SHARE EXCHANGE AGREEMENT
EXHIBIT
2.1
THIS
SHARE EXCHANGE AGREEMENT, dated as of the 21st day of August, 2006 (the
“Agreement”), by and among SRKP 1, Inc. a Delaware corporation (the “Company”);
KGE Group Limited, a Hong Kong Corporation (the “Sellers”); and Full Art
International, Ltd., a Hong Kong company (“Full Art”). The Company, the Sellers
and Full Art are collectively referred to herein as the “Parties”.
W
I T N E
S S E T H:
WHEREAS,
the Sellers own 100% of the shares of the capital of Full Art (the “Full Art
Shares”) which in turn is the parent of Zhuhai King Glass Engineering Co., Ltd.,
a company organized under the laws of the People’s Republic of China (the
“Subsidiary”).
WHEREAS,
the Company desires to acquire from Sellers, and Sellers desire to sell to
the
Company, the Full Art Shares in exchange (the “Exchange”) for the issuance by
the Company of an aggregate of 45,750,000 shares (the “Company Shares”) of
Company Common Stock to the Sellers and their designees on the terms and
conditions set forth herein.
WHEREAS,
immediately after the Exchange and concurrently with the Closing (as that term
is described below), the Company will issue to certain investors an aggregate
of
1,875,000 shares of Company Common Stock further to the Equity Financing (as
that term is defined herein) so that immediately after the Closing and after
giving effect to the Equity Financing, there will be 50,000,000 shares of stock
outstanding, 48,125,000 of which will be held together by the Sellers and their
designees (45,750,000 shares) and by shareholders of the Company as of the
date
of the Closing (2,375,000 shares).
WHEREAS,
the parties intend, by executing this Agreement, to implement a tax-deferred
exchange of property governed by Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal
Revenue Code of 1986, as amended (the “Code”).
NOW,
THEREFORE, in consideration, of the promises and of the mutual representations,
warranties and agreements set forth herein, the parties hereto agree as
follows:
ARTICLE
I
THE
EXCHANGE
1.1 The
ExchangeSubject
to the terms and conditions of this Agreement, on the Closing Date (as
hereinafter defined):
(a) the
Company shall issue and deliver to the Sellers and their designees the number
of
authorized but unissued shares of Company Common Stock set forth opposite their
and their designee’s names set forth on Schedule
I
hereto
or pursuant to separate instructions to be delivered prior to Closing,
and
(b) the
Sellers agree to deliver to the Company duly endorsed certificates representing
the Full Art Shares.
1.2 Time
and Place of Closing
The
closing of the transactions contemplated hereby (the “Closing”) shall take place
at the offices of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP on or before
September 30, 2006 (the “Closing Date”) at 6:00 p.m. Pacific Time, or at such
place and time as mutually agreed upon by the parties hereto.
1.3 Effective
Time
The
Exchange shall become effective (the “Effective Time”) at such time as all of
the conditions to set forth in Article VII hereof have been satisfied or waived
by the Parties hereto.
1.4 Tax
Consequences
It is
intended by the parties hereto that for United States income tax purposes,
the
contribution and transfer of the Full Art Shares by the Sellers to the Company
in exchange for Company Shares constitutes a tax-deferred exchange within the
meaning of Section 351 of the Code.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Full Art and the Sellers that now and/or
as
of the Closing:
2.1 Due
Organization and Qualification; Due Authorization.
(a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, with full corporate power
and
authority to own, lease and operate its respective business and properties
and
to carry on its 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.
(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 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, equitable remedies is subject to the discretion of the court before
which any proceeding therefore may be brought.
2.3 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) 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 110,000,000 shares of which
100,000,000 have been designated as Company Common Stock $.0001 par value and
10,000,000 shares have been designed as preferred stock, $.0001 par value
(“Preferred Stock”). As of the date hereof, there are 5,400,000 shares of
Company Common Stock issued and outstanding, 3,025,000 of which will be
cancelled as of the Closing, and no shares of Preferred Stock outstanding.
All
of the outstanding shares of Company 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. 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 Company Common Stock. The Company
has
not granted registration rights to any person.
2.4 Financial
Statements
Item 2.4
of the Disclosure Schedule to this Agreement, includes copies the (i) balance
sheet of the Company at December 31, 2005, and the related statements of
operations, stockholders’ equity (deficit) and cash flows for the fiscal year
then ended, including the notes thereto, as audited by AJ. Xxxxxxx, P.C.,
independent registered public accounting firm and (ii) balance sheet of the
Company at June 30, 2006, and the related statements of operations, and cash
flows for the three month period then ended (the “Financial Statements”). The
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. The Financial 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 Assets
and Liabilities
As of
the Closing, the Company shall have no more than $30,000 in liabilities. Except
for the foregoing or as set forth on the Financial Statements, 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.
2.6 Taxes
The
Company has filed all United States federal, state, county 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 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.
2.7 Indebtedness;
Contracts; No Defaults
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
is
a parry.
2.8 Real
Property
The
Company does not own or lease any real property.
2.9 Compliance
with Law
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 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 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.
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 twelve month period preceding the date hereof. 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. 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 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.
2.14 Securities
Law Compliance
The
Company has complied with all of the applicable requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and the Securities Act of
1933, as amended (the “Securities Act”), and has complied with all applicable
blue sky laws.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF FULL ART
Full
Art
and the Sellers 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) Each
of
Full Art and its Subsidiary is a company duly organized, validly existing and
in
good standing in its country of origination, with full corporate power and
authority to own, lease and operate its business and properties and to carry
on
its business in the places and in the manner as presently conducted or proposed
to be conducted. Each of Full Art and its 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 Full Art or its
Subsidiary.
(b) Neither
Full Art nor its Subsidiary owns, directly or indirectly, any capital stock,
equity or interest in any corporation, firm, partnership, joint venture or
other
entity, other than the Subsidiaries as set forth in Item 3.1 of the Disclosure
Schedule. Each such Subsidiary is owned 100% by Full Art and the outstanding
equity interest owned by Full Art in each Subsidiary is 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 either Full
Art or its 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 Full Art or the Subsidiary.
(c) Full
Art
has all requisite power and authority to execute and deliver this Agreement,
and
to consummate the transactions contemplated hereby and thereby. Full Art and
its
Subsidiary has taken all corporate action necessary for the execution and
delivery by Full Art of this Agreement and the consummation of the transactions
contemplated hereby, and this Agreement constitutes the valid and binding
obligation of Full Art, enforceable against Full Art and its Subsidiary 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 Full Art and the consummation of
the
transactions contemplated hereby do not and shall not (a) contravene the
governing documents of Full Art or any of the Subsidiaries, 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 Full Art or the Subsidiary is a party or by which Full Art or the
Subsidiary or any of their respective assets are bound, or any judgment, order
or decree, or any law, rule or regulation to which their 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 Full Art or the Subsidiary, (iii) terminate or give
any parry the right to terminate, amend, abandon or refuse to perform any
material agreement, arrangement or commitment to which Full Art or its
Subsidiary is a party or by which Full Art or any of its 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 Full Art or any its Subsidiary 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
Except
as set forth herein, all of the outstanding shares of Full Art are duly
authorized, validly issued, fully paid and nonassessable, and have not been
or,
with respect to Full Art Shares, will not be transferred in violation of any
rights of third parties. The Full Art 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 Full Art 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. All of the Full Art Shares are owned of record
and beneficially by the Sellers free and clear of any liens, claims,
encumbrances, or restrictions of any kind.
3.4 Taxes
Each of
Full Art and its Subsidiary has filed all returns and reports which were
required to be filed on or prior to the date hereof, 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 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 Full Art or its Subsidiary
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 Full
Art
such judgments were reasonable under the circumstances) and complete in all
material respects. Except as indicated in 3.4 of the Disclosure Schedule, no
extension for the filing of any such return or report is currently in effect.
Except as indicated in Item 3.4 of the Disclosure Schedule, no tax return or
tax
return liability of Full Art or its Subsidiary has been audited or, presently
under audit. All taxes and any penalties, fines and interest which have been
asserted to be payable as a result of any audits have been paid. Except as
indicated in Item 3.4 of the Disclosure Schedule, Full Art or its Subsidiary
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). There are no claims pending for past due Taxes. Except as indicated
in Item 3.4 of the Disclosure Statement, 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 Full Art or any of its Subsidiaries have been paid or shall
be
paid prior to the Closing and have been duly provided for on the books and
records of Full Art and in the Full Art Financial Statements.
3.5 Compliance
with Law
Full Art
and its Subsidiaries are conducting their respective businesses in material
compliance with all applicable law, ordinance, rule, regulation, court or
administrative order, decree or process, or any requirement of insurance
carriers material to its business. Neither Full Art nor the Subsidiary has
received any notice of violation or claimed violation of any such law,
ordinance, rule, regulation, order, decree, process or requirement.
3.6 Litigation.
(a) There
is
no claim, dispute, action, suit, proceeding or investigation pending or
threatened, against or affecting Full Art or the 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, 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 Full Art or the Subsidiary; and
(c) neither
Full Art nor the 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.
ARTICLE
IV
REPRESENTATION
AND WARRANTIES OF THE SELLERS
Each
Seller represents and warrants to the Company that now and/or as of the
Closing:
4.1 Title
to Full Art Shares
Each
Seller is the legal and beneficial owner of the Full Art Shares to be
transferred to the Company by such Seller, and upon consummation of the exchange
contemplated herein, the Company will acquire from such Seller good and
marketable title to the Full Art Shares, free and clear of all liens excepting
only such restrictions upon future transfers by the Company, if any, as maybe
imposed by applicable law.
4.2 Due
Authorization
Each
Seller has all requisite power and authority to execute and deliver this
Agreement, and to consummate the transactions contemplated hereby and thereby.
This Agreement constitutes the valid and binding obligation of each Seller,
enforceable against such Seller 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.
4.3 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
Securities Exchange Act of 1933, as amended (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.
4.4 Investment
Experience
Each
Seller acknowledges that it 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.
4.5 Information
Each
Seller has carefully reviewed such information as such Seller deemed necessary
to evaluate an investment in the Company Shares. To the full satisfaction of
the
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 such Seller. 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 such Seller has relied in making an exchange of the Full Art Shares for
the Company Shares.
4.6 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. 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.
4.7 Exempt
Issuance
Each
Seller acknowledges that he must assure the Company that the offer and sale
of
the Company Shares to him qualifies for an exemption from the registration
requirements imposed by the 1933 Act and from applicable securities laws of
any
state of the United States. Each Seller agrees that he meets the criteria
established in one or more of subsections (a) or (b), below.
(a) Accredited
Investor, Section 4(2) of the 1933 Act and/or Rule 506 of Regulation
D.
The
Seller qualifies as an “accredited investor”, as that term is defined in Rule
501 of Regulation D.
(b) Offshore
Investor, Rule 903 of Regulation S.
The
Seller is not a U.S Person, as defined in Rule 901 of Regulation S promulgated
under the 1933 Act, and the Seller, severally but not jointly, represents and
warrants to the Company that:
(i) The
Seller is not acquiring the Company Shares as a result of, and such Seller
covenants that he or she will not engage in any “directed selling efforts” (as
defined in Regulation S under the 0000 Xxx) in the United States in respect
of
the Company Shares which would include any activities undertaken for the purpose
of, or that could reasonably be expected to have the effect of, conditioning
the
market in the United States for the resale of any of the Company
Shares;
(ii) The
Seller is not acquiring the Company Shares for the account or benefit of,
directly or indirectly, any U.S. Person;
(iii) The
Seller is a resident of China;
(iv) the
offer
and the sale of the Company Shares to him as contemplated in this Agreement
complies with or is exempt from the applicable securities legislation of
China;
(v) the
Seller is outside the United States when receiving and executing this Agreement
and that the Seller will be outside the United States when acquiring the Company
Shares,
(vi) and
the
Seller covenants with Company that:
|
(1)
|
offers
and sales of any of the Company Shares prior to the expiration of
a period
of one year after the date of original issuance of the Company Shares
(the
one year period hereinafter referred to as the “Distribution Compliance
Period”) shall only be made in compliance with the safe harbor provisions
set forth in Regulation S, pursuant to the registration provisions
of the
1933 Act or an exemption therefrom, and that all offers and sales
after
the Distribution Compliance Period shall be made only in compliance
with
the registration provisions of the 1933 Act or an exemption therefrom
and
in each case only in accordance with applicable state securities
laws;
and
|
|
(2)
|
The
Seller will not engage in hedging transactions with respect to the
Company
Shares until after the expiration of the Distribution Compliance
Period.
|
ARTICLE
V
COVENANTS
5.1 Further
Assurances
Each of
the Parties shall use its reasonable commercial efforts to proceed promptly
with
the transactions contemplated herein, to fulfill the conditions precedent for
such parry’s benefit or to cause the same to be fulfilled and to execute such
further documents and other papers and perform such further acts as may be
reasonably required or desirable to carry out the provisions of this Agreement
and to consummate the transactions contemplated herein.
ARTICLE
VI
DELIVERIES
6.1 Items
to
be delivered to the Sellers prior to or at Closing by the Company.
(a) Certificate
of Incorporation and amendments thereto, By-laws 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 all tax returns in possession of the
Company;
(f) resolution
from the Company’s Board appointing the designees of Full Art to the Company’s
Board of Directors;
(g) resolution
from the Company’s Board, and if applicable, shareholder resolutions approving
this transaction and authorizing the issuances of the shares
hereto;
(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 shares of the Company Shares issued in the denominations as set
forth opposite the name of the Sellers and their designees on Schedule
I
to this
Agreement;
(j) evidence
of satisfaction and payment of those Company liabilities, if any, in excess
of
$20,000 as of the Closing as referenced in Section 7.2(c) herein;
and
(k) any
other
document reasonably requested by the Sellers that they deem necessary for the
consummation of this transaction.
6.2 Items
to
be delivered to the Company prior to or at Closing by Full Art and the
Sellers.
(a) all
applicable schedules hereto;
(b) instructions
from Full Art appointing its designees to the Company’s Board of
Directors;
(c) share
certificates and duly executed stock powers from the Sellers transferring the
Full Art Shares to the Company;
(d) resolutions
from the Board of Directors of Full Art, if applicable, and shareholder
resolutions approving the transactions contemplated hereby;
(e) payment
of all liabilities of the Company of up to $20,000 directly out of the proceeds
of the Equity Financing (as defined in Section 7.1(e) herein) to the appropriate
creditors of the company which shall include indebtedness owed to Company
shareholders and fees owing to Company lawyers, accountants and similar parties;
and
(f) any
other
document reasonably requested by the Company that it deems necessary for the
consummation of this transaction.
ARTICLE
VII
CONDITIONS
PRECEDENT
7.1 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 except for changes permitted or contemplated
by this Agreement.
(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;
(c) The
Company shall have cancelled 3,025,000 shares of Common Stock owned by the
certain of its shareholders;
(d) That
the
Company shall have engaged a public relations firm prior to Closing that is
mutually acceptable to the Company and Full Art, and
(e) The
Company shall have concluded an equity financing of at least $3,000,000 at
the
time of Closing (the “Equity Financing”).
7.2 Conditions
to Obligations of Sellers
The
obligations of the Sellers shall be subject to fulfillment prior to or at the
Closing, of each of the following conditions:
(a) The
Company shall have received all of the regulatory, shareholder and other third
party consents, permits, approvals and authorizations necessary to consummate
the transactions contemplated by this Agreement;
(b) The
Company shall have complied with Rule 14(f)(1) of the Exchange Act, if required;
and
(c) To
the
extent that the liabilities of the company exceed $20,000 as of the Closing,
the
Company shareholders shall have satisfied and paid such excess liabilities
in
full.
7.3 Conditions
to Obligations of the Company
The
obligations of the Company shall be subject to fulfillment at or prior to or
at
the Closing, of each of the following conditions:
(a) Full
Art
and the Sellers shall have received all of the regulatory, shareholder and
other
third party consents, permits, approvals and authorizations necessary to
consummate the transactions contemplated by this Agreement;
(b) The
Sellers shall have delivered to the Company the share certificates and duly
executed stock powers from the Sellers transferring the Full Art Shares to
the
Company; and
(c) All
liabilities of the Company up to $20,000 shall be paid directly out of the
proceeds of the Equity Financing to the appropriate creditors, which shall
include indebtedness owed to the Company shareholders and fees owing to lawyers,
accountants and similar parties.
ARTICLE
VIII
INDEMNIFICATION
8.1 Indemnity
of the Company
The
Company agrees as to defend, indemnify and hold harmless the Sellers from and
against, and to reimburse the Sellers 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
the Sellers 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 in any document or certificate delivered by the Company pursuant
to
the provisions of this Agreement or in connection with the transactions
contemplated thereby.
8.2 Indemnity
of the Sellers
Each
Seller agrees to defend, indemnify and hold harmless the Company from and
against, and to reimburse the Company with respect to, all losses, 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 such Seller or in any document or certificate
delivered by such Seller pursuant to the provisions of this Agreement or in
connection with the transactions contemplated thereby, it being understood
that
such Seller shall have responsibility hereunder only for the representations
and
warranties made by such Seller.
8.3 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 VIII. The Indemnifying Party shall have the right to assume
and to control the defense of 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 Parry
which consent shall not be unreasonably withheld.
ARTICLE
IX
TERMINATION
9.1 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
X
COVENANTS
SUBSEQUENT TO CLOSING
10.1 Registration
Rights
The
Company shall file, within thirty (30) days after the Closing and at its
expense, with the U.S. Securities and Exchange Commission (the “Commission”) a
registration statement (the “Initial Registration Statement”) covering the
resale of Common Shares held by those persons (and their designees) that are
shareholders of the Company immediately prior to the Closing (“Pre-Existing
Shareholders”).
10.2 AMEX
Listing
The
Company shall take reasonable efforts to cause the Company’s securities to be
listed on the American Stock Exchange as soon as practicable after the
Closing.
ARTICLE
XI
MISCELLANEOUS
11.1 Survival
of Representations, Warranties and Agreements
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. Except as specifically set forth in this Agreement,
representations and warranties and statements made by a party to in this
Agreement or in any document or certificate delivered pursuant hereto shall
not
survive the Closing Date, and no claims made by virtue of such representations,
warranties, agreements and covenants shall be made or commenced by any party
hereto from and after the Closing Date.
11.2 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.
11.3 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.
11.4 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 Sellers and Full Art: | |||
|
Full
Art International, Ltd
|
|||
|
|
|||
|
|
|||
|
Attn: Xx. Xxx Xxx Yi
Telecopy No.:
|
|||
|
|
|||
| With a copy to: | |||
|
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
00000
Xxxxx Xxxxxx Xxxx., Xxxxxxx Xxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn:
Xxxxxx X. Xxxxxxx, Esq.
Telecopy
No.: (000) 000-0000
|
|||
|
If
to the Company:
|
|||
|
SRKP
1, Inc.
0000
Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxx Xxxxxxxxx
Telecopy
No.: (000) 000-0000
|
11.5 Entire
Agreement
This
Agreement, the Disclosure Schedules 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.
11.6 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.
11.7 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.
11.8 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.
11.9 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.
11.10 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.
[SIGNATURE
PAGE TO FOLLOW]
IN
WITNESS WHEREOF, each of the parties hereto has executed this Agreement as
of
the date first set forth above.
| SRKP 1, INC. | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxxxxx | |
|
Name: Xxxxxxx Xxxxxxxxx |
||
| Title: President | ||
| FULL ART INTERNATIONAL, LTD. | ||
| |
|
|
| By: | /s/ Xxx Xxx Yi | |
|
Name: Xxx Xxx Yi |
||
| Title: Chairman and CEO | ||
| SELLERS | |||
| KGE Group Limited : /s/ Xxx Xxx Yi | |||
| Name: Xxx Xxx Yi. Title: Chairman and CEO | |||
|
|
|||
|
|
TABLE
OF CONTENTS
| Page | ||
|
ARTICLE
I THE EXCHANGE
|
1
|
|
|
1.1
|
The
Exchange
|
1
|
|
1.2
|
Time
and Place of Closing
|
2
|
|
1.3
|
Effective
Time
|
2
|
|
1.4
|
Tax
Consequences
|
2
|
|
ARTICLE
II REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
2
|
|
|
2.1
|
Due
Organization and Qualification; Due Authorization.
|
2
|
|
2.2
|
No
Conflicts or Defaults
|
3
|
|
2.3
|
Capitalization
|
3
|
|
2.4
|
Financial
Statements
|
3
|
|
2.5
|
Assets
and Liabilities
|
3
|
|
2.6
|
Taxes
|
4
|
|
2.7
|
Indebtedness;
Contracts; No Defaults
|
4
|
|
2.8
|
Real
Property
|
4
|
|
2.9
|
Compliance
with Law
|
4
|
|
2.10
|
Permits
and Licenses
|
4
|
|
2.11
|
Litigation
|
4
|
|
2.12
|
Insurance
|
5
|
|
2.13
|
Patents;
Trademarks and Intellectual Property Rights
|
5
|
|
2.14
|
Securities
Law Compliance
|
5
|
|
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF FULL ART
|
5
|
|
|
3.1
|
Due
Organization and Qualification; Subsidiaries, Due
Authorization.
|
5
|
|
3.2
|
No
Conflicts or Defaults
|
6
|
|
3.3
|
Capitalization
|
6
|
|
3.4
|
Taxes
|
6
|
|
3.5
|
Compliance
with Law
|
7
|
|
3.6
|
Litigation.
|
7
|
|
ARTICLE
IV REPRESENTATION AND WARRANTIES OF THE SELLERS
|
7
|
|
|
4.1
|
Title
to Full Art Shares
|
7
|
|
4.2
|
Due
Authorization
|
7
|
|
4.3
|
Purchase
for Investment.
|
8
|
|
4.4
|
Investment
Experience
|
8
|
|
4.5
|
Information
|
8
|
|
4.6
|
Restricted
Securities
|
8
|
|
4.7
|
Exempt
Issuance
|
8
|
|
ARTICLE
V COVENANTS
|
10
|
|
|
5.1
|
Further
Assurances
|
10
|
|
|
||
|
ARTICLE
VI DELIVERIES
|
10
|
|
|
6.1
|
Items
to be delivered to the Sellers prior to or at Closing by the
Company.
|
10
|
|
6.2
|
Items
to be delivered to the Company prior to or at Closing by Full Art
and the
Sellers.
|
11
|
|
ARTICLE
VII CONDITIONS PRECEDENT
|
11
|
|
|
7.1
|
Conditions
Precedent to Closing
|
11
|
|
7.2
|
Conditions
to Obligations of Sellers
|
12
|
|
7.3
|
Conditions
to Obligations of the Company
|
12
|
|
ARTICLE
VIII INDEMNIFICATION
|
12
|
|
|
8.1
|
Indemnity
of the Company
|
12
|
|
8.2
|
Indemnity
of the Sellers
|
12
|
|
8.3
|
Indemnification
Procedure
|
13
|
|
ARTICLE
IX TERMINATION
|
13
|
|
|
9.1
|
Termination
|
13
|
|
ARTICLE
X COVENANTS SUBSEQUENT TO CLOSING
|
14
|
|
|
10.1
|
Registration
Rights
|
14
|
|
10.2
|
AMEX
Listing
|
14
|
|
ARTICLE
XI MISCELLANEOUS
|
14
|
|
|
11.1
|
Survival
of Representations, Warranties and Agreements
|
14
|
|
11.2
|
Access
to Books and Records
|
14
|
|
11.3
|
Further
Assurances
|
14
|
|
11.4
|
Notice
|
15
|
|
11.5
|
Entire
Agreement
|
15
|
|
11.6
|
Successors
and Assigns
|
16
|
|
11.7
|
Governing
Law
|
16
|
|
11.8
|
Counterparts
|
16
|
|
11.9
|
Construction
|
16
|
|
11.10
|
Severability
|
16
|
