EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of October 17, 2006, is made by and
among PARQUE LA QUINTA ESTATES, a Nevada corporation (the "Acquiror Company"),
each of the Persons listed on Exhibit A as an Acquiror Company Shareholder
(collectively, the "ACQUIROR COMPANY SHAREHOLDERS", and individually an
"ACQUIROR COMPANY SHAREHOLDER"), WEALTHCRAFT SYSTEMS LIMITED, a private limited
company organized under the laws of the Hong Kong Special Administrative Region
of the People's Republic of China ("WEALTHCRAFT"), and each of the persons
listed on Exhibit B as a WealthCraft Shareholder (collectively, the "WEALTHCRAFT
SHAREHOLDERS", and individually a "WEALTHCRAFT SHAREHOLDER").
BACKGROUND
The WealthCraft Shareholders have agreed to transfer to the Acquiror
Company, and the Acquiror Company has agreed to acquire from the WealthCraft
Shareholders, all of the issued and outstanding shares of WealthCraft (the
"WEALTHCRAFT SHARES"), in exchange for 7,000,000 shares of the Acquiror
Company's Common Stock (the "Exchange Shares"), which Exchange Shares shall
constitute 70% of the issued and outstanding shares of Acquiror Company's Common
Stock immediately after the closing of the transactions contemplated herein, in
each case, on the terms and conditions as set forth herein.
ARTICLE I.
DEFINITIONS
Section 1.1 Unless the context otherwise requires, the terms defined in
this Section 1 will have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
herein defined.
"ACQUIROR COMPANY BALANCE SHEET" means the Acquiror Company's balance sheet
at September 30, 2006.
"ACQUIROR COMPANY BOARD" means the Board of Directors of the Acquiror
Company.
"ACQUIROR COMPANY COMMON STOCK" means the Acquiror Company's common stock,
par value US $0.001 per share.
"AFFILIATE" means any Person that directly or indirectly controls, is
controlled by or is under common control with the indicated Person.
"AGREEMENT" means this Share Exchange Agreement, including all Schedules
and Exhibits hereto, as this Share Exchange Agreement may be from time to time
amended, modified or supplemented.
"CLOSING DATE" has the meaning set forth in Section 3.
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"COMMISSION" means the United States Securities and Exchange Commission or
any other federal agency then administering the Securities Act or any successor
statute.
"COMPANY INDEMNIFIED PARTY" has the meaning set forth in Section 10.2.
"COVERED PERSONS" means all Persons, other than the Acquiror Company, who
are parties to indemnification and employment agreements with the Acquiror
Company existing on or before the Closing Date.
"DAMAGES" the actual losses, damages, liabilities, penalties, Taxes,
interest and expenses (including reasonable attorneys' fees and disbursements
and other out-of-pocket expenses and costs incurred in connection with
mitigating the Loss and investigating, preparing, settling or defending any
pending or threatened action, claim or proceeding (including those brought by
third Persons)).
"DISTRIBUTOR" means any underwriter, dealer or other Person who
participates, pursuant to a contractual arrangement, in the distribution of the
securities offered or sold in reliance on Regulation S.
"ENVIRONMENTAL LAWS" means any Law or other requirement relating to the
environment, natural resources, or public or employee health and safety.
"ENVIRONMENTAL PERMIT" means all licenses, permits, authorizations,
approvals, franchises and rights required under any applicable Environmental Law
or Order.
"EQUITY SECURITY" means any stock or similar security, including, without
limitation, securities containing equity features and securities containing
profit participation features, or any security convertible into or exchangeable
for, with or without consideration, any stock or similar security, or any
security carrying any warrant, right or option to subscribe to or purchase any
shares of capital stock, or any such warrant or right.
"ERISA" means the United States Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE" has the meaning set forth in Section 2.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934 or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same are in effect from time to time.
"EXCHANGE SHARES" means the Acquiror Company Common Stock being issued to
the WealthCraft Shareholders pursuant hereto.
"EXHIBITS" means the several exhibits referred to and identified in this
Agreement.
"GAAP" means, with respect to any Person, United States generally accepted
accounting principles applied on a consistent basis with such Person's past
practices.
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"GOVERNMENTAL AUTHORITY" means any federal or national, state or
provincial, municipal or local government (including, without limitation, that
of the PRC or the HKSAR), governmental authority, regulatory or administrative
agency, governmental commission, department, board, bureau, agency or
instrumentality, political subdivision, commission, court, tribunal, official,
arbitrator or arbitral body, in each case whether United States or non-United
States with jurisdiction over any party hereto.
"HK$" - Hong Kong Dollars, the lawful currency of the HKSAR.
"HKSAR" means the Hong Kong Special Administrative Region of the PRC.
"INDEBTEDNESS" means any obligation, contingent or otherwise. Any
obligation secured by a Lien on, or payable out of the proceeds of, or
production from, property of the relevant party will be deemed to be
Indebtedness.
"INTELLECTUAL PROPERTY" means all industrial and intellectual property,
including, without limitation, all United States and non-United States patents,
patent applications, patent rights, trademarks, trademark applications, common
law trademarks, Internet domain names, trade names, service marks, service xxxx
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world.
"LAWS" means, with respect to any Person, any United States or non-United
States federal, national, state, provincial, local, municipal, international,
multilateral or other law (including common law), constitution, statute, code,
ordinance, rule, regulation or treaty applicable to such Person.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including, without limitation, any conditional sale or other
title retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction and including any lien or charge arising by Law.
"MATERIAL ACQUIROR COMPANY CONTRACT" means any and all agreements,
contracts, arrangements, leases, commitments or otherwise, of the Acquiror
Company, of the type and nature that the Acquiror Company is required to file
with the Commission.
"MATERIAL ADVERSE EFFECT" means, when used with respect to the Acquiror
Company or WealthCraft, as the case may be, any change, effect or circumstance
which, individually or in the aggregate, would reasonably be expected to (a)
have a material adverse effect on the business, assets, financial condition or
results of operations of the Acquiror Company or WealthCraft, as the case may
be, in each case taken as a whole or (b) materially impair the ability of the
Acquiror Company (or the Acquiror Company Shareholders) or WealthCraft (or the
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WealthCraft Shareholders), as the case may be, to perform its obligations under
this Agreement, excluding any change, effect or circumstance resulting from (i)
the announcement, pendency or consummation of the transactions contemplated by
this Agreement, (ii) changes in the United States securities markets generally,
or (iii) changes in general economic, currency exchange rate, political or
regulatory conditions in industries in which the Acquiror Company or
WealthCraft, as the case may be, operate.
"ORDER" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any Governmental
Authority.
"ORGANIZATIONAL DOCUMENTS" means (a) the articles or certificate of
incorporation, memorandum and articles of association and/or the by-laws or code
of regulations of a corporation; (b) the partnership agreement and any statement
of partnership of a general partnership; (c) the limited partnership agreement
and the certificate of limited partnership of a limited partnership; (d) the
articles or certificate of formation and operating agreement of a limited
liability company; (e) any other document performing a similar function to the
documents specified in clauses (a), (b), (c) and (d) adopted or filed in
connection with the creation, formation or organization of a Person; and (f) any
and all amendments to any of the foregoing.
"PRC" means the People's Republic of China.
"WEALTHCRAFT" means, collectively, WealthCraft individually and, as the
context requires, the WealthCraft Subsidiaries.
"WEALTHCRAFT BOARD" means the Board of Directors of WealthCraft.
"WEALTHCRAFT SHARES" means the 10,148,500 issued and outstanding ordinary
shares of WealthCraft.
"WEALTHCRAFT SUBSIDIARIES" means all of the direct and indirect
Subsidiaries of WealthCraft, including, without limitation, WealthCraft Systems
(Shenzhen) Limited, a private limited company organized under the laws of the
PRC.
"PERMITTED LIENS" means (a) Liens for Taxes not yet payable or in respect
of which the validity thereof is being contested in good faith by appropriate
proceedings and for the payment of which the relevant Person has made adequate
reserves; (b) Liens in respect of pledges or deposits under workmen's
compensation laws or similar Laws, carriers, warehousemen, mechanics, laborers
and materialmen and similar Liens, if the obligations secured by such Liens are
not then delinquent or are being contested in good faith by appropriate
proceedings conducted and for the payment of which the relevant Person has made
adequate reserves; (c) statutory Liens incidental to the conduct of the business
of the relevant Person which were not incurred in connection with the borrowing
of money or the obtaining of advances or credits and that do not in the
aggregate materially detract from the value of its property or materially impair
the use thereof in the operation of its business; and (d) Liens that would not
have a Material Adverse Effect.
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"PERSON" means all natural persons, corporations, business trusts,
associations, companies, general partnerships, limited partnerships, limited
liability companies, joint ventures and other entities, governments, agencies
and political subdivisions.
"PROCEEDING" means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative or investigative)
commenced, brought, conducted, or heard by or before, or otherwise involving,
any Governmental Authority.
"REGULATION S" means Regulation S under the Securities Act, as the same may
be amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission.
"RULE 144" means Rule 144 under the Securities Act, as the same may be
amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission.
"SCHEDULE 14(F) FILING" means an information statement filed by the
Acquiror Company on Schedule 14f-1 under the Exchange Act.
"SCHEDULES" means the several schedules referred to and identified herein,
setting forth certain disclosures, exceptions and other information, data and
documents referred to at various places throughout this Agreement.
"SEC DOCUMENTS" has the meaning set forth in Section 6.26.
"SECTION 4(2)" means Section 4(2) of the Securities Act, as the same may be
amended from time to time, or any successor statute.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same will be in effect at the time.
"SUBSIDIARY" means, with respect to any Person, any other Person of which
such Person (a) beneficially owns, either directly or indirectly, more than 50%
of (i) the total combined voting power of all classes of voting securities of
such Person, (ii) the total combined equity interests, or (iii) the capital or
profit interests of such Person; or (b) otherwise has the power to Control such
Person.
"SURVIVAL PERIOD" has the meaning set forth in Section 10.1.
"TAX" or "TAXES" means all United States, HKSAR, PRC other applicable
federal, state or local taxes, charges, fees, levies, imposts, duties and other
assessments, as applicable, including, but not limited to, any income,
alternative minimum or add-on, estimated, gross income, gross receipts, sales,
use, transfer, transactions, intangibles, ad valorem, value-added, franchise,
registration, title, license, capital, paid-up capital, profits, withholding,
payroll, employment, unemployment, excise, severance, stamp, occupation,
premium, real property, recording, personal property, federal highway use,
commercial rent, environmental (including, but not limited to, taxes under
Section 59A of the Code) or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalties or additions to tax with respect to any of
the foregoing.
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"TAX GROUP" means any United States, HKSAR, PRC and other applicable
federal, state, local or foreign consolidated, affiliated, combined, unitary or
other similar group of which the Acquiror Company is now or was formerly a
member.
"TAX RETURN" means any return, declaration, report, claim for refund or
credit, information return, statement or other similar document filed with any
Governmental Authority with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TRANSACTION DOCUMENTS" means, collectively, all agreements, instruments
and other documents to be executed and delivered in connection with the
transactions contemplated by this Agreement.
"UNITED STATES" means the United States of America.
"UNITED STATES DOLLARS" or "US $" or "$" means the currency of the United
States of America.
"U.S. PERSON" has the meaning set forth in Regulation S under the
Securities Act and set forth on Exhibit C hereto.
ARTICLE II.
EXCHANGE OF WEALTHCRAFT SHARES AND SHARE CONSIDERATION
Section 2.1 SHARE EXCHANGE. At the Closing, each WealthCraft Shareholder
shall transfer to the Acquiror Company the number of WealthCraft Shares set out
forth opposite each such WealthCraft Shareholder's name in Exhibit B, and, in
consideration therefor, the Acquiror Company shall issue to such WealthCraft
Shareholder the number of Exchange Shares set forth opposite each WealthCraft
Shareholder's name in Exhibit B (the "EXCHANGE").
Section 2.2 TAX WITHHOLDING. The Acquiror Company shall be entitled to
deduct and withhold from the Exchange Shares otherwise deliverable to the
WealthCraft Shareholders pursuant to this Agreement such amounts as the Acquiror
Company is required to deduct and withhold with respect to the making of such
payment under the Code or any provision of state, local, provincial or foreign
Tax Law. To the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to such
WealthCraft Shareholder in respect of which such deduction and withholding was
made.
Section 2.3 SECTION 368 REORGANIZATION. For United States federal income
tax purposes, the Exchange is intended to constitute a "reorganization" within
the meaning of Section 368(a)(1)(B) of the Code. The parties to this Agreement
hereby adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
Notwithstanding the foregoing or anything else to the contrary contained in this
Agreement, the parties acknowledge and agree that no party is making any
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representation or warranty as to the qualification of the Exchange as a
reorganization under Section 368 of the Code or as to the effect, if any, that
any transaction consummated prior to the Closing Date has or may have on any
such reorganization status. The parties acknowledge and agree that each (i) has
had the opportunity to obtain independent legal and tax advice with respect to
the transaction contemplated by this Agreement, and (ii) is responsible for
paying its own Taxes, including without limitation, any adverse Tax consequences
that may result if the transaction contemplated by this Agreement is not
determined to qualify as a reorganization under Section 368 of the Code.
Section 2.4 DIRECTORS OF THE ACQUIROR COMPANY AT THE CLOSING DATE.
Effective as of the Closing Date the current directors of the Acquiror Company
shall appoint Xxxxx Xxx Xxxxxxx Xxxxxx and Xxxxxx Xxxxxxxx as additional members
of the Acquiror Company Board. Immediately thereafter, all current directors of
the Acquiror Company shall resign as directors of the Acquiror Company Board.
ARTICLE III.
CLOSING DATE
The closing of the Exchange will occur on October 31, 2006 or at such later
date as all of the closing conditions set forth in Articles 8 and 9 have been
satisfied or waived (the "CLOSING DATE").
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE WEALTHCRAFT SHAREHOLDERS
Each WealthCraft Shareholder, severally and not jointly, hereby represents
and warrants to the Acquiror Company:
Section 4.1 AUTHORITY. Such WealthCraft Shareholder has the right, power,
authority and capacity to execute and deliver this Agreement and each of the
Transaction Documents to which such WealthCraft Shareholder is a party, to
consummate the transactions contemplated by this Agreement and each of the
Transaction Documents to which such WealthCraft Shareholder is a party, and to
perform such WealthCraft Shareholder's obligations under this Agreement and each
of the Transaction Documents to which such WealthCraft Shareholder is a party.
This Agreement has been, and each of the Transaction Documents to which such
WealthCraft Shareholder is a party will be, duly and validly authorized and
approved, executed and delivered by such WealthCraft Shareholder. Assuming this
Agreement and the Transaction Documents have been duly and validly authorized,
executed and delivered by the parties thereto other than such WealthCraft
Shareholder, this Agreement is, and each of the Transaction Documents to which
such WealthCraft Shareholder is a party have been, duly authorized, executed and
delivered by such WealthCraft Shareholder and constitutes the legal, valid and
binding obligation of such WealthCraft Shareholder, enforceable against such
WealthCraft Shareholder in accordance with their respective terms, except as
such enforcement is limited by general equitable principles, or by bankruptcy,
insolvency and other similar Laws affecting the enforcement of creditors rights
generally.
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Section 4.2 NO CONFLICT. Neither the execution or delivery by such
WealthCraft Shareholder of this Agreement or any Transaction Document to which
such WealthCraft Shareholder is a party, nor the consummation or performance by
such WealthCraft Shareholder of the transactions contemplated hereby or thereby
will, directly or indirectly, contravene, conflict with, constitute a default
(or an event or condition which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or acceleration of,
any agreement or instrument to which such WealthCraft Shareholder is a party or
by which the properties or assets of such WealthCraft Shareholder are bound; or
(c) contravene, conflict with, or result in a violation of, any Law or Order to
which such WealthCraft Shareholder, or any of the properties or assets of such
WealthCraft Shareholder, may be subject.
Section 4.3 OWNERSHIP OF WEALTHCRAFT SHARES. Such WealthCraft Shareholder
owns, of record and beneficially, and has good, valid and indefeasible title to
and the right to transfer to the Acquiror Company pursuant to this Agreement,
such WealthCraft Shareholder's WealthCraft Shares free and clear of any and all
Liens. There are no options, rights, voting trusts, stockholder agreements or
any other contracts or understandings to which such WealthCraft Shareholder is a
party or by which such WealthCraft Shareholder or such WealthCraft Shareholder's
WealthCraft Shares are bound with respect to the issuance, sale, transfer,
voting or registration of such WealthCraft Shareholder's WealthCraft Shares. At
the Closing Date, the Acquiror Company will acquire good, valid and marketable
title to such WealthCraft Shareholder's WealthCraft Shares free and clear of any
and all Liens.
Section 4.4 LITIGATION. There is no pending Proceeding against such
WealthCraft Shareholder that challenges, or may have the effect of preventing,
delaying or making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement and, to the knowledge of such
WealthCraft Shareholder, no such Proceeding has been threatened, and no event or
circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding.
Section 4.5 NO BROKERS OR FINDERS. Except as disclosed in Schedule 4.5, no
Person has, or as a result of the transactions contemplated herein will have,
any right or valid claim against such WealthCraft Shareholder for any
commission, fee or other compensation as a finder or broker, or in any similar
capacity.
Section 4.6 INVESTMENT REPRESENTATIONS. Each WealthCraft Shareholder,
severally and not jointly, hereby represents and warrants to the Acquiror
Company:
(a) UNREGISTERED SHARES. Each WealthCraft Shareholder understands and
agrees that the Exchange Shares to be issued pursuant to this Agreement has
not been registered under the Securities Act or the securities laws of any
state of the United States or any foreign country and that the issuance of
the Exchange Shares is being effected in reliance upon an exemption from
registration afforded either under Section 4(2) of the Securities Act for
transactions by an issuer not involving a public offering or Regulation S
for offers and sales of securities outside the United States.
(b) STATUS. Such WealthCraft Shareholder is not a U.S. Person. Such
WealthCraft Shareholder understands that the Exchange Shares are being
offered and sold to such WealthCraft Shareholder in reliance upon the truth
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and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of such WealthCraft Shareholder set
forth in this Agreement, in order that the Acquiror Company may determine
the applicability and availability of the exemptions from registration of
the Exchange Shares on which the Acquiror Company is relying.
(c) REPRESENTATIONS OF NON-U.S. PERSONS. Such WealthCraft Shareholder
that is acknowledging that such WealthCraft Shareholder not a U.S. Person
on the signature page hereto further makes the representations and
warranties to the Acquiror Company set forth on Exhibit D.
(d) STOCK LEGENDS. Each WealthCraft Shareholder hereby agrees with the
Acquiror Company to the inclusion, as applicable of the following legends,
or legends substantially similar, on the certificates for the Exchange
Shares and any other legend required under any applicable Law, including,
without limitation, any United States state corporate and state securities
law, or contract:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT
(1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE
STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE ISSUER AN OPINION OF COUNSEL, WHICH COUNSEL
AND OPINION ARE REASONABLY SATISFACTORY TO THE ISSUER, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE
STATE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT
(1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER
THE ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO THE ISSUER, THAT THE PROVISIONS OF
REGULATION S HAVE BEEN SATISFIED (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
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LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH
CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE ISSUER AN
OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE ISSUER, THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT AND APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
(e) OPINION. No WealthCraft Shareholder will transfer any or all of
the Exchange Shares pursuant to Regulation S or absent an effective
registration statement under the Securities Act and applicable state
securities law covering the disposition of such WealthCraft Shareholder's
Exchange Shares, without first providing the Acquiror Company with an
opinion of counsel (which counsel and opinion are reasonably satisfactory
to the Acquiror Company) to the effect that such transfer will be made in
compliance with Regulation S or will be exempt from the registration and
the prospectus delivery requirements of the Securities Act and the
registration or qualification requirements of any applicable United States
state securities laws.
(f) CONSENT. Each WealthCraft Shareholder understands and acknowledges
that the Acquiror Company may refuse to transfer the Exchange Shares,
unless such WealthCraft Shareholder complies with this Section 4.2 and any
other restrictions on transferability set forth in Exhibit D. Each
WealthCraft Shareholder consents to the Acquiror Company making a notation
on its records or giving instructions to any transfer agent of the Acquiror
Company's Common Stock in order to implement the restrictions on transfer
of the Exchange Shares.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF WEALTHCRAFT
WealthCraft represents and warrants to the Acquiror Company as follows:
Section 5.1 ORGANIZATION AND QUALIFICATION. WealthCraft is duly organized
and validly existing under the laws of the HKSAR, has all requisite authority
and power (corporate and other), governmental licenses, authorizations, consents
and approvals to carry on its business as presently conducted and as
contemplated to be conducted, to own, hold and operate its properties and assets
as now owned, held and operated by it, to enter into this Agreement, to carry
out the provisions hereof except where the failure to be so organized, existing
and, if applicable, in good standing or to have such authority or power will
not, in the aggregate, either (i) have a Material Adverse Effect on WealthCraft,
or (ii) materially impair the ability of WealthCraft and the WealthCraft
Shareholders each to perform their material obligations under this Agreement.
WealthCraft is duly qualified, licensed or domesticated as a foreign corporation
in good standing in each jurisdiction wherein the nature of its activities or
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its properties owned or leased makes such qualification, licensing or
domestication necessary, except where the failure to be so qualified, licensed
or domesticated will not have a Material Adverse Effect. Set forth on Schedule
5.1 is a list of those jurisdictions in which WealthCraft presently conducts its
business or owns, holds and operates its properties and assets.
Section 5.2 SUBSIDIARIES. Except as set forth on Schedule 5.2, WealthCraft
does not own directly or indirectly, any equity or other ownership interest in
any Person. Each WealthCraft Subsidiary is duly organized and validly existing
under the laws of the jurisdiction of its organization as set forth on Schedule
5.2, has all requisite authority and power (corporate and other), governmental
licenses, authorizations, consents and approvals to carry on its business as
presently conducted and as contemplated to be conducted, to own, hold and
operate its properties and assets as now owned, held and operated by it, except
where the failure to be so organized, existing and in good standing or to have
such authority or power will not, in the aggregate, have a Material Adverse
Effect. Each WealthCraft Subsidiary is duly qualified, licensed or domesticated
as a foreign corporation in good standing in each jurisdiction wherein the
nature of its activities or its properties owned or leased makes such
qualification, licensing or domestication necessary, except where the failure to
be so qualified, licensed or domesticated will not have a Material Adverse
Effect. Set forth on Schedule 5.2 is a list of those jurisdictions in which any
WealthCraft Subsidiary presently conducts its business or owns, holds and
operates its properties and assets.
Section 5.3 ARTICLES OF ASSOCIATION AND GOVERNING RULES. True, correct and
complete copies of the Organizational Documents of WealthCraft and each
WealthCraft Subsidiary have been delivered to the Acquiror Company prior to the
execution of this Agreement, and no action has been taken to amend or repeal
such Organizational Documents. WealthCraft is not in violation or breach of any
of the provisions of its Organizational Documents, except for such violations or
breaches as would not have a Material Adverse Effect.
Section 5.4 AUTHORIZATION AND VALIDITY OF THIS AGREEMENT AND THE
TRANSACTION DOCUMENTS. The recording of the transfer of the WealthCraft Shares
and the delivery of new certificates representing the WealthCraft Shares
registered in the name of Acquiror Company are within WealthCraft's corporate
powers, have been duly authorized by all necessary corporate action, do not
require from the WealthCraft Board or WealthCraft Shareholders any consent or
approval that has not been validly and lawfully obtained, and require no
authorization, consent, approval, license, exemption of or filing or
registration with any Governmental Authority, as the case may be, except for
those that, if not obtained or made would not have a Material Adverse Effect.
Section 5.5 NO VIOLATIONS. None of the execution, delivery or performance
by WealthCraft of this Agreement or any Transaction Document to which
WealthCraft is a party, nor the consummation by WealthCraft of the transactions
contemplated hereby violates any provision of its Organizational Documents, or
violates or conflicts with, or constitute a default (or an event or condition
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination or acceleration of, or result in the creation of
imposition of any Lien under, any agreement or instrument to which WealthCraft
is a party or by which WealthCraft is or will be bound or subject, or violate
any Laws.
11
Section 5.6 BINDING OBLIGATIONS. Assuming this Agreement has been duly and
validly authorized, executed and delivered by the Acquiror Company, the Acquiror
Company Shareholders and the WealthCraft Shareholders, this Agreement is and all
agreements or instruments contemplated hereby to which WealthCraft is a party,
will be, duly authorized, executed and delivered by WealthCraft and are the
legal, valid and binding Agreement of WealthCraft and is enforceable against
WealthCraft in accordance with their respective terms, except as such
enforcement is limited by general equitable principles, or by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors rights
generally.
Section 5.7 CAPITALIZATION AND RELATED MATTERS.
(a) CAPITALIZATION. The authorized capital stock of WealthCraft
consists of HK$39,274,695 divided into 10,148,500 ordinary shares of
HK$3.87 each. Except as set forth in Schedule 5.7(a), there are no
outstanding or authorized options, warrants, calls, subscriptions, rights
(including any preemptive rights or rights of first refusal), agreements or
commitments of any character obligating WealthCraft to issue any ordinary
shares or any other Equity Securities of WealthCraft. All issued and
outstanding shares of WealthCraft's capital stock are duly authorized,
validly issued, fully paid and nonassessable and have not been issued in
violation of any preemptive or similar rights.
(b) NO REDEMPTION REQUIREMENTS. Except as set forth in Schedule
5.7(b), there are no outstanding contractual obligations (contingent or
otherwise) of WealthCraft to retire, repurchase, redeem or otherwise
acquire any outstanding shares of capital stock of, or other Equity
Securities in, WealthCraft or to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any other
Person.
(c) DUE AUTHORIZATION. The exchange of the WealthCraft Shares has been
duly authorized, and the WealthCraft Shares have been validly issued and
are fully paid and nonassessable.
(d) SHAREHOLDERS. Exhibit B contains a true and complete list of the
names and addresses of the record and beneficial holders of all of the
outstanding capital stock of WealthCraft and each Subsidiary of
WealthCraft. Except as expressly provided in this Agreement or on Schedule
5.7(a), no holder of WealthCraft Shares or any other Equity Security of
WealthCraft or any other Person is entitled to any preemptive right, right
of first refusal or similar right as a result of the issuance of the
WealthCraft Shares, the transactions contemplated hereby or otherwise.
Except as set forth on Schedule 5.7(a), there is no voting trust, agreement
or arrangement among any of the WealthCraft Shareholders of any capital
stock of WealthCraft affecting the exercise of the voting rights of any
such capital stock.
Section 5.8 COMPLIANCE WITH LAWS; NO DEFAULTS. Except as would not have a
Material Adverse Effect, the business and operations of WealthCraft have been
and are being conducted in accordance with all applicable Laws and all
applicable Orders of all Governmental Authorities. Except as would not have a
Material Adverse Effect, WealthCraft is not, and is not alleged to be, in
violation of, or (with or without notice or lapse of time or both) in default
under, or in breach of, any term or provision of its Organizational Documents or
of any indenture, loan or credit agreement, note, deed of trust, mortgage,
12
security agreement or other material agreement, lease, license or other
instrument, commitment, obligation or arrangement to which WealthCraft is a
party or by which any of WealthCraft's properties, assets or rights are bound or
affected. To the knowledge of WealthCraft, no other party to any material
contract, agreement, lease, license, commitment, instrument or other obligation
to which WealthCraft is a party is (with or without notice or lapse of time or
both) in default thereunder or in breach of any term thereof. WealthCraft is not
subject to any obligation or restriction of any kind or character, nor is there,
to the knowledge of WealthCraft, any event or circumstance relating to
WealthCraft that materially and adversely affects in any way its business,
properties, assets or prospects or that would prevent or make burdensome its
performance of or compliance with all or any part of this Agreement or the
consummation of the transactions contemplated hereby or thereby.
Section 5.9 CERTAIN PROCEEDINGS. There is no pending Proceeding that has
been commenced against WealthCraft and that challenges, or may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, any of
the transactions contemplated by this Agreement. To WealthCraft's knowledge, no
such Proceeding has been threatened.
Section 5.10 NO BROKERS OR FINDERS. Except as disclosed in Schedule 5.10,
no Person has, or as a result of the transactions contemplated hereby will have,
any right or valid claim against WealthCraft for any commission, fee or other
compensation as a finder or broker, or in any similar capacity.
Section 5.11 TITLE TO AND CONDITION OF PROPERTIES. WealthCraft owns or
holds under valid leases or other rights to use all real property, plants,
machinery and equipment necessary for the conduct of the business of WealthCraft
as presently conducted, except where the failure to own or hold such property,
plants, machinery and equipment would not have a Material Adverse Effect.
Section 5.12 WEALTHCRAFT BOARD RECOMMENDATION. The WealthCraft Board has,
by unanimous written consent, determined that this Agreement and the
transactions contemplated by this Agreement, are advisable and in the best
interests of the WealthCraft Shareholders.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR COMPANY AND THE
ACQUIROR COMPANY SHAREHOLDERS
The Acquiror Company and the Acquiror Company Shareholders, jointly and
severally, represent and warrant to the WealthCraft Shareholders and WealthCraft
as follows:
Section 6.1 ORGANIZATION AND QUALIFICATION. The Acquiror Company is duly
organized, validly existing and in good standing under the laws of the State of
Nevada, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to carry on its
business as presently conducted and to own, hold and operate its properties and
assets as now owned, held and operated by it, except where the failure to be so
organized, existing and in good standing, or to have such authority and power,
governmental licenses, authorizations, consents or approvals would not have a
Material Adverse Effect. The Acquiror Company is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned, held or operated
13
makes such qualification, licensing or domestication necessary, except where the
failure to be so duly qualified, licensed or domesticated and in good standing
would not have a Material Adverse Effect. Schedule 6.1 sets forth a true,
correct and complete list of the Acquiror Company's jurisdiction of organization
and each other jurisdiction in which the Acquiror Company presently conducts its
business or owns, holds and operates its properties and assets.
Section 6.2 SUBSIDIARIES. The Acquiror Company does not own, directly or
indirectly, any Equity Securities or other ownership interest in any Person.
Section 6.3 ORGANIZATIONAL DOCUMENTS. True, correct and complete copies of
the Organizational Documents of the Acquiror Company have been delivered to
WealthCraft prior to the execution of this Agreement, and no action has been
taken to amend or repeal such Organizational Documents. The Acquiror Company is
not in violation or breach of any of the provisions of its Organizational
Documents, except for such violations or breaches as would not have a Material
Adverse Effect.
Section 6.4 AUTHORIZATION. The Acquiror Company has all requisite authority
and power (corporate and other), governmental licenses, authorizations, consents
and approvals to enter into this Agreement and each of the Transaction Documents
to which the Acquiror Company is a party, to consummate the transactions
contemplated by this Agreement and each of the Transaction Documents to which
the Acquiror Company is a party and to perform its obligations under this
Agreement and each of the Transaction Documents to which the Acquiror Company is
a party. The execution, delivery and performance by the Acquiror Company of this
Agreement and each of the Transaction Documents to which the Acquiror Company is
a party have been duly authorized by all necessary corporate action and do not
require from the Acquiror Company Board or the stockholders of the Acquiror
Company any consent or approval that has not been validly and lawfully obtained.
The execution, delivery and performance by the Acquiror Company of this
Agreement and each of the Transaction Documents to which the Acquiror Company is
a party requires no authorization, consent, approval, license, exemption of, or
filing or registration with, any Governmental Authority or other Person other
than (a) the Schedule 14(f) Filing, and (b) such other customary filings with
the Commission for transactions of the type contemplated by this Agreement.
Section 6.5 NO VIOLATION. Neither the execution nor the delivery by the
Acquiror Company of this Agreement or any Transaction Document to which the
Acquiror Company is a party, nor the consummation or performance by the Acquiror
Company of the transactions contemplated hereby or thereby will, directly or
indirectly, (a) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of the Acquiror Company; (b)
contravene, conflict with, constitute a default (or an event or condition which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or acceleration of, or result in the imposition or
creation of any Lien under, any agreement or instrument to which the Acquiror
Company is a party or by which the properties or assets of the Acquiror Company
are bound; (c) contravene, conflict with, or result in a violation of, any Law
or Order to which the Acquiror Company, or any of the properties or assets owned
or used by the Acquiror Company, may be subject; or (d) contravene, conflict
with, or result in a violation of, the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate
14
or modify, any licenses, permits, authorizations, approvals, franchises or other
rights held by the Acquiror Company or that otherwise relate to the business of,
or any of the properties or assets owned or used by, the Acquiror Company,
except, in the case of clause (b), (c), or (d), for any such contraventions,
conflicts, violations, or other occurrences as would not have a Material Adverse
Effect.
Section 6.6 BINDING OBLIGATIONS. Assuming this Agreement and the
Transaction Documents have been duly and validly authorized, executed and
delivered by the parties thereto other than the Acquiror Company, this Agreement
and each of the Transaction Documents to which the Acquiror Company is a party
are duly authorized, executed and delivered by the Acquiror Company and
constitutes or will constitute the legal, valid and binding obligations of the
Acquiror Company, enforceable against the Acquiror Company in accordance with
its terms, except as such enforcement is limited by general equitable
principles, or by bankruptcy, insolvency and other similar Laws affecting the
enforcement of creditors rights generally.
Section 6.7 SECURITIES LAWS. Assuming the accuracy of the representations
and warranties of the WealthCraft Shareholders contained in Section 4 and
Exhibits D, the issuance of the Exchange Shares pursuant to this Agreement (a)
is exempt from the registration and prospectus delivery requirements of the
Securities Act, (b) has been registered or qualified (or are exempt from
registration and qualification) under the registration permit or qualification
requirements of all applicable state securities Laws, and (c) has been
accomplished in conformity with all other applicable United States federal and
state securities Laws.
Section 6.8 CAPITALIZATION AND RELATED MATTERS.
(a) CAPITALIZATION. The authorized capital stock of the Acquiror
Company consists of 25,000,000 shares of the Acquiror Company's Common
Stock, of which 7,700,000 shares are issued and outstanding. All issued and
outstanding shares of the Acquiror Company's Common Stock are duly
authorized, validly issued, fully paid and nonassessable, and have not been
issued in violation of any preemptive or similar rights. At the Closing
Date, the Acquiror Company will have sufficient authorized and unissued
Acquiror Company's Common Stock to consummate the transactions contemplated
hereby. Except as disclosed in the SEC Documents, there are no outstanding
options, warrants, purchase agreements, participation agreements,
subscription rights, conversion rights, exchange rights or other Equity
Securities or contracts that could require the Acquiror Company to issue,
sell or otherwise cause to become outstanding any of its authorized but
unissued shares of capital stock or any Equity Securities or Equity
Securities convertible into, exchangeable for or carrying a right or option
to purchase Equity Securities or to create, authorize, issue, sell or
otherwise cause to become outstanding any new class of Equity Securities.
There are no outstanding stockholders' agreements, voting trusts or
arrangements, registration rights agreements, rights of first refusal or
other contracts pertaining to the Equity Securities of the Acquiror
Company. The issuance of all of the shares of Acquiror Company's Common
Stock described in this Section 6.8(a) have been in compliance with United
States federal and state securities Laws.
(b) NO REDEMPTION REQUIREMENTS. Except as set forth in the SEC
Documents, there are no outstanding contractual obligations (contingent or
otherwise) of the Acquiror Company to retire, repurchase, redeem or
otherwise acquire any Equity Securities of shares of capital stock of, or
15
other Equity Securities of, the Acquiror Company or to provide funds to or
make any investment (in the form of a loan, capital contribution or
otherwise) in any other Person.
(c) DUE AUTHORIZATION. The issuance of the Exchange Shares has been
duly authorized and, upon delivery to the WealthCraft Shareholders of
certificates therefor in accordance with the terms of this Agreement, the
Exchange Shares will have been validly issued and fully paid, and will be
nonassessable, have the rights, preferences and privileges specified, will
be free of preemptive rights and will be free and clear of all Liens and
restrictions, other than Liens created by the WealthCraft Shareholders and
restrictions on transfer imposed by this Agreement and the Securities Act.
Section
6.9 COMPLIANCE WITH LAWS. Except as would not have a Material Adverse
Effect, the business and operations of the Acquiror Company have been and are
being conducted in accordance with all applicable Laws and Orders. Except as
would not have a Material Adverse Effect, the Acquiror Company has not received
notice of any violation (or any Proceeding involving an allegation of any
violation) of any applicable Law or Order by or affecting such Acquiror Company
and, to the knowledge of the Acquiror Company, no Proceeding involving an
allegation of violation of any applicable Law or Order is threatened or
contemplated. Except as would not have a Material Adverse Effect, the Acquiror
Company is not subject to any obligation or restriction of any kind or
character, nor is there, to the knowledge of the Acquiror Company, any event or
circumstance relating to the Acquiror Company that materially and adversely
affects in any way its business, properties, assets or prospects or that
prohibits the Acquiror Company from entering into this Agreement or would
prevent or make burdensome its performance of or compliance with all or any part
of this Agreement or the consummation of the transactions contemplated hereby.
Section
6.10 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against the Acquiror Company. To the knowledge of the Acquiror
Company, no such Proceeding has been threatened. Section
6.11 NO BROKERS OR FINDERS. No Person has, or as a result of the
transactions contemplated hereby will have, any right or valid claim against the
Acquiror Company for any commission, fee or other compensation as a finder or
broker, or in any similar capacity. Section
6.12 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the SEC
Documents, the Acquiror Company has no debt, obligation or liability (whether
accrued, absolute, contingent, liquidated or otherwise, whether due or to become
due, whether or not known to the Acquiror Company) arising out of any
transaction entered into at or prior to the Closing Date or any act or omission
at or prior to the Closing Date, except to the extent set forth on or reserved
against on the Acquiror Company Balance Sheet. All debts, obligations or
liabilities with respect to directors and officers will be cancelled prior to
the Closing. The Acquiror Company has not incurred any liabilities or
obligations under agreements entered into in the usual and ordinary course of
business since July 1, 2006. The Acquiror Company Balance Sheet provides a true
and fair view of the assets and liabilities (whether accrued, absolute,
contingent, liquidated or otherwise, whether due or to become due, whether or
not known to Acquiror Company) as at September 30, 2006.
16
Section 6.13 CHANGES. Except as set forth in the SEC Documents, the
Acquiror Company has , since September 30, 2006, conducted its business in the
ordinary course and has not:
(a) NON-ORDINARY COURSE TRANSACTIONS. Entered into any transaction
other than in the usual and ordinary course of business, except for this
Agreement.
(b) ADVERSE CHANGES. Suffered or experienced any change in, or
affecting, its condition (financial or otherwise), properties, assets,
liabilities, business, operations, results of operations or prospects other
than changes, events or conditions in the usual and ordinary course of its
business, none of which would have a Material Adverse Effect;
(c) LOANS. Made any loans or advances to any Person;
(d) LIENS. Created or permitted to exist any Lien on any material
property or asset of the Acquiror Company, other than Permitted Liens;
(e) CAPITAL STOCK. Issued, sold, disposed of or encumbered, or
authorized the issuance, sale, disposition or encumbrance of, or granted or
issued any option to acquire any shares of its capital stock or any other
of its securities or any Equity Security, or altered the term of any of its
outstanding securities or made any change in its outstanding shares of
capital stock or its capitalization, whether by reason of reclassification,
recapitalization, stock split, combination, exchange or readjustment of
shares, stock dividend or otherwise;
(f) DIVIDENDS. Declared, set aside, made or paid any dividend or other
distribution to any of its stockholders;
(g) MATERIAL CONTRACTS. Terminated or modified any Material Acquiror
Company Contract, except for termination upon expiration in accordance with
the terms thereof;
(h) CLAIMS. Released, waived or cancelled any claims or rights
relating to or affecting the Acquiror Company in excess of US $10,000 in
the aggregate or instituted or settled any Proceeding involving in excess
of US $10,000 in the aggregate;
(i) DISCHARGE OF LIABILITIES. Paid, discharged or satisfied any claim,
obligation or liability in excess of US $10,000 in the aggregate, except
for claims, obligations or liabilities incurred prior to the date of this
Agreement in the ordinary course of business;
(j) INDEBTEDNESS. Created, incurred, assumed or otherwise become
liable for any Indebtedness in excess of US $10,000 in the aggregate, other
than professional fees relating to the SEC Documents or the transactions
contemplated hereby;
(k) GUARANTEES. Guaranteed or endorsed in a material amount any
obligation or net worth of any Person;
(l) ACQUISITIONS. Acquired the capital stock or other securities or
any ownership interest in, or substantially all of the assets of, any other
Person;
17
(m) ACCOUNTING. Changed its method of accounting or the accounting
principles or practices utilized in the preparation of its financial
statements, other than as required by GAAP;
(n) AGREEMENTS. Except as set forth in the SEC Documents, entered into
any agreement, or otherwise obligated itself, to do any of the foregoing.
Section 6.14 MATERIAL CONTRACTS.
(a) Except to the extent filed with the SEC Documents, the Acquiror
Company has made available to WealthCraft, prior to the date of this
Agreement, true, correct and complete copies of each written Material
Acquiror Company Contract, including each amendment, supplement and
modification thereto.
(b) ABSENCE OF DEFAULTS. Each Material Acquiror Company Contract is a
valid and binding agreement of the Acquiror Company and, to the knowledge
of the Acquiror Company, the other parties thereto, and each such Material
Company Contract is in full force and effect. Except as would not have a
Material Adverse Effect, the Acquiror Company is not in breach or default
of any Material Acquiror Company Contract to which it is a party and, to
the knowledge of the Acquiror Company, no other party to any Material
Acquiror Company Contract is in breach or default thereof. Except as would
not have a Material Adverse Effect, no event has occurred or circumstance
exists that (with or without notice or lapse of time) would (a) contravene,
conflict with or result in a violation or breach of, or become a default or
event of default under, any provision of any Material Acquiror Company
Contract or (b) permit the Acquiror Company or any other Person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or modify any Material
Acquiror Company Contract. The Acquiror Company has not received notice of
the pending or threatened cancellation, revocation or termination of any
Material Acquiror Company Contract to which it is a party. There are no
renegotiations of, or attempts to renegotiate, or outstanding rights to
renegotiate any material terms of any Material Acquiror Company Contract.
Section 6.15 EMPLOYEES.
(a) The Acquiror Company has no employees, independent contractors or
other Persons providing research or other services to it. Except as would
not have a Material Adverse Effect, the Acquiror Company is and has been in
full compliance with all Laws regarding employment, wages, hours, benefits,
equal opportunity, collective bargaining, the payment of Social Security
and other taxes, occupational safety and health and plant closing. The
Acquiror Company is not liable for the payment of any compensation,
damages, taxes, fines, penalties or other amounts, however designated, for
failure to comply with any of the foregoing Laws.
(b) No director, officer or employee of the Acquiror Company is a
party to, or is otherwise bound by, any contract (including any
confidentiality, noncompetition or proprietary rights agreement) with any
other Person and each employee of the Acquiror Company is employed on an
at-will basis.
18
Section 6.16 TAX RETURNS AND AUDITS.
(a) TAX RETURNS. The Acquiror Company has filed all Tax Returns
required to be filed by or on behalf of the Acquiror Company and has paid
all Taxes of the Acquiror Company required to have been paid (whether or
not reflected on any Tax Return). Except as set forth in the SEC Documents,
(a) no Governmental Authority in any jurisdiction has made a claim,
assertion or threat to the Acquiror Company that the Acquiror Company is or
may be subject to taxation by such jurisdiction; (b) there are no Liens
with respect to Taxes on the Acquiror Company's property or assets other
than Permitted Liens; and (c) there are no Tax rulings, requests for
rulings, or closing agreements relating to the Acquiror Company for any
period (or portion of a period) that would affect any period after the date
hereof.
(b) NO ADJUSTMENTS OR CHANGES. Neither the Acquiror Company nor any
other Person on behalf of the Acquiror Company (a) has executed or entered
into a closing agreement pursuant to Section 7121 of the Code or any
predecessor provision thereof or any similar provision of Law; or (b) has
agreed to or is required to make any adjustments pursuant to Section 481(a)
of the Code or any similar provision of Law.
(c) NO DISPUTES. There is no pending audit, examination,
investigation, dispute, Proceeding or claim with respect to any Taxes of
the Acquiror Company, nor is any such claim or dispute pending or
contemplated, nor is there any basis for any such dispute, Proceeding or
claim. The Acquiror Company has delivered to WealthCraft true, correct and
complete copies of all Tax Returns, if any, examination reports and
statements of deficiencies assessed or asserted against or agreed to by the
Acquiror Company since its inception and any and all correspondence with
respect to the foregoing.
(d) REAL PROPERTY HOLDING COMPANY. The Acquiror Company is not and has
not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code at any time during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code.
(e) NO TAX ALLOCATION OR SHARING AGREEMENTS. The Acquiror Company is
not a party to any Tax allocation or sharing agreement. The Acquiror
Company (a) has not been a member of a Tax Group filing a consolidated
income Tax Return under Section 1501 of the Code (or any similar provision
of state, local or foreign law), and (b) has no liability for Taxes for any
Person under Treasury Regulations Section 1.1502-6 (or any similar
provision of Law) as a transferee or successor, by contract or otherwise.
(f) NO OTHER TAX RELATED AGREEMENTS. The Acquiror Company is not a
party to any agreement, contract or arrangement for services that would
result, individually or in the aggregate, in the payment of any amount that
would not be deductible by reason of Section 162(m), 280G or 404 of the
Code. The Acquiror Company is not a "consenting corporation" within the
meaning of Section 341(f) of the Code. The Acquiror Company does not have
any "tax-exempt bond financed property" or "tax-exempt use property" within
the meaning of Section 168(g) or (h), respectively of the Code. The
Acquiror Company does not have any outstanding closing agreement, ruling
request, request for consent to change a method of accounting, subpoena or
request for information to or from a Governmental Authority in connection
19
with any Tax matter. During the last two years, the Acquiror Company has
not engaged in any exchange with a related party (within the meaning of
Section 1031(f) of the Code) under which gain realized was not recognized
by reason of Section 1031 of the Code.
Section 6.17 MATERIAL ASSETS. The financial statements of the Acquiror
Company set forth in the SEC Documents reflect the material properties and
assets (real and personal) owned or leased by the Acquiror Company.
Section 6.18 INSURANCE. The Acquiror Company has made available to
WealthCraft, prior to the date of this Agreement, true, correct and complete
copies of any insurance policies maintained by the Acquiror Company on its
properties and assets. Except as would not have a Material Adverse Effect, all
of such policies (a) taken together, provide adequate insurance coverage for the
properties, assets and operations of each Acquiror Company for all risks
normally insured against by a Person carrying on the same business as such
Acquiror Company, and (b) are sufficient for compliance with all applicable Laws
and Material Acquiror Company Contracts. Except as would not have a Material
Adverse Effect, all of such policies are valid, outstanding and in full force
and effect and, by their express terms, will continue in full force and effect
following the consummation of the transactions contemplated by this Agreement.
Except as set forth in the SEC Documents, the Acquiror Company has not received
(x) any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (y) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder. All premiums due on such insurance policies on or prior
to the date hereof have been paid. There are no pending claims with respect to
the Acquiror Company or its properties or assets under any such insurance
policies, and there are no claims as to which the insurers have notified the
Acquiror Company that they intend to deny liability. There is no existing
default under any such insurance policies.
Section 6.19 LITIGATION; ORDERS. Except as set forth in the SEC Documents,
there is no Proceeding (whether federal, state, local or foreign) pending or, to
the knowledge of the Acquiror Company, threatened against or affecting the
Acquiror Company or the Acquiror Company's properties, assets, business or
employees. To the knowledge of the Acquiror Company, there is no fact that might
result in or form the basis for any such Proceeding. The Acquiror Company is not
subject to any Orders.
Section 6.20 LICENSES. Except as would not have a Material Adverse Effect,
the Acquiror Company possesses from the appropriate Governmental Authority all
licenses, permits, authorizations, approvals, franchises and rights that are
necessary for the Acquiror Company to engage in its business as currently
conducted and to permit the Acquiror Company to own and use its properties and
assets in the manner in which it currently owns and uses such properties and
assets (collectively, "ACQUIROR COMPANY PERMITS"). The Acquiror Company has not
received notice from any Governmental Authority or other Person that there is
lacking any license, permit, authorization, approval, franchise or right
necessary for the Acquiror Company to engage in its business as currently
conducted and to permit the Acquiror Company to own and use its properties and
assets in the manner in which it currently owns and uses such properties and
assets. Except as would not have a Material Adverse Effect, the Acquiror Company
Permits are valid and in full force and effect. Except as would not have a
Material Adverse Effect, no event has occurred or circumstance exists that may
20
(with or without notice or lapse of time): (a) constitute or result, directly or
indirectly, in a violation of or a failure to comply with any Acquiror Company
Permit; or (b) result, directly or indirectly, in the revocation, withdrawal,
suspension, cancellation or termination of, or any modification to, any Acquiror
Company Permit. The Acquiror Company has not received notice from any
Governmental Authority or any other Person regarding: (a) any actual, alleged,
possible or potential contravention of any Acquiror Company Permit; or (b) any
actual, proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to, any Acquiror Company Permit.
All applications required to have been filed for the renewal of such Company
Permits have been duly filed on a timely basis with the appropriate Persons, and
all other filings required to have been made with respect to such Acquiror
Company Permits have been duly made on a timely basis with the appropriate
Persons. All Acquiror Company Permits are renewable by their terms or in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine fees or
similar charges, all of which have, to the extent due, been duly paid.
Section 6.21 INTERESTED PARTY TRANSACTIONS. No officer, director or
stockholder of the Acquiror Company or any Affiliate or "associate" (as such
term is defined in Rule 405 under the Securities Act) of any such Person, has or
has had, either directly or indirectly, (1) an interest in any Person which (a)
furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Acquiror Company, or (b) purchases from
or sells or furnishes to, or proposes to purchase from, sell to or furnish any
Acquiror Company any goods or services; or (2) a beneficial interest in any
contract or agreement to which the Acquiror Company is a party or by which it
may be bound or affected.
Section 6.22 GOVERNMENTAL INQUIRIES. The Acquiror Company has provided to
WealthCraft a copy of each material written inspection report, questionnaire,
inquiry, demand or request for information received by the Acquiror Company from
any Governmental Authority, and the Acquiror Company's response thereto, and
each material written statement, report or other document filed by the Acquiror
Company with any Governmental Authority.
Section 6.23 BANK ACCOUNTS AND SAFE DEPOSIT BOXES. The Acquiror Company
does not use a deposit or financial account, a lock box, or a safety deposit
box, in its business as presently conducted.
Section 6.24 INTELLECTUAL PROPERTY. The Acquiror Company does not own, use
or license any Intellectual Property in its business as presently conducted,
except as set forth in the SEC Documents. None of the intellectual property
owned by the Acquiror Company infringes on the rights of any person.
Section 6.25 TITLE TO AND CONDITION OF PROPERTIES. Except as would not have
a Material Adverse Effect, the Acquiror Company owns good and marketable title
to, or holds under valid leases or other rights to use, all real property,
plants, machinery, equipment and other personal property necessary for the
conduct of its business as presently conducted, free and clear of all Liens,
except Permitted Liens. The material buildings, plants, machinery and equipment
necessary for the conduct of the business of the Acquiror Company as presently
conducted are structurally sound, are in good operating condition and repair and
21
are adequate for the uses to which they are being put, and none of such
buildings, plants, machinery or equipment is in need of maintenance or repairs,
except for ordinary, routine maintenance and repairs that are not material in
nature or cost.
Section 6.26 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Acquiror Company has
filed all reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the three (3) years preceding
the date hereof (the foregoing materials being collectively referred to herein
as the "SEC DOCUMENTS") and is current with respect to its Exchange Act filing
requirements. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statement therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Acquiror Company included in the SEC Documents comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing, were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto,
or, in the case of unaudited statements as permitted by Form 10-Q adopted by the
Commission), and fairly present in all material respects (subject in the case of
unaudited statements, to normal, recurring audit adjustments) the financial
position of the Acquiror Company as at the dates thereof and the results of its
operations and cash flows for the periods then ended. The Acquiror Company is
not aware of any facts which would make the Acquiror Company's Common Stock
ineligible for quotation on the OTC Bulletin Board.
Section 6.27 STOCK OPTION PLANS; EMPLOYEE BENEFITS.
(a) STOCK OPTION PLANS. The Acquiror Company has no stock option plans
providing for the grant by the Acquiror Company of stock options to
directors, officers or employees.
(b) EMPLOYEE BENEFIT PLANS. The Acquiror Company has no employee
benefit plans or arrangements covering its present and former employees or
providing benefits to such persons in respect of services provided the
Acquiror Company.
Section 6.28 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in the
SEC Documents and except as would not have a Material Adverse Effect, the
Acquiror Company has at all time been and is in compliance with all
Environmental Laws applicable to the Acquiror Company. There are no Proceedings
pending or threatened against the Acquiror Company alleging the violation of any
Environmental Law or Environmental Permit applicable to the Acquiror Company or
alleging that the Acquiror Company is a potentially responsible party for any
environmental site contamination. Neither this Agreement nor the consummation of
the transactions contemplated by this Agreement shall impose any obligations to
notify or obtain the consent of any Governmental Authority or third Persons
under any Environmental Laws applicable to the Acquiror Company.
22
Section 6.29 MONEY LAUNDERING LAWS. The operations of the Acquiror Company
are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all Governmental Authorities, and the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any Governmental Authority (collectively, the "MONEY LAUNDERING
LAWS") and no Proceeding involving the Acquiror Company with respect to the
Money Laundering Laws is pending or, to the knowledge of the Acquiror Company,
threatened.
Section 6.30 BOARD RECOMMENDATION. The Acquiror Company Board, at a meeting
duly called and held, has determined that this Agreement and the transactions
contemplated by this Agreement are advisable and in the best interests of the
Acquiror Company's stockholders.
ARTICLE VII.
COVENANTS OF THE ACQUIROR COMPANY
Section 7.1 RULE 144 REPORTING. With a view to making available to the
Acquiror Company's stockholders the benefit of certain rules and regulations of
the Commission which may permit the sale of the Acquiror Company Common Stock to
the public without registration, from and after the Closing Date, the Acquiror
Company agrees to make and keep public information available, as those terms are
understood and defined in Rule 144; and file with the Commission, in a timely
manner, all reports and other documents required of the Acquiror Company under
the Exchange Act.
Section 7.2 SEC DOCUMENTS. From and after the Closing Date, in the event
the Commission notifies the Acquiror Company of its intent to review any SEC
Document filed prior to the Closing Date or the Acquiror Company receives any
oral or written comments from the Commission with respect to any SEC Document
filed prior to the Closing Date, the Acquiror Company shall promptly notify the
Acquiror Company Shareholders and the Acquiror Company Shareholders shall fully
cooperate with the Acquiror Company.
ARTICLE VIII.
CONDITIONS PRECEDENT OF THE ACQUIROR COMPANY
The Acquiror Company's obligation to acquire the WealthCraft Shares and to
take the other actions required to be taken by the Acquiror Company at the
Closing Date is subject to the satisfaction, at or prior to the Closing Date, of
each of the following conditions (any of which may be waived by the Acquiror
Company, in whole or in part):
Section 8.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
of WealthCraft and the WealthCraft Shareholders set forth in this Agreement or
in any Schedule or certificate delivered pursuant hereto that are not qualified
as to materiality shall be true and correct in all material respects as of the
date of this Agreement except to the extent a representation or warranty is
expressly limited by its terms to another date and without giving effect to any
supplemental Schedule. The representations and warranties of WealthCraft and the
WealthCraft Shareholders set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto that are qualified as to materiality shall
23
be true and correct in all respects as of the date of this Agreement, except to
the extent a representation or warranty is expressly limited by its terms to
another date and without giving effect to any supplemental Schedule.
Section 8.2 PERFORMANCE BY WEALTHCRAFT AND THE WEALTHCRAFT SHAREHOLDERS.
All of the covenants and obligations that WealthCraft and WealthCraft
Shareholders are required to perform or to comply with pursuant to this
Agreement (considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects. Each document required to be delivered by WealthCraft and
the WealthCraft Shareholders pursuant to this Agreement must have been
delivered.
Section 8.3 NO FORCE MAJEURE EVENT. There shall not have been any delay,
error, failure or interruption in the conduct of the business of WealthCraft, or
any loss, injury, delay, damage, distress, or other casualty, due to force
majeure, including but not limited to (a) acts of G-d; (b) fire or explosion;
(c) war, acts of terrorism or other civil unrest; or (d) national emergency.
Section 8.4 OFFICER'S CERTIFICATE. WealthCraft will have delivered to the
Acquiror Company a certificate executed by an officer of WealthCraft, certifying
the satisfaction by WealthCraft of the conditions specified in Sections 8.1,
8.2, and 8.3.
Section 8.5 WEALTHCRAFT SHAREHOLDERS' CERTIFICATE. Each WealthCraft
Shareholder will have delivered to the Acquiror Company a certificate executed
by such WealthCraft Shareholder, certifying the satisfaction of the conditions
of the WealthCraft Shareholders specified in Sections 8.1 and 8.2.
Section 8.6 CONSENTS. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by WealthCraft and/or the WealthCraft Shareholders for the authorization,
execution and delivery of this Agreement and the consummation by them of the
transactions contemplated by this Agreement, shall have been obtained and made
by WealthCraft or the WealthCraft Shareholders, as the case may be, except where
the failure to receive such consents, waivers, approvals, authorizations or
orders or to make such filings would not have a Material Adverse Effect on
WealthCraft or the Acquiror Company.
Section 8.7 DOCUMENTS. WealthCraft and the WealthCraft Shareholders shall
have delivered to the Acquiror Company at the Closing (a) share certificates
evidencing the number of WealthCraft Shares held by each WealthCraft Shareholder
(as set forth in Exhibit B), along with executed share transfer forms
transferring such WealthCraft Shares to the Acquiror Company together with a
certified copy, if required, of a board resolution of WealthCraft approving the
registration of the transfer of such shares to Acquiror Company (subject to
Closing), (b) each of the Transaction Documents to which WealthCraft and/or the
WealthCraft Shareholders is a party, duly executed, (c) and such other documents
as the Acquiror Company may reasonably request for the purpose of (i) evidencing
the accuracy of any of the representations and warranties of WealthCraft and the
WealthCraft Shareholders pursuant to Section 8.1, (ii) evidencing the
performance of, or compliance by WealthCraft and the WealthCraft Shareholders
with, any covenant or obligation required to be performed or complied with by
WealthCraft or the WealthCraft Shareholders, as the case may be, (iii)
24
evidencing the satisfaction of any condition referred to in this Section, or
(iv) otherwise facilitating the consummation or performance of any of the
transactions contemplated by this Agreement.
Section 8.8 NO PROCEEDINGS. There must not have been commenced or
threatened by any third party against the Acquiror Company, WealthCraft or any
WealthCraft Shareholder, or against any Affiliate thereof, any Proceeding (which
Proceeding remains unresolved as of the Closing Date) (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
transactions contemplated by this Agreement, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
transactions contemplated by this Agreement.
Section 8.9 NO CLAIM REGARDING STOCK OWNERSHIP OR CONSIDERATION. There
shall not have been made or threatened by any Person any claim asserting that
such Person (a) is the holder of, or has the right to acquire or to obtain
beneficial ownership of the WealthCraft Shares or any other stock, voting,
equity, or ownership interest in, WealthCraft, or (b) is entitled to all or any
portion of the Acquiror Company Shares.
ARTICLE IX.
CONDITIONS PRECEDENT OF WEALTHCRAFT
AND THE WEALTHCRAFT SHAREHOLDERS
The WealthCraft Shareholders' obligation to transfer the WealthCraft Shares
and the obligations of WealthCraft to take the other actions required to be
taken by WealthCraft in advance of or at the Closing Date are subject to the
satisfaction, at or prior to the Closing Date, of each of the following
conditions (any of which may be waived by WealthCraft and the WealthCraft
Shareholders jointly, in whole or in part):
Section 9.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
of the Acquiror Company and Acquiror Company Shareholders set forth in this
Agreement or in any Schedule or certificate delivered pursuant hereto that are
not qualified as to materiality shall be true and correct in all material
respects as of the date of this Agreement except to the extent a representation
or warranty is expressly limited by its terms to another date and without giving
effect to any supplemental Schedule. The representations and warranties of the
Acquiror Company and Acquiror Company Shareholders set forth in this Agreement
or in any Schedule or certificate delivered pursuant hereto that are qualified
as to materiality shall be true and correct in all respects as of the date of
this Agreement, except to the extent a representation or warranty is expressly
limited by its terms to another date and without giving effect to any
supplemental Schedule.
Section 9.2 PERFORMANCE BY THE ACQUIROR COMPANY.
(a) All of the covenants and obligations that the Acquiror Company and
Acquiror Company Shareholders are required to perform or to comply with
pursuant to this Agreement (considered collectively), and each of these
covenants and obligations (considered individually), must have been
performed and complied with in all respects.
(b) Each document required to be delivered by the Acquiror Company and
Acquiror Company Shareholders pursuant to this Agreement must have been
delivered.
25
Section 9.3 NO FORCE MAJEURE EVENT. There shall not have been any delay,
error, failure or interruption in the conduct of the business of the Acquiror
Company, or any loss, injury, delay, damage, distress, or other casualty, due to
force majeure including but not limited to (a) acts of G-d; (b) fire or
explosion; (c) war, acts of terrorism or other civil unrest; or (d) national
emergency.
Section 9.4 CERTIFICATE OF OFFICER. The Acquiror Company will have
delivered to WealthCraft a certificate, dated the Closing Date, executed by an
officer of the Acquiror Company, certifying the satisfaction of the conditions
specified in Sections 9.1, 9.2, and 9.3.
Section 9.5 CERTIFICATE OF ACQUIROR COMPANY SHAREHOLDERS. The Acquiror
Company Shareholders will have delivered to WealthCraft a certificate, dated the
Closing Date, executed by such Acquiror Company Shareholder, if a natural
person, or an authorized officer of the Acquiror Company Shareholder, if an
entity, certifying the satisfaction of the conditions specified in Sections 9.1,
9.2 and 9.3.
Section 9.6 CONSENTS.
(a) All material consents, waivers, approvals, authorizations or
orders required to be obtained, and all filings required to be made, by the
Acquiror Company for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated by
this Agreement, shall have been obtained and made by the Acquiror Company,
except where the failure to receive such consents, waivers, approvals,
authorizations or orders or to make such filings would not have a Material
Adverse Effect on WealthCraft or the Acquiror Company.
(b) Without limiting the foregoing, the Schedule 14(f) Filing shall
have been mailed to the stockholders of the Acquiror Company not less than
ten (10) days prior to the Closing Date. No Proceeding occasioned by the
Section 14(f) Filing shall have been initiated or threatened by the
Commission (which Proceeding shall remain unresolved as of the Closing
Date).
Section 9.7 DOCUMENTS. The Acquiror Company must have caused the following
documents to be delivered to WealthCraft and/or the WealthCraft Shareholders:
(a) Share certificates evidencing each WealthCraft Shareholder's
portion of the Exchange Shares (as set forth in Exhibit B);
(b) A Secretary's Certificate, dated the Closing Date certifying
attached copies of (A) the Organizational Documents of the Acquiror
Company, (B) the resolutions of the Acquiror Company Board approving this
Agreement and the transactions contemplated hereby; and (C) the incumbency
of each authorized officer of the Acquiror Company signing this Agreement
and any other agreement or instrument contemplated hereby to which the
Acquiror Company is a party;
(c) A Certificate of Good Standing of the Acquiror Company;
26
(d) Each of the Transaction Documents to which the Acquiror Company is
a party, duly executed; and
(e) Such other documents as WealthCraft may reasonably request for the
purpose of (i) evidencing the accuracy of any representation or warranty of
the Acquiror Company pursuant to Section 9.1, (ii) evidencing the
performance by the Acquiror Company of, or the compliance by the Acquiror
Company with, any covenant or obligation required to be performed or
complied with by, the Acquiror Company, (iii) evidencing the satisfaction
of any condition referred to in this Section 9, or (iv) otherwise
facilitating the consummation of any of the transactions contemplated by
this Agreement.
Section 9.8 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced or threatened against the Acquiror Company, WealthCraft
or any WealthCraft Shareholder, or against any Affiliate thereof, any Proceeding
(which Proceeding remains unresolved as of the date of this Agreement) (a)
involving any challenge to, or seeking damages or other relief in connection
with, any of the transactions contemplated hereby, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the transactions contemplated hereby.
Section 9.9 NO CLAIMS REGARDING STOCK OWNERSHIP OR OTHER COMPENSATION.
There shall not have been made or threatened by any Person any claim asserting
that such Person is the holder of, or has the right to acquire or to obtain
beneficial ownership of the Acquiror Company Common Stock or any other stock,
voting, equity, or ownership interest in, the Acquiror Company.
Section 9.10 INVESTMENT OF $1,000,000. The Acquiror Company shall have
consummated the transactions contemplated by the certain Stock Purchase
Agreement by and among the Acquiror Company and certain purchasers pursuant to
which the Acquiror Company shall have issued to the purchasers 375,000 shares of
Common Stock in consideration for $1,000,000.
Section 9.11 SURRENDER OF SHARES. Xxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and
Xxxx X. Xxxxxxx shall have surrendered an aggregate of 5,075,000 restricted
shares of Common Stock of the Acquiror Company owned by them.
ARTICLE X.
INDEMNIFICATION; REMEDIES
Section 10.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement shall expire on the first (1st) anniversary of the
date this Agreement is executed (the "SURVIVAL PERIOD"). The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant, or obligation. The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will not
27
affect the right to indemnification, payment of Damages, or other remedy based
on such representations, warranties, covenants, and obligations.
Section 10.2 INDEMNIFICATION BY THE ACQUIROR COMPANY SHAREHOLDERS. From and
after the execution of this Agreement until the expiration of the Survival
Period, each of the Acquiror Company Shareholders shall indemnify and hold
harmless the Acquiror Company, Company and the WealthCraft Shareholders
(collectively, the "COMPANY INDEMNIFIED PARTIES"), from and against any Damages
arising, directly or indirectly, from or in connection with:
(a) Any misrepresentation or breach of warranty made by the Acquiror
Company or the Acquiror Company Shareholders in this Agreement or in any
certificate delivered by the Acquiror Company pursuant to this Agreement;
(b) any breach by the Acquiror Company or the Acquiror Company
Shareholders of any covenant or obligation of the Acquiror Company in this
Agreement required to be performed by the Acquiror Company or the Acquiror
Company Shareholders on or prior to the Closing Date; or
(c) any and all Damages against the Acquiror Company, occurring on or
prior to the Closing Date.
Section 10.3 LIMITATIONS ON LIABILITY. No Company Indemnified Party shall
be entitled to indemnification pursuant to Section 10.2, unless and until the
aggregate amount of Damages to all Company Indemnified Parties with respect to
such matters under Section 10.4 exceeds US$20,000, at which time, WealthCraft
Indemnified Parties shall be entitled to indemnification for the total amount of
such Damages in excess of US $20,000.
Section 10.4 DETERMINING DAMAGES. Materiality qualifications to the
representations and warranties of WealthCraft and the Acquiror Company shall not
be taken into account in determining the amount of Damages occasioned by a
breach of any such representation and warranty for purposes of determining
whether the aggregate damage threshold set forth in Section 10.3 has been met.
ARTICLE XI.
GENERAL PROVISIONS
Section 11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants. In the
event of termination of this Agreement, the obligation of each party to pay its
own expenses will be subject to any rights of such party arising from a breach
of this Agreement by another party.
Section 11.2 PUBLIC ANNOUNCEMENTS. The Acquiror Company shall promptly, but
no later than three (3) days following the execution of this Agreement, issue a
press release disclosing the transactions contemplated hereby. Prior to the
Closing Date, WealthCraft and the Acquiror Company shall consult with each other
28
in issuing any other press releases or otherwise making public statements or
filings and other communications with the Commission or any regulatory agency or
stock market or trading facility with respect to the transactions contemplated
hereby, and neither party shall issue any such press release or otherwise make
any such public statement, filings or other communications without the prior
written consent of the other, which consent shall not be unreasonably withheld
or delayed, except that no prior consent shall be required if such disclosure is
required by law, in which case the disclosing party shall provide the other
party with prior notice of such public statement, filing or other communication
and shall incorporate into such public statement, filing or other communication
the reasonable comments of the other party.
Section 11.3 CONFIDENTIALITY.
(a) Subsequent to the date of this Agreement, the Acquiror Company,
the Acquiror Company Shareholders, the WealthCraft Shareholders and
WealthCraft will maintain in confidence, and will cause their respective
directors, officers, employees, agents, and advisors to maintain in
confidence, any written, oral, or other information obtained in confidence
from another party in connection with this Agreement or the transactions
contemplated by this Agreement, unless (i) such information is already
known to such party or to others not bound by a duty of confidentiality or
such information becomes publicly available through no fault of such party,
(ii) the use of such information is necessary or appropriate in making any
required filing with the Commission, or obtaining any consent or approval
required for the consummation of the transactions contemplated by this
Agreement, or (iii) the furnishing or use of such information is required
by or necessary or appropriate in connection with legal proceedings.
(b) In the event that any party is required to disclose any
information of another party pursuant to Section (ii) or (iii) of Section
11.3(a), the party requested or required to make the disclosure (the
"DISCLOSING PARTY") shall provide the party that provided such information
(the "PROVIDING PARTY") with prompt notice of any such requirement so that
the providing party may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Section 11.3. If, in
the absence of a protective order or other remedy or the receipt of a
waiver by the providing party, the disclosing party is nonetheless, in the
opinion of counsel, legally compelled to disclose the information of the
providing party, the disclosing party may, without liability hereunder,
disclose only that portion of the providing party's information which such
counsel advises is legally required to be disclosed, provided that the
disclosing party exercises its reasonable efforts to preserve the
confidentiality of the providing party's information, including, without
limitation, by cooperating with the providing party to obtain an
appropriate protective order or other relief assurance that confidential
treatment will be accorded the providing party's information.
(c) If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
Section 11.4 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
29
receipt), (b) sent by telecopier (with written confirmation of receipt), or (c)
when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by written notice to the other
parties):
If to Acquiror Company:
0000 X. Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000-0000
Telephone No.: 000- 000-0000
with a copy to
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Los Angeles, California 90067
United States of America
Attention: Xxxxxx X. Xxxxxxx
Telephone No.: x0-000-000-0000
Facsimile No.: x0-000-000-0000
If to WealthCraft or the WealthCraft Shareholders
WealthCraft Systems Limited
Room 1005, 10/F Universal Trade Centre
3 Xxxxxxxxx Road, Central
Honk Kong
Attention: Xxxxx X. Xxxxxx
Telephone: x000-0000-0000
Facsimile No.: x000-0000-0000
with a copy to
Xxxxxx Xxxxxx Rosenman LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxx of America
Attention: Xxxx X. Xxxxxxx, Esq.
Telephone No.: x0-000-000-0000
Facsimile No.: x0-000-000-0000
Section 11.5 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
30
Section 11.6 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
Section 11.7 ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party against whom the enforcement of such
amendment is sought.
Section 11.8 ASSIGNMENT; SUCCESSORS; AND THIRD PARTY BENEFICIARIES. No
party may assign any of its rights under this Agreement without the prior
consent of the other parties. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of and
be enforceable by the respective successors and permitted assigns of the
parties. Except as set forth in Section 7.1 and Section 10.3, nothing expressed
or referred to in this Agreement will be construed to give any Person other than
the parties to this Agreement any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
Section 11.9 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
Section 11.10 SECTION HEADINGS; CONSTRUCTION. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement . All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
Section 11.11 GOVERNING LAW. This Agreement will be governed by the laws of
the State of New York without regard to conflicts of laws principles.
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Section 11.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Share
Exchange Agreement as of the date first written above.
ACQUIROR COMPANY:
PARQUE LA QUINTA ESTATES
By: /s/ XXXXXX X. XXXXXXX
__________________________________
Xxxxxx X. Xxxxxxx
President
ACQUIROR COMPANY SHAREHOLDERS:
/s/ XXXXXX X. XXXXXXX
__________________________________
Xxxxxx X. Xxxxxxx
/s/ XXXXXXX X. XXXXXXX
__________________________________
Xxxxxxx X. Xxxxxxx
/s/ XXXX WO. XXXXXXX
__________________________________
Xxxx X. Xxxxxxx
WEALTHCRAFT SYSTEMS LIMITED
By:/s/ XXXXX X. XXXXXX
________________________________
Xxxxx X. Xxxxxx
Chief Executive Officer
WEALTHCRAFT SHAREHOLDERS:
/s/ XXXXX X. XXXXXX
__________________________________
Xxxxx X. Xxxxxx
__________________________________
Xxxxxx Xxxxxxxxx Xxxxxxxx
32
__________________________________
Xxxxx Xxxx Xxxxxx
[Signature Pages Continue on Following Page]
__________________________________
Xxxxxx Xxxxxxx Xxxxxx
__________________________________
Xxxxxx Xxxxxxx Xxxxxxxx
__________________________________
Xxxxx Xxxx Xxxxx Xxxxxxxx
__________________________________
Xxxxxxx Xxxxx Xxxxxx
__________________________________
Shayne Xxxxxx Xxxxxxx
__________________________________
Kit Xxxx Xxxxx Au Xxxxx
__________________________________
Ka Xxxx Xxxxx
__________________________________
Yat Hang Xxxxxxx Xxxxx
__________________________________
Hup Bor Xxxxx
__________________________________
Xxxxxxx Xxxxxxxx
__________________________________
Xxxxxxx Xxxxxxxx
__________________________________
Xxxx Xxx
__________________________________
Xxxx Xxxxxxx
33
OFFSHORE DELIVERY INSTRUCTIONS:
PRINT EXACT NAME IN WHICH YOU WANT THE SECURITIES TO BE REGISTERED
Attn: __________________________________________________
Address: ________________________________________________
______________________________________________________
______________________________________________________
Phone No. _______________________________________________
Facsimile No. ____________________________________________
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SCHEDULES
Schedule 4.5 WealthCraft Shareholder Brokers or Finders
Schedule 5.1 WealthCraft Organization and Qualification
Schedule 5.2 WealthCraft Subsidiaries
Schedule 5.7(a) WealthCraft Capitalization
Schedule 5.7(b) WealthCraft Redemption Requirements
Schedule 5.7(c) WealthCraft Shareholders Agreement
Schedule 5.19 WealthCraft Brokers or Finders
Schedule 6.1 Company Organization and Qualification
35
EXHIBIT A
ACQUIROR COMPANY SHAREHOLDERS
ACQUIROR COMPANY SHAREHOLDER NAME AND ADDRESS
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
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EXHIBIT B
SHARES AND ACQUIROR COMPANY SHARES TO BE EXCHANGED
WEALTHCRAFT SHAREHOLDER NAME WEALTHCRAFT SHARES EXCHANGE SHARES
AND ADDRESS
Xxxxx Xxx Xxxxxxx Xxxxxx 5,290,975 3,649,488
Xxxxxx Xxxxxxxxx Xxxxxxxx 3,203,911 2,209,920
Xxxxx Xxxx Xxxxxx 990,039 682,886
Xxxxxx Xxxxxxx Xxxxxx 202,018 139,343
Xxxxxx Xxxxxxx Xxxxxxxx 188,389 129,943
Xxxxx Xxxx Xxxxx Xxxxxxxx 30,000 20,693
Xxxxxxx Xxxxx Xxxxxx 20,000 13,795
Shayne Xxxxxx Xxxxxxx 40,000 27,590
Kit Xxxx Xxxxx Au Xxxxx 16,528 11,400
Ka Xxxx Xxxxx 8,140 5,615
Yat Hang Xxxxxxx Xxxxx 30,000 20,693
Hup Bor Xxxxx 20,000 13,795
Xxxxxxx Xxxxxxxx 15,500 10,691
Xxxxxxx Xxxxxxxx 31,000 21,383
Xxxx Xxx 23,250 16,037
Xxxx Xxxxxxx 38,750 26,728
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EXHIBIT C
DEFINITION OF "US PERSON"
1. "United States person" (as defined in Regulation S) means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under the
laws of the United States;
(iii) Any estate of which any executor or administrator is a United States
person;
(iv) Any trust of which any trustee is a United States person;
(v) Any agency or branch of a foreign entity located in the United States;
(vi) Any non-discretionary account or similar account (other than an estate
or trust) held by a dealer or other fiduciary for the benefit or
account of a United States person;
(vii) Any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or
(if an individual) resident in the United States; and
(viii) Any partnership or corporation if: (A) organized or incorporated
under the laws of any foreign jurisdiction; and (B) formed by a United
States person principally for the purpose of investing in securities
not registered under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule
501(a)) who are not natural persons, estates or trusts.
2. Notwithstanding paragraph (1) above, any discretionary account or similar
account (other than an estate or trust) held for the benefit or account of
a non-United States person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United
States shall not be deemed a "United States person."
3. Notwithstanding paragraph (1), any estate of which any professional
fiduciary acting as executor or administrator is a United States person
shall not be deemed a United States person if:
(i) An executor or administrator of the estate who is not a United States
person has sole or shared investment discretion with respect to the
assets of the estate; and
(ii) The estate is governed by foreign law.
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4. Notwithstanding paragraph (1), any trust of which any professional
fiduciary acting as trustee is a United States person shall not be deemed a
United States person if a trustee who is not a United States person has
sole or shared investment discretion with respect to the trust assets, and
no beneficiary of the trust (and no settlor if the trust is revocable) is a
United States person.
5. Notwithstanding paragraph (1), an employee benefit plan established and
administered in accordance with the law of a country other than the United
States and customary practices and documentation of such country shall not
be deemed a United States person.
6. Notwithstanding paragraph (1), any agency or branch of a United States
person located outside the United States shall not be deemed a "United
States person" if:
(i) The agency or branch operates for valid business reasons; and
(ii) The agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking regulation,
respectively, in the jurisdiction where located.
7. The International Monetary Fund, the International Bank for Reconstruction
and Development, the Inter-American Development Bank, the Asian Development
Bank, the African Development Bank, the United Nations, and their agencies,
affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be
deemed "United States persons."
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EXHIBIT D
NON US PERSON REPRESENTATIONS
Each WealthCraft Shareholder indicating that it is not a United States
person, severally and not jointly, further represents and warrants to the
Acquiror Company as follows:
8. At the time of (a) the offer by the Acquiror Company and (b) the acceptance
of the offer by such WealthCraft Shareholder, of the Acquiror Company
Shares, such WealthCraft Shareholder was outside the United States.
9. No offer to acquire the Acquiror Company Shares or otherwise to participate
in the transactions contemplated by this Agreement was made to such
WealthCraft Shareholder or its representatives inside the United States.
10. Such WealthCraft Shareholder is not purchasing the Acquiror Company Shares
for the account or benefit of any United States person, or with a view
towards distribution to any United States person, in violation of the
registration requirements of the Securities Act.
11. Such WealthCraft Shareholder will make all subsequent offers and sales of
the Acquiror Company Shares either (x) outside of the United States in
compliance with Regulation S; (y) pursuant to a registration under the
Securities Act; or (z) pursuant to an available exemption from registration
under the Securities Act. Specifically, such WealthCraft Shareholder will
not resell the Acquiror Company Shares to any United States person or
within the United States prior to the expiration of a period commencing on
the Closing Date and ending on the date that is one year thereafter (the
"DISTRIBUTION COMPLIANCE PERIOD"), except pursuant to registration under
the Securities Act or an exemption from registration under the Securities
Act.
12. Such WealthCraft Shareholder is acquiring the Acquiror Company Shares for
such WealthCraft Shareholder's own account, for investment and not for
distribution or resale to others.
13. Such WealthCraft Shareholder has no present plan or intention to sell the
Acquiror Company Shares in the United States or to a United States person
at any predetermined time, has made no predetermined arrangements to sell
the Acquiror Company Shares and is not acting as a Distributor of such
securities.
14. Neither such WealthCraft Shareholder, its Affiliates nor any Person acting
on such WealthCraft Shareholder's behalf, has entered into, has the
intention of entering into, or will enter into any put option, short
position or other similar instrument or position in the United States with
respect to the Acquiror Company Shares at any time after the Closing Date
through the Distribution Compliance Period except in compliance with the
Securities Act.
15. Such WealthCraft Shareholder consents to the placement of a legend on any
certificate or other document evidencing the Acquiror Company Shares
substantially in the form set forth in Section 4.2.5(b).
40
16. Such WealthCraft Shareholder is not acquiring the Acquiror Company Shares
in a transaction (or an element of a series of transactions) that is part
of any plan or scheme to evade the registration provisions of the
Securities Act.
17. Such WealthCraft Shareholder has sufficient knowledge and experience in
finance, securities, investments and other business matters to be able to
protect such WealthCraft Shareholder's interests in connection with the
transactions contemplated by this Agreement.
18. Such WealthCraft Shareholder has consulted, to the extent that it has
deemed necessary, with its tax, legal, accounting and financial advisors
concerning its investment in the Acquiror Company Shares.
19. Such WealthCraft Shareholder understands the various risks of an investment
in the Acquiror Company Shares and can afford to bear such risks for an
indefinite period of time, including, without limitation, the risk of
losing its entire investment in the Acquiror Company Shares.
20. Such WealthCraft Shareholder has had access to the Acquiror Company's
publicly filed reports with the SEC.
21. Such WealthCraft Shareholder has been furnished during the course of the
transactions contemplated by this Agreement with all other public
information regarding the Acquiror Company that such WealthCraft
Shareholder has requested and all such public information is sufficient for
such WealthCraft Shareholder to evaluate the risks of investing in the
Acquiror Company Shares.
22. Such WealthCraft Shareholder has been afforded the opportunity to ask
questions of and receive answers concerning the Acquiror Company and the
terms and conditions of the issuance of the Acquiror Company Shares.
23. Such WealthCraft Shareholder is not relying on any representations and
warranties concerning the Acquiror Company made by the Acquiror Company or
any officer, employee or agent of the Acquiror Company, other than those
contained in this Agreement.
24. Such WealthCraft Shareholder will not sell or otherwise transfer the
Acquiror Company Shares, unless either (A) the transfer of such securities
is registered under the Securities Act or (B) an exemption from
registration of such securities is available.
25. Such WealthCraft Shareholder understands and acknowledges that the Acquiror
Company is under no obligation to register the Acquiror Company Shares for
sale under the Securities Act.
26. Such WealthCraft Shareholder represents that the address furnished by such
WealthCraft Shareholder on its signature page to this Agreement and in
Exhibit B is such WealthCraft Shareholder's principal residence if he is an
individual or its principal business address if it is a corporation or
other entity.
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27. Such WealthCraft Shareholder understands and acknowledges that the Acquiror
Company Shares have not been recommended by any federal or state securities
commission or regulatory authority, that the foregoing authorities have not
confirmed the accuracy or determined the adequacy of any information
concerning the Acquiror Company that has been supplied to such WealthCraft
Shareholder and that any representation to the contrary is a criminal
offense.
28. Such WealthCraft Shareholder acknowledges that the representations,
warranties and agreements made by such WealthCraft Shareholder herein shall
survive the execution and delivery of this Agreement and the purchase of
the Acquiror Company Shares.
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