together with the proceeds
such company would receive, were it to liquidate all of its assets, after
taking
into account all anticipated uses of the cash, would be sufficient to pay
all
amounts on or in respect of its debt when such amounts are required to
be paid.
No Intra-Asia Company intends to incur debts beyond its ability to pay
such
debts as they mature (taking into account the timing and amounts of cash
to be
payable on or in respect of its debt).
SECTION
4.22. Application
of Takeover Protections.
The
Parent has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including
any
distribution under a rights agreement) or other similar anti-takeover provision
under the Parent's charter documents or the laws of its state of incorporation
that is or could become applicable to the Stockholders as a result of the
Stockholders and the Parent fulfilling their obligations or exercising
their
rights under this Agreement, including, without limitation, the issuance
of the
Shares and the Stockholders’ ownership of the Shares.
21
SECTION
4.23. No
Additional Agreements.
The
Parent does not have any agreement or understanding with the Stockholders
with
respect to the transactions contemplated by this Agreement other than as
specified in this Agreement.
SECTION
4.24. Investment
Company.
The
Parent is not, and is not an affiliate of, and immediately following the
Closing
will not have become, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
SECTION
4.25. Disclosure.
All
disclosure provided to the Stockholders regarding the Intra-Asia Companies
and
the Selling Stockholders, their business and the transactions contemplated
hereby, furnished by or on behalf of such companies (including the their
representations and warranties set forth in this Agreement) are true and
correct
and do not contain any untrue statement of a material fact or omit to state
any
material fact necessary in order to make the statements made therein, in
light
of the circumstances under which they were made, not misleading.
SECTION
4.26. Certain
Registration Matters.
Except
as specified in Section
4.26 of the Parent Disclosure Schedule,
and
Filed Parent SEC Documents, the Parent has not granted or agreed to grant
to any
person any rights (including “piggy-back” registration rights) to have any
securities of the Parent registered with the SEC or any other governmental
authority that have not been satisfied.
SECTION
4.27. Listing
and Maintenance Requirements.
The
Parent is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with the listing and maintenance
requirements for continued listing of the Parent Stock on the trading market
on
which the Parent
Stock are
currently listed or quoted. The issuance and sale of the Shares under this
Agreement does not contravene the rules and regulations of the trading
market on
which the Parent Stock are currently listed or quoted, and no approval
of the
stockholders of the Parent is required for the Parent to issue and deliver
to
the Stockholders the Shares contemplated by this Agreement.
SECTION
4.28. No
Undisclosed Events, Liabilities, Developments or Circumstances.
No
event, liability, development or circumstance has occurred or exists, or
is
contemplated to occur with respect to the Intra-Asia Companies or their
respective business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Parent under applicable securities
laws on a registration statement on Form S-1 filed with the SEC relating
to an
issuance and sale by the Parent of its Common Stock and which has not been
publicly announced will not be publicly announced in the current report
on Form
8-K that will be filed by the Parent at the Closing.
SECTION
4.29. Foreign
Corrupt Practices.
None of
the Intra-Asia Companies, or any Selling Stockholder, nor, to the Parent’s or
any Selling Stockholder’s knowledge, any director, officer, agent, employee or
other person acting on behalf of the Parent or any of the Intra-Asia
Subsidiaries has, in the course of its actions for, or on behalf of, the
Parent
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; (ii) made any
direct
or indirect unlawful payment to any foreign or domestic government official
or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended;
or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or
other
unlawful payment to any foreign or domestic government official or
employee.
22
ARTICLE
V
Deliveries
SECTION
5.01. Deliveries
of the Stockholders.
(a) Concurrently
herewith each Stockholder is delivering to the Parent this Agreement executed
by
the Stockholder.
(b) At
or
prior to the Closing, each Stockholder shall deliver to the Parent:
(i) certificates
representing its Company Stock; and
(ii) duly
executed stock powers for transfer by the Stockholder of its Company Stock
to
the Parent.
SECTION
5.02. Deliveries
of the Parent and Selling Stockholders.
(a) Concurrently
herewith, the Parent and the Selling Stockholders, as applicable are
delivering:
(i) to
each
Stockholder and to the Company, a copy of this Agreement executed by The
Parent;
(ii) to
the
Company, certificates from the Parent, signed by its Secretary or Assistant
Secretary certifying that the attached copies of (i) the Parent Charter,
Parent
Bylaws and resolutions of the Board of Directors of the Parent approving
the
Agreement and the Transactions, and (ii) the Intra-Asia Subsidiaries
Organizational Document for each Intra-Asia Subsidiary, are all true, complete
and correct and remain in full force and effect; and
(iii) to
the
Company, certificates from each Selling Stockholder, signed by its Secretary
or
Assistant Secretary certifying that the attached copies of (i) such Selling
Stockholders Charter, such Selling Stockholders Bylaws and resolutions
of the
Board of Directors and Stockholders, as applicable, of such Selling Stockholder
approving the Agreement and the Transactions.
(b) At
or
prior to the Closing, the Parent shall deliver:
23
(i) to
the
Company, a letter of resignation of each of the executive officers of the
Parent
from all offices that they hold with The Parent effective upon the
Closing;
(ii) to
the
Company, a letter of resignation of Xxxxx Xxxxxx and Xxxx Xxxxx as a director
of
the Parent effective upon the Closing;
(iii) to
the
Company, a letter of resignation of Xxxxxxx Xx and Xxxxxxx Xxxxx from their
positions as directors of the Parent that will become effective upon
the
10th
day
following the mailing by the Parent to its stockholders the 14f-1
Notice;
(iv) to
the
Company, evidence of the election of the executive officers of PKU as executive
officers of the Parent effective as of the Closing, including the election
of
Xxxxxxx Xxx, as a director and as the Chairman and Chief Executive Officer
of
the Parent effective upon the Closing;
(v) to
the
Company, such pay-off letters and releases relating to liabilities as the
Company shall request and such pay-off letters and releases shall be in
form and
substance satisfactory to the Company;
(vi) to
the
Company the results of UCC, judgment lien and tax lien searches with respect
to
the Parent, the results of which indicate no liens on the assets of the
Parent;
(vii) to
the
Company, originals or certified copies of all existing corporate records,
accounting books and records (including without limitation, journals, schedules,
work papers, breakdowns, software records), lists of bank accounts and
signatories thereon, locations of safe deposit boxes with a list of signatories,
the name, address, contact numbers and contact persons of the Parent’s current
independent auditors and controller and chief financial officer, and all
other
administrative and financial documentation, files, records of the Parent;
and
(c) At
or
within 5 business days following the Closing, the Parent shall
deliver:
(i) to
each
Stockholder, certificates representing the Shares of Parent Common Stock
issued
to such Stockholder as set forth on Exhibit A; and
(ii) to
the
Company, consent letters of the accounting firms of Parent confirming each
such
firm’s respective consent to the use by the Parent of reports prepared by such
firm regarding the financial statements of the Parent in all future registration
statements filed with the SEC.
SECTION
5.03. Deliveries
of the Company.
(a) Concurrently
herewith, the Company is delivering to the Parent:
24
(i) this
Agreement executed by Company; and
(ii) a
certificate from the Company, signed by its authorized officer certifying
that
the attached copies of the Company Constituent Instruments and resolutions
of
the Board of Directors of the Company approving the Agreement and the
Transactions are all true, complete and correct and remain in full force
and
effect.
(b) At
or
prior to the Closing, the Company shall deliver:
(i) To
the
Parent, a form of Current Report on Form 8-K, which is substantially in
the form
to be filed, which includes the financial statements and pro forma financial
statements required by the Form 8-K for a reverse merger - shell transaction,
together with a signed audit report of the independent accountants for
the
Company.
ARTICLE
VI
Conditions
to Closing
SECTION
6.01. Stockholder
and Company Conditions Precedent.
The
obligations of the Stockholders and the Company to enter into and complete
the
Closing is subject, at the option of the Stockholders and the Company,
to the
fulfillment on or prior to the Closing Date of the following conditions.
(a) Representations
and Covenants.
The
representations and warranties of the Parent and Selling Stockholders contained
in this Agreement shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of
the
Closing Date. The Parent and Selling Stockholders shall have performed
and
complied in all material respects with all covenants and agreements required
by
this Agreement to be performed or complied with by such parties on or prior
to
the Closing Date. The Parent and each Selling Stockholder shall have delivered
to the Stockholders and the Company, a certificate, dated the Closing Date,
to
the foregoing effect.
(b) Litigation.
No
action, suit or proceeding shall have been instituted before any court
or
governmental or regulatory body or instituted or threatened by any governmental
or regulatory body to restrain, modify or prevent the carrying out of the
Transactions or to seek damages or a discovery order in connection with
such
Transactions, or which has or may have, in the reasonable opinion of the
Company
or the Stockholders, a materially adverse effect on the assets, properties,
business, operations or condition (financial or otherwise) of any Intra-Asia
Company, Selling Stockholders, or the Company.
(c) No
Material Adverse Change.
There
shall not have been any occurrence, event, incident, action, failure to
act, or
transaction since December 31, 2006 which has had or is reasonably likely
to
cause a Parent Material Adverse Effect.
25
(d) Post-Closing
Capitalization.
At, and
immediately after, the Closing, the authorized capitalization, and the
number of
issued and outstanding shares of the capital stock of the Company and the
Parent, on a fully-diluted basis, as indicated on a schedule to be delivered
by
the Parties at or prior to the Closing, shall be acceptable to the Stockholders
in their sole and absolute discretion.
(e) SEC
Reports.
The
Parent shall have filed all reports and other documents required to be
filed by
Parent under the U.S. federal securities laws through the Closing Date.
The
Parent shall have filed the Annual Report for the fiscal year ended December
31,
2006 with the SEC.
(f) OTCBB
Quotation.
The
Parent shall have maintained its status as a Company whose common stock
is
quoted on the Over-the-Counter Bulletin Board and no reason shall exist
as to
why such status shall not continue immediately following the
Closing.
(g) Deliveries.
The
deliveries specified in Section 5.02 shall have been made by the Parent.
(h) No
Suspensions of Trading in Parent Stock; Listing.
Trading
in the Parent Stock shall not have been suspended by the SEC or any trading
market (except for any suspensions of trading of not more than one trading
day
solely to permit dissemination of material information regarding the Parent)
at
any time since the date of execution of this Agreement, and the Parent
Stock
shall have been at all times since such date listed for trading on a trading
market.
(i) Satisfactory
Completion of Due Diligence.
The
Company and the Stockholders shall have completed their legal, accounting
and
business due diligence of each of the Intra-Asia Companies and the results
thereof shall be satisfactory to the Company and the Stockholders in their
sole
and absolute discretion.
(j) Delivery
of Audit Report and Financial Statements.
The
Company shall have completed the Company Financial Statements and shall
have
received an audit report from an independent audit firm that is registered
with
the Public Company Accounting Oversight Board relating to the fiscal years
ended
December 31, 2005 and 2006.
(k) Completion
of Financing.
The
Financing (as defined in Section 7.11 below) shall have been completed
or shall
be completed simultaneously with the Closing.
(l) Delivery
of PRC and BVI Legal Opinions.
The
Company shall have received an opinion from its legal counsel in the People’s
Republic of China and BVI that is otherwise satisfactory to the Company,
the
Stockholders, the Parent and the investors investing in the
Financing.
(m) Derivative
Securities.
Any
issued and outstanding options, convertible notes or other securities of
the
Parent that are exercisable or exchangeable for or convertible into, Parent
Common Stock shall have been exercised, converted or exchanged for Parent
Common
Stock in a manner satisfactory to the Company, the Stockholder and the
investors
in the Financing.
26
(n) Exercise
of Option.
The
Intra-Asia Company to which the Option is assigned, shall have exercised
the
Option and the Interest shall have been acquired by such Intra-Asia Company,
and
such Intra-Asia Company shall be the record and beneficial owner of the
Interest
and such interest shall not be subject to any Liens.
(o) Cancellation
Agreement.
The
Cancellation Agreement (as defined in Section 7.13) shall have been executed
and
delivered by the parties thereto and all of the transactions contemplated
thereby shall have been consummated.
SECTION
6.02. Parent
Conditions Precedent.
The
obligations of the Parent to enter into and complete the Closing is subject,
at
the option of the Parent, to the fulfillment on or prior to the Closing
Date of
the following conditions, any one or more of which may be waived by the
Parent
in writing.
(a) Representations
and Covenants.
The
representations and warranties of the Stockholders and the Company contained
in
this Agreement shall be true in all material respects on and as of the
Closing
Date with the same force and effect as though made on and as of the Closing
Date. The Stockholders and the Company shall have performed and complied
in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by the Stockholders and the Company on
or prior
to the Closing Date. The Company shall have delivered to the Parent, if
requested, a certificate, dated the Closing Date, to the foregoing effect.
(b) Litigation.
No
action, suit or proceeding shall have been instituted before any court
or
governmental or regulatory body or instituted or threatened by any governmental
or regulatory body to restrain, modify or prevent the carrying out of the
Transactions or to seek damages or a discovery order in connection with
such
Transactions, or which has or may have, in the reasonable opinion of the
Parent,
a materially adverse effect on the assets, properties, business, operations
or
condition (financial or otherwise) of the Parent.
(c) No
Material Adverse Change.
There
shall not have been any occurrence, event, incident, action, failure to
act, or
transaction since December 31, 2006 which has had or is reasonably likely
to
cause a Company Material Adverse Effect.
(d) Deliveries.
The
deliveries specified in Section 5.01 and Section 5.03 shall have been made
by
the Stockholders and the Company, respectively.
(e) Audited
Financial Statements and Form 10 Disclosure.
The
Company shall have provided the Parent and the Stockholders with reasonable
assurances that the Parent will be able to comply with its obligation to
file a
current report on Form 8-K within one (1) business days following the Closing
containing the requisite audited consolidated financial statements of the
Company and the requisite Form 10-type disclosure regarding the Company.
27
(f) Post-Closing
Capitalization.
At, and
immediately after, the Closing, the authorized capitalization, and the
number of
issued and outstanding shares of the capital stock of the Company and the
Parent, on a fully-diluted basis, as indicated on a schedule to be delivered
by
the Parties at or prior to the Closing, shall be acceptable to the Parent
in its
sole and absolute discretion.
(g) Satisfactory
Completion of Due Diligence.
The
Parent shall have completed its legal, accounting and business due diligence
of
the Company and the Stockholders and the results thereof shall be satisfactory
to the Parent in its sole and absolute discretion.
(h) Delivery
of Audit Report and Financial Statements.
The
Company shall have completed the Company Financial Statements and shall
have
received an audit report from an independent audit firm that is registered
with
the Public Company Accounting Oversight Board relating to the fiscal years
ended
December 31, 2006 and December 31, 2005. The form and substance of the
Financial
Statements shall be satisfactory to the Parent in its sole and absolute
discretion.
(i) Completion
of Financing.
The
Financing (as defined in Section 7.11 below) shall have been completed
or shall
be completed simultaneously with the Closing.
(j) Delivery
of PRC and BVI Legal Opinion.
The
Parent shall have received an opinion from the Company’s legal counsel in the
People’s Republic of China and BVI that is otherwise satisfactory to the
Company, the Stockholders, the Parent and the investors investing in the
Financing.
(k) Derivative
Securities.
Any
issued and outstanding options, convertible notes or other securities of
the
Parent that are exercisable or exchangeable for or convertible into, Parent
Common Stock shall have been exercised, converted or exchanged for Parent
Common
Stock in a manner satisfactory to the Parent.
(l) Registration
Rights Agreement.
The
Company shall have entered into a registration rights agreement with such
parties as indicated by the Parent and the form and substance of such
registration rights agreement shall be reasonably satisfactory to the
Parent.
(m) Exercise
of Option.
The
Intra-Asia Company to which the Option is assigned, shall have exercised
the
Option and the Interest shall have been acquired by such Intra-Asia Company,
and
such Intra-Asia Company shall be the record and beneficial owner of the
Interest
and such interest shall not be subject to any Liens.
(n) Cancellation
Agreement.
The
Cancellation Agreement (as defined in Section 7.13) shall have been executed
and
delivered by the parties thereto and all of the transactions contemplated
thereby shall have been consummated.
28
ARTICLE
VII
Covenants
SECTION
7.01. Preparation
of the 14f-1 Notice; Blue Sky Laws
(a) As
soon
as possible following the Closing and in any event, within two business
days
thereafter, the Company and Parent shall prepare and file with the SEC
the 14f-1
Notice in connection with the consummation of this Agreement. The Parent
shall
cause the 14f-1 Notice to be mailed to the Parent’s stockholders as promptly as
practicable thereafter.
(b) Parent
shall take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified) required to be taken under any applicable
state securities laws in connection with the issuance of Parent Stock in
connection with this Agreement.
SECTION
7.02. Public
Announcements.
Parent
and the Company will consult with each other before issuing, and provide
each
other the opportunity to review and comment upon, any press release or
other
public statements with respect to the Agreement and the Transactions and
shall
not issue any such press release or make any such public statement prior
to such
consultation, except as may be required by applicable Law, court process
or by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION
7.03. Fees
and Expenses.
All
fees and expenses incurred in connection with this Agreement shall be paid
by
the Party incurring such fees or expenses, whether or not this Agreement
is
consummated.
SECTION
7.04. Continued
Efforts.
Each
Party shall use commercially reasonable efforts to (a) take all action
reasonably necessary to consummate the Transactions, and (b) take such
steps and do such acts as may be necessary to keep all of its representations
and warranties true and correct as of the Closing Date with the same effect
as
if the same had been made, and this Agreement had been dated, as of the
Closing
Date.
SECTION
7.05. Conduct
of Business.
During
the period from the date hereof through the Closing Date, Parent and the
Company
shall carry on their respective businesses in the ordinary and usual course
consistent with past practice.
SECTION
7.06. Exclusivity.
The
Parent shall not (i) solicit, initiate, or encourage the submission of
any
proposal or offer from any person relating to the acquisition of any capital
stock or other voting securities of the Parent, or any assets of the Parent
(including any acquisition structured as a merger, consolidation, share
exchange
or other business combination), (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist
or
participate in, or facilitate in any other manner any effort or attempt
by any
person to do or seek any of the foregoing, or (iii) take any other action
that
is inconsistent with the Transactions and that has the effect of avoiding
the
Closing contemplated hereby. The Parent shall notify the Company immediately
if
any person makes any proposal, offer, inquiry, or contact with respect
to any of
the foregoing.
29
SECTION
7.07. Filing
of 8-K and Press Release.
Parent
shall file, within one business day of the Closing Date, a current report
on
Form 8-K and attach as exhibits all relevant agreements with the SEC disclosing
the terms of this Agreement and other requisite disclosure regarding the
Transactions and including the requisite audited consolidated financial
statements of the Company and the requisite Form 10 disclosure regarding
the
Company. In addition, the Parent shall issue a press release prior to 9:30
a.m.
(New York Time) on the business day following the Closing Date, announcing
the
closing of the transaction.
SECTION
7.08. Furnishing
of Information.
As long
as any Stockholder owns the Shares, the Parent covenants to timely file
(or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Parent after the date hereof
pursuant to the Exchange Act. As long as any Stockholder owns Shares, if
the
Parent is not required to file reports pursuant to such laws, it will prepare
and furnish to the Stockholders and make publicly available in accordance
with
Rule 144(c) promulgated by the SEC pursuant to the Securities Act, such
information as is required for the Stockholder to sell the Shares under
Rule
144. The Parent further covenants that it will take such further action
as any
holder of Shares may reasonably request, all to the extent required from
time to
time to enable such person to sell the Shares without registration under
the
Securities Act within the limitation of the exemptions provided by Rule
144.
SECTION
7.09. Access.Each
Party shall permit representatives of each other Party to have full access
to
all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to such Party.
SECTION
7.10. Preservation
of Business.
From the
date of this Agreement until the Closing Date, each of the Company and
the
Parent shall operate only in the ordinary and usual course of business
consistent with past practice (provided, however, that Parent shall not
issue
any securities without the prior written consent of the Company), and shall
use
reasonable commercial efforts to (a) preserve intact its respective business
organization, (b) preserve the good will and advantageous relationships
with
customers, suppliers, independent contractors, employees and other Persons
material to the operation of its respective business, and (c) not permit
any
action or omission which would cause any of its respective representations
or
warranties contained herein to become inaccurate or any of its respective
covenants to be breached in any material respect.
SECTION
7.11. Financing.
Parent
shall use commercially reasonable efforts to raise at least $3.2 million
in an
equity financing with accredited investors and, in connection with the
same
equity financing transaction and on the same terms, the Selling Stockholders
(as
defined below) will sell to the same investors a total of 28,333,333 shares
of
Parent Common Stock for aggregate gross proceeds to the Selling Stockholders
of
$6.8 million (the “Financing”),
which
Financing shall be consummated simultaneously with the Closing.
SECTION
7.12. Acquisition
of PKU.
The
Intra-Asia Company to which the Option is assigned, shall have exercised
the
Option and the Interest shall have been acquired by such Intra-Asia Company,
and
such Intra-Asia Company shall be the record and beneficial owner of the
Interest
and such interest shall not be subject to any Liens.
30
SECTION
7.13. Cancellation
of Certain Shares.
A total
of 15,328,369 shares of Parent Common Stock, in the aggregate, held by
Weicheng
shall have been cancelled and Weicheng and Xxxxxx shall have delivered
to the
Parent a Cancellation Agreement (the “Cancellation
Agreement”)
containing a release and such other provisions as are satisfactory to the
Parent, the Company and the investors in the Financing.
SECTION
7.14. Change
of Name and Reverse Stock Split.
As soon
as practicable following the Closing, but in any event within 60 days following
the Closing, the Parent will change its name to ChinaFront Technology Company
and the Parent will effect a reverse stock split on a 1 for 6 basis. In
connection with such name change and reverse stock split, the Parent shall
comply with all applicable federal securities laws and effect any and all
required filings and mailings, including, without limitation, the filing
of
preliminary and definitive information statements on Schedule 14C or Schedule
14A, as applicable, and the mailing of the same to the stockholders of
the
Parent as and to the extent required by applicable federal securities
laws.
ARTICLE
VIII
Indemnification
SECTION
8.01. General
Indemnification Provision.
The
Parent and the Selling Stockholders (the “Indemnifying
Parties”)
shall
jointly and severally indemnify, defend and hold each of the Company and
each
Stockholder, their affiliates and their respective officers, directors,
partners
(general and limited), employees, agents, attorneys successors and assigns
(each
an “Indemnified
Party”)
harmless from and against all Losses incurred or suffered by a Indemnified
Party
as a result of the breach of any of the representations, warranties, covenants
or agreements made by the Company and/or the Selling Stockholders in this
Agreement.
SECTION
8.02. Indemnification
Principles.
For
purposes of this Article VIII, “Losses”
shall
mean each and all of the following items: claims, losses (including, without
limitation, losses of earnings), liabilities, obligations, payments, damages
(actual, punitive or consequential), charges, judgments, fines, penalties,
amounts paid in settlement, costs and expenses (including, without limitation,
interest which may be imposed in connection therewith, costs and expenses
of
investigation, actions, suits, proceedings, demands, assessments and reasonable
fees, expenses and disbursements of counsel, consultants and other experts).
SECTION
8.03. Claim
Notice; Right to Defend.
The
Indemnified Party shall promptly upon becoming aware of the facts indicating
that a claim for indemnification may be warranted, give to the Indemnifying
Party a claim notice relating to such Loss (a “Claim
Notice”).
Each
Claim Notice shall specify the nature of the claim and, if possible, the
amount
or the estimated amount thereof. No failure or delay in giving a Claim
Notice
and no failure to include any specific information relating to the claim
(such
as the amount or estimated amount thereof) shall affect the obligation
of the
Indemnifying Party unless such failure materially and adversely prejudices
the
Indemnifying Party. If such Loss relates to the commencement of any action
or
proceeding by a third person, the Indemnified Party shall give a Claim
Notice to
the Indemnifying Party regarding such action or proceeding and the Indemnifying
Party shall be entitled to participate therein to assume the defense thereof
with counsel reasonably satisfactory to the Indemnified Party. After the
delivery of notice from the Indemnifying Party to the Indemnified Party
of its
election to assume the defense of such action or proceeding, the Indemnifying
Party shall not be liable (except to the extent the proviso to this sentence
is
applicable, in which event it will be so liable) to the Indemnified Party
under
this Article VIII for any legal or other expenses subsequently incurred
by the
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation, provided
that
each Indemnified Party shall have the right to employ separate counsel
to
represent it and assume its defense (in which case, the Indemnifying Party
shall
not represent it) if (i) upon the advice of counsel, the representation
of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, (ii) in the event the Indemnifying Party
has
not assumed the defense thereof within 10 days of receipt of notice of
such
claim or commencement of action, and in which case the fees and expenses
of one
such separate counsel shall be paid by the Indemnifying Party or (iii)
if such
Indemnified Party who is a defendant in any action or proceeding which
is also
brought against the Indemnifying Party reasonably shall have concluded
that
there may be one or more legal defenses available to such Indemnified Party
which are not available to the Indemnifying Party. If the Indemnifying
Party so
assumes the defense thereof, it may not agree to any settlement of any
such
claim or action as the result of which any remedy or relief, other than
monetary
damages for which the Indemnifying Party shall be responsible hereunder,
shall
be applied to or against the Indemnified Party, without the prior written
consent of the Indemnified Party. In any action hereunder as to which the
Indemnifying Party has assumed the defense thereof with counsel reasonably
satisfactory to the Indemnified Party, the Indemnified Party shall continue
to
be entitled to participate in the defense thereof, with counsel of its
own
choice, but, except as set forth above, the Indemnifying Party shall not
be
obligated hereunder to reimburse the Indemnified Party for the costs
thereof.
31
ARTICLE
IX
Miscellaneous
SECTION
9.01. Notices.
All
notices, requests, claims, demands and other communications under this
Agreement
shall be in writing and shall be deemed given upon receipt by the Parties
at the
following addresses (or at such other address for a Party as shall be specified
by like notice):
If
to the
Parent or the Selling Stockholders, to:
c/o
Xx.
Xxxxxxx Xx
0000
Xxxxxxxxx Xxxxxx Xxxx
Xxxxx
000
X
Xxxxxxxx
Xxxx, XX 00000
Facsimile:
(000) 000-0000
If
to the
Company or the Stockholder, to:
Cabowise
International Ltd.
717
Tower
B, E-Wing Center
113
Zhichunlu, Haidian District, Beijing, 100086
32
with
a
copy to:
Xxxxxx
Xxxx Xxxxx Raysman & Xxxxxxx LLP
000
Xxxxxx Xxxxxx, XX
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
SECTION
9.02. Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company, Parent and the Stockholders holding (or
entitled to receive hereunder) a majority of the Shares. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a
waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either Party to
exercise
any right hereunder in any manner impair the exercise of any such right.
No
consideration shall be offered or paid to any Stockholder to amend or consent
to
a waiver or modification of any provision of any transaction document unless
the
same consideration is also offered and paid to all Stockholders who then
hold
Shares (or are entitled to receive Shares hereunder).
SECTION
9.03. Termination.
(a) Termination
of Agreement.
The
Parties may terminate this Agreement as provided below:
(i) The
Company, the Stockholders and the Parent may terminate this Agreement by
mutual
written consent at any time prior to the Closing;
(ii) The
Parent may terminate this Agreement by giving written notice to the Company
and
the Stockholders at any time prior to the Closing (A) in the event the
Company
or the Stockholders have breached any material representation, warranty,
or
covenant contained in this Agreement in any material respect, the Parent
has
notified the Company and/or the Stockholders of the breach, and the breach
has
continued without cure for a period of twenty days after the notice of
breach,
or (B) if the Closing shall not have occurred on or before sixty days after
the
date of this Agreement by reason of the failure of any condition precedent
under
Section 6.02 hereof (unless the failure results primarily from the Parent
itself
breaching any representation, warranty, or covenant contained in this
Agreement); and
(iii) The
Company may terminate this Agreement by giving written notice to the Parent
at
any time prior to the Closing (A) in the event the Parent has breached
any
material representation, warranty, or covenant contained in this Agreement
in
any material respect, the Company has notified the Parent of the breach,
and the
breach has continued without cure for a period of twenty days after the
notice
of breach or (B) if the Closing shall not have occurred on or before sixty
days
after the date of this Agreement, by reason of the failure of any condition
precedent under Section 6.01 hereof (unless the failure results primarily
from
the Company or the Stockholders themselves breaching any representation,
warranty, or covenant contained in this Agreement).
33
(b) Effect
of Termination.
If any
Party terminates this Agreement pursuant to Section 8.03(a) above, all
rights
and obligations of the Parties hereunder shall terminate without any Liability
of any Party to any other Party.
SECTION
9.04. Replacement
of Securities.
If any
certificate or instrument evidencing any Shares is mutilated, lost, stolen
or
destroyed, the Parent shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Parent of such loss, theft or destruction
and
customary and reasonable indemnity, if requested. The applicants for a
new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Shares.
If a
replacement certificate or instrument evidencing any Shares is requested
due to
a mutilation thereof, the Parent may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
SECTION
9.05. Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Stockholders, Parent and
the
Company will be entitled to specific performance under this Agreement.
The
Parties agree that monetary damages may not be adequate compensation for
any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
SECTION
9.06. Independent
Nature of Stockholders' Obligations and Rights.
The
obligations of each Stockholder under this Agreement are several and not
joint
with the obligations of any other Stockholder, and no Stockholder shall
be
responsible in any way for the per-formance of the obligations of any other
Stockholder under this Agreement. The decision of each Stockholder to acquire
Shares pursuant to this Agreement has been made by such Stock-holder
independently of any other Stockholder. Nothing contained herein, and no
action
taken by any Stockholder pursuant hereto, shall be deemed to constitute
the
Stockholders as a partner-ship, an association, a joint venture or any
other
kind of entity, or create a presumption that the Stockholders are in any
way
acting in concert or as a group with respect to such obligations or the
transactions contemplated herein. Each Stockholder acknowledges that no
other
Stockholder has acted as agent for such Stockholder in connection with
making
its investment hereunder and that no Stockholder will be acting as agent
of such
Stockholder in connection with monitoring its investment in the Shares
or
enforcing its rights under this Agreement. Each Stockholder shall be entitled
to
independently protect and enforce its rights, including without limitation
the
rights arising out of this Agreement, and it shall not be necessary for
any
other Stockholder to be joined as an additional party in any proceeding
for such
purpose. Each of the Company and Parent ac-knowledge that each of the
Stockholders has been provided with this same Agreement for the purpose
of
closing a transaction with multiple Stockholders and not because it was
required
or requested to do so by any Stockholder.
34
SECTION
9.07. Limitation
of Liability.
Notwithstanding anything herein to the contrary, each of the Parent and
the
Company acknowledge and agree that the liability of a Stockholder arising
directly or indirectly, under any transaction document of any and every
nature
whatsoever shall be satisfied solely out of the assets of such Stockholder,
and
that no trustee, officer, other investment vehicle or any other affiliate
of
such Stockholder or any investor, shareholder or holder of shares of beneficial
interest of such Stockholder shall be personally liable for any liabilities
of
such Stockholder.
SECTION
9.08. Interpretation.
When a
reference is made in this Agreement to a Section, such reference shall
be to a
Section of this Agreement unless otherwise indicated. Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation”.
SECTION
9.09. Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule or Law, or public policy, all other conditions
and
provisions of this Agreement shall nevertheless remain in full force and
effect
so long as the economic or legal substance of the Transactions contemplated
hereby is not affected in any manner materially adverse to any Party. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Parties shall negotiate in good faith to modify
this
Agreement so as to effect the original intent of the Parties as closely
as
possible in an acceptable manner to the end that Transactions contemplated
hereby are fulfilled to the extent possible.
SECTION
9.10. Counterparts;
Facsimile Execution.
This
Agreement may be executed in one or more counterparts, all of which shall
be
considered one and the same agreement and shall become effective when one
or
more counterparts have been signed by each of the Parties and delivered
to the
other Parties. Facsimile execution and delivery of this Agreement is legal,
valid and binding for all purposes.
SECTION
9.11. Entire
Agreement; Third Party Beneficiaries.
This
Agreement, taken together with the Company Disclosure Schedule and the
Parent
Disclosure Schedule, (a) constitute the entire agreement, and supersede
all
prior agreements and understandings, both written and oral, among the Parties
with respect to the Transactions and (b) are not intended to confer upon
any
person other than the Parties any rights or remedies.
SECTION
9.12. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York, regardless of the laws that might otherwise govern
under
applicable principles of conflicts of laws thereof, except to the extent
the
laws of Nevada are mandatorily applicable to the Transactions.
SECTION
9.13. Assignment.
Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the Parties without the prior written consent of the
other
Parties. Any purported assignment without such consent shall be void. Subject
to
the preceding sentences, this Agreement will be binding upon, inure to
the
benefit of, and be enforceable by, the Parties and their respective successors
and assigns.
35
The
Parties hereto have executed and delivered this Share Exchange Agreement
as of
the date first above written.
The
Parent:
|
INTRA-ASIA
ENTERTAINMENT CORPORATION
|
||
| |
|
|
| By: | /s/ Xxxxxxx Xx | |
|
Name:
|
Xxxxxxx
Xx
|
|
| Title: | CEO and President | |
The
Selling Stockholders:
|
WEICHENG
INTERNATIONAL INC.
|
||
| |
|
|
| By: | /s/ | |
|
Name:
|
|
|
| Title: | ||
|
XXXXXX
GROWTH LTD.
|
||
| |
|
|
| By: | /s/ | |
|
Name:
|
|
|
| Title: | ||
The
Company:
|
CABOWISE
INTERNATIONAL
LTD.
|
||
| |
|
|
| By: | /s/ | |
|
Name:
|
|
|
| Title: | ||
The
Stockholders:
|
LEGUNA
VERDE INVESTMENTS
LTD.
|
||
| |
|
|
| By: | /s/ | |
|
Name:
|
|
|
| Title: | ||
|
XXXXXX
INVESTMENT HOLDINGS
LTD.
|
||
| |
|
|
| By: | /s/ | |
|
Name:
|
|
|
| Title: | ||
EXHIBIT
A
|
Name
and Address of Stockholder
|
Number
of Shares of Company Stock Being Exchanged
|
Percentage
of Total Company Shares Represented By Shares Being
Exchanged
|
Number
of Shares of Parent Stock to be Received by
Stockholder
|
|
Leguna
Verde Investments Ltd.
Portcullis
TrustNet Xxxxxxxx
P.O.
Box 3444
Road
Town, Tortola
British
Virgin Islands
|
5,880
|
11.76%
|
9,562,195
|
|
Xxxxxx
Investment Holdings Ltd.
Portcullis
TrustNet Xxxxxxxx
P.O.
Box 3444
Road
Town, Tortola
British
Virgin Islands
|
44,120
|
88.24%
|
71,748,984
|
|
TOTAL
|
50,000
|
100.00%
|
81,311,179
|
