SHARE EXCHANGE AGREEMENT By and Among LEARNING QUEST TECHNOLOGIES, INC., COLOR MAN HOLDINGS LIMITED and JOYLINK HOLDINGS LIMITED Dated as of February 8, 2008
By
and
Among
COLOR
MAN HOLDINGS LIMITED
and
JOYLINK
HOLDINGS LIMITED
Dated
as
of February 8, 2008
TABLE
OF CONTENTS
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PAGE
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ARTICLE
I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF CMH
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1
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Section 1.01
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Organization
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1
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Section
1.02
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Capitalization
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2
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Section
1.03
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Subsidiaries
and Predecessor Corporations
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2
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Section
1.04
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Financial
Statements
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2
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Section
1.05
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Information
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3
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Section
1.06
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Options
or Warrants
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3
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Section
1.07
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Absence
of Certain Changes or Events
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3
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Section
1.08
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Contracts
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4
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Section
1.09
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No
Conflict With Other Instruments
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4
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Section
1.10
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Compliance
With Laws and Regulations
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4
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Section
1.11
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Approval
of Agreement
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5
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Section
1.12
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Valid
Obligation
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5
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ARTICLE
II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF LQTI
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5
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Section
2.01
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Organization
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5
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Section
2.02
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Capitalization
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5
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Section
2.03
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Subsidiaries
and Predecessor Corporations
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5
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Section
2.04
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Financial
Statements
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5
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Section
2.05
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Information
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6
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Section
2.06
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Options
or Warrants
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6
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Section
2.07
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Absence
of Certain Changes or Events
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6
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Section
2.08
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Litigation
and Proceedings
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7
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Section
2.09
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Contracts
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7
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Section
2.10
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No
Conflict With Other Instruments
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7
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Section
2.11
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Compliance
With Laws and Regulations
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8
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Section
2.12
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Approval
of Agreement
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8
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Section
2.13
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Material
Transactions or Affiliations
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8
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Section
2.14
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Bank
Accounts; Power of Attorney
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8
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Section
2.15
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Valid
Obligation
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8
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Section
2.16
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Filings
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8
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ARTICLE
III
PLAN OF EXCHANGE
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9
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Section
3.01
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The
Exchange
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9
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Section
3.02
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Anti-Dilution
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9
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Section
3.03
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Closing
Events
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9
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Section
3.04
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Termination
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9
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ARTICLE
IV
SPECIAL COVENANTS
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9
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Section
4.01
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Access
to Properties and Records
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9
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Section
4.02
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Delivery
of Books and Records
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10
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Section
4.03
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Third
Party Consents and Certificates
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10
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Section
4.04
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Principal
Stockholder Approval
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10
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Section
4.05
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Cancellation
of Shares Held By Principal Stockholder
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10
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Section
4.06
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Designation
of Directors and Officers
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10
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-i-
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Section 4.07
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Indemnification.
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10
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Section
4.08
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The
Acquisition of LQTI Common Stock
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10
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ARTICLE
V
CONDITIONS PRECEDENT TO OBLIGATIONS OF LQTI
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12
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Section
5.01
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Accuracy
of Representations and Performance of Covenants
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12
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Section
5.02
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Officer’s
Certificate
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12
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Section
5.03
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Good
Standing
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12
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Section
5.04
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Approval
by Stockholder
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12
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Section
5.05
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No
Governmental Prohibition
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12
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Section
5.06
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Consents
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12
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Section
5.07
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Other
Items
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12
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ARTICLE
VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF CMH AND THE
STOCKHOLDER
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13
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Section
6.01
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Accuracy
of Representations and Performance of Covenants
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13
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Section
6.02
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Officer’s
Certificate
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13
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Section
6.03
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Good
Standing
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13
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Section
6.04
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No
Governmental Prohibition
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13
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Section
6.05
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Consents
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13
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Section
6.06
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Legal
Opinion.
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13
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Section
6.07
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Other
Items
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13
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ARTICLE
VII
MISCELLANEOUS
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14
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Section
7.01
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Brokers
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14
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Section
7.02
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Governing
Law
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14
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Section
7.03
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Notices
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14
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Section
7.04
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Attorney’s
Fees
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15
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Section
7.05
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Confidentiality
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15
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Section
7.06
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Public
Announcements and Filings
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16
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Section
7.07
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Entire
Agreement
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16
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Section
7.08
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Recitals
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16
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Section
7.09
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Third
Party Beneficiaries
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16
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Section
7.10
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Expenses
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16
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Section
7.11
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Survival;
Termination
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16
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Section
7.12
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Counterparts
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16
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Section
7.13
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Amendment
or Waiver
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16
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Section
7.14
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Best
Efforts
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16
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Section
7.15
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Entire
Agreement
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17
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CMH
SCHEDULES
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20
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LQTI
SCHEDULES
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21
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EXHIBIT
A
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A-1
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EXHIBIT
B
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B-1
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-ii-
THIS
SHARE EXCHANGE AGREEMENT
(this
“Agreement”) is entered into as of this 8th
day of
February 2008, by and among LEARNING
QUEST TECHNOLOGIES, INC., a
Nevada
corporation (“LQTI”), COLOR
MAN HOLDINGS LIMITED,
a
limited company organized under the laws of the British Virgin Islands
(“CMH”) and JOYLINK
HOLDINGS LIMITED,
a
limited company organized under the laws of the British Virgin Islands (the
“Stockholder”).
RECITALS:
WHEREAS,
LQTI is
a U.S. publicly held corporation organized under the laws of the State of Nevada
with no significant operations;
WHEREAS,
CMH is
a privately held company organized under the laws of the British Virgin Islands;
WHEREAS,
the
Stockholder owns one hundred percent (100%) of the total issued and outstanding
shares of capital stock of CMH (the “CMH Shares”);
WHEREAS,
LQTI
desires to acquire the CMH Shares in exchange for the issuance by LQTI to the
Stockholder of Fifty-Four Million Four Hundred Thousand (54,400,000) shares
of
LQTI’s common stock on the terms and subject to the conditions set forth herein
(the “Exchange”); and
WHEREAS,
the
parties hereto intend for this transaction to constitute a tax-free
reorganization pursuant to the provisions of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
AGREEMENT:
NOW
THEREFORE,
on the
stated premises and for and in consideration of the mutual covenants and
agreements hereinafter set forth and the mutual benefits to the parties to
be
derived herefrom, and intending to be legally bound hereby, it is hereby agreed
as follows:
ARTICLE
I
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF CMH
As
an
inducement to, and to obtain the reliance of LQTI, except as set forth in those
schedules prepared by CMH which are attached and made a part hereto (the “CMH
Schedules”), CMH hereby represents and warrants as of the date hereof (the
“Closing Date”) as follows:
Section
1.01 Organization.
CMH is
a limited company duly organized, validly existing, and in good standing under
the laws of the British Virgin Islands and has the corporate power and is duly
authorized under all applicable laws, regulations, ordinances and orders of
public authorities to carry on its business in all material respects as it
is
now being conducted. Included in Item 1.01 of the CMH Schedules are complete
and
correct copies of the Certificate of Incorporation of CMH (or their equivalent)
as in effect on the date hereof. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will
not,
violate any provision of CMH’s Certificate of Incorporation. CMH has taken all
actions required by law, its Certificate of Incorporation, or otherwise to
authorize the execution and delivery of this Agreement. CMH has full power,
authority, and legal right and has taken all action required by law, its
Certificate of Incorporation, and otherwise to consummate the transactions
herein contemplated.
Section
1.02 Capitalization.
The
authorized capitalization of CMH consists of Fifty Thousand (50,000) ordinary
shares of capital stock, par value $1.00 per share (“CMH Common Stock”),
of which Ten (10) shares of CMH Common Stock are currently issued and
outstanding. The issued and outstanding shares are legally issued, fully paid,
and non-assessable and not issued in violation of the preemptive or other rights
of any person.
Section
1.03 Subsidiaries
and Predecessor Corporations.
Other
than Wise On China Limited, the wholly-owned and chief operating subsidiary
of
CMH (“WOC”), CMH does not have any subsidiaries or predecessor corporations, and
does not own, beneficially or of record, any shares of any other corporation.
WOC is an inactive holding company formed under the laws of Hong Kong and is
the
sole stockholder of Pingdingshan Pinglin Expressway Co., Ltd. (“Ping”), a
company organized under the laws of the People’s Republic of China (the “PRC”)
and doing business in the PRC as the chief operating subsidiary of WOC. As
of
the date of this Agreement, the Operations of Ping are the only operations
of
CMH. For the purposes hereinafter, the term “CMH” also includes WOC and
Ping.
Section
1.04 Financial
Statements.
(a) Included
in Item 1.04 of the CMH Schedules are (i) the audited balance sheet of CMH
as of
June 30, 2007 and the related audited statements of operations, stockholders’
equity and cash flows for the period ended June 30, 2007 together with the
notes
to such statements and the opinion of X.X. Xxxxx & Company, independent
certified public accountants. -
(b) Included
in Item 1.04 of the CMH Schedules are: (i) the unaudited consolidated balance
sheet of CMH as of September 30, 2007 and the related unaudited consolidated
statements of operations, stockholders’ equity and cash flows for the three (3)
and six (6) months ended September 30, 2007, and all such financial statements
have been reviewed by X.X. Xxxxx & Company, independent certified public
accountants.
(c) All
such
financial statements have been prepared in accordance with generally accepted
accounting principles of the United States (“GAAP”) consistently applied
throughout the periods involved. The CMH balance sheets are true and accurate
and present fairly as of their respective dates the financial condition of
CMH.
As of the date of such balance sheets, except as and to the extent reflected
or
reserved against therein, CMH had no liabilities or obligations (absolute or
contingent) which should be reflected in the balance sheets or the notes thereto
prepared in accordance with GAAP, and all assets reflected therein are properly
reported and present fairly the value of the assets of CMH, in accordance with
GAAP. The statements of operations, stockholders’ equity and cash flows reflect
fairly the information required to be set forth therein by
GAAP.
-2-
(d) CMH
has
no liabilities with respect to the payment of any federal, state, county, local
or other taxes (including any deficiencies, interest or penalties), except
for
taxes accrued but not yet due and payable (if any).
(e) CMH
has
timely filed all state, federal or local income and/or franchise tax returns
required to be filed by it from inception to the date hereof. Each of such
income tax returns reflects the taxes due for the period covered thereby, except
for amounts which, in the aggregate, are immaterial.
(f) All
of
CMH’s assets are reflected on its financial statements, and, except as set forth
in the CMH Schedules or the financial statements of CMH or the notes thereto,
CMH has no material liabilities, direct or indirect, matured or unmatured,
contingent or otherwise.
Section
1.05 Information.
The
information concerning CMH set forth in this Agreement and in the CMH Schedules
is complete and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a material fact required
to
make the statements made, in light of the circumstances under which they were
made, not misleading.
Section
1.06 Options
or Warrants.
There
are no existing options, warrants, calls, or commitments of any character
relating to the authorized and unissued shares of capital stock of
CMH.
Section
1.07 Absence
of Certain Changes or Events.
Since
September 30, 2007:
(a) there
has
not been any material adverse change in the business, operations, properties,
assets, or condition (financial or otherwise) of CMH;
(b) CMH
has
not (i) amended its Certificate of Incorporation (or its equivalent); (ii)
declared or made, or agreed to declare or make, any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or purchased
or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii)
made any material change in its method of management, operation or accounting,
(iv) entered into any other material transaction other than sales in the
ordinary course of its business; or (v) made any increase in or adoption of
any
profit sharing, bonus, deferred compensation, insurance, pension, retirement,
or
other employee benefit plan, payment, or arrangement made to, for, or with
its
officers, directors, or employees; and
(c) CMH
has
not (i) granted or agreed to grant any options, warrants or other rights for
its
stocks, bonds or other corporate securities calling for the issuance thereof,
(ii) borrowed or agreed to borrow any funds or incurred, or become subject
to,
any material obligation or liability (absolute or contingent) except as
disclosed herein and except liabilities incurred in the ordinary course of
business; (iii) sold or transferred, or agreed to sell or transfer, any of
its
assets, properties, or rights or canceled, or agreed to cancel, any debts or
claims; or (iv) issued, delivered, or agreed to issue or deliver any stock,
bonds or other corporate securities including debentures (whether authorized
and
unissued or held as treasury stock) except in connection with this
Agreement.
-3-
(d) Litigation
and Proceedings. Except as set forth in Item 1.07(d) of the CMH Schedules,
there are no actions, suits, proceedings, or investigations pending or, to
the
knowledge of CMH after reasonable investigation, threatened by or against CMH
or
affecting CMH or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. CMH does not have any knowledge of any material default
on its part with respect to any judgment, order, injunction, decree, award,
rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality or of any circumstances which, after reasonable investigation,
would result in the discovery of such a default.
Section
1.08 Contracts.
(a) All
“material” contracts, agreements, franchises, license agreements, debt
instruments or other commitments to which CMH is a party or by which it or
any
of its assets, products, technology, or properties are bound other than those
incurred in the ordinary course of business are set forth on Item 1.08 of the
CMH Schedules. A “material” contract, agreement, franchise, license agreement,
debt instrument or commitment is one which (i) will remain in effect for more
than six (6) months after the date of this Agreement or (ii) involves aggregate
obligations of at least Fifty Thousand Dollars ($50,000);
(b) All
contracts, agreements, franchises, license agreements, and other commitments
to
which CMH is a party or by which its properties are bound and which are material
to the operations of CMH taken as a whole are valid and enforceable by CMH
in
all respects, except as limited by bankruptcy and insolvency laws and by other
laws affecting the rights of creditors generally; and
(c) Except
as
included or described in the CMH Schedules or reflected in the most recent
CMH
balance sheet, CMH is not a party to any oral or written (i) contract for the
employment of any officer or employee; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension benefit or retirement plan,
(iii) agreement, contract, or indenture relating to the borrowing of money,
(iv)
guaranty of any obligation; (vi) collective bargaining agreement; or (vii)
agreement with any present or former officer or director of CMH.
Section
1.09 No
Conflict With Other Instruments.
The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, constitute a default under, or terminate, accelerate or modify
the
terms of any indenture, mortgage, deed of trust, or other material agreement,
or
instrument to which CMH is a party or to which any of its assets, properties
or
operations are subject.
Section
1.10 Compliance
With Laws and Regulations.
To the
best of its knowledge, CMH has complied with all applicable statutes and
regulations of any federal, state, or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets, or condition
of
CMH or except to the extent that noncompliance would not result in the
occurrence of any material liability for CMH.
-4-
Section
1.11 Approval
of Agreement.
The
Sole Director of CMH has authorized the execution and delivery of this Agreement
by CMH and has approved this Agreement and the transactions contemplated hereby,
and will recommend to the Stockholder that the Exchange be accepted by the
Stockholder.
Section
1.12 Valid
Obligation.
This
Agreement and all agreements and other documents executed by CMH in connection
herewith constitute the valid and binding obligation of CMH, enforceable in
accordance with its terms.
ARTICLE
II
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF LQTI
As
an
inducement to, and to obtain the reliance of CMH and the Stockholder, except
as
set forth in those schedules prepared by LQTI which are attached and made a
part
hereto (the “LQTI Schedules”), LQTI represents and warrants, as of the
date hereof and as of the Closing Date, as follows:
Section
2.01 Organization.
LQTI is
a corporation duly organized, validly existing, and in good standing under
the
laws of the State of Nevada and has the corporate power and is duly authorized
under all applicable laws, regulations, ordinances, and orders of public
authorities to carry on its business in all material respects as it is now
being
conducted. Included in Item 2.01 of the LQTI Schedules are complete and correct
copies of the Articles of Incorporation and Bylaws of LQTI as in effect on
the
Closing Date. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of LQTI’s Articles of Incorporation or Bylaws. LQTI has taken all
action required by law, its Articles of Incorporation, its Bylaws, or otherwise
to authorize the execution and delivery of this Agreement, and LQTI has full
power, authority, and legal right and has taken all action required by law,
its
Articles of Incorporation, Bylaws, or otherwise to consummate the transactions
herein contemplated.
Section
2.02 Capitalization.
LQTI’s
authorized capitalization as of the Closing Date consists of (a) One Hundred
Fifty Million (150,000,000) shares of common stock, par value $0.001 per share
(“LQTI Common Stock”), of which 26,250,005 shares are issued and
outstanding on the date immediately preceding the Closing Date and (b) Ten
Million (10,000,000) shares of preferred stock, par value $0.001 per share,
of
which no shares are issued and outstanding on the date immediately preceding
the
Closing Date. All issued and outstanding shares are legally issued, fully paid,
and non-assessable and not issued in violation of the preemptive or other rights
of any person.
Section
2.03 Subsidiaries
and Predecessor Corporations.
LQTI
does not have any predecessor corporation(s) or subsidiaries, and does not
own,
beneficially or of record, any shares of any other corporation.
Section
2.04 Financial
Statements.
-5-
(a) Included
in Item 2.04 of the LQTI Schedules are (i) the audited balance sheets of LQTI
as
of December 31, 2007 and the related audited statements of operations,
stockholders’ equity and cash flows for the year ended December 31, 2007,
together with the notes to such statements and the opinion of HJ &
Associates, L.L.C., independent certified public accountants with respect
thereto.
(b) All
such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved.
The
LQTI balance sheets are true and accurate and present fairly as of their
respective dates the financial condition of LQTI. As of the date of such balance
sheets, except as and to the extent reflected or reserved against therein,
LQTI
had no liabilities or obligations (absolute or contingent), which should be
reflected in the balance sheets or the notes thereto prepared in accordance
with
GAAP, and all assets reflected therein are properly reported and present fairly
the value of the assets of LQTI, in accordance with generally accepted
accounting principles. The statements of operations, stockholders’ equity and
cash flows reflect fairly the information required to be set forth therein
by
GAAP.
(c) LQTI
has
no liabilities with respect to the payment of any federal, state, county, local
or other taxes (including any deficiencies, interest or penalties), except
for
taxes accrued but not yet due and payable.
(d) LQTI
has
timely filed all state, federal or local income and/or franchise tax returns
required to be filed by it from its inception to the date hereof. Each of such
income tax returns reflects the taxes due for the period covered thereby, except
for amounts which, in the aggregate, are immaterial.
(e) All
of
LQTI’s assets are reflected on its financial statements, and, except as set
forth in the LQTI Schedules or the financial statements of LQTI or the notes
thereto, LQTI has no material liabilities, direct or indirect, matured or
unmatured, contingent or otherwise.
(f)
LQTI
shall have no liabilities on the Closing Date.
Section
2.05 Information.
The
information concerning LQTI set forth in this Agreement and the LQTI Schedules
is complete and accurate in all material respects and does not contain any
untrue statements of a material fact or omit to state a material fact required
to make the statements made, in light of the circumstances under which they
were
made, not misleading.
Section
2.06 Options
or Warrants.
There
are no existing options, warrants, calls, or commitments of any character
relating to the authorized and unissued stock of LQTI.
Section
2.07 Absence
of Certain Changes or Events.
Except
as set forth in Item 2.07 of the LQTI Schedules, since December 31,
2007:
(a) There
has
not been any material adverse change in the business, operations, properties,
assets or condition (financial or otherwise) of LQTI;
-6-
(b) LQTI
has
not (i) amended its Articles of Incorporation or Bylaws; (ii) declared or made,
or agreed to declare or make any payment of dividends or distributions of any
assets of any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any of its capital stock; (iii) made any material
change in its method of management, operation or accounting; (iv) entered into
any transactions or agreements other than in connection with this Agreement
and
the transactions contemplated herein; or (v) made any increase in or adoption
of
any profit sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement, made to,
for or with its officers, directors, or employees; and
(c) LQTI
has
not (i) granted or agreed to grant any options, warrants, or other rights for
its stock, bonds, or other corporate securities calling for the issuance
thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties,
or
rights, or canceled, or agreed to cancel, any debts or claims; or (iv) issued,
delivered or agreed to issue or deliver, any stock, bonds or other corporate
securities including debentures (whether authorized and unissued or held as
treasury stock), except in connection with this Agreement.
Section
2.08 Litigation
and Proceedings.
There
are no actions, suits, proceedings or investigations pending, threatened by
or
against LQTI or affecting LQTI or its properties, at law or in equity, before
any court or other governmental agency or instrumentality, domestic or foreign,
or before any arbitrator of any kind. LQTI has no knowledge of any default
on
its part with respect to any judgment, order, writ, injunction, decree, award,
rule or regulation of any court, arbitrator, or governmental agency or
instrumentality or any circumstance which after reasonable investigation would
result in the discovery of such default.
Section
2.09 Contracts.
Except
as set forth in Item 2.09 of the LQTI Schedules:
(a) LQTI
is
not a party to, and its assets, products, technology and properties are not
bound by, any contract, franchise, license agreement, agreement, debt instrument
or other commitments whether such agreement is in writing or oral.
(b) LQTI
is
not a party to or bound by, and the properties of LQTI are not subject to any
contract, agreement, other commitment or instrument; any charter or other
corporate restriction; or any judgment, order, writ, injunction, decree, or
award; and
(c) LQTI
is
not a party to any oral or written (i) contract for the employment of any
officer or employee; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, (iii) agreement,
contract, or indenture relating to the borrowing of money, (iv) guaranty of
any
obligation, (vi) collective bargaining agreement; or (vii) agreement with any
present or former officer or director of LQTI.
-7-
Section
2.10 No
Conflict With Other Instruments.
The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, constitute a default under, or terminate, accelerate or modify
the
terms of, any indenture, mortgage, deed of trust, or other material agreement
or
instrument to which LQTI is a party or to which any of its assets, properties
or
operations are subject.
Section
2.11 Compliance
With Laws and Regulations.
To the
best of its knowledge, LQTI has complied with all applicable statutes and
regulations of any federal, state, or other applicable governmental entity
or
agency thereof. This compliance includes, but is not limited to, the filing
of
all reports to date with federal and state securities authorities.
Section
2.12 Approval
of Agreement.
The
Sole Director of LQTI has authorized the execution and delivery of this
Agreement by LQTI and has approved this Agreement and the transactions
contemplated hereby and will recommend to Xxxx Xxxx, the principal
stockholder of
LQTI
(the “Principal Stockholder”), that the Exchange be accepted by the
Principal Stockholder.
Section
2.13 Material
Transactions or Affiliations.
Except
as set forth on Item 2.13 of the LQTI Schedules, there exists no contract,
agreement or arrangement between LQTI and any predecessor and any person who
was
at the time of such contract, agreement or arrangement an officer, director,
or
person owning of record or known by LQTI to own beneficially, five percent
(5%)
or more of the issued and outstanding common stock of LQTI and which is to
be
performed in whole or in part after the date hereof or was entered into not
more
than three (3) years prior to the Closing Date. Neither any officer, director,
nor five percent (5%) stockholder of LQTI has, or has had since inception of
LQTI, any known interest, direct or indirect, in any such transaction with
LQTI
which was material to the business of LQTI. LQTI has no commitment, whether
written or oral, to lend any funds to, borrow any money from, or enter into
any
other transaction with, any such affiliated person.
Section
2.14 Bank
Accounts; Power of Attorney.
Set
forth in Item 2.14 of the LQTI Schedules is a true and complete list of (a)
all
accounts with banks, money market mutual funds or securities or other financial
institutions maintained by LQTI within the past twelve (12) months, the account
numbers thereof, and all persons authorized to sign or act on behalf of LQTI,
(b) all safe deposit boxes and other similar custodial arrangements maintained
by LQTI within the past twelve (12) months, (c) the check ledger for the last
twelve (12) months and (d) the names of all persons holding powers of attorney
from LQTI or who are otherwise authorized to act on behalf of LQTI with respect
to any matter, other than its officers and directors, and a summary of the
terms
of such powers or authorizations.
Section
2.15 Valid
Obligation.
This
Agreement and all agreements and other documents executed by LQTI in connection
herewith constitute the valid and binding obligation of LQTI, enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefore may be brought.
Section
2.16 Filings.
LQTI
has timely filed all reports required to be filed by it under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
-8-
Section
2.17 OTCBB.
LQTI trades its common stock on the Over-The-Counter Bulletin Board
(“OTCBB”) and meets all requirements to be listed on the
OTCBB.
ARTICLE
III
PLAN
OF EXCHANGE
Section
3.01 The
Exchange.
On the
terms and subject to the conditions set forth in this Agreement, on the Closing
Date, the Stockholder, by executing this Agreement, shall assign, transfer
and
deliver, free and clear of all liens, pledges, encumbrances, charges,
restrictions or known claims of any kind, nature, or description, the CMH
Shares, constituting all of the shares of capital stock, including voting power,
of CMH. In exchange for the transfer of the CMH Shares by the Stockholder,
LQTI
shall issue to the Stockholder Fifty-Four Million Four Hundred Thousand
(54,400,000) shares of LQTI Common Stock, which such shares shall represent
sixty-eight percent (68%) of total number of issued and outstanding shares
of
LQTI Common Stock upon issuance. On the Closing Date, the Stockholder shall
surrender its certificate or certificates representing the CMH Shares to LQTI
or
its registrar or transfer agent. Upon consummation of the transaction
contemplated herein, all of the shares of capital stock of CMH shall be held
by
LQTI. Upon consummation of the transaction contemplated herein (including,
but
not limited to, the cancellation of the shares set forth in Section 4.05 herein
below), there shall be Eighty Million (80,000,000) shares of LQTI Common Stock
issued and outstanding.
Section
3.02 Anti-Dilution.
The
number of shares of LQTI Common Stock issuable upon exchange pursuant to Section
3.01 shall be appropriately adjusted to take into account any other stock split,
stock dividend, reverse stock split, recapitalization, or similar change in
the
LQTI Common Stock which may occur between the date of the execution of this
Agreement and the Closing Date.
Section
3.03 Closing
Events.
On the
Closing Date, LQTI, CMH and the Stockholder shall execute, acknowledge, and
deliver (or shall ensure to be executed, acknowledged, and delivered), any
and
all certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement to be
so
delivered on or prior to the Closing Date, together with such other items as
may
be reasonably requested by the parties hereto and their respective legal counsel
in order to effectuate or evidence the transactions contemplated hereby.
Section
3.04 Termination.
This
Agreement may be terminated by the Board of Directors of CMH only in the event
that LQTI or CMH do not meet the conditions precedent set forth in Articles
V
and VI. If this Agreement is terminated pursuant this Section, this Agreement
shall be of no further force or effect, and no obligation, right or liability
shall arise hereunder.
ARTICLE
IV
SPECIAL
COVENANTS
Section
4.01 Access
to Properties and Records.
LQTI
and CMH will each afford to the officers and authorized representatives of
the
other full access to the properties, books and records of LQTI or CMH, as the
case may be, in order that each may have a full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the other,
and each will furnish the other with such additional financial and operating
data and other information as to the business and properties of LQTI or CMH,
as
the case may be, as the other shall from time to time reasonably request.
Without limiting the foregoing, as soon as practicable after the end of each
fiscal quarter (and in any event through the last fiscal quarter prior to the
Closing Date), each party shall provide the other with quarterly internally
prepared and unaudited financial statements.
-9-
Section
4.02 Delivery
of Books and Records.
On or
prior to the Closing Date, CMH shall deliver to LQTI the originals of the
corporate minute books, books of account, contracts, records, and all other
books or documents of CMH now in the possession of CMH or its representatives.
LQTI shall deliver to CMH the originals of the corporate minute books, books
of
account, contracts, records, and all other books or documents of LQTI now in
the
possession of LQTI or its representatives.
Section
4.03 Third
Party Consents and Certificates.
LQTI
and CMH hereby agree to cooperate with each other in order to obtain any
required third party consents to this Agreement and the transactions herein
contemplated.
Section
4.04 Principal
Stockholder Approval.
LQTI
shall obtain shareholder approval of this Agreement from the Principal
Stockholder of LQTI prior to the Closing Date.
Section
4.05 Cancellation
of Shares Held By Principal Stockholder.
Prior
to the Closing Date, the Principal Stockholder shall cancel a total number
of
Six Hundred Fifty Thousand Five (650,005) shares of LQTI Common Stock.
Section
4.06 Payment.
On the
Closing Date, CMH shall pay to LQTI Thirty Thousand Dollars ($30,000) by wire
transfer in immediately available funds for payment of all outstanding debt
of
LQTI and the costs associated with the cancellation of the Principal
Stockholder’s shares in accordance with Section 4.05 herein above.
Section
4.07 Designation
of Directors and Officers.
On the
Closing Date, Li Xipeng shall be appointed to serve as a director of LQTI.
After
compliance by LQTI with Rule 14F-1 promulgated under the Exchange Act, (a)
Zhang
Chunxian, Sun Jianhao, Xxxxx Xxxxxx, Xx Xxxxxxx, Li Changlai and Mu Xinjie
shall
be appointed to serve as Directors of LQTI, with Li Xipeng serving as Chairman
of the Board, (b) Li Xepeng shall be appointed to serve as Chief Executive
Officer of LQTI, (c) Xxx Xxx and Wu Lei shall be appointed to serve as Vice
President of Operations and Vice President of Strategic Development,
respectively, (d) Zhang Chunxian shall be appointed to serve as Chief Financial
Officer of LQTI and (e) Xxxx Xxxx shall resign as Director and Sole Officer
of
LQTI.
Section
4.08 Indemnification.
(a) CMH
hereby agrees to indemnify LQTI and each of the officers, agents and directors
of LQTI as of the date of execution of this Agreement against any loss,
liability, claim, damage, or expense (including, but not limited to, any and
all
expense whatsoever reasonably incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever)
(“Loss”), to which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentations made under Article I of this
Agreement. The indemnification provided for in this paragraph shall survive
the
closing hereunder and the consummation of the transactions contemplated hereby
and termination of this Agreement for one (1) year following the Closing
Date.
-10-
(b) LQTI
hereby agrees to indemnify CMH and each of the officers, agents, and directors
of CMH and the Stockholder as of the date of execution of this Agreement against
any Loss to which it or they may become subject arising out of or based on
any
inaccuracy appearing in or misrepresentation made under Article II of this
Agreement. The indemnification provided for in this paragraph shall survive
the
Closing hereunder and the consummation of the transactions contemplated hereby
and termination of this Agreement for one (1) year following the Closing
Date.
Section
4.09 The
Acquisition of LQTI Common Stock.
LQTI
and CMH understand and agree that the consummation of this Agreement including
the issuance of the LQTI Common Stock to the Stockholder in exchange for the
CMH
Common Stock as contemplated hereby constitutes the offer and sale of securities
under the Securities Act of 1933, as amended (the “Securities Act”) and
applicable state statutes. LQTI and CMH agree that such transactions shall
be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes, which depend, among other items, on
the
circumstances under which such securities are acquired.
(a) In
order
to provide documentation for reliance upon the exemptions from the registration
and prospectus delivery requirements for such transactions, the Stockholder
shall execute and deliver to LQTI an Investment Representation Letter in
substantially the form of Exhibit A attached hereto.
(b) In
connection with the transactions contemplated by this Agreement, LQTI and
CMH
shall
each file, with the assistance of the other and their respective legal counsel,
such notices, applications, reports, or other instruments as may be deemed
by
them to be necessary or appropriate in an effort to document reliance on such
exemptions, and the appropriate regulatory authority in the states where the
Stockholder resides unless an exemption requiring no filing is available in
such
jurisdiction, all to the extent and in the manner as may be deemed by such
party
to be appropriate.
(c) In
order
to more fully document reliance on the exemptions as provided herein,
CMH,
the
Stockholder, and LQTI shall execute and deliver to the other, at or prior to
the
Closing Date, such further letters of representation, acknowledgment,
suitability, or the like as CMH,
the
Stockholder or LQTI and their respective counsel may reasonably request in
connection with reliance on exemptions from registration under such securities
laws.
(d) The
Stockholder acknowledges that the basis for relying on exemptions from
registration or qualifications are factual, depending on the conduct of the
various parties, and that a legal opinion will be provided to the effect that
the transactions contemplated hereby are in fact exempt from registration or
qualification.
-11-
ARTICLE
V
CONDITIONS
PRECEDENT TO OBLIGATIONS OF LQTI
The
obligations of LQTI under this Agreement are subject to the satisfaction, on
or
before the Closing Date, of the following conditions:
Section
5.01 Accuracy
of Representations and Performance of Covenants.
The
representations and warranties made by CMH and the Stockholder in this Agreement
were true when made and shall be true at the Closing Date with the same force
and effect as if such representations and warranties were made at and as of
the
Closing Date (except for changes therein permitted by this Agreement). CMH
shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by CMH prior to or on the Closing
Date. LQTI shall be furnished with a certificate, signed by a duly authorized
executive officer of CMH and dated the Closing Date, to the foregoing effect.
Section
5.02 Officer’s
Certificate.
LQTI
shall have been furnished with a certificate dated the Closing Date and signed
by a duly authorized officer of CMH to the effect that no litigation,
proceeding, investigation, or inquiry is pending, or to the best knowledge
of
CMH threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement, or, to the
extent not disclosed in the CMH Schedules, by or against CMH, which might result
in any material adverse change in any of the assets, properties, business,
or
operations of CMH.
Section
5.03 Good
Standing.
LQTI
shall have received a certificate of good standing from CMH, dated as of a
date
within ten (10) days prior to the Closing Date certifying that CMH is in good
standing as a limited company in the British Virgin Islands.
Section
5.04 Approval
by Stockholder.
The
Exchange shall have been approved, and shares delivered in accordance with
Section 3.01, by the holders of not less than one hundred percent (100%) of
the
outstanding CMH Common Stock, including voting power, of CMH, unless a lesser
number is agreed to by LQTI.
Section
5.05 No
Governmental Prohibition.
No
order, statute, rule, regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted, entered, promulgated
or
enforced by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the transactions contemplated
hereby.
Section
5.06 Consents.
All
consents, approvals, waivers or amendments pursuant to all contracts, licenses,
permits, trademarks and other intangibles in connection with the transactions
contemplated herein, or for the continued operation of CMH after the Closing
Date on the basis as presently operated shall have been obtained.
Section
5.07 Other
Items.
(a) LQTI
shall have received a list containing the names, addresses, and number of shares
held by each holder of capital stock in CMH as of the Closing Date, certified
by
an executive officer of CMH as being true, complete and accurate;
(b) LQTI
shall have received the payment contemplated in Section 4.06 herein;
and
-12-
(c)
LQTI
shall have received such further opinions, documents, certificates or
instruments relating to the transactions contemplated hereby as LQTI may
reasonably request.
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF CMH
AND
THE STOCKHOLDER
The
obligations of CMH and the Stockholder under this Agreement are subject to
the
satisfaction, at or before the Closing Date, of the following
conditions:
Section
6.01 Accuracy
of Representations and Performance of Covenants.
The
representations and warranties made by LQTI in this Agreement were true when
made and shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date. LQTI
shall have performed and complied with all covenants and conditions required
by
this Agreement to be performed or complied with by LQTI. Prior to or on the
Closing Date, LQTI shall furnish to CMH a certificate signed by a duly
authorized officer of LQTI and dated the Closing Date, to the foregoing effect.
Section
6.02 Officer’s
Certificate.
CMH
shall have been furnished with certificates dated the Closing Date and signed
by
duly authorized executive officers of LQTI, to the effect that no litigation,
proceeding, investigation or inquiry is pending, or to the best knowledge of
LQTI threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the LQTI Schedules, by or against LQTI, which might
result in any material adverse change in any of the assets, properties or
operations of LQTI.
Section
6.03 Good
Standing.
CMH
shall have received a certificate of good standing from the Secretary of State
of Nevada or other appropriate office, dated as of a date within five (5) days
prior to the Closing Date certifying that LQTI is in good standing as a
corporation in the State of Nevada and has filed all tax returns required to
have been filed by it to date and has paid all taxes reported as due
thereon.
Section
6.04 No
Governmental Prohibition.
No
order, statute, rule, regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted, entered, promulgated
or
enforced by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the transactions contemplated
hereby.
Section
6.05 Consents.
All
consents, approvals, waivers or amendments pursuant to all contracts, licenses,
permits, trademarks and other intangibles in connection with the transactions
contemplated herein, or for the continued operation of LQTI after the Closing
Date on the basis as presently operated shall have been obtained.
Section
6.06 Legal
Opinion. CMH
shall
have been furnished with a legal opinion from LQTI’s counsel in the form of
Exhibit C hereto stating, among other things, that the transactions contemplated
hereby are exempt from registration or qualification.
-13-
Section
6.07 Other
Items.
CMH
shall have received further opinions, documents, certificates, or instruments
relating to the transactions contemplated hereby as CMH may reasonably
request.
ARTICLE
VII
MISCELLANEOUS
Section
7.01 Brokers.
LQTI
and CMH agree that, except as set out on Item 7.01 of the LQTI Schedule, there
were no finders or brokers involved in bringing the parties together or who
were
instrumental in the negotiation, execution or consummation of this Agreement.
LQTI and CMH each agree to indemnify the other against any claim by any third
person other than those described above for any commission, brokerage, or
finder’s fee arising from the transactions contemplated hereby based on any
alleged agreement or understanding between the indemnifying party and such
third
person, whether express or implied from the actions of the indemnifying
party.
Section
7.02 Governing
Law.
This
Agreement shall be governed by, enforced, and construed under and in accordance
with the laws of the United States of America and, with respect to the matters
of state law, with the laws of the State of New York. Venue for all matters
shall be in New York, New York, without giving effect to principles of conflicts
of law thereunder. Each of the parties (a) irrevocably consents and agrees
that
any legal or equitable action or proceedings arising under or in connection
with
this Agreement shall be brought exclusively in the federal courts of the United
States. By execution and delivery of this Agreement, each party hereto
irrevocably submits to and accepts, with respect to any such action or
proceeding, generally and unconditionally, the jurisdiction of the aforesaid
court, and irrevocably waives any and all rights such party may now or hereafter
have to object to such jurisdiction.
Section
7.03 Notices.
Any
notice or other communications required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered to it or sent
by
telecopy, overnight courier or registered mail or certified mail, postage
prepaid, addressed as follows:
| If to CMH, to: |
Color
Man Holdings Limited
|
Xxxx
00,
Xxxxxx Xxxxx
00
Xxx
Xxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx
Attention:
XXX Xxxx Fat, Director of RCD (NOMINEE) LTD.
Facsimile:
(000) 0000 0000
| With copies to: |
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxx Xxxxx Xxxxx
LLP
|
Wachovia
Financial Center
000
Xxxxx
Xxxxxxxx Xxxx., Xxxxx 0000
Xxxxx,
XX
00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Telephone
(000) 000-0000
Facsimile:
(000) 000-0000
-14-
| If toStockholder,to: |
Joylink
Holdings Limited
|
Xxxx
00,
Xxxxxx Xxxxx
00
Xxx
Xxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx
Attention:
XXX Xxxx Fat, Sole Director
Facsimile:
(000) 0000 0000
| If to LQTI, to: |
0000
Xxxx
0000 Xxxxx, Xxxxx, Xxxx 00000
Xxxxx,
Xxxx 00000
Attention:
Xxxx Xxxx, Chief Executive Officer
Telephone:
(000) 000-0000
Facsimile:
[___________]
| With copies to: |
Xxxxxx
X. Xxxxxxxxx
|
0000
X.
Xxxxxx Xxxxxx
Xxxxx,
Xxxx 00000
Attention:
Xxxxxx X. Xxxxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
or
such
other addresses as shall be furnished in writing by any party in the manner
for
giving notices hereunder, and any such notice or communication shall be deemed
to have been given (i) upon receipt, if personally delivered, (ii) on the day
after dispatch, if sent by overnight courier and (iii) upon dispatch, if
transmitted by facsimile or telecopy and receipt is confirmed by telephone.
Section
7.04 Attorney’s
Fees.
In the
event that either party institutes any action or suit to enforce this Agreement
or to secure relief from any default hereunder or breach hereof, the prevailing
party shall be reimbursed by the losing party for all costs, including
reasonable attorney’s fees, incurred in connection therewith and in enforcing or
collecting any judgment rendered therein.
Section
7.05 Confidentiality.
Each
party hereto agrees with the other that, unless and until the transactions
contemplated by this Agreement have been consummated, it and its representatives
will hold in strict confidence all data and information obtained with respect
to
another party or any subsidiary thereof from any representative, officer,
director or employee, or from any books or records or from personal inspection,
of such other party, and shall not use such data or information or disclose
the
same to others, except (i) to the extent such data or information is published,
is a matter of public knowledge, or is required by law to be published; or
(ii)
to the extent that such data or information must be used or disclosed in order
to consummate the transactions contemplated by this Agreement. In the event
of
the termination of this Agreement, each party shall return to the other party
all documents and other materials obtained by it or on its behalf and shall
destroy all copies, digests, work papers, abstracts or other materials relating
thereto, and each party will continue to comply with the confidentiality
provisions set forth herein.
-15-
Section
7.06 Public
Announcements and Filings.
Unless
required by applicable law or regulatory authority, none of the parties will
issue any report, statement or press release to the general public, to the
trade, to the general trade or trade press, or to any third party (other than
its advisors and representatives in connection with the transactions
contemplated hereby) or file any document, relating to this Agreement and the
transactions contemplated hereby, except as may be mutually agreed by the
parties. Copies of any such filings, public announcements or disclosures,
including any announcements or disclosures mandated by law or regulatory
authorities, shall be delivered to each party at least one (1) business day
prior to the release thereof.
Section
7.07 Entire
Agreement.
This
Agreement represents the entire agreement between the parties relating to the
subject matter thereof and supersedes all prior agreements, understandings
and
negotiations, written or oral, with respect to such subject matter.
Section
7.08 Recitals.
The
above
recitals are true and correct and are incorporated herein, in their entirety,
by
this reference.
Section
7.09 Third
Party Beneficiaries.
This
contract is strictly between LQTI, the Stockholder and CMH, and, except as
specifically provided, no director, officer, stockholder (other than the
Stockholder), employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this
Agreement.
Section
7.10 Expenses.
Subject
to Section 7.04 above, whether or not the Exchange is consummated, each of
LQTI,
the Stockholder and CMH will bear their own respective expenses, including
legal, accounting and professional fees, incurred in connection with the
Exchange or any of the other transactions contemplated hereby; provided,
however, that upon the consummation of the Exchange, LQTI will not be
responsible for the legal, accounting and other professional fees incurred
by
LQTI prior to the Closing Date in connection with the Exchange or an of the
other transactions contemplated hereby.
Section
7.11 Survival;
Termination.
The
representations, warranties, and covenants of the respective parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated for a period of two (2) years.
Section
7.12 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.
Section
7.13 Amendment
or Waiver.
Every
right and remedy provided herein shall be cumulative with every other right
and
remedy, whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance of any
obligation by the other shall be construed as a waiver of the same or any other
default then, theretofore, or thereafter occurring or existing. At any time
prior to the Closing Date, this Agreement may by amended by a writing signed
by
all parties hereto, with respect to any of the terms contained herein, and
any
term or condition of this Agreement may be waived or the time for performance
may be extended by a writing signed by the party or parties for whose benefit
the provision is intended.
Section
7.14 Best
Efforts.
Subject
to the terms and conditions herein provided, each party shall use its best
efforts to perform or fulfill all conditions and obligations to be performed
or
fulfilled by it under this Agreement so that the transactions contemplated
hereby shall be consummated as soon as practicable. Each party also agrees
that
it shall use its best efforts to take, or cause to be taken, all actions and
to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective this Agreement
and the transactions contemplated herein.
-16-
Section
7.15 Entire
Agreement.
This
Agreement represents the entire agreement between the parties relating to the
subject matter thereof and supersedes all prior agreements, understandings
and
negotiations, written or oral, with respect to such subject matter.
[Signature
Page To Follow]
-17-
IN
WITNESS WHEREOF,
the
corporate parties hereto have caused this Share Exchange Agreement to be
executed by their respective officers, hereunto duly authorized, as of the
date
first-above written.
|
By:
|
/s/
Xxxx
Xxxx
|
| Name: Xxxx Xxxx | |
| Title: Sole Officer | |
|
COLOR
MAN HOLDINGS LIMITED
|
|
|
By:
|
RCD
(NOMINEE) LTD.
|
|
Its:
|
Sole
Director
|
|
By:
/s/ Xxx Xxxx
Fat
|
|
|
Name:
XXX XXXX FAT
|
|
|
Title:
Director
|
|
-18-
The
undersigned Stockholder of CMH hereby agrees to participate in the Exchange
on
the terms set forth above. Subject to Section 7.11 above, the undersigned hereby
represents and affirms that it has read each of the representations and
warranties of CMH set out in Article I hereof and that, to the best of its
knowledge, all of such representations and warranties are true and
correct.
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JOYLINK
HOLDINGS LIMITED
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By:
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/s/
Xxx Xxxx Fat
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Name:
XXX Xxxx Fat
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Title:
Sole Director
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-19-
CMH
SCHEDULES
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Item
1.01
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Certificate
of Incorporation (attached)
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Item
1.04
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Audited
Financial Statements at June 30, 2007 (attached)
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Unaudited
Consolidated Financial Statements at September 30, 2007
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Item
1.07(d)
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Litigation
and Proceedings:
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Ping
entered into an agreement to purchase land from Pingdingshan No.3 Cement Factory
for $1,843,646. However, the Company was not informed that such land was pledged
as collateral for loans tohe cement factory. Pingdingshan No. 3 Cement Company
went bankrupt and the company that loaned the money then sued Ping for the
loss
of the collateral. On July 13, 2006, judgment was made by the Henan Pingdingshan
Intermediary Court in which Ping was required to pay to the lending company
$485,851. The amount was paid in August 2006 and recorded as other expense
in
the statement of income (loss) for the year ended June 30, 2007. Ping is
appealing the ruling to a higher court and the final judgment is
pending.
On
June
27, 0000, Xxxxx railway No. 5 bureau, the constructor that won the bid in the
Pinglin Expressway no.2 road connection project, was sued by the subcontractors
Hujianting and Hefeiyue for postponing the commencement date of construction by
more than ten (10) months. The total damage claimed in this case was $647,364,
and Ping, as the 5th defendant, was brought into this case by the plaintiff.
The
case is currently ongoing and Ping believes the claims against them are without
substance and they plan to vigorously defend themselves. As such, there is
no
contingency accrual for this case at June 30, 2007.
In
the
normal course of business, we are named as defendant in lawsuits in which claims
are asserted against us. In our opinion, the liabilities, if any, which may
ultimately result from such lawsuits, are not expected to have a material
adverse effect on our financial position, results of operations or cash flows.
As of the date hereof, there is no outstanding litigation with Learning
Quest.
Item
1.08 Material
Contracts:
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Chartered
Rights Agreement on Pingdingshan-Linru Expressway Project, dated
April 10,
2003, by and between Pingdingshan Pinglin Expressway Co., Ltd. and
Pingdingshan
Bureau of Communications
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Loan
Contract of the Year 2004, dated December 28, 2004, by and between
the
China Development Bank and Pingdingshan Pinglin Expressway Co.,
Ltd.
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Loan
Contract of the Fixed Assets (No. YBZ No. 0054, 2005), dated July
29,
2005, by and between The Pingdingshan Branch of Industrial and Commerical
Bank of China and Pingdingshan Pinglin Expressway Co.,
Ltd.
|
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Loan
Contract, dated February 25, 2005, by and between the Agricultural
Bank of
China, Xinhua Branch of Pingdingshan City and Pingdingshan Pinglin
Expressway Co., Ltd.
|
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Loan
Contract of the Year 2007, dated September 28, 2007, by and between
the
China Development Bank and Pingdingshan Pinglin Expressway Co.,
Ltd.
|
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Loan
Contract, dated June 7, 2005, by and between the Agricultural Bank
of
China, Xinhua Branch of Pingdingshan City and Pingdingshan Pinglin
Expressway Co., Ltd.
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General
Loan Contract, dated November 29, 2004, by and between the China
Development Bank and Pingdingshan Pinglin Expressway Co.,
Ltd.
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Loan
Contract of the Fixed Assets (No. YBZ No. 0051, 2005), dated July
29,
2005, by and between The Pingdingshan Branch of Industrial and Commerical
Bank of China and Pingdingshan Pinglin Expressway Co.,
Ltd.
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-20-
LQTI
SCHEDULES
|
Item
2.01
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Articles
of Incorporation and Bylaws
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Item
2.04
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Audited
Financial Statements at December 31, 2007
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Item
2.07
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Absence
of Certain Changes or Events:
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On
January 22, 2008, the Company completed a dividend distribution to
its
shareholders of record as of January 18, 2008 in the amount equal
to 5%
(1,250,005 shares) of the then issued and outstanding common stock.
Following the dividend distribution, the Company has 26,250,005
shares of common stock issued and outstanding.
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Item
2.09
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Material
Contracts
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Item
2.13
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Material
Transactions or Affiliations
|
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Item
2.14
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Bank
Accounts; Powers of Attorney
|
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Item
7.01
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Brokers
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-21-
EXHIBIT
A
FORM
OF INVESTMENT LETTER
Re:
Purchase
of shares of Common Stock of Learning Quest Technologies, Inc.
Gentlemen:
In
connection with the acquisition by the undersigned of shares of common stock
of
Learning Quest Technologies, Inc. (“Securities”), the undersigned
represents that the securities are being acquired without a view to, or for,
resale in connection with any distribution of such Securities or any interest
therein without registration or other compliance under the Securities Act of
1933, as amended (“Securities Act”), and that the undersigned has no
direct or indirect participation in any such undertaking or in the underwriting
of such an undertaking.
The
undersigned understands that the Securities have not been registered, but are
being acquired by reason of a specific exemption under the Securities Act as
well as under certain state statutes for transactions by an issuer not involving
any public offering and that any disposition of the subject Securities may,
under certain circumstances, be inconsistent with this exemption and may make
the undersigned an “underwriter” within the meaning of the Securities Act. It is
understood that the definition of an “underwriter” focuses on the concept of
“distribution” and that any subsequent disposition of the subject Securities can
only be effected in transactions which are not considered distributions.
Generally, the term “distribution” is considered synonymous with “public
offering” or any other offer or sale involving general solicitation or general
advertising. Under present law, in determining whether a distribution occurs
when securities are sold into the public market, under certain circumstances
one
must consider the availability of public information regarding the issuer,
a
holding period for the securities sufficient to assure that the persons desiring
to sell the securities without registration first bear the economic risk of
their investment, and a limitation on the number of securities which the
stockholder is permitted to sell and on the manner of sale, thereby reducing
the
potential impact of the sale on the trading markets. These criteria are set
forth specifically in rule 144 promulgated under the Securities Act. As
calculated in accordance with rule 144(b), sales of the Securities in reliance
on rule 144 can only be made in limited amounts in accordance with the terms
and
conditions of that rule. As calculated in accordance with rule 144(k), sales
of
the Securities in reliance on rule 144 can generally be sold without meeting
these conditions provided the holder is not (and has not been for the preceding
three months) an affiliate of the issuer.
A-1
Page
Two
The
undersigned acknowledges that the securities must be held and may not be sold,
transferred, or otherwise disposed of for value unless it is subsequently
registered under the Securities Act or an exemption from such registration
is
available; the issuer is under no obligation to register the Securities under
the Securities Act or under Section 12 of the Securities Exchange Act of 1934,
as amended, except as may be expressly agreed to by it in writing; if rule
144
is available, and no assurance is given that it will be, initially only routine
sales of such Securities in limited amounts can be made in reliance on rule
144
in accordance with the terms and conditions of that rule; the issuer is under
no
obligation to the undersigned to make rule 144 available, except as may be
expressly agreed to by it in writing; in the event rule 144 is not available,
compliance with regulation A or some other exemption may be required before
the
undersigned can sell, transfer, or otherwise dispose of such Securities without
registration under the Securities Act; the issuer’s registrar and transfer agent
will maintain a stop transfer order against the registration of transfer of
the
Securities; and the certificate representing the convertible promissory notes
and warrants composing the Securities will bear a legend in substantially the
following form so restricting the sale of such Securities.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ARE “RESTRICTED
SECURITIES” WITHIN THE MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.
The
issuer may refuse to register transfer of the securities in the absence of
compliance with rule 144 unless the undersigned furnishes the issuer with a
“no-action” or interpretative letter from the U.S. Securities and Exchange
Commission or an opinion of counsel reasonably acceptable to the issuer stating
that the transfer is proper; further, unless such letter or opinion states
that
the Securities are free of any restrictions under the Securities Act, the issuer
may refuse to transfer the Securities to any transferee who does not furnish
in
writing to the issuer the same representations and agree to the same conditions
with respect to such Securities as are set forth herein. The issuer may also
refuse to transfer the securities if any circumstances are present reasonably
indicating that the transferee’s representations are not accurate.
Very
truly yours,
Dated:
A-2
EXHIBIT
B
[FORM
OF LEGAL OPINION]
B-1
