SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT, dated as of the 5th day of November 2002
(the "Agreement"), is by and among Xxxxx Educational Systems, Inc., a Delaware
corporation (the "Company"), and Halter Capital Corporation, a Texas corporation
and Xxxxx Xxxxxx (the "Shareholders"), on the one hand; and Fang Dehou, Li Ming
and Xxx Xxxxxxxx (collectively, the "Sellers"), on the other hand.
W I T N E S S E T H:
WHEREAS, the Sellers collectively own or have the authority to transfer
all of the equity interest of Intsys Share Limited, a British Virgin Islands
corporation ("Intsys"), as set forth on Schedule I to this Agreement (the
"Intsys Shares").
WHEREAS, the Company desires to acquire from Sellers, and Sellers
desire to sell to the Company, the Intsys Shares in exchange (the "Exchange")
for the issuance by the Company of an aggregate of 40,000,000 shares (the
"Company Shares") of the Company's common stock, par value $0.001 per share (the
"Company Common Stock") to be issued to the Sellers and their designees, on the
terms and conditions set forth below.
WHEREAS, the Company currently has 192,063 shares of common stock
issued and outstanding. After giving effect to the Exchange, the Company shall
have 40,192,063 shares of Common Stock issued and outstanding.
WHEREAS, the Shareholder is a shareholder, officer and director of the
Company and will benefit from the transactions contemplated herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements set forth herein, the parties hereto
agree as follows:
ARTICLE I
EXCHANGE OF SHARES
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1.1 Exchange of Shares. Subject to the terms and conditions of this
Agreement, on the Closing Date (as hereinafter defined):
(a) the Company shall issue and deliver to each of the Sellers and/or
their designees the number of authorized but unissued shares of Company Common
Stock set forth opposite such Seller's and designee's names set forth on
Schedule I hereto, and
(b) each Seller agrees to deliver to the Company, the number of issued
shares of Intsys set forth opposite such Seller's name on Schedule I hereto
along with an appropriately executed transfer documents in favor of the Company.
1.2 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Loeb &
Loeb LLP on the date hereof (the "Closing Date") at 10:00 a.m., it being
understood and agreed that the closing shall be deemed to occur simultaneously
with the execution of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SHAREHOLDERS
The Company and the Shareholders represent and warrant, jointly and
severally, to each of the Sellers that now and/or as of the Closing:
2.1 Due Organization and Qualification; Subsidiaries; Due
Authorization.
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of formation, with full
corporate power and authority to own, lease and operate its respective business
and properties and to carry on its respective business in the places and in the
manner as presently conducted or proposed to be conducted. The Company is in
good standing as a foreign corporation in each jurisdiction in which the
properties owned, leased or operated, or the business conducted, by it requires
such qualification except for any such failure, which when taken together with
all other failures, is not likely to have a material adverse effect on the
business of the Company and its Subsidiaries taken as a whole.
(b) The Company does not own, directly or indirectly, any capital
stock, equity or interest in any corporation, firm, partnership, joint venture
or other entity.
(c) The Company has all requisite corporate power and authority to
execute and deliver this Agreement, and to consummate the transactions
contemplated hereby and thereby. The Company has taken all corporate action
necessary for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, and this Agreement constitutes the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its respective terms, except as may be affected by bankruptcy,
insolvency, moratoria 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.
2.2 No Conflicts or Defaults. The execution and delivery of this
Agreement by the Company and the consummation of the transactions contemplated
hereby do not and shall not (a) contravene the Certificate of Incorporation or
By-laws of the Company or (b) with or without the giving of notice or the
passage of time (i) violate, conflict with, or result in a breach of, or a
default or loss of rights under, any material covenant, agreement, mortgage,
indenture, lease, instrument, permit or license to which the Company is a party
or by which the Company is bound, or any judgment, order or decree, or any law,
rule or regulation to which the Company is subject, (ii) result in the creation
of, or give any party the right to create, any lien, charge, encumbrance or any
other right or adverse interest ("Liens") upon any of the assets of the Company,
(iii) terminate or give any party the right to terminate, amend, abandon or
refuse to perform, any material agreement, arrangement or commitment to which
the Company is a party or by which the Company's assets are bound, or (iv)
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accelerate or modify, or give any party the right to accelerate or modify, the
time within which, or the terms under which, the Company is to perform any
duties or obligations or receive any rights or benefits under any material
agreement, arrangement or commitment to which it is a party.
2.3 Capitalization. The authorized capital stock of the Company
immediately prior to giving effect to the transactions contemplated hereby
consists of 100,000,00 shares of Common Stock par value $.001 per share, of
which 192,063, shares are issued and outstanding as of the date hereof and
10,000,000 Preference Shares, par value, $0.001 per share, none of which are
outstanding. All of the outstanding shares of Common Stock are, and the Company
Shares when issued in accordance with the terms hereof, will be, duly
authorized, validly issued, fully paid and nonassessable, and have not been or,
with respect to the Company Shares, will not be issued in violation of any
preemptive right of stockholders. The Company Shares are not subject to any
preemptive or subscription right. There is no outstanding voting trust agreement
or other contract, agreement, arrangement, option, warrant, call, commitment or
other right of any character obligating or entitling the Company to issue, sell,
redeem or repurchase any of its securities, and there is no outstanding security
of any kind convertible into or exchangeable for Common Stock. The Company has
not granted registration rights to any person.
2.4 Financial Statements. Item 2.4 of the Disclosure Schedule contains
copies of the balance sheets of the Company at March 31, 2002 and the related
statements of operations and deficit, stockholders' deficiency and cash flows
for the fiscal years then ended, including the notes thereto, as audited by X.
X. Xxxxxxxx, certified public accountants and the balance sheet of the Company
at June 30, 2002 and the related statements of operations and deficit,
stockholders' deficiency and cash flows for the three month period then ended
prepared by the Company's management (all such statements being the "Company
Financial Statements"). The Company Financial Statements, together with the
notes thereto, have been prepared in accordance with U.S. generally accepted
accounting principles applied on a basis consistent throughout all periods
presented, subject to audit adjustments, which are not expected to be material.
Such Statements present fairly the financial position of the Company as of the
dates and for the periods indicated. The books of account and other financial
records of the Company have been maintained in accordance with good business
practices.
2.5 Further Financial Matters. The Company does not have any (a) assets
of any kind or (b) liabilities or obligations, whether secured or unsecured,
accrued, determined, absolute or contingent, asserted or unasserted or
otherwise, which are required to be reflected or reserved in a balance sheet or
the notes thereto under generally accepted accounting principles, but which are
not reflected in the Company Financial Statements.
2.6 Taxes. The Company has filed all United States federal, state,
county, local and foreign national, provincial and local returns and reports
which were required to be filed on or prior to the date hereof in respect of all
income, withholding, franchise, payroll, excise, property, sales, use,
value-added or other taxes or levies, imposts, duties, license and registration
fees, charges, assessments or withholdings of any nature whatsoever (together,
"Taxes"), and has paid all Taxes (and any related penalties, fines and interest)
which have become due pursuant to such returns or reports or pursuant to any
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assessment which has become payable, or, to the extent its liability for any
Taxes (and any related penalties, fines and interest) has not been fully
discharged, the same have been properly reflected as a liability on the books
and records of the Company and adequate reserves therefore have been
established. All such returns and reports filed on or prior to the date hereof
have been properly prepared and are true, correct (and to the extent such
returns reflect judgments made by the Company, as the case may be, such
judgments were reasonable under the circumstances) and complete in all material
respects. No tax return or tax return liability of the Company has been audited
or, presently under audit. The Company has not given or been requested to give
waivers of any statute of limitations relating to the payment of any Taxes (or
any related penalties, fines and interest). Except for Item 2.6 of the
Disclosure Schedule, there are no claims pending or, to the knowledge of the
Company, threatened, against the Company for past due Taxes. All payments for
withholding taxes, unemployment insurance and other amounts required to be paid
for periods prior to the date hereof to any governmental authority in respect of
employment obligations of the Company, including, without limitation, amounts
payable pursuant to the Federal Insurance Contributions Act, have been paid or
shall be paid prior to the Closing and have been duly provided for on the books
and records of the Company and in the Financial Statements.
2.7 Indebtedness; Contracts; No Defaults.
(a) The Company has no material instruments, agreements, indentures,
mortgages, guarantees, notes, commitments, accommodations, letters of credit or
other arrangements or understandings, whether written or oral, to which the
Company or any Subsidiary is a party.
(b) Neither the Company, any Subsidiary, nor, to the Company's
knowledge, any other person or entity is in breach in any material respect of,
or in default in any material respect under, any material contract, agreement,
arrangement, commitment or plan to which the Company is a party, and no event or
action has occurred, is pending or is threatened, which, after the giving of
notice, passage of time or otherwise, would constitute or result in such a
material breach or material default by the Company or, to the knowledge of the
Company, any other person or entity. The Company has not received any notice of
default under any contract, agreement, arrangement, commitment or plan to which
it is a party, which default has not been cured to the satisfaction of, or duly
waived by, the party claiming such default on or before the date hereof.
2.8 Real Property. The Company does not own or lease any real property.
2.9 Compliance with Law. The Company is not conducting its respective
business or affairs in violation of any applicable federal, state or local law,
ordinance, rule, regulation, court or administrative order, decree or process,
or any requirement of insurance carriers. The Company has not received any
notice of violation or claimed violation of any such law, ordinance, rule,
regulation, order, decree, process or requirement.
(a) The Company is in compliance with all applicable federal, state,
local and foreign laws and regulations relating to the protection of the
environment and human health. There are no claims, notices, actions, suits,
hearings, investigations, inquiries or proceedings pending or, to the knowledge
of the Company, threatened against the Company that are based on or related to
any environmental matters or the failure to have any required environmental
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permits, and there are no past or present conditions that the Company has reason
to believe are likely to give rise to any material liability or other
obligations of the Company or any Subsidiary under any environmental laws.
2.10 Permits and Licenses. The Company has all certificates of
occupancy, rights, permits, certificates, licenses, franchises, approvals and
other authorizations as are reasonably necessary to conduct its respective
business and to own, lease, use, operate and occupy its assets, at the places
and in the manner now conducted and operated, except those the absence of which
would not materially adversely affect its respective business. The Company has
not received any written or oral notice or claim pertaining to the failure to
obtain any material permit, certificate, license, approval or other
authorization required by any federal, state or local agency or other regulatory
body, the failure of which to obtain would materially and adversely affect its
business.
2.11 Litigation. There is no claim, dispute, action, suit, proceeding
or investigation pending or, to the knowledge of the Company, threatened,
against or affecting the business of the Company, or challenging the validity or
propriety of the transactions contemplated by this Agreement, at law or in
equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of the Company, has any such claim, dispute, action, suit, proceeding
or investigation been pending or threatened, during the 12 month period
preceding the date hereof; (b) there is no outstanding judgment, order, writ,
ruling, injunction, stipulation or decree of any court, arbitrator or federal,
state, local, foreign or other governmental authority, board, agency, commission
or instrumentality, against or materially affecting the business of the Company
; and (c) the Company has not received any written or verbal inquiry from any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality concerning the possible violation of any law, rule
or regulation or any matter disclosed in respect of its business.
2.12 Insurance. The Company does not currently maintain any form of
insurance.
2.13 Certificate of Incorporation and By-laws; Minute Books. The copies
of the Certificate of Incorporation and By-laws (or similar governing documents)
of the Company, and all amendments to each are true, correct and complete. The
minute books of the Company contains true and complete records of all meetings
and consents in lieu of meetings of their respective Board of Directors (and any
committees thereof), or similar governing bodies, since the time of their
respective organization. The stock books of the Company are true, correct and
complete.
2.14 Employee Benefit Plans. The Company does not maintain, nor has the
Company maintained in the past, any employee benefit plans ("as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any plans, programs, policies, practices, arrangements or
contracts (whether group or individual) providing for payments, benefits or
reimbursements to employees of the Company, former employees, their
beneficiaries and dependents under which such employees, former employees, their
beneficiaries and dependents are covered through an employment relationship with
the Company, any entity required to be aggregated in a controlled group or
affiliated service group with the Company for purposes of ERISA or the Internal
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Revenue Code of 1986 (the "Code") (including, without limitation, under Section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA, at any relevant
time ("Benefit Plans").
2.15 Patents; Trademarks and Intellectual Property Rights. The Company
does not own or possesses any patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, Internet web site(s) or
proprietary rights of any nature.
2.16 Brokers. Except as set forth on Item 2.16 of the Disclosure
Schedule, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company directly with the
Sellers without the intervention of any Person on behalf of the Company in such
a manner as to give rise to any valid claim by any Person against any Seller for
a finder's fee, brokerage commission or similar payment.
2.17 Affiliate Transactions. Except as disclosed in Item 2.17 of the
Disclosure Schedule neither the Company nor any officer, director or employee of
the Company (or any of the relatives or Affiliates of any of the aforementioned
Persons) is a party to any agreement, contract, commitment or transaction with
the Company or affecting the business of the Company, or has any interest in any
property, whether real, personal or mixed, or tangible or intangible, used in or
necessary to the Company which will subject the Sellers to any liability or
obligation from and after the Closing Date.
2.18 Trading. The Company Common Stock is currently listed for trading
on the OTC Bulletin Board (the "Bulletin Board"), and the Company has received
no notice that its Common Stock is subject to being delisted therefrom.
2.19 Compliance. The Company and its shareholders, have complied with
all applicable foreign, federal and state laws, rules and regulations,
including, without limitation, the requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the Securities Act of 1933, as
amended, is current in its filings.
2.20 Filings. None of the filings made by the Company under the
Securities Act or the Exchange act make any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, represent and warrant to the
Company that now and/or as of the Closing:
3.1 Due Organization and Qualification; Subsidiaries; Due
Authorization.
(a) Intsys and each Subsidiary (as hereinafter defined) of Intsys is an
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of formation, with full corporate power and authority to own,
lease and operate its respective business and properties and to carry on its
respective business in the places and in the manner as presently conducted or
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proposed to be conducted. Intsys and each Subsidiary is in good standing as a
foreign corporation in each jurisdiction in which the properties owned, leased
or operated, or the business conducted, by it requires such qualification except
for any such failure, which when taken together with all other failures, is not
likely to have a material adverse effect on the business of Intsys and its
Subsidiaries taken as a whole.
(b) Intsys does not own, directly or indirectly, any capital stock,
equity or interest in any corporation, firm, partnership, joint venture or other
entity, other than those (each, a "Subsidiary" and together, the "Subsidiaries")
set forth in Item 3.1 of the Disclosure Schedule. Except as set forth in Item
3.1 of the Disclosure Schedule, each Subsidiary is wholly owned by Intsys, all
the outstanding shares of capital stock of each Subsidiary are owned free and
clear of all liens, there is no contract, agreement, arrangement, option,
warrant, call, commitment or other right of any character obligating or
entitling any Subsidiary to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind convertible into or
exchangeable for securities of any Subsidiary.
(c) Each of the Sellers has all requisite power and authority to
execute and deliver this Agreement, and to consummate the transactions
contemplated hereby and thereby. Each of the Sellers has taken all corporate
action necessary for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and this Agreement
constitutes the valid and binding obligation of each of the Sellers, enforceable
against each of the Sellers in accordance with its terms, except as may be
affected by bankruptcy, insolvency, moratoria 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.
3.2 No Conflicts or Defaults. The execution and delivery of this
Agreement by each of the Sellers and the consummation of the transactions
contemplated hereby do not and shall not (a) contravene the governing documents
of said Seller, or (b) with or without the giving of notice or the passage of
time, (i) violate, conflict with, or result in a breach of, or a default or loss
of rights under, any material covenant, agreement, mortgage, indenture, lease,
instrument, permit or license to which Intsys, any of the Subsidiaries or any
Seller is a party or by which Intsys, any of the Subsidiaries or any Seller or
any of their respective assets are bound, or any judgment, order or decree, or
any law, rule or regulation to which Intsys, any of the Subsidiaries or any
Seller or any of their respective assets are subject, (ii) result in the
creation of, or give any party the right to create, any lien upon any of the
assets of Intsys or any of the Subsidiaries, (iii) terminate or give any party
the right to terminate, amend, abandon or refuse to perform, any material
agreement, arrangement or commitment to which Intsys or any of the Subsidiaries
is a party or by which Intsys or any of the Subsidiaries or any of their
respective assets are bound, or (iv) accelerate or modify, or give any party the
right to accelerate or modify, the time within which, or the terms under which
Intsys, or any of the Subsidiaries is to perform any duties or obligations or
receive any rights or benefits under any material agreement, arrangement or
commitment to which it is a party.
3.3 Capitalization. The authorized capital stock of Intsys consists of
50,000 ordinary shares of US $.01 per share of which _____ shares are issued and
outstanding. Set forth in Item 3.3 of the Disclosure Schedule is a list of all
holders of the equity of Intsys, setting forth their names, and percentage of
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equity owned. All of the outstanding shares of Intsys Common Stock are, and the
Intsys Shares when transferred in accordance with the terms hereof, will be,
duly authorized, validly issued, fully paid and nonassessable, and have not been
or, with respect to Intsys Shares, will not be transferred in violation of any
rights of third parties. The Intsys Shares are not subject to any preemptive or
subscription right, any voting trust agreement or other contract, agreement,
arrangement, option, warrant, call, commitment or other right of any character
obligating or entitling Intsys to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind convertible into or
exchangeable for Common Stock.
3.4 Financial Statements. The Sellers have delivered to the Company
copies of the unaudited consolidated balance sheets of Intsys at December 31,
2002 and the related statements of operations, stockholders' equity and cash
flows for the period then ended, including the notes thereto (all such
statements being the "Intsys Financial Statements"). The Financial Statements,
together with the notes thereto, have been prepared in accordance with generally
accepted Hong Kong accounting principles applied on a basis consistent
throughout all periods presented, subject to audit adjustments, which are not
expected to be material. Such statements present fairly the financial position
of Intsys as of the dates and for the periods indicated. The books of account
and other financial records of Intsys have been maintained in accordance with
good business practices.
3.5 Further Financial Matters. Except as set forth in Item 3.5 of the
Disclosure Schedule, neither Intsys nor any of the Subsidiaries has any material
liabilities or obligations, whether secured or unsecured, accrued, determined,
absolute or contingent, asserted or unasserted or otherwise, which are required
to be reflected or reserved in a balance sheet or the notes thereto under
generally accepted accounting principles, but which are not reflected in the
Financial Statements.
3.6 No Adverse Changes. There has not been (a) any material adverse
change in the business, prospects, the financial or other condition, or the
respective assets or liabilities of Intsys and the Subsidiaries as reflected in
the Intsys Financial Statements, (b) any material loss sustained by Intsys or
any Subsidiary, including, but not limited to any loss on account of theft,
fire, flood, explosion, accident or other calamity, whether or not insured,
which has materially and adversely interfered, or may materially and adversely
interfere, with the operation of Intsys' or any Subsidiary's business, or (c) to
the best knowledge of the Sellers, any event, condition or state of facts,
including, without limitation, the enactment, adoption or promulgation of any
law, rule or regulation, the occurrence of which materially and adversely does
or would affect the results of operations or the business or financial condition
of Intsys or any Subsidiary.
3.7 Litigation.
(a) There is no claim, dispute, action, suit, proceeding or
investigation pending or, to the knowledge of the Sellers, threatened, against
or affecting the business of Intsys or any Subsidiary, or challenging the
validity or propriety of the transactions contemplated by this Agreement, at law
or in equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of Intsys, has any such claim, dispute, action, suit, proceeding or
investigation been pending or threatened, during the 12 month period preceding
the date hereof;
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(b) there is no outstanding judgment, order, writ, ruling, injunction,
stipulation or decree of any court, arbitrator or federal, state, local, foreign
or other governmental authority, board, agency, commission or instrumentality,
against or materially affecting the business of Intsys or any Subsidiary; and
(c) neither Intsys nor any Subsidiary has received any written or verbal inquiry
from any federal, state, local, foreign or other governmental authority, board,
agency, commission or instrumentality concerning the possible violation of any
law, rule or regulation or any matter disclosed in respect of its business.
3.8 Patents; Trademarks and Intellectual Property Rights. Each of
Intsys and the Subsidiaries owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, internet web site(s) proprietary rights and processes
necessary for its business as now conducted without any conflict with or
infringement of the rights of others. There are no outstanding options, licenses
or agreements of any kind relating to the foregoing, and neither Intsys nor any
Subsidiary is bound by, or a party to, any options, licenses or agreements of
any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity.
3.9 Brokers. Except as set forth on Item 3.9 of the Disclosure
Schedule, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Sellers directly with the
Company without the intervention of any Person on behalf of the Sellers in such
a manner as to give rise to any valid claim by any Person against any Seller for
a finder's fee, brokerage commission or similar payment.
3.10 Purchase for Investment.
(a) Each Seller is acquiring the Company Shares for investment for such
Seller's own account and not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and such Seller has no present
intention of selling, granting any participation in, or otherwise distributing
the same. Each Seller further represents that he does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Company Shares.
(b) Each Seller understands that the Company Shares are not registered
under the Act on the ground that the sale and the issuance of securities
hereunder is exempt from registration under the Act pursuant to Section 4(2)
thereof, and that the Company's reliance on such exemption is predicated on such
Seller's representations set forth herein. Such Seller is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D under the Act.
3.11 Investment Experience. Each Seller acknowledges that he can bear
the economic risk of its investment, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Company Shares.
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3.12 Information. The Sellers have carefully reviewed such information
as each Seller deemed necessary to evaluate an investment in the Company Shares.
To the full satisfaction of each Seller, it has been furnished all materials
that it has requested relating to the Company and the issuance of the Company
Shares hereunder, and each Seller has been afforded the opportunity to ask
questions of representatives of the Company to obtain any information necessary
to verify the accuracy of any representations or information made or given to
the Sellers. Notwithstanding the foregoing, nothing herein shall derogate from
or otherwise modify the representations and warranties of the Company set forth
in this Agreement, on which each of the Sellers has relied in making an exchange
of the Intsys Shares for the Company Shares.
3.13 Restricted Securities. Each Seller understands that the Company
Shares may not be sold, transferred, or otherwise disposed of without
registration under the Act or an exemption there from, and that in the absence
of an effective registration statement covering the Company Shares or any
available exemption from registration under the Act, the Company Shares must be
held indefinitely. Each Seller is aware that the Company Shares may not be sold
pursuant to Rule 144 promulgated under the Act unless all of the conditions of
that Rule are met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about the Company.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnity of the Company and the Shareholders. The Company and the
Shareholders agree to jointly and severally defend, indemnify and hold harmless
each Seller from and against, and to reimburse each Seller with respect to, all
liabilities, losses, costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements (collectively the "Losses")
asserted against or incurred by such Seller by reason of, arising out of, or in
connection with any material breach of any representation or warranty contained
in this Agreement made by the Company or the Shareholders or in any document or
certificate delivered by the Company or the Shareholders pursuant to the
provisions of this Agreement or in connection with the transactions contemplated
thereby.
4.2 Indemnity of the Sellers. Each of the Sellers agrees to defend,
indemnify and hold harmless the Company from and against, and to reimburse the
Company with respect to, all liabilities, losses, costs and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, asserted
against or incurred by the Company by reason of, arising out of, or in
connection with any material breach of any representation or warranty contained
in this Agreement and made by the applicable Seller or in any document or
certificate delivered by the applicable Seller pursuant to the provisions of
this Agreement or in connection with the transactions contemplated thereby, it
being understood that each Seller shall have responsibility hereunder only for
the representations and warranties made by such Seller. All claims to be
asserted hereunder must be made by the first anniversary of the Closing.
4.3 Indemnification Procedure. A party (an "Indemnified Party") seeking
indemnification shall give prompt notice to the other party (the "Indemnifying
Party") of any claim for indemnification arising under this Article 4. The
Indemnifying Party shall have the right to assume and to control the defense of
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any such claim with counsel reasonably acceptable to such Indemnified Party, at
the Indemnifying Party's own cost and expense, including the cost and expense of
reasonable attorneys' fees and disbursements in connection with such defense, in
which event the Indemnifying Party shall not be obligated to pay the fees and
disbursements of separate counsel for such in such action. In the event,
however, that such Indemnified Party's legal counsel shall determine that
defenses may be available to such Indemnified Party that are different from or
in addition to those available to the Indemnifying Party, in that there could
reasonably be expected to be a conflict of interest if such Indemnifying Party
and the Indemnified Party have common counsel in any such proceeding, or if the
Indemnified Party has not assumed the defense of the action or proceedings, then
such Indemnifying Party may employ separate counsel to represent or defend such
Indemnified Party, and the Indemnifying Party shall pay the reasonable fees and
disbursements of counsel for such Indemnified Party. No settlement of any such
claim or payment in connection with any such settlement shall be made without
the prior consent of the Indemnifying Party which consent shall not be
unreasonably withheld.
ARTICLE V
DELIVERIES
5.1 Items to be delivered to the Sellers prior to or at Closing by the
Company.
(a) articles of incorporation and amendments thereto, bylaws and
amendments thereto, certificate of good standing in the Company's state of
incorporation;
(b) all applicable schedules hereto;
(c) all minutes and resolutions of board of director and shareholder
meetings in possession of the Company;
(d) shareholder list;
(e) all financial statements and tax returns in possession of the
Company;
(f) copies of all SEC filings;
(g) resolution from the Company's current directors appointing the
designees of the Sellers to the Company's Board of Directors;
(h) letters of resignation from the Company's current officers and
directors to be effective upon Closing and after the appointments described in
this section;
(i) certificates representing 40,000,000 shares of the Company's $0.001
par value common stock issued in the denominations as set forth opposite the
respective names of Sellers and/or their designees on Schedule I to this
Agreement, duly authorized, validly issued, fully paid for and non-assessable;
(j) copies of board, and if applicable, shareholder resolutions
approving this transaction and authorizing the issuances of the shares hereto;
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(k) any other document reasonably requested by the Sellers that it
deems necessary for the consummation of this transaction
5.2 Items to be delivered to the Company prior to or at Closing by the
Sellers.
(a) all applicable schedules hereto;
(b) instructions from the Sellers appointing designees of the Sellers
to the Company's Board of Directors;
(c) documents from the Sellers transferring the all of the equity
interests in Intsys as set forth opposite their respective names on Schedule I
to this Agreement;
(d) any other document reasonably requested by the Company that it
deems necessary for the consummation of this transaction.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent to Closing. The obligations of the Parties
under this Agreement shall be and are subject to fulfillment, prior to or at the
Closing, of each of the following conditions:
(a) That each of the representations and warranties of the Parties
contained herein shall be true and correct at the time of the Closing date as if
such representations and warranties were made at such time; and
(b) That the Parties shall have performed or complied with all
agreements, terms and conditions required by this Agreement to be performed or
complied with by them prior to or at the time of the Closing.
6.2 Conditions to Obligations of Sellers. The obligations of Sellers
shall be subject to fulfillment prior to or at the Closing, of each of the
following conditions:
(a) The Shareholder shall have paid all of the costs and expenses of
the Company and himself associated with the acquisition of the Intsys Shares by
the Company;
(b) As of the Closing, the Company shall have no assets and no
liabilities whatsoever, contingent or otherwise, and all of the notes shall have
been converted into shares of the Company's Common Stock or shall have been
cancelled;
(c) The Company shall have entered into a registration rights agreement
with all the Sellers, in the form attached as Exhibit 6.2(c) (the "Registration
Rights Agreement");
(d) The shares of the Company's Common Stock shall be continued to be
traded on the Bulletin Board.
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(e) The Company shall have complied with the provisions of Rule 14f-1
of the Exchange Act.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time before
or, at Closing, by:
(a) The mutual agreement of the Parties;
(b) Any party if:
(i) Any provision of this Agreement applicable to a party shall be
materially untrue or fail to be accomplished; or
(ii) Any legal proceeding shall have been instituted or shall be
imminently threatening to delay, restrain or prevent the consummation of this
Agreement;
(c) Upon termination of this Agreement for any reason, in accordance
with the terms and conditions set forth in this paragraph, each said party shall
bear all costs and expenses as each party has incurred.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations, Warranties and Agreements. All
representations and warranties and statements made by a party to in this
Agreement or in any document or certificate delivered pursuant hereto shall
survive the Closing Date for so long as the applicable statute of limitations
shall remain open. Each of the parties hereto is executing and carrying out the
provisions of this agreement in reliance upon the representations, warranties
and covenants and agreements contained in this agreement or at the closing of
the transactions herein provided for and not upon any investigation which it
might have made or any representations, warranty, agreement, promise or
information, written or oral, made by the other party or any other person other
than as specifically set forth herein.
8.2 Access to Books and Records. During the course of this transaction
through Closing, each party agrees to make available for inspection all
corporate books, records and assets, and otherwise afford to each other and
their respective representatives, reasonable access to all documentation and
other information concerning the business, financial and legal conditions of
each other for the purpose of conducting a due diligence investigation thereof.
Such due diligence investigation shall be for the purpose of satisfying each
party as to the business, financial and legal condition of each other for the
purpose of determining the desirability of consummating the proposed
transaction. The Parties further agree to keep confidential and not use for
their own benefit, except in accordance with this Agreement any information or
documentation obtained in connection with any such investigation.
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8.3 Further Assurances. If, at any time after the Closing, the parties
shall consider or be advised that any further deeds, assignments or assurances
in law or that any other things are necessary, desirable or proper to complete
the merger in accordance with the terms of this agreement or to vest, perfect or
confirm, of record or otherwise, the title to any property or rights of the
parties hereto, the Parties agree that their proper officers and directors shall
execute and deliver all such proper deeds, assignments and assurances in law and
do all things necessary, desirable or proper to vest, perfect or confirm title
to such property or rights and otherwise to carry out the purpose of this
Agreement, and that the proper officers and directors the parties are fully
authorized to take any and all such action.
8.4 Notice. All communications, notices, requests, consents or demands
given or required under this Agreement shall be in writing and shall be deemed
to have been duly given when delivered to, or received by prepaid registered or
certified mail or recognized overnight courier addressed to, or upon receipt of
a facsimile sent to, the party for whom intended, as follows, or to such other
address or facsimile number as may be furnished by such party by notice in the
manner provided herein:
If to the Company and the Shareholders:
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx, Xx.
If to the Sellers:
At the respective addresses of the Sellers set forth
on Schedule 1 hereto.
8.5 Entire Agreement. This Agreement, the Disclosure Schedule and any
instruments and agreements to be executed pursuant to this Agreement, sets forth
the entire understanding of the parties hereto with respect to its subject
matter, merges and supersedes all prior and contemporaneous understandings with
respect to its subject matter and may not be waived or modified, in whole or in
part, except by a writing signed by each of the parties hereto. No waiver of any
provision of this Agreement in any instance shall be deemed to be a waiver of
the same or any other provision in any other instance. Failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver of
its rights under such provision.
8.6 Successors and Assigns. This Agreement shall be binding upon,
enforceable against and inure to the benefit of, the parties hereto and their
respective heirs, administrators, executors, personal representatives,
successors and assigns, and nothing herein is intended to confer any right,
remedy or benefit upon any other person. This Agreement may not be assigned by
any party hereto except with the prior written consent of the other parties,
which consent shall not be unreasonably withheld.
8.7 Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Delaware are
applicable to agreements made and fully to be performed in such state, without
giving effect to conflicts of law principles.
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8.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.9 Construction. Headings contained in this Agreement are for
convenience only and shall not be used in the interpretation of this Agreement.
References herein to Articles, Sections and Exhibits are to the articles,
sections and exhibits, respectively, of this Agreement. The Disclosure Schedule
is hereby incorporated herein by reference and made a part of this Agreement. As
used herein, the singular includes the plural, and the masculine, feminine and
neuter gender each includes the others where the context so indicates.
8.10 Severability. If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, this Agreement
shall be interpreted and enforceable as if such provision were severed or
limited, but only to the extent necessary to render such provision and this
Agreement enforceable.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first set forth above.
XXXXX EDUCATIONAL SYSTEMS, INC.
By:
----------------------------------
President, CEO, CFO and Director
Fang Dehou
-------------------------------------
Xxx Xxxxxxxx
-------------------------------------
Li Ming
SHAREHOLDERS:
Halter Capital Corporation
-------------------------------------
Xxxxx Xxxxxx
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SCHEDULE I
Seller's and Designee's Name
----------------------------
and Address % of Intsys Shares Number of Company Shares
----------- ------------------ ------------------------
Xxx Xxxxxxxx 68.25% 34,125,000
Fang Dehou 16.48% 8,240,000
Li Ming 15.27% 7,635,000
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DISCLOSURE SCHEDULE - COMPANY
ITEM 2.4
FINANCIAL STATEMENTS
See SEC Filings
18
ITEM 2.16
BROKERS
19
ITEM 3.1
DISCLOSURE SCHEDULE - SUBSIDIARIES
65.41% interest in Shenzen Digitainment Co., Ltd, a Sino-foreign joint venture.
20
ITEM 3.3
CAPITALIZATION
Name of Shareholder Percentage of Interest
-------------------------------------- ---------------------------------------
Fang Dehou 68.25
16.48
Xxx Xxxxxxxx
15.27
Li Ming
21
ITEM 3.9
BROKERS ETC.
Agreement with Xxxxxxx Xxxx Financial Corporation
22
