SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
BY
AND BETWEEN
DEER
INTERNATIONAL GROUP LIMITED
and
TAG
EVENTS CORP.
Dated
as of September 3, 2008
SHARE
EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
This
SHARE
EXCHANGE AGREEMENT
AND PLAN OF REORGANIZATION
(this
“Agreement”)
is
entered into as of September 3, 2008, by and among DEER
INTERNATIONAL GROUP LIMITED,
a
company incorporated under the laws of British Virgin Islands (“Deer”)
and
TAG
EVENTS CORP.,
a
Nevada corporation (“Purchaser”)
and
each of the shareholders of Deer listed on Schedule
2.1
hereto
(the “Deer
Shareholders”).
RECITALS
WHEREAS,
Deer is
a BVI company that is engaged in manufacture, marketing, distribution and sale
of household appliances (blenders, food processors, choppers, juicers, etc.);
WHEREAS,
Purchaser and Deer have agreed to the acquisition by Purchaser of all of the
issued and outstanding capital stock of Deer pursuant to a voluntary share
exchange transaction (the “Share
Exchange”)
between Purchaser and Deer upon the terms and subject to the conditions set
forth herein;
WHEREAS,
in
furtherance thereof, the Board of Directors of Purchaser has approved the Share
Exchange in accordance with the applicable provisions of the NGCL
and upon
the
terms and subject to the conditions set forth herein;
WHEREAS,
in
furtherance thereof, the Board of Directors and shareholders of Deer have each
approved the Share Exchange in accordance with the applicable provisions of
the
laws of the BVI and upon
the
terms and subject to the conditions set forth herein; and
WHEREAS,
for
United States federal income tax purposes, the parties intend that the Share
Exchange shall constitute a tax-free reorganization within the meaning of
Sections 368 and 1032 of the Code.
NOW,
THEREFORE,
in
consideration of the premises, and the mutual covenants and agreements contained
herein, the parties do hereby agree as follows:
ARTICLE
I. DEFINITIONS
(a) “Affiliate”
shall
mean, as to any Person, any other Person controlled by, under the control of,
or
under common control with, such Person. As used in this definition, “control”
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns or holds directly or indirectly five
per cent (5%) or more of the voting securities or five per cent (5%) or more
of
the partnership or other equity interests of any other Person (other than as
a
limited partner of such other Person) will be deemed to control such other
Person.
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(b) “Agreement”
means
this Share Exchange Agreement and Plan of Reorganization.
(c) “Applicable
Law”
or
“Applicable
Laws”
means
any and all laws, ordinances, constitutions, regulations, statutes, treaties,
rules, codes, licenses, certificates, franchises, permits, principles of common
law, requirements and Orders adopted, enacted, implemented, promulgated, issued,
entered or deemed applicable by or under the authority of any Governmental
Body
having jurisdiction over a specified Person or any of such Person’s properties
or assets.
(d) “Best
Efforts”
means
the efforts that a prudent Person desirous of achieving a result would use
in
similar circumstances to achieve that result as expeditiously as possible,
provided, however, that a Person required to use Best Efforts under this
Agreement will not be thereby required to take actions that would result in
a
Material Adverse Effect in the benefits to such Person of this Agreement and
the
Share Exchange.
(e) “Breach”
means
any
breach of, or any inaccuracy in, any representation or warranty or any breach
of, or failure to perform or comply with, any covenant or obligation, in or
of
this Agreement or any other Contract.
(f) “Business”
means
the manufacture, marketing, distribution and sale of household appliances
(blenders, food processors, choppers, juicers, etc.) as presently conducted
by
Deer.
(g) “Business
Day”
means
any day other than (a) Saturday or Sunday or (b) any other day on which
major money center banks in New York, New York are
permitted or required to be closed.
(h) “BVI”
shall
mean the British Virgin Islands.
(i) “Closing”
shall
mean the completion of the Share Exchange and the consummation of the
transactions set forth herein.
(j) “Closing
Date”
shall
mean the date on which the Closing is completed.
(k) “Code”
shall
mean the Internal Revenue Code of 1986, as amended.
(l) “Competing
Transaction”
has
the
meaning set forth in Section 7.6.
(m) “Confidential
Information”
means
any information pertaining to the business, operations, marketing, customers,
financing, forecasts and plans of any Party provided to or learned by any other
Party during the course of negotiation of the Share Exchange. Information shall
be treated as Confidential Information whether such information has been marked
“confidential” or in a similar manner.
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(n) “Consent”
means
any approval, consent, license, permits, ratification, waiver or other
authorization.
(o) “Contract”
means
any agreement, contract, lease, license, consensual obligation, promise,
undertaking, understanding, commitment, arrangement, instrument or document
(whether written or oral and whether express or implied), whether or not legally
binding.
(p) “Deer”
has
the
meaning set forth in the preamble.
(q) “Deer
Balance Sheet”
has
the
meaning set forth in Section 4.6(c).
(r) “Deer
Board”
has
the
meaning set forth in Section 4.4.
(s) “Deer
Contracts”
has
the
meaning set forth in Section 4.15.
(t) “Deer
Employee Plans”
has
the
meaning set forth in Section 4.18.
(u) “Deer
Financial Information”
has
the
meaning set forth in Section 4.6.
(v) “Deer
Intellectual Property”
has
the
meaning set forth in Section 4.13(a).
(w) “Deer
Shareholders”
has
the
meaning set forth in Section 2.1.
(x) “Deer
Tax Affiliate”
has
the
meaning set forth in Section 4.8(a).
(y) “Distribution
Compliance Period”
shall
have the meaning set forth in Section 3.1(e).
(z) “Employee
Benefit Plan”
has
the
meaning set forth in ERISA Section 3(3).
(aa) “Encumbrance”
means
and includes:
(i) with
respect to any personal property, any security or other property interest or
right, claim, lien, pledge, option, charge, security interest, contingent or
conditional sale, or other title claim or retention agreement or lease or use
agreement in the nature thereof, interest or other right or claim of third
parties, whether voluntarily incurred or arising by operation of law, and
including any agreement to grant or submit to any of the foregoing in the
future; and
(ii) with
respect to any Real Property (whether and including owned real estate or Real
Estate subject to a Real Property Lease), any mortgage, lien, easement,
interest, right-of-way, condemnation or eminent domain proceeding, encroachment,
any building, use or other form of restriction, encumbrance or other claim
(including adverse or prescriptive) or right of Third Parties (including
Governmental Bodies), any lease or sublease, boundary dispute, and agreements
with respect to any real property including: purchase, sale, right of first
refusal, option, construction, building or property service, maintenance,
property management, conditional or contingent sale, use or occupancy, franchise
or concession, whether voluntarily incurred or arising by operation of law,
and
including any agreement to grant or submit to any of the foregoing in the
future.
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(bb) “ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations issued by the Department of Labor pursuant to ERISA or any
successor law.
(cc) “Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
(dd) “GAAP”
means
at any particular time generally accepted accounting principles in the United
States, consistently applied on a going concern basis, using consistent audit
scope and materiality standards.
(ee) “Governing
Documents”
means
with respect to any particular entity, the articles or certificate of
incorporation and the bylaws (or equivalent documents for entities of foreign
jurisdictions); all equity holders’ agreements, voting agreements, voting trust
agreements, joint venture agreements, registration rights agreements or other
agreements or documents relating to the organization, management or operation
of
any Person or relating to the rights, duties and obligations of the equity
holders of any Person; and any amendment or supplement to any of the
foregoing.
(ff) “Governmental
Authorization”
means
any Consent, license, registration or permit issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant
to
any Applicable Law.
(gg) “Governmental
Body”
means:
(i) nation, state, county, city, town, borough, village, district, tribe or
other jurisdiction; (ii) federal, state, local, municipal, foreign, tribal
or
other government; (iii) governmental or quasi-governmental authority of any
nature (including any agency, branch, department, board, commission, court,
tribunal or other entity exercising governmental or quasi-governmental powers);
(iv) multinational organization or body; (v) body exercising, or entitled or
purporting to exercise, any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power; or (vi) official of any of
the
foregoing.
(hh) “Improvements”
means
all buildings, structures, fixtures and improvements located on Land, including
those under construction.
(ii) “IRS”
means
the United States Internal Revenue Service and, to the extent relevant, the
United States Department of the Treasury.
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(jj) “Knowledge”
means
actual knowledge without independent investigation.
(kk) “Land”
means
all parcels and tracts of land in which any Person has an ownership or leasehold
interest.
(ll) “Material
Adverse Effect”
or
“Material
Adverse Change”
means,
in connection with any Person, any event, change or effect that is materially
adverse, individually or in the aggregate, to the condition (financial or
otherwise), properties, assets, liabilities, revenues, income, business,
operations, results of operations or prospects of such Person, taken as a
whole.
(mm) “NGCL”
shall
mean the Nevada General Corporation Law, as amended.
(nn) “Order”
means
any writ, directive, order, injunction, judgment, decree, ruling, assessment
or
arbitration award of any Governmental Body or arbitrator.
(oo) “Ordinary
Course of Business”
means
an action taken by a Person will be deemed to have been taken in the Ordinary
Course of Business only if that action: (i) is consistent in nature, scope
and
magnitude with the past practices of such Person and is taken in the ordinary
course of the normal, day-to-day operations of such Person; (ii) does not
require authorization by the board of directors or shareholders of such Person
(or by any Person or group of Persons exercising similar authority) and does
not
require any other separate or special authorization of any nature; and (iii)
is
similar in nature, scope and magnitude to actions customarily taken, without
any
separate or special authorization, in the ordinary course of the normal,
day-to-day operations of other Persons that are in the same line of business
as
such Person.
(pp) “Party”
or
“Parties”
means
Deer and/or Purchaser.
(qq) “Person”
shall
mean an individual, company, partnership, Limited Liability Company, limited
liability partnership, joint venture, trust or unincorporated organization,
Joint Stock Corporation or other similar organization, government or any
political subdivision thereof, or any other legal entity.
(rr) “Proceeding”
means
any action, arbitration, audit, hearing, investigation, litigation or suit
(whether civil, criminal, administrative, judicial or investigative, whether
formal or informal, whether public or private) commenced, brought, conducted
or
heard by or before, or otherwise involving, any Governmental Body or
arbitrator.
(ss) “Purchaser”
has
the
meaning set forth in the Preamble.
(tt) “Purchaser
Balance Sheet”
has
the
meaning set forth in Section 5.1(f).
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(uu) “Purchaser
Business”
means
Purchaser’s business in the exploration of mineral properties.
(vv) “Purchaser
Common Stock”
means
the common stock, par value $.001 per share, of Purchaser.
(ww) “Purchaser
Contracts”
has
the
meaning set forth in Section 5.1(o).
(xx) “Purchaser’s
Counsel”
means
Xxxxx Xxxxx Esq.
(yy) “Purchaser
Employee Plans”
has
the
meaning set forth in Section 5.1(r)(i).
(zz) “Purchaser
Financial Information”
has
the
meaning set forth in Section 5.1(f).
(aaa) “Purchaser
Intellectual Property”
has
the
meaning set forth in Section 5.1(m).
(bbb) “Purchaser
SEC Reports”
has
the
meaning set forth in Section 5.1(n).
(ccc) “Real
Property”
means
any Land and Improvements and all privileges, rights, easements, and
appurtenances belonging to or for the benefit of any Land, including all
easements appurtenant to and for the benefit of any Land (a “Dominant
Parcel”)
for,
and as the primary means of access between, the Dominant Parcel and a public
way, or for any other use upon which lawful use of the Dominant Parcel for
the
purposes for which it is presently being used is dependent, and all rights
existing in and to any streets, alleys, passages and other rights-of-way
included thereon or adjacent thereto (before or after vacation thereof) and
vaults beneath any such streets.
(ddd) “Related
Agreements”
means
the Return to Treasury Agreement.
(eee) “Real
Property Lease”
means
any lease, rental agreement or rights to use land pertaining to the occupancy
of
any improved space on any Land.
(fff) “Representative”
means
with respect to a particular Person, any director, officer, manager, employee,
agent, consultant, advisor, accountant, financial advisor, legal counsel or
other Representative of that Person.
(ggg) “Return
to Treasury Agreement”
has the
meaning set forth in Section 2.5.
(hhh) “SEC”
means
the United States Securities and Exchange Commission.
(iii) “Securities
Act”
means
the Securities Act of 1933, as amended.
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(jjj) “Security
Interest”
means
any mortgage, pledge, security interest, Encumbrance, charge, claim, or other
lien, other than: (a) mechanic’s, materialmen’s and similar liens; (b) liens for
Taxes not yet due and payable or for Taxes that the taxpayer is contesting
in
good faith through appropriate Proceedings; (c) liens arising under worker’s
compensation, unemployment insurance, social security, retirement and similar
legislation; (d) liens arising in connection with sales of foreign receivables;
(e) liens on goods in transit incurred pursuant to documentary letters of
credit; (f) purchase money liens and liens securing rental payments under
capital lease arrangements; and (g) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of
money.
(kkk) “Share
Exchange”
has
the
meaning set forth in the preamble.
(lll) “Shares”
has
the
meaning set forth in Section 2.1.
(mmm) “Subsidiary”
means
with respect to any Person (the “Owner”),
any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation’s or other Person’s board of
directors or similar governing body, or otherwise having the power to direct
the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred), are held by the Owner or one or more of its
Subsidiaries.
(nnn) “Tangible
Personal Property”
means
all machinery, equipment, tools, furniture, office equipment, computer hardware,
supplies, materials, vehicles and other items of tangible personal property
of
every kind owned or leased by a Party (wherever located and whether or not
carried on a Party’s books), together with any express or implied warranty by
the manufacturers or sellers or lessors of any item or component part thereof
and all maintenance records and other documents relating thereto.
(ooo) “Tax”
or
“Taxes”
means,
with respect to any Person, (i) all income taxes (including any tax on or based
upon net income, gross income, gross receipts, income as specially defined,
earnings, profits or selected items of income, earnings or profits) and all
gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
commercial rent, premium, property or windfall profit taxes, alternative or
add-on minimum taxes, customs duties and other taxes, fees, assessments or
charges of any kind whatsoever, together with all interest and penalties,
additions to tax and other additional amounts imposed by any taxing authority
(domestic or foreign) on such person (if any), (ii) all value added taxes and
(iii) any liability for the payment of any amount of the type described in
clauses (i) or (ii) above as a result of (A) being a “transferee” (within the
meaning of Section 6901 of the Code or any Applicable Law) of another person,
(B) being a member of an affiliated, combined or consolidated group or (C)
a
contractual arrangement or otherwise.
(ppp) “Tax
Return”
means
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
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(qqq) “Third
Party”
means
a
Person that is not a Party to this Agreement.
ARTICLE
II. THE
SHARE
EXCHANGE
2.1
The
Share Exchange. Upon
the
terms and subject to the conditions set forth in this Agreement and in
accordance with the NGCL, at the Closing, the parties shall cause the Share
Exchange to be consummated by taking all appropriate actions to ensure that
all
of the issued and outstanding shares of capital stock of Deer are delivered
to
Purchaser duly executed and endorsed in blank (or accompanied by duly executed
stock powers duly endorsed in blank), in proper form for transfer, in exchange
for the issuance of an aggregate of 18,050,000 shares of Purchaser Common Stock
(the “Shares”)
to the
shareholders of Deer listed on Schedule
2.1.
2.2
Tax
Free Reorganization. The
Parties each hereby agree to use their Best Efforts and to cooperate with each
other to cause the Share Exchange to be a tax-free reorganization within the
meaning of Sections 368 and 1032 of the Code.
2.3
Closing. The
Closing will occur via e-mail and facsimile on September 3, 2008 at 10:00 a.m.
EST or such later date and time to be agreed upon by the parties (the
“Closing
Date”),
following satisfaction or waiver of the conditions set forth in
Article VIII.
2.4
Reorganization.
(a) As
of the
Closing, Crescent Liu shall resign from the board of directors of the Purchaser
and Xxxx Xx and Man Wai Xxxxx Xxxx shall be appointed as the directors of the
Purchaser until their respective successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with Purchaser’s Articles of Incorporation and By-laws.
(b) The
nominees of Deer shall, as of the Closing, be appointed as the officers of
the
Purchaser until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Purchaser’s Articles of Incorporation and By-laws. As of the Closing,
Crescent Liu and Art Balykin shall resign from all positions as an officer
of
Purchaser.
(c) If
at any
time after the Closing, any party shall consider that any further deeds,
assignments, conveyances, agreements, documents, instruments or assurances
in
law or any other things are necessary or desirable to vest, perfect, confirm
or
record in the Purchaser the title to any property, rights, privileges, powers
and franchises of Deer by reason of, or as a result of, the Share Exchange,
or
otherwise to carry out the provisions of this Agreement, the remaining parties,
as applicable, shall execute and deliver, upon request, any instruments or
assurances, and do all other things necessary or proper to vest, perfect,
confirm or record title to such property, rights, privileges, powers and
franchises in the Purchaser, and otherwise to carry out the provisions of this
Agreement.
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2.5
Cancellation
of Purchaser Common Stock.
At
the
Closing, immediately after consummation of the Share Exchange, Purchaser shall,
pursuant to the terms and conditions of that certain Return to Treasury
Agreement dated of even date herewith entered into by and between Purchaser
and
Crescent Liu (the “Return
to Treasury Agreement”)
which
shall be substantially in the form attached hereto as Attachment
2.5,
cause
5,950,000 shares of the Purchaser’s Common Stock held by Crescent Liu to be
cancelled and extinguished.
ARTICLE
III. COMPLIANCE
WITH APPLICABLE SECURITIES LAWS
3.1
Covenants,
Representations and Warranties of the Deer Shareholders.
(a) The
Deer
Shareholders acknowledge and agree that they are acquiring the Shares for
investment purposes and will not offer, sell or otherwise transfer, pledge
or
hypothecate any of the Shares issued to them (other than pursuant to an
effective Registration Statement under the Securities Act) directly or
indirectly unless:
(i) The
sale
is to Purchaser;
(ii) the
sale
is made pursuant to the exemption from registration under the Securities Act,
provided by Regulation S thereunder; or
(iii) the
Shares are sold in a transaction that does not require registration under the
Securities Act, or any applicable United States state laws and regulations
governing the offer and sale of securities, and the vendor has furnished to
Purchaser an opinion of counsel to that effect or such other written opinion
as
may be reasonably required by Purchaser.
(b) The
Deer
Shareholders acknowledge and agree that the certificates representing the Shares
shall bear the following legend:
“THESE
SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S.
PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATIONS UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE
SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE
1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY
BE
OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS
(AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AN IN EACH CASE ONLY IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE
1933
ACT.”
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(c) The
Deer
Shareholders represent and warrant that:
(i) the
Deer
Shareholders are located outside the United States;
(ii) the
Deer
Shareholders are not aware of any advertisement of any of the shares being
issued hereunder;
(iii) the
Deer
Shareholders will not acquire the shares as a result of, and will not itself
engage in, any “directed selling efforts: (as defined in Regulation S under the
Securities Act) in the United States in respect of the shares which would
include any activities undertaken for the purpose of, or that could reasonably
be expected to have the effect of, conditioning the market in the United States
for the resale of the shares; provided, however, that the Deer Shareholders
may
sell or otherwise dispose of the shares pursuant to registration of the shares
pursuant to the Securities Act and any applicable state and provincial
securities laws or under an exemption from such registration requirements and
as
otherwise provided herein.
(d) The
Deer
Shareholders acknowledge and agree that Purchaser will refuse to register any
transfer of the shares not made in accordance with the provisions of Regulation
S, pursuant to an effective registration statement under the Securities Act
or
pursuant to an available exemption from the registration requirements of the
Securities Act and in accordance with applicable state and provincial securities
laws;
(e) The
Deer
Shareholders acknowledge and agree that offers and sales of any of the Shares,
prior to the expiration of a period of one year after the date of transfer
of
the shares (the “Distribution
Compliance Period”),
shall
only be made in compliance with the safe harbor provisions set forth in
Regulation S, pursuant to the registration provisions of the Securities Act
or
an exemption therefrom, and that all offers and sales after the Distribution
Compliance Period shall be made only in compliance with the registration
provisions of the Securities Act or an exemption therefrom and in each case
only
in accordance with all applicable securities laws;
(f) The
Deer
Shareholders acknowledge and agree not to engage in any hedging transactions
involving the Shares prior to the end of the Distribution Compliance Period
unless such transactions are in compliance with the provisions of the Securities
Act; and
(g)
The
Deer Shareholders hereby acknowledge and agree to Purchaser making a notation
on
its records or giving instructions to the registrar and transfer agent of
Purchaser in order to implement the restrictions on transfer set forth and
described herein.
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ARTICLE
IV. REPRESENTATIONS
AND WARRANTIES OF DEER
As
a
material inducement for Purchaser to enter into this Agreement and to consummate
the transactions contemplated hereby, Deer makes the following representations
and warranties as of the date hereof and as of the Closing Date, each of which
is relied upon by Purchaser regardless of any investigation made or information
obtained by Purchaser (unless and to the extent specifically and expressly
waived in writing by Purchaser on or before the Closing Date):
4.1
Organization
and Good Standing.
(a) Deer
is a
corporation duly organized, validly existing and in good standing under the
laws
of BVI. Deer is duly qualified to do business in China and is in good standing
under the laws of each jurisdiction in which either the ownership or use of
the
properties owned or used by it, or the nature of the activities conducted by
it,
requires such qualification and the failure to be so qualified would have a
Material Adverse Effect on Deer.
(b) Deer
does
not presently own or control, directly or indirectly, any interest in any other
corporation, partnership, trust, joint venture, association, or other
entity.
4.2
Corporate
Documents. Schedule 4.2
consists
of a true and correct copy of
a
shareholder list setting forth all owners of the capital stock of
Deer.
4.3
Capitalization
of Deer. The
entire authorized capital stock of Deer consists of 50,000 shares of common
stock having a par value of US$1 per share, of which 50,000 shares are issued
and outstanding. All of Deer’s issued and outstanding shares of common stock
have been duly authorized, are validly issued, fully paid and nonassessable,
and
are held of record by the stockholders listed on the shareholder list attached
as Schedule
4.2.
.
4.4
Authorization
of Transaction. Deer
has
full power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement has be duly and validly authorized
by
all necessary action on the part of Deer in accordance with Applicable Laws
and
Deer’s Governing Documents. This Agreement constitutes the valid and legally
binding obligation of Deer, enforceable in accordance with its terms and
conditions. The Board of Directors of Deer (the “Deer
Board”) has
duly
and validly authorized the execution and delivery of this Agreement and approved
the consummation of the transactions contemplated hereby, and has taken all
corporate actions required to be taken by the Deer Board for the consummation
of
the Share Exchange.
4.5
Noncontravention.
Neither
the execution and delivery of this Agreement, nor consummation of the Share
Exchange, by Deer will:
(a)
violate any Applicable Law, Order, stipulation, charge or other restriction
of
any Governmental Body to which Deer is subject or any provision of its Governing
Documents; or
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(b) conflict
with, result in a Breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate, modify
or cancel, or require any notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which Deer is a party or by which it is bound or to which any of its assets
is
subject (or result in the imposition of any Security Interest upon any of its
assets), except where the violation, conflict, Breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a Material Adverse Effect on the financial condition
of
Deer or on the ability of the Parties to consummate the Share Exchange.
4.6
Deer
Financial Information. Schedule 4.6
shall
include the following financial information (collectively, the “Deer
Financial Information”):
(a) audited
combined balance sheets and statements of income, stockholders’ equity and cash
flow as of and for the year ended December 31, 2007 and December 31, 2007 for
Deer;
4.7
Events
Subsequent to Deer Balance Sheet. Since
the
date of the Deer 2007 Balance Sheet, there has not been, occurred or arisen,
with respect to any member of the Deer:
(a) any
change or amendment in its Governing Documents;
(b) any
reclassification, split up or other change in, or amendment of or modification
to, the rights of the holders of any of its capital stock;
(c) any
direct or indirect redemption, purchase or acquisition by any Person of any
of
its capital stock or of any interest in or right to acquire any such
stock;
(d) any
issuance, sale, or other disposition of any capital stock, or any grant of
any
options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any capital stock;
(e) any
declaration, set aside, or payment of any dividend or any distribution with
respect to its capital stock (whether in cash or in kind) or any redemption,
purchase, or other acquisition of any of its capital stock;
(f) the
organization of any Subsidiary or the acquisition of any shares of capital
stock
by any Person or any equity or ownership interest in any business;
(g) any
damage, destruction or loss of any of the its properties or assets whether
or
not covered by insurance;
(h) any
material sale, lease, transfer, or assignment of any of its assets, tangible
or
intangible, other than for a fair consideration in the Ordinary Course of
Business;
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(i) the
execution of, or any other commitment to any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
outside the Ordinary Course of Business;
(j) any
acceleration, termination, modification, or cancellation of any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) involving more than $10,000 to which it is a party or by which
it
is bound;
(k) any
Security Interest or Encumbrance imposed upon any of its assets, tangible or
intangible;
(l) any
grant
of any license or sublicense of any rights under or with respect to any material
Deer Intellectual Property;
(m) any
sale,
assignment or transfer (including transfers to any employees, Affiliates or
shareholders) of any material Deer Intellectual Property;
(n) any
capital expenditure (or series of related capital expenditures) involving more
than $25,000 and outside the Ordinary Course of Business;
(o) any
capital investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments, loans,
and acquisitions) involving more than $25,000 and outside the Ordinary Course
of
Business;
(p) any
issuance of any note, bond, or other debt security or created, incurred,
assumed, or guaranteed any indebtedness for borrowed money or capitalized lease
obligation involving more than $25,000;
(q) any
delay
or postponement of the payment of accounts payable or other liabilities, other
than those being contested in good faith;
(r) any
cancellation, compromise, waiver, or release of any right or claim (or series
of
related rights and claims) involving more than $25,000 and outside the Ordinary
Course of Business;
(s) any
loan
to, or any entrance into any other transaction with, any of its directors,
officers, and employees either involving more than $1,000 individually or $5,000
in the aggregate;
(t) the
adoption, amendment, modification, or termination of any bonus, profit-sharing,
incentive, severance, or other plan, contract, or commitment for the benefit
of
any of its directors, officers, and employees (or taken away any such action
with respect to any other Employee Benefit Plan);
(u) any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
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(v) any
increase in the base compensation of any of its directors, officers, and
employees that is greater than Twenty Five Thousand Dollars ($25,000) per
annum;
(w) any
charitable or other capital contribution in excess of $2,500;
(x) any
taking of other action or entrance into any other transaction other than in
the
Ordinary Course of Business, or entrance into any transaction with any insider
of Deer, except as disclosed in this Agreement and the Disclosure
Schedules;
(y) any
other
event or occurrence that may have or could reasonably be expected to have a
Material Adverse Effect on Deer or any member of the Deer (whether or not
similar to any of the foregoing); or
(z) any
agreement or commitment, whether in writing or otherwise, to do any of the
foregoing.
4.8
Tax
Matters.
(a) Deer:
(i) has
timely paid or caused to be paid all material Taxes required to be paid by
it
though the date hereof and as of the Closing Date (including any Taxes shown
due
on any Tax Return);
(ii) has
filed
or caused to be filed in a timely and proper manner (within any applicable
extension periods) all Tax Returns required to be filed by it with the
appropriate Governmental Body in all jurisdictions in which such Tax Returns
are
required to be filed; and all tax returns filed on behalf of Deer were complete
and correct in all material respects; and
(iii) has
not
requested or caused to be requested any extension of time within which to file
any Tax Return, which Tax Return has not since been filed.
(b)
(i) since
January 1, 2006, Deer has not been notified by any Governmental Body that
any material issues have been raised (and no such issues are currently pending)
by any Governmental Body in connection with any Tax Return filed by or on behalf
of Deer; there are no pending Tax audits and no waivers of statutes of
limitations have been given or requested with respect to Deer; no Tax liens
have
been filed against Deer or unresolved deficiencies or additions to Taxes have
been proposed, asserted or assessed against Deer;
(ii) full
and
adequate accrual has been made (A) on the Deer Balance Sheet, and the books
and
records of Deer for all income taxes currently due and all accrued Taxes not
yet
due and payable by Deer for all periods ending on or prior to the Deer Balance
Sheet Date, and (B) on the books and records of Deer for all Taxes payable
by
Deer for all periods beginning after the Deer Balance Sheet Date;
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(iii) No
member
of the Deer has incurred any liability for Taxes from and after the Deer Balance
Sheet Date other than Taxes incurred in the Ordinary Course of Business and
consistent with past practices;
(iv) Deer
has
complied in all material respects with all Applicable Laws relating to the
collection or withholding of Taxes (such as Taxes or withholding of Taxes from
the wages of employees);
(v) Deer
does
not have any liability in respect of any Tax sharing agreement with any
Person;
(vi) No
member
of the Deer has incurred any liability to make any payments either alone or
in
conjunction with any other payments that would
constitute a “parachute payment” within the meaning of Section 280G of the
Code (or any corresponding provision of state local or foreign Applicable Law
related to Taxes);
(vii) no
claim
has been made within the last three years by any taxing authority in a
jurisdiction in which Deer does not file Tax Returns that Deer is or may be
subject to taxation by that jurisdiction;
(viii) the
consummation of the Share Exchange will not trigger the realization or
recognition of intercompany gain or income to Deer or any Deer Tax Affiliate
under the Federal consolidated return regulations with respect to Federal,
state
or local taxes; and
(ix) Deer
is
not currently, nor has it been at any time during the previous five years,
a
“U.S. real property holding corporation” and, therefore, the Shares are not
“U.S. real property interests,” as such terms are defined in Section 897 of
the Code.
4.9
Title
to Assets. Deer
has
good and marketable title to, or a valid leasehold interest in, the properties
and assets owned or leased and used by it to operate the Business in the manner
presently operated by it, as reflected in the Deer Financial
Information.
4.10
Leased
Real Property. Except
as
disclosed on Schedule
4.10,
Deer
does not own or holds any leasehold interest in or right to use any Real
Property.
4.11
Condition
of Facilities.
(a) Use
of
the Real Property of Deer for the various purposes for which it is presently
being used is permitted as of right under all Applicable Laws related to zoning
and is not subject to “permitted nonconforming” use or structure
classifications. All Improvements are in compliance with all Applicable Laws,
including those pertaining to zoning, building and the disabled, are in good
repair and in good condition, ordinary wear and tear excepted, and are free
from
latent and patent defects. No part of any Improvement encroaches on any real
property not included in the Real Property of Deer or the Deer, and there are
no
buildings, structures, fixtures or other Improvements primarily situated on
adjoining property which encroach on any part of the Land.
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(b) Each
item
of Tangible Personal Property is in good repair and good operating condition,
ordinary wear and tear excepted, is suitable for immediate use in the Ordinary
Course of Business and is free from latent and patent defects. No item of
Tangible Personal Property is in need of repair or replacement other than as
part of routine maintenance in the Ordinary Course of Business. All Tangible
Personal Property used in the Business is in the possession of
Deer.
4.12
Deer
Intellectual Property.
(a) Deer
owns, or is licensed or otherwise possesses legal enforceable rights to use
all:
(i) trademarks and service marks (registered or unregistered), trade dress,
trade names and other names and slogans embodying business goodwill or
indications of origin, all applications or registrations in any jurisdiction
pertaining to the foregoing and all goodwill associated therewith; (ii) material
patentable inventions, technology, computer programs and software (including
password unprotected interpretive code or source code, object code, development
documentation, programming tools, drawings, specifications and data) and all
applications and patents in any jurisdiction pertaining to the foregoing,
including re-issues, continuations, divisions, continuations-in-part, renewals
or extensions; (iii) trade secrets, including confidential and other non-public
information (iv) copyrights in writings, designs, software programs, mask works
or other works, applications or registrations in any jurisdiction for the
foregoing and all moral rights related thereto; (v) databases and all database
rights; and (vi) Internet web sites, domain names and applications and
registrations pertaining thereto (collectively, “Deer
Intellectual Property”)
that
are used in the Business except for any such failures to own, be licensed or
process that would not be reasonably likely to have a Material Adverse
Effect.
(b) Except
as
may be evidenced by patents issued after the date hereof, there are no conflicts
with or infringements of any material Deer Intellectual Property by any third
party and the conduct of the Business as currently conducted does not conflict
with or infringe any proprietary right of a third party.
(c) Deer
owns
or has the right to use all software currently used in and material to the
Business.
4.13
Affiliate
Transactions. No
officer, director, or employee of Deer or any member of the immediate family
of
any such officer, director or employee, or any entity in which any of such
persons owns any beneficial interest (other than any publicly-held corporation
whose stock is traded on a national securities exchange or in the
over-the-counter market and less than one percent of the stock of which is
beneficially owned by any of such persons), has any agreement with a member
of
the Deer or any interest in any of their property of any nature, used in or
pertaining to the Business (other than the ownership of capital stock of the
corporation as disclosed in Section 4.3). None of the foregoing Persons has
any direct or indirect interest in any competitor, supplier or customer of
Deer
or in any Person from whom or to whom the Deer leases any property or transacts
business of any nature.
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4.14
Powers
of Attorney. There
are
no outstanding powers of attorney executed on behalf of Deer.
4.15
Litigation. There
is
no pending or, to Deer’s Knowledge, threatened Proceeding:
(i) by
or
against Deer or that otherwise relates to or may affect the Business which,
if
adversely determined, would have a Material Adverse Effect; or
(ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Share Exchange.
To
the
Knowledge of Deer, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement
of
any such Proceeding. Deer has delivered to Purchaser copies, if any, of all
pleadings, correspondence and other documents relating to each
Proceeding.
(iii) there
is
no material Order to which Deer, any member of the Deer or the Business is
subject; and
(iv) to
the
Knowledge of Deer, no officer, director, agent or employee of Deer is subject
to
any Order that prohibits such officer, director, agent or employee from engaging
in or continuing any conduct, activity or practice relating to the
Business.
(v) Deer
has
been and is in compliance with all of the terms and requirements of each Order
to which it or the Business is or has been subject;
(vi) No
event
has occurred or circumstance exists that is reasonably likely to constitute
or
result in (with or without notice or lapse of time) a violation of or failure
to
comply with any term or requirement of any Order to which Deer or the Business
is subject; and
(vii) Deer
has
not received any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding any actual, alleged,
possible or potential violation of, or failure to comply with, any term or
requirement of any Order to which Deer or the Business is subject.
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4.16
Employee
Benefits.
(a) Schedule
4.18
lists
all material (i) Employee Benefit Plans of the Deer, (ii) bonus, stock
option, stock purchase, stock appreciation right, incentive, deferred
compensation, supplemental retirement, severance, and fringe benefit plans,
programs, policies or arrangements, and (iii) employment or consulting
agreements, for the benefit of, or relating to, any current or former employee
(or any beneficiary thereof) of the Deer, in the case of a plan described in
(i)
or (ii) above, that is currently maintained by the Deer or with respect to
which
the Deer has an obligation to contribute, and in the case of an agreement
described in (iii) above, that is currently in effect (the “Deer
Employee Plans”).
(b) There
is
no Proceeding pending or, to Deer’s knowledge, threatened against the assets of
any Deer Employee Plan or, with respect to any Deer Employee Plan, against
Deer,
other than Proceedings that would not reasonably be expected to result in a
Material Adverse Effect, and to Deer’s Knowledge there is no Proceeding pending
or threatened in writing against any fiduciary of any Deer Employee Plan other
than Proceedings that would not reasonably be expected to result in a Material
Adverse Effect.
(c) Each
of
the Deer Employee Plans has been operated and administered in all material
respects in accordance with its terms and applicable law.
(d) No
director, officer, or employee of Deer will become entitled to retirement,
severance or similar benefits or to enhanced or accelerated benefits (including
any acceleration of vesting or lapsing of restrictions with respect to
equity-based awards) under any Deer Employee Plan solely as a result of
consummation of the Share Exchange.
4.17
Insurance. Schedule
4.20
is an
accurate and complete description of all policies of insurance of any kind
or
nature, including, but not limited to, fire, liability, workmen’s compensation
and other forms of insurance owned or held by or covering Deer or all or any
portion of its property and assets.
4.18
Employees. To
the
Knowledge of Deer, no officer, director, agent, employee, consultant, or
contractor of Deer is bound by any Contract that purports to limit the ability
of such officer, director, agent, employee, consultant, or contractor (i) to
engage in or continue or perform any conduct, activity, duties or practice
relating to the Business or (ii) to assign to Deer or to any other Person any
rights to any invention, improvement, or discovery. No former or current
employee of Deer is a party to, or is otherwise bound by, any Contract that
in
any way adversely affected, affects, or will affect the ability of Deer or
Purchaser to conduct the Business as heretofore carried on by Deer.
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4.19
Labor
Relations. Deer
is
not a party to any collective bargaining or similar agreement. To the Knowledge
of Deer, there are no strikes, work stoppages, unfair labor practice charges
or
grievances pending or threatened against Deer by any employee of Deer or any
other Person or entity.
4.20
Legal
Compliance.
To the
Knowledge of Deer, Deer is in material compliance with all Applicable Laws
(including rules and regulations thereunder) of any Governmental Bodies having
jurisdiction over Deer, including any requirements relating to antitrust,
consumer protection, currency exchange, equal opportunity, health, occupational
safety, pension and securities matters.
4.21
Brokers’
Fees. Deer
has
no liability or obligation to pay any fees or commissions to any broker, finder
or agent with respect to the Share Exchange for which Deer could become liable
or obligated.
4.22
Undisclosed
Liabilities. To
the
Knowledge of Deer, Deer does not have any liability (and to the knowledge of
Deer, there is no basis for any present or future Proceeding, charge, complaint,
claim, or demand against any of them giving rise to any liability), except
for
(i) liabilities
reflected or reserved against in the Deer Balance Sheet; or
(ii) liabilities
which have arisen in the Ordinary Course of Business since the date of the
Deer
Balance Sheet.
4.23
Disclosure. The
representations and warranties of Deer contained in this Agreement do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained herein
not misleading.
4.24
Subsidiaries.
Deer
owns
100% of the issued and outstanding capital stock of Winder
Electric (Guangdong) Co., Ltd., a company organized under the laws of the PRC,
and Delta International Limited, a company organized under the laws of the
PRC.
ARTICLE
V. REPRESENTATIONS
AND WARRANTEES OF PURCHASER
As
a
material inducement for Deer to enter into this Agreement and to consummate
the
transactions contemplated hereby, Purchaser hereby makes the following
representations and warranties as of the date hereof and as of the Closing
Date,
each of which is relied upon by Deer regardless of any investigation made or
information obtained by Deer (unless and to the extent specifically and
expressly waived in writing by Deer on or before the Closing Date):
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5.1
Representations
of Purchaser Concerning the Transaction.
(a) Organization
and Good Standing
(i) Purchaser
is a corporation duly organized, validly existing and in good standing under
the
laws of State of Nevada. Purchaser is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification and the failure to be so qualified would have a Material Adverse
Effect on Purchaser.
(ii) Purchaser
has no Subsidiary and does not own any shares of capital stock or other
securities of any other Person.
(b) Authorization
of Transaction
Purchaser has the corporate power to execute, deliver and perform this
Agreement, the Related Agreements, and, subject to the satisfaction of the
conditions precedent set forth herein, has taken all action required by law,
its
Governing Documents or otherwise, to authorize the execution and delivery of
this Agreement and such related documents. The execution and delivery of this
Agreement has been approved by the Board of Directors of Purchaser. This
Agreement is a valid obligation of Purchaser and is legally binding on each
in
accordance with its terms.
(c) Capitalization
of Purchaser
The
entire authorized capital stock of Purchaser consists of 75,000,000 shares
of
common stock having a par value of $0.001 per share, of which 10,500,000 shares
are issued and outstanding. All issued and outstanding shares of Purchaser
Common Stock have been duly authorized, are validly issued, fully paid and
nonassessable. There are no outstanding or authorized options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights or other
agreements or commitments to which Purchaser is a party or which are binding
upon Purchaser providing for the issuance, disposition or acquisition of any
of
its capital stock, nor any outstanding or authorized stock appreciation, phantom
stock or similar rights with respect to Purchaser.
(d) Noncontravention.
Neither
the execution and delivery of this Agreement, nor consummation of the Share
Exchange, will:
(i) violate
any Applicable Law, Order, stipulation, charge or other restriction of any
Governmental Body to which Purchaser is subject or any provision of its
Governing Documents; or
(ii) conflict
with, result in a Breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate, modify
or cancel, or require any notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest, or other arrangement
to
which Purchaser is a party or by which it is bound or to which any of its assets
is subject (or result in the imposition of any Security Interest upon any of
its
assets), except where the violation, conflict, Breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a Material Adverse Effect on the financial condition
of
Purchaser or on the ability of the Parties to consummate the Share
Exchange.
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(e) Affiliate
Transactions.
No
officer, director, or employee of Purchaser or any member of the immediate
family of any such officer, director or employee, or any entity in which any
of
such persons owns any beneficial interest (other than any publicly-held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than one percent of the stock of which is
beneficially owned by any of such Persons), has any agreement with Purchaser
or
any interest in any of their property of any nature, used in or pertaining
to
the Purchaser Business. None of the foregoing Persons has any direct or indirect
interest in any competitor, supplier or customer of Purchaser or in any Person
from whom or to whom Purchaser leases any property or transacts business of
any
nature.
(f) Purchaser
Financial Information.
Schedule 5.1(f)
shall
include the following financial information (collectively, the “Purchaser
Financial Information”):
(i) audited
balance sheet and statements of income, changes in stockholders’ equity and cash
flow as of and for the fiscal years ended 2006 and 2007 for Purchaser;
and
(ii) the
names
and locations of all banks, trust companies, savings and loan associations
and
other financial institutions at which Purchaser maintains safe deposit boxes
or
accounts of any nature and the names of all persons authorized to have access
thereto, draw thereon or make withdrawals therefrom, as listed on Schedule
5.1(f).
The
audited balance sheet dated as of 2007 of Purchaser shall be referred to as
the
“Purchaser
Balance Sheet.”
Purchaser Financial Information presents fairly the financial condition of
Purchaser as of such dates and the results of operations of Purchaser for such
periods, in accordance with GAAP and are consistent with the books and records
of Purchaser (which books and records are correct and complete).
(g) Events
Subsequent to Purchaser Balance Sheet.
Since
the date of Purchaser Interim Balance Sheet, there has not been, occurred or
arisen, with respect to Purchaser:
(i) any
change or amendment in its Governing Documents;
(ii) any
reclassification, split up or other change in, or amendment of or modification
to, the rights of the holders of any of its capital stock;
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(iii) any
direct or indirect redemption, purchase or acquisition by any Person of any
of
its capital stock or of any interest in or right to acquire any such
stock;
(iv) any
issuance, sale, or other disposition of any capital stock, or any grant of
any
options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any capital stock;
(v) any
declaration, set aside, or payment of any dividend or any distribution with
respect to its capital stock (whether in cash or in kind) or any redemption,
purchase, or other acquisition of any of its capital stock;
(vi) the
organization of any Subsidiary or the acquisition of any shares of capital
stock
by any Person or any equity or ownership interest in any business;
(vii) any
damage, destruction or loss of any of the its properties or assets whether
or
not covered by insurance;
(viii) any
sale,
lease, transfer, or assignment of any of its assets, tangible or intangible,
other than for a fair consideration in the Ordinary Course of
Business;
(ix) the
execution of, or any other commitment to any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
outside the Ordinary Course of Business;
(x) any
acceleration, termination, modification, or cancellation of any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses), involving more than $10,000 to which it is a party or by which
it
is bound;
(xi) any
Security Interest or Encumbrance imposed upon any of its assets, tangible or
intangible;
(xii) any
grant
of any license or sublicense of any rights under or with respect to any
Purchaser Intellectual Property;
(xiii) any
sale,
assignment or transfer (including transfers to any employees, affiliates or
shareholders) of any Purchaser Intellectual Property;
(xiv) any
capital expenditure (or series of related capital expenditures) involving more
than $10,000 and outside the Ordinary Course of Business;
(xv) any
capital investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments, loans,
and acquisitions) involving more than $10,000 and outside the Ordinary Course
of
Business;
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(xvi) any
issuance of any note, bond, or other debt security or created, incurred,
assumed, or guaranteed any indebtedness for borrowed money or capitalized lease
obligation involving more than $25,000;
(xvii) any
delay
or postponement of the payment of accounts payable or other
liabilities;
(xviii) any
cancellation, compromise, waiver, or release of any right or claim (or series
of
related rights and claims) involving more than $25,000 and outside the Ordinary
Course of Business;
(xix) any
loan
to, or any entrance into any other transaction with, any of its directors,
officers, and employees either involving more than $500 individually or $2,500
in the aggregate;
(xx) the
adoption, amendment, modification, or termination of any bonus, profit-sharing,
incentive, severance, or other plan, contract, or commitment for the benefit
of
any of its directors, officers, and employees (or taken away any such action
with respect to any other Employee Benefit Plan);
(xxi) any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xxii) any
increase in the base compensation of any of its directors, officers, and
employees;
(xxiii) any
charitable or other capital contribution in excess of $2,500;
(xxiv) any
taking of other action or entrance into any other transaction other than in
the
Ordinary Course of Business, or entrance into any transaction with any insider
of Purchaser, except as disclosed in this Agreement and the Disclosure
Schedules;
(xxv) any
other
event or occurrence that may have or could reasonably be expected to have an
Material Adverse Effect on Purchaser (whether or not similar to any of the
foregoing); or
(xxvi) any
agreement or commitment, whether in writing or otherwise, to do any of the
foregoing.
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(h) Tax
Matters.
(i) Purchaser:
(A) has
timely paid or caused to be paid all Taxes required to be paid by it though
the
date hereof and as of the Closing Date (including any Taxes shown due on any
Tax
Return);
(B) has
filed
or caused to be filed in a timely and proper manner (within any applicable
extension periods) all Tax Returns required to be filed by it with the
appropriate Governmental Body in all jurisdictions in which such Tax Returns
are
required to be filed; and all tax returns filed on behalf of Purchaser and
each
Purchaser Tax Affiliate were completed and correct in all material respects;
and
(C) has
not
requested or caused to be requested any extension of time within which to file
any Tax Return, which Tax Return has not since been filed.
(ii) Purchaser
has previously delivered true, correct and complete copies of all Federal Tax
Returns filed by or on behalf of Purchaser through the date hereof for the
periods ending after December 31, 2004.
(iii) Purchaser:
(A) since
January 1, 2005, Purchaser has not been notified by the IRS or any other
Governmental Body that any issues have been raised (and no such issues are
currently pending) by the IRS or any other Governmental Body in connection
with
any Tax Return filed by or on behalf of Purchaser or any Purchaser Tax
Affiliate; there are no pending Tax audits and no waivers of statutes of
limitations have been given or requested with respect to Purchaser or any
Purchaser Tax Affiliate (for years that it was a Purchaser Tax Affiliate);
no
Tax liens have been filed against Purchaser or unresolved deficiencies or
additions to Taxes have been proposed, asserted or assessed against Purchaser
or
any Purchaser Tax Affiliate (for the years that it was a Purchaser Tax
Affiliate);
(B) full
and
adequate accrual has been made (i) on the Purchaser Balance Sheet, and the
books
and records of Purchaser for all income Taxes currently due and all accrued
Taxes not yet due and payable by Purchaser for all periods ending on or prior
to
the Purchaser Balance Sheet Date, and (ii) on the books and records of Purchaser
and for all Taxes payable by Purchaser for all periods beginning after the
Purchaser Balance Sheet Date;
(C) Purchaser
has not incurred any liability for Taxes from and after the Purchaser Balance
Sheet Date other than Taxes incurred in the Ordinary Course of Business and
consistent with past practices;
(D) Purchaser
has not (i) made an election (or had an election made on its behalf by another
person) to be treated as a “consenting corporation” under Section 341(f) of
the Code or (ii) a “personal holding company” within the meaning of Section 542
of the Code;
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(E) Purchaser
has complied in all material respects with all Applicable Laws relating to
the
collection or withholding of Taxes (such as Taxes or withholding of Taxes from
the wages of employees);
(F) Purchaser
has no liability in respect of any Tax sharing agreement with any Person and
all
Tax sharing agreements to which Purchaser has been bound have been
terminated;
(G) Purchaser
has not incurred any Liability to make any payments either alone or in
conjunction with any other payments that:
(1) shall
be
non-deductible under, or would otherwise constitute a “parachute payment” within
the meaning of Section 280G of the Code (or any corresponding provision of
state local or foreign income Tax Law); or
(2) are
or
may be subject to the imposition of an excise Tax under Section 4999 of the
Code;
(H) Purchaser
has not agreed to (nor has any other Person agreed to on its behalf) and is
not
required to make any adjustments or changes on, before or after the Closing
Date, to its accounting methods pursuant to Section 481 of the Code, and
the Internal Revenue Service has not proposed any such adjustments or changes
in
the accounting methods of Purchaser;
(I) no
claim
has been made within the last three years by any taxing authority in a
jurisdiction in which Purchaser does not file Tax Returns that Purchaser is
or
may be subject to taxation by that jurisdiction;
(J) the
consummation of the Share Exchange will not trigger the realization or
recognition of intercompany gain or income to Purchaser under the Federal
consolidated return regulations with respect to Federal, state or local Taxes;
and
(K) Purchaser
is not currently, nor has it been at any time during the previous five years,
a
“U.S. real property holding corporation” and, therefore, the Purchaser Common
Stock is not “U.S. real property interests,” as such terms are defined in
Section 897 of the Code.
(i) Title
to Assets.
Purchaser has good and marketable title to, or a valid leasehold interest in,
the properties and assets owned or leased and used by it to operate the
Purchaser Business in the manner presently operated by Purchaser, as reflected
in Purchaser Financial Information.
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(j) Real
Property.
Except
as set forth in Schedule
5.1(j)
Purchaser does not own or hold an ownership interest in any Real
Property.
(k) Leased
Real Property.
Except
as set forth in Schedule 5.1(k),
Purchaser
does not own or a leasehold interest in any Real Property.
(l) Condition
of Facilities.
(i) Use
of
the Real Property of Purchaser for the various purposes for which it is
presently being used is permitted as of right under all Applicable Laws related
to zoning and is not subject to “permitted nonconforming” use or structure
classifications. All Improvements are in compliance with all Applicable Laws,
including those pertaining to zoning, building and the disabled, are in good
repair and in good condition, ordinary wear and tear excepted, and are free
from
latent and patent defects. To the Knowledge of Purchaser, no part of any
Improvement encroaches on any real property not included in the Real Property
of
Purchaser, and there are no buildings, structures, fixtures or other
Improvements primarily situated on adjoining property which encroach on any
part
of the Land.
(ii) Each
item
of Tangible Personal Property is in good repair and good operating condition,
ordinary wear and tear excepted, is suitable for immediate use in the Ordinary
Course of Business and is free from latent and patent defects. No item of
Tangible Personal Property is in need of repair or replacement other than as
part of routine maintenance in the Ordinary Course of Business. Except as
disclosed in Schedule 5.1(l)(ii),
all
Tangible Personal Property used in the Purchaser Business is in the possession
of Purchaser.
(m) Purchaser
Intellectual Property.
(i) Purchaser
owns, or is licensed or otherwise possesses legal enforceable rights to use
all:
(i) trademarks and service marks (registered or unregistered), trade dress,
trade names and other names and slogans embodying business goodwill or
indications of origin, all applications or registrations in any jurisdiction
pertaining to the foregoing and all goodwill associated therewith; (ii)
patentable inventions, technology, computer programs and software (including
password unprotected interpretive code or source code, object code, development
documentation, programming tools, drawings, specifications and data) and all
applications and patents in any jurisdiction pertaining to the foregoing,
including re-issues, continuations, divisions, continuations-in-part, renewals
or extensions; (iii) trade secrets, including confidential and other non-public
information (iv) copyrights in writings, designs, software programs, mask works
or other works, applications or registrations in any jurisdiction for the
foregoing and all moral rights related thereto; (v) databases and all database
rights; and (vi) Internet Web sites, domain names and applications and
registrations pertaining thereto (collectively, “Purchaser
Intellectual Property”)
that
are used in the Purchaser Business except for any such failures to own, be
licensed or process that would not be reasonably likely to have a Material
Adverse Effect.
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(ii) Purchaser
owns or has the right to use all software currently used in and material to
the
Purchaser Business.
(n) SEC
Reports and Financial Statements.
Since
January 1, 2005, Purchaser has filed with the SEC all reports and other filings
required to be filed by Purchaser in accordance with the Securities Act and
the
Exchange Act and the rules and regulations promulgated thereunder (the
“Purchaser
SEC Reports”).
As of
their respective dates, Purchaser SEC Reports complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and
the
respective rules and regulations promulgated thereunder applicable to such
Purchaser SEC Reports and, except to the extent that information contained
in
any Purchaser SEC Report has been revised or superseded by a later Purchaser
SEC
Report filed and publicly available prior to the date of this Agreement, none
of
the Purchaser SEC Reports contained any untrue statement of a material fact
or
omitted to state any material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of Purchaser included
in Purchaser SEC Reports were prepared from and are in accordance with the
accounting books and other financial records of Purchaser, were prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by the rules of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and presented fairly
the consolidated financial position of Purchaser and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of
unaudited statements, to normal year-end audit adjustments). Except as set
forth
in the Purchaser SEC Reports, Purchaser has no liabilities or obligations of
any
nature (whether accrued, absolute, contingent or otherwise) other than
liabilities or obligations incurred in the Ordinary Course of Business. The
Purchaser SEC Reports accurately disclose (i) the terms and provisions of all
stock option plans, (ii) transactions with Affiliates, and (iii) all material
contracts required to be disclosed pursuant to Item 601(b)(10) of Regulation
S-B
promulgated by the SEC.
(o) Contracts.
Schedule 5.1(o)
is a
true, complete and accurate list of all written or oral contracts,
understandings, agreements and other arrangements (including a brief description
of all such oral arrangements) executed by an officer or duly authorized
employee of Purchaser or to which Purchaser is a party either:
(i) involving
more than $10,000, or
(ii) in
the
nature of a collective bargaining agreement, employment agreement, or severance
agreement with any of its directors, officers and employees.
Purchaser
has delivered or will, prior to Closing, deliver to Deer a correct and complete
copy of each Contract (redacted copies for names are acceptable) listed in
Schedule 5.1(o)
(the
“Purchaser
Contracts”).
Except as disclosed in Schedule 5.1(o):
(i)
Purchaser has fully complied with all material terms of Purchaser Contracts;
(ii) to the Knowledge of Purchaser, other parties to Purchaser Contracts have
fully complied with the terms of Purchaser Contracts; and (iii) there are no
disputes or complaints with respect to nor has Purchaser received any notices
(whether oral or in writing) that any other party to Purchaser Contracts is
terminating, intends to terminate or is considering terminating, any of
Purchaser Contracts listed or required to be listed in Schedule 5.1(o).
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(p) Powers
of Attorney.
There
are no outstanding powers of attorney executed on behalf of
Purchaser.
(q) Litigation.
(i) There
is
no pending or, to Purchaser’s Knowledge, threatened Proceeding:
(A) by
or
against Purchaser or that otherwise relates to or may affect the Purchaser
Business which, if adversely determined, would have a Material Adverse Effect;
or
(B) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Share Exchange.
To
the
Knowledge of Purchaser, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement
of
any such Proceeding.
(ii) Except
as
set forth in Schedule 5.1(q)(ii):
(A) there
is
no material Order to which Purchaser or the Purchaser Business is subject;
and
(B) to
the
Knowledge of Purchaser, no officer, director, agent or employee of Purchaser
is
subject to any Order that prohibits such officer, director, agent or employee
from engaging in or continuing any conduct, activity or practice relating to
the
Purchaser Business.
(iii) Except
as
set forth in Schedule 5.1(q)(iii):
(A) Purchaser
has been and is in compliance with all of the terms and requirements of each
Order to which it or the Purchaser Business is or has been subject;
(B) No
event
has occurred or circumstance exists that is reasonably likely to constitute
or
result in (with or without notice or lapse of time) a violation of or failure
to
comply with any term or requirement of any Order to which Purchaser or the
Purchaser Business is subject; and
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(C) Purchaser
has not received any notice, or received but subsequently resolved to the
satisfaction of the Governmental Body or other Person (evidence of such approval
is attached as Schedule 5.1(q)(iii)),
or
other communication (whether oral or written) from any Governmental Body or
any
other Person regarding any actual, alleged, possible or potential violation
of,
or failure to comply with, any term or requirement of any Order to which
Purchaser or the Purchaser Business is subject.
(r) Employee
Benefits.
(i) Purchaser
has no (i) Employee Benefit Plans, (ii) bonus, stock option, stock purchase,
stock appreciation right, incentive, deferred compensation, supplemental
retirement, severance, and fringe benefit plans, programs, policies or
arrangements, and (iii) employment or consulting agreements, for the benefit
of,
or relating to, any current or former employee (or any beneficiary thereof)
of
Purchaser, in the case of a plan described in (i) or (ii) above, that is
currently maintained by Purchaser or with respect to which Purchaser has an
obligation to contribute, and in the case of an agreement described in
(iii) above, that is currently in effect (the “Purchaser
Employee Plans”).
(ii) No
director, officer, or employee of Purchaser will become entitled to retirement,
severance or similar benefits or to enhanced or accelerated benefits (including
any acceleration of vesting or lapsing of restrictions with respect to
equity-based awards) under any Purchaser Employee Plan solely as a result of
consummation of the Share Exchange.
(s) Insurance.
Schedule 5.1(s)
is an
accurate and complete description of all policies of insurance of any kind
or
nature, including, but not limited to, fire, liability, workmen’s compensation
and other forms of insurance owned or held by or covering Purchaser or all
or
any portion of its property and assets.
(t) Employees.
Crescent Liu and Art Balykin are the sole employees of Purchaser and he
presently does not receive any compensation for their services. To the Knowledge
of Purchaser, no officer, director, agent, employee, consultant, or contractor
of Purchaser is bound by any Contract that purports to limit the ability of
such
officer, director, agent, employee, consultant, or contractor (i) to engage
in
or continue or perform any conduct, activity, duties or practice relating to
the
Purchaser Business or (ii) to assign to Purchaser or to any other Person any
rights to any invention, improvement, or discovery. No former or current
employee of Purchaser is a party to, or is otherwise bound by, any Contract
that
in any way adversely affected, affects, or will affect the ability of Purchaser
to conduct the Purchaser Business.
(u) Labor
Relations.
Purchaser is not a party to any collective bargaining or similar agreement.
To
the Knowledge of Purchaser, there are no strikes, work stoppages, unfair labor
practice charges or grievances pending or threatened against Purchaser by any
employee of Purchaser or any other person or entity.
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(v) Legal
Compliance.
To the
Knowledge of Purchaser, Purchaser is in material compliance with all Applicable
Laws of any Governmental Bodies having jurisdiction over Purchaser, including
any requirements relating to antitrust, consumer protection, currency exchange,
equal opportunity, health, occupational safety, pension and securities
matters.
(w) Brokers’
Fees.
Purchaser has no liability or obligation to pay any fees or commissions to
any
broker, finder or agent with respect to the Share Exchange for which Purchaser
could become liable or obligated.
(x) Undisclosed
Liabilities.
Purchaser has no liability (and to the Knowledge of Purchaser, there is no
basis
for any present or future Proceeding, charge, complaint, claim, or demand
against any of them giving rise to any liability), except for
(i) liabilities
reflected or reserved against in the Purchaser Balance Sheet; or
(ii) liabilities
which have arisen in the Ordinary Course of Business since the date of the
Purchaser Balance Sheet.
(y) Disclosure.
The
representations and warranties of Purchaser contained in this Agreement do
not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained herein
not misleading.
ARTICLE
VI. ACCESS
TO INFORMATION AND DOCUMENTS
6.1
Access
to Information. Between
the date hereof and the Closing Date, each Party will give to the other and
its
counsel, accountants and other Representatives full access to all the
properties, documents, contracts, personnel files and other records and shall
furnish copies of such documents and with such information with respect to
its
affairs as may from time to time be reasonably requested. Each Party will
disclose to the other and make available to such Party and its Representatives
all books, contracts, accounts, personnel records, letters of intent, papers,
records, communications with regulatory authorities and other documents relating
to the business and operations of Deer or Purchaser, as the case may be. In
addition, Deer shall make available to Purchaser all such banking, investment
and financial information as shall be necessary to allow for the efficient
integration of Deer’s banking, investment and financial arrangements with those
of Purchaser at the Closing. Access of Purchaser pursuant to the foregoing
shall
be granted at a reasonable time and upon reasonable notice.
6.2
Effect
of Access.
(a) Nothing
contained in this Article VI shall be deemed to create any duty or
responsibility on the part of either Party to investigate or evaluate the value,
validity or enforceability of any Contract or other asset included in the assets
of the other Party.
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(b) With
respect to matters as to which any Party has made express representations or
warranties herein, the Parties shall be entitled to rely upon such express
representations and warranties irrespective of any investigations made by such
Parties, except to the extent that such investigations result in actual
knowledge of the inaccuracy or falsehood of particular representations and
warranties.
ARTICLE
VII. COVENANTS
7.1
Preservation
of Business.
(a) Prior
to
the Closing or the termination of this Agreement, Deer will use its Best Efforts
to preserve the Business, to keep available to Purchaser the services of the
present employees of the Deer, and to preserve for Purchaser the goodwill of
the
suppliers, customers and others having business relations with the Deer. Deer
shall conduct its Business only in the Ordinary Course of Business, including,
without limitation, its policies and practices relating to the collection of
accounts receivable and the payment of accounts payable and other liabilities,
and not introduce any new methods of management, operations or accounting,
without Purchaser’s prior written consent (which shall not be unreasonably
withheld); maintain its assets in as good working order and condition as at
present, ordinary wear and tear excepted; perform all material obligations
under
material agreements and leases relating to or affecting it, and keep in full
force and effect present insurance policies.
(b) Prior
to
the Closing or the termination of this Agreement, Purchaser will use its Best
Efforts to preserve the Purchaser Business, to keep available to Purchaser
the
services of the present employees of Purchaser, and to preserve for Purchaser
the goodwill of the suppliers, customers and others having business relations
with Purchaser. Purchaser shall conduct the Purchaser Business only in the
Ordinary Course of Business as it has previously been conducted, including,
without limitation, its policies and practices relating to the collection of
accounts receivable and the payment of accounts payable and other liabilities,
and not introduce any new methods of management, operations or accounting,
without the prior written consent of Deer (which shall not be unreasonably
withheld); maintain its assets in as good working order and condition as at
present, ordinary wear and tear excepted; perform all material obligations
under
material agreements and leases relating to or affecting it, and keep in full
force and effect present insurance policies.
7.2
Current
Information.
(a) During
the period from the date of this Agreement to the Closing, each Party hereto
shall promptly notify each other Party of any (i) significant change in its
Ordinary Course of Business, (ii) Proceeding (or communications indicating
that
the same may be contemplated), or the institution or threat or settlement of
Proceedings, in each case involving the Parties the outcome of which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect on the Party, taken as a whole or (iii) event which such Party reasonably
believes could be expected to have a Material Adverse Effect on the ability
of
any party hereto to consummate the Share Exchange.
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(b) During
the period from the date of this Agreement to the Closing, Purchaser shall
promptly notify Deer of any correspondence received from the SEC and shall
deliver a copy of such correspondence to Deer within one (1) Business Day of
receipt.
7.3
Material
Transactions. Prior
to
the Closing, no
Party
will
(other than (i) as contemplated by the terms of this Agreement and the Related
Agreements, (ii) with respect to transactions for which there is a binding
commitment existing prior to the date hereof disclosed in the Disclosure
Schedules, and (iii) transactions described on Schedule
7.3
which do
not vary materially from the terms set forth on such Schedule
7.3,
or in
the Ordinary Course of Business without first obtaining the written consent
of
the other Parties):
(a) declare
or pay any dividend or make any other distribution to shareholders, whether
in
cash, stock or other property;
(b) amend
its
Governing Documents or enter into any agreement to merge or consolidate with,
or
sell a significant portion of its assets to, any other Person;
(c) except
pursuant to options, warrants, conversion rights or other contractual rights,
issue any shares of its capital stock or any options, warrants or other rights
to subscribe for or purchase such common or other capital stock or any
securities convertible into or exchangeable for any such common or other capital
stock;
(d) directly
redeem, purchase or otherwise acquire any of its common or other capital
stock;
(e) effect
a
reclassification, recapitalization, split-up, exchange of shares, readjustment
or other similar change in or to any capital stock or otherwise reorganize
or
recapitalize;
(f) enter
into any employment contract which is not terminable upon notice of ninety
(90)
days or less, at will, and without penalty except as provided herein or grant
any increase (other than ordinary and normal increases consistent with past
practices) in the compensation payable or to become payable to officers or
salaried employees, grant any stock options or, except as required by law,
adopt
or make any change in any bonus, insurance, pension or other Employee Benefit
Plan, agreement, payment or agreement under, to, for or with any of such
officers or employees;
(g) make
any
payment or distribution to the trustee under any bonus, pension, profit sharing
or retirement plan or incur any obligation to make any such payment or
contribution which is not in accordance with such
Party’s usual
past practice, or make any payment or contributions or incur any obligation
pursuant to or in respect of any other plan or contract or arrangement providing
for bonuses, options, executive incentive compensation, pensions, deferred
compensation, retirement payments, profit sharing or the like, establish or
enter into any such plan, contract or arrangement, or terminate or modify any
plan;
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(h) prepay
any debt in excess of Twenty Five Thousand Dollars ($25,000), borrow or agree
to
borrow any amount of funds except in the Ordinary Course of Business or,
directly or indirectly, guarantee or agree to guarantee obligations of others,
or fail to pay any monetary obligation in a timely manner prior to
delinquency;
(i) enter
into any agreement, contract or commitment having a term in excess of three
(3)
months or involving payments or obligations in excess of Twenty Five Thousand
Dollars ($25,000) in the aggregate, except in the Ordinary Course of
Business;
(j) amend
or
modify any material Contract;
(k) agree
to
increase the compensation or benefits of any employee (except for normal annual
salary increases in accordance with past practices);
(l) place
on
any of its assets or properties any pledge, charge or other Encumbrance, except
as otherwise authorized hereunder, or enter into any transaction or make any
contract or commitment relating to its properties, assets and business, other
than in the Ordinary Course of Business or as otherwise disclosed
herein;
(m) guarantee
the obligation of any person, firm or corporation, except in the Ordinary Course
of Business;
(n) make
any
loan or advance in excess of Twenty-Five Thousand Dollars ($25,000) or
cancel
or accelerate any material indebtedness owing to it or any claims which it
may
possess or waive any material rights of substantial value;
(o) sell
or
otherwise dispose of any Real Property or any material amount of any tangible
or
intangible personal property other than leasehold interests in closed
facilities, except in the Ordinary Course of Business;
(p) commit
any act or fail to do any act which will cause a Breach of any Contract and
which will have a Material Adverse Effect on its business, financial condition
or earnings;
(q) violate
any Applicable Law which violation might have a Material Adverse Effect on
such
Party;
(r) purchase
any real or personal property or make any other capital expenditure where the
amount paid or committed is in excess of Twenty-Five Thousand Dollars
($25,000) per
expenditure;
(s) except
in
the Ordinary Course of Business, enter into any agreement or transaction with
any of such Party’s Affiliates; or
(t) engage
in
any transaction or take any action that would render untrue in any material
respect any of the representations and warranties of such
Party contained
in this Agreement, as if such representations and warranties were given as
of
the date of such transaction or action.
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7.4
Public
Disclosures. Purchaser
and Deer
will
consult with each other before issuing any press release or otherwise making
any
public statement with respect to the transactions contemplated by this
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation except as may be required by Applicable
Law. The Parties shall issue a joint press release, mutually acceptable to
Deer
and
Purchaser, promptly upon execution and delivery of this Agreement.
7.5
Confidentiality. Purchaser
and Deer
shall
hold, and shall use their best efforts to cause their respective auditors,
attorneys, financial advisors, bankers and other consultants and advisors to
hold, in strict confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all Confidential
Information, and each Party shall not release or disclose such Confidential
Information to any other Person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors in connection with the
transactions contemplated by this Agreement.
ARTICLE
VIII. CONDITIONS
TO CLOSING
8.1
Mutual
Conditions. The
respective obligations of each party to effect the Share Exchange shall be
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions (any of which may be waived in writing by Purchaser and
Deer:
(a) None
of
Purchaser, or Deer shall be subject to any Order by a court of competent
jurisdiction which (i) prevents or materially delays the consummation of the
Share Exchange or (ii) would impose any material limitation on the ability
of
Purchaser effectively to exercise full rights of ownership of the common stock
of any member of the Deer or any material portion of the assets or Business,
taken as a whole.
(b) No
statute, rule or regulation, shall have been enacted by any Governmental Body
that makes the consummation of the Share Exchange illegal.
(c) Purchaser
and Deer shall have received all Consents of Third Parties that are required
of
such Third Parties prior to the consummation of the Share Exchange, in form
and
substance acceptable to Purchaser or Deer, as the case may be, except where
the
failure to obtain such consent, approval or authorization would not have a
Material Adverse Effect.
8.2
Conditions
to the Obligations of Purchaser. The
obligations of Purchaser under this Agreement are subject to the satisfaction,
at or before the Closing, of each of the following conditions:
(a) The
representations and warranties of Deer contained herein that are qualified
as to
materiality shall be true in all respects on and as of the Closing Date with
the
same force and effect as though made on and as of such date, and each of the
representations and warranties of Deer that are not so qualified shall be true
in all material respects.
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(b) Deer
shall have performed and complied in all material respects with all covenants,
agreements, obligations and conditions required by this Agreement to be
performed or complied with by Deer at or prior to the Closing.
(c) There
shall not be threatened, instituted or pending any Proceeding by or before
any
court or Governmental Body requesting or looking toward an Order that (a)
restrains or prohibits the consummation of the Share Exchange, (b) could have
a
Material Adverse Effect on Purchaser’s ability to exercise control over or
manage the Deer after the Closing or (c) could have a Material Adverse Effect
any member of the Deer.
(d) On
the
Closing Date, there shall be no effective Order issued by a court of competent
jurisdiction restraining or prohibiting the consummation of the Share
Exchange.
(e) The
Related Agreements to which Deer is a party and all other documents to be
delivered by Deer to Purchaser at the Closing shall be satisfactory in form
and
substance to Purchaser.
(f) All
Consents of all Third Parties and Governmental Bodies shall have been obtained
that are necessary, in the opinion of Purchaser Counsel, in connection with
(a)
the execution and delivery by Deer of this Agreement and the Related Agreements
to which it is a Party or (b) the consummation by Deer of the Share Exchange
and
copies of all such Consents shall have been delivered to Purchaser.
(g) Deer
and
Crescent Liu shall have executed and delivered to Purchaser the Return to
Treasury Agreement and shall simultaneously with the Closing consummate the
transactions contemplated therein.
8.3
Conditions
to the Obligations of Deer. The
obligations of Deer under this Agreement are subject to the satisfaction, at
or
before the Closing, of each of the following conditions:
(a) The
representations and warranties of Purchaser contained herein that are qualified
as to materiality shall be true in all respects on and as of the Closing Date
(except for the representations and warranties made as of a specific date which
shall be true in all material respects as of such date) with the same force
and
effect as though made on and as of such date, and each of the representations
and warranties of Purchaser that are not so qualified shall be true in all
material respects.
(b) Purchaser
shall have performed and complied in all material respects with all covenants,
agreements, obligations and conditions required by this Agreement to be so
performed or complied with by Purchaser at or prior to the
Closing.
-
35
-
(c) There
shall not be threatened, instituted or pending any Proceeding by or before
any
court or Governmental Body requesting or looking toward an Order, that (a)
restrains or prohibits the consummation of the Share Exchange or (b) could
have
a Material Adverse Effect on Purchaser.
(d) On
the
Closing Date, there shall be no effective Order issued by a court of competent
jurisdiction restraining or prohibiting the consummation of the Share
Exchange.
(e) The
Related Agreements to which Purchaser is a party and all other documents to
be
delivered by Purchaser to Deer at the Closing shall be satisfactory in form
and
substance to Deer.
(f) All
Consents of all Third Parties and Governmental Bodies shall have been obtained
that are necessary, in the opinion of counsel to Deer, in connection with (a)
the execution and delivery by Purchaser of this Agreement or the Related
Agreements to which either of them is a party, and (b) the consummation by
Purchaser of the transactions contemplated hereby or thereby, and copies of
all
such Consents shall have been delivered to Deer.
(g) Purchaser
shall have delivered to Deer the resignations of Crescent Liu and Art Balykin
from all positions as an officers and directors of Purchaser effective upon
Closing.
(h) Purchaser
shall have delivered to Deer evidence of the expansion of Purchaser’s Board of
Directors to two (2) members and evidence of the appointment of two (2) new
directors nominated by Deer.
(i) Purchaser
shall deliver to each stockholder of Deere certificate evidencing ownership
of
the Shares described in Section 3.2.
(j) Purchaser
shall deliver to Deer evidence of the cancellation of 5,950,000 shares of
Purchaser Common Stock held by Crescent Liu.
(k) The
stockholders of Deer shall have given all necessary approvals and consents
required under NGCL.
(l) The
Share
Exchange shall qualify as a tax-free transaction to each of Purchaser, Deer
and
Deer’s stockholders.
(m) As
of the
Closing Date, Purchaser shall not have any debts or liabilities and shall not
have any liens recorded against its properties or assets.
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36
-
ARTICLE
IX. SURVIVAL
OF REPRESENTATIONS
9.1
Survival
of Representations. All
representations and warranties made by any party to this Agreement or pursuant
hereto, as modified by any Disclosure Schedule, exhibit, certificate or other
document executed and delivered pursuant hereto shall survive the Closing and
any investigation made by or on behalf of any party hereto for a period of
one
(1) year following the Closing Date. All statements contained herein or in
any
schedule, exhibit, certificate or other document executed and delivered pursuant
hereto shall be deemed representations and warranties for purposes of Sections
9.1, 8.2(a), and 8.3(a). The right to any remedy based upon such representations
and warranties shall not be affected by any investigation conducted with respect
to, or any knowledge acquired at any time, whether before or after execution
and
delivery of this Agreement or the Closing Date, with respect to the accuracy
or
inaccuracy of any such representation or warranty.
ARTICLE
X. TERMINATION,
AMENDMENT AND WAIVER
10.1
Termination. This
Agreement may be terminated at anytime prior to the Closing:
(a) by
mutual
written consent of Purchaser and Deer;
(b) by
Purchaser or Deer:
(i) if
the
Share Exchange shall not have been consummated on or before September 4,
2008, unless the failure to consummate the Share Exchange is the result of
a
willful and material Breach of this Agreement by the Party seeking to terminate
this Agreement;
(ii) if
any
court of competent jurisdiction or other Governmental Body shall have issued an
Order or taken any other action permanently enjoining, restraining or otherwise
prohibiting the Share Exchange and such order, decree, ruling or other action
shall have become final and non-appealable;
(iii) in
the
event of a Breach by the other Party of any material representation, warranty,
covenant or other agreement contained in this Agreement which cannot be or
has
not been cured within ten (10) days after the giving of written notice to the
breaching Party of such Breach (provided that the terminating Party is not
then
in Breach of any material representation, warranty, covenant or other agreement
contained in this Agreement);
(iv) in
the
event that (i) all of the conditions to the obligation of such Party to effect
the Share Exchange set forth in Section 8.1 shall have been satisfied and (ii)
any condition to the obligation of such Party to effect the Share Exchange
set
forth in Section 8.2 (in the case of Purchaser) or Section 8.3 (in the case
of
Deer) is not capable of being satisfied prior to the end of the period referred
to in Section 10.1(b)(i); or
(v) if
there
shall have occurred prior to the Closing changes in Applicable Law that, in
the
aggregate, shall have a Material Adverse Effect on either Party.
-
37
-
10.2
Effect
of Termination. In
the
event of termination of this Agreement as provided in Section 10.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of any Party except to the extent that such
termination results from the willful and material Breach by a Party of any
of
its representations, warranties, covenants or other agreements set forth in
this
Agreement, in which case the terminating Party shall have the right to pursue
any remedies available to it at law or in equity.
10.3
Amendment. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the Parties.
10.4
Extension;
Waiver. At
any
time prior to the Closing, the Parties may (i) extend the time for the
performance of any of the obligations or other acts of the other Parties, (ii)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (iii)
waive
compliance with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a Party to any such extension or waiver shall
be
valid only if set forth in an instrument in writing signed on behalf of such
Party.
10.5
Procedure
for Termination, Amendment Extension or Waiver. A
termination of this Agreement pursuant to Section 10.1, an amendment of this
Agreement pursuant to Section 10.3, or an extension or waiver pursuant to
Section 10.4 shall, in order to be effective, require in the case of Purchaser
or Deer, action by its Board of Directors or the duly authorized designee of
the
Board of Directors.
ARTICLE
XI. MISCELLANEOUS
11.1
Notices. Any
communications required or desired to be given hereunder shall be deemed to
have
been properly given if sent by hand delivery or by facsimile and overnight
courier or overnight courier to the parties hereto at the following addresses,
or at such other address as either party may advise the other in writing from
time to time:
|
If
to Purchaser:
|
|
|
TAG
EVENTS CORP.
|
|
|
Building
Xx. 0, Xxxxx X-000, Xxx Xxxx Xxx Xx, Xx. 00, Xi Da Xxxx Xx, Xxxx
Xxxx
District, Beijing
|
|
|
Attention:
Crescent Liu
|
|
|
with
a copy to:
|
Xxxxx
Xxxxx Esq.
|
|
0000
X. Xxxxxxx Xxxxx
|
|
|
Xxxxxxxx,
Xxxxxxxx 00000
|
|
|
Tel:
000-000-0000
|
|
|
(which
copy shall not constitute notice)
|
|
-
38
-
|
If
to Deer:
|
|
|
DEER
INTERNATIONAL GROUP LIMITED
|
|
|
Area
2, 1/F, Building M-6, Central High-Tech Industrial Park, Nanshan,
Shenzhen
China 518057
|
|
|
Attention:
Xxxx Xx, Chairman & CEO
|
|
|
Tel:
(00) 000-0000-0000
|
|
|
with
a copy to:
|
The
Xxxxxx Law Offices
|
|
00
Xxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Att:Xxxxxx
Xxxxxx Esq.
|
|
| Tel: 000-000-0000 | |
|
(which
copy shall not constitute
notice)
|
|
All
such
communications shall be deemed to have been delivered on the date of hand
delivery or on the next Business Day following the deposit of such
communications with the overnight courier. The address for notice may be changed
by delivering a notice of such change of address in the manner proscribed
herein.
11.2
Further
Assurances. Each
Party hereby agrees to perform any further acts and to execute and deliver
any
documents which may be reasonably necessary to carry out the provisions of
this
Agreement.
11.3
Governing
Law. This
Agreement shall be interpreted, construed and enforced in accordance with the
laws of the State of New York, applied without giving effect to any
conflicts-of-law principles.
11.4
Commissions. Each
of
the Parties hereto represents and warrants that no broker or finder is entitled
to any brokerage or finder’s fee or other commission in connection with the
Share Exchange. Each of the Parties hereto shall pay or discharge, and shall
indemnify and hold the other harmless from and against, all claims or
liabilities for brokerage commissions or finder’s fees incurred by reason of any
action taken by it.
11.5
Captions. The
captions or headings in this Agreement are made for convenience and general
reference only and shall not be construed to describe, define or limit the
scope
or intent of the provisions of this Agreement.
11.6
Integration
of Exhibits and Schedules. All
Exhibits and Disclosure Schedules to this Agreement are integral parts of this
Agreement as if fully set forth herein.
11.7
Entire
Agreement. This
Agreement, the Related Agreements, including all Exhibits and Disclosure
Schedules attached hereto and thereto contain the entire agreement of the
parties and supersede any and all prior or contemporaneous agreements between
the parties, written or oral, with respect to the transactions contemplated
hereby. Such agreement may not be changed or terminated orally, but may only
be
changed by an agreement in writing signed by the party or parties against whom
enforcement of any waiver, change, modification, extension, discharge or
termination is sought.
-
39
-
11.8
Expenses. Except
as
expressly provided otherwise, each party hereto will bear its own costs and
expenses (including fees and expenses of auditors, attorneys, financial
advisors, bankers, brokers and other consultants and advisors) incurred in
connection with this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby.
11.9
Counterparts. This
Agreement may be executed in several counterparts, each of which, when so
executed, shall be deemed to be an original, and such counterparts shall
together constitute and be one and the same instrument.
11.10
Binding
Effect. This
Agreement shall be binding on, and shall inure to the benefit of, the Parties
hereto, and their respective successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No Party may
assign any right or obligation hereunder without the prior written consent
of
the other Parties.
11.11
No
Rule of Construction. The
Parties agree that, because all Parties participated in negotiating and drafting
this Agreement, no rule of construction shall apply to this Agreement which
construes ambiguous language in favor of or against any Party by reason of
that
Party’s role in drafting this Agreement.
[REMINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-
40
-
SIGNATURE
PAGE OF PURCHASER AND DEER TO
SHARE
EXCHANGE AGREEMENT
AND PLAN OF REORGANIZATION
IN
WITNESS WHEREOF, Purchaser
and Deer have caused this Share Exchange Agreement and Plan of Reorganization
to
be executed by their respective duly authorized officers, all as of the day
and
year first above written.
|
|
By
Purchaser:
|
|
|
|
|
|
|
|
TAG
EVENTS CORP.
|
|
|
|
|
|
|
|
By:
|
/s/
Crescent Liu
|
|
|
|
Crescent
Liu
|
|
|
|
Chief
Executive Officer
|
|
|
|
|
|
|
By
Deer:
|
|
|
|
|
|
|
|
DEER
INTERNATIONAL GROUP LIMITED
|
|
|
|
|
|
|
|
By:
|
/s/ Xxxx Xx |
|
|
|
Xxxx
Xx
|
|
|
|
Chairman,Chief
Executive Officer &
President
|
-
41
-
SIGNATURE
PAGE OF DEER SHAREHOLDERS TO
SHARE
EXCHANGE AGREEMENT
AND PLAN OF REORGANIZATION
IN
WITNESS WHEREOF, the shareholders of Deer have executed this Share Exchange
Agreement and Plan of Reorganization as of the day and year first above
written.
|
ACHIEVE
ON LIMITED
|
||
|
By:
|
/s/
Xxxx Xx
|
|
|
Name:
Xxxx Xx
|
||
|
Title:
Chief Executive Officer
|
||
|
46.25%
of shares
|
||
|
SINO
UNITY LIMITED
|
||
|
By:
|
/s/
Yu Xxx Xxxx
|
|
|
Name:
Yu Xxx Xxxx
|
||
|
Title:
Chief Executive Officer
|
||
|
10.75%
of shares
|
||
|
TRUE
OLYMPIC LIMITED
|
||
|
By:
|
/s/
Xxxx Xxx Nie
|
|
|
Name:
Xxxx Xxx Nie
|
||
|
Title:
Chief Executive Officer
|
||
|
10.00%
of shares
|
||
|
GREAT
SCALE HOLDINGS
|
||
|
By:
|
/s/ Fa Min He | |
|
Name:
Fa Min He
|
||
|
Title:
Chief Executive Officer
|
||
|
8.00%
of shares
|
||
-
42
-
|
NEW
MILLION HOLDINGS
|
||
|
By:
|
/s/
Bao Xxx Xx
|
|
|
Name:
Bao Xxx Xx
|
||
|
Title:
Chief Executive Officer
|
||
|
8.00%
of shares
|
||
|
TIGER
CASTLE LIMITED
|
||
|
By:
|
/s/
Xxx Xx Xxxx
|
|
|
Name:
Xxx Xx Chen
|
||
|
Title:
Chief Executive Officer
|
||
|
7.00%
of shares
|
||
|
SHARP
CHAMPION LIMITED
|
||
|
By:
|
/s/
Man Wai Xxxxx Xxxx
|
|
|
Name:
Man Wai Xxxxx Xxxx
|
||
|
Title:
Chief Executive Officer
|
||
|
6.00%
of shares
|
||
|
SOURCELAND
LIMITED
|
||
|
By:
|
/s/
Yong Xxx Xxxx
|
|
|
Name:
Yong Xxx Xxxx
|
||
|
Title:
Chief Executive Officer
|
||
|
4.00%
of shares
|
||
-
43
-
SCHEDULE
OF EXHIBITS
| Exhibit A |
Disclosure
Schedules
|
-
44
-
SCHEDULE
2.1
ACHIEVE
ON LIMITED
SINO
UNITY LIMITED
TRUE
OLYMPIC LIMITED
GREAT
SCALE HOLDINGS LIMITED
NEW
MILLION HOLDINGS LIMITED
TIGER
CASTLE LIMITED
SHARP
CHAMPION LIMITED
SOURCELAND
LIMITED
-
45
-
SCHEDULE
4.2
ACHIEVE
ON LIMITED
SINO
UNITY LIMITED
TRUE
OLYMPIC LIMITED
GREAT
SCALE HOLDINGS LIMITED
NEW
MILLION HOLDINGS LIMITED
TIGER
CASTLE LIMITED
SHARP
CHAMPION LIMITED
SOURCELAND
LIMITED
-
46
-
Schedule
4.6
(See
Attached)
-
47
-
Schedule
4.10
Deer’s
subsidiaries have signed 50 year lease agreements for the properties on which
their owned manufacturing, office, and employee dorms are located in Yangjiang.
The properties and associated structures are as shown in the tables
below:
|
Certificate
No.
|
Issuance
Authority
|
Location
|
Measurement
(m2)
|
Designated
Use
|
Valid
Until
|
|
(2005)
No1400008
|
Yangjiang
government
|
Xxxx
0, Xxxxxxxx 0, Xxxx Xxxx
Science
& Technology
Park,Yangjiang
High&New
Technological
Development Zone
|
31216.95
|
Industrial
|
2050.7.22
|
|
(2002)No11325
|
Yangjiang
government
|
Xx.0,
Xxxxxxxx 0, Xxxx Xxxx
Science
& Technology
Park,Yangjiang
High&New
Technological
Development
Zone
|
33728
|
Industrial
|
2052.12.6
|
|
(2004)No100
|
Yangjiang
government
|
Xxxx
000, Xxxxx X, Xx Xxx
Xxxxxx,
Xxxxx Xxxx, Yangjiang
City.
|
185.83
|
Commercial
Housing
|
2062.9.30
|
-
48
-
Schedule
4.18
None
-
49
-
Schedule
4.20
None
-
50
-
