SHARE EXCHANGE AGREEMENT
Exhibit
10
SHARE
EXCHANGE AGREEMENT (this "Agreement") is made this 10th day of October 2007,
by
and between Axiom III, Inc., a Nevada corporation (“AXIO”); Xxxxx Xxxxxxx, a
Director and beneficial owner of a majority of the outstanding shares of common
stock of AXIO (“Xxxxxxx”); Eastern Concept Development Ltd., a
company organized and existing under the laws of the Hong Kong SAR of the
People’s Republic of China (“Eastern Concept”), the shareholder of Eastern
Concept (the “Eastern Concept Shareholder”); Foshan Wanzhi Electronic Technology
Co., Ltd., a company organized and existing under the laws of the People’s
Republic of China (“Foshan”), and the shareholders of Foshan (the “Foshan
Shareholders”); all of whom execute this Agreement, based on the
following:
Recitals
WHEREAS,
AXIO wishes to acquire one hundred percent (100%) of all of the issued and
outstanding share capital of Eastern Concept from the Eastern Concept
Shareholder in an exchange for 35,351,667 shares of common stock of AXIO in
a
transaction intended to qualify as a tax-free exchange pursuant to sections
351
and 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
WHEREAS,
in furtherance thereof, the
respective Boards of Directors of AXIO and Eastern Concept, have approved the
exchange, upon the terms and subject to the conditions set forth in this
Agreement, pursuant to which one hundred percent (100%) of the share capital
of
Eastern Concept (the "Eastern Concept Share Capital”) issued and outstanding
prior to the exchange, will be exchanged by the Eastern Concept Shareholder
or
its designee in the aggregate for 35,351,667 shares of common stock, $.001
par
value, of AXIO (the "AXIO Common Stock").
WHEREAS,
subsequent to the share exchange, Eastern Concept or a subsidiary of Eastern
Concept will acquire from the Foshan Shareholders, all of the share capital
of
Foshan, and Foshan shall become an indirect wholly owned subsidiary of
AXIO.
WHEREAS,
neither party is seeking tax counsel or legal or accounting opinions on whether
the transactions qualify for tax free treatment.
Agreement
Based
on
the stated premises, which are incorporated herein by reference, and for and
in
consideration of the mutual covenants and agreements hereinafter set forth,
the
mutual benefits to the parties to be derived herefrom, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, it is hereby agreed as follows:
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ARTICLE
I
EXCHANGE
OF SHARE CAPITAL FOR STOCK
1.01
Exchange of Share Capital for Stock. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date (as defined in
Section 1.05 hereof), the Eastern Concept Shareholder shall assign, transfer,
and deliver to AXIO, free and clear of all liens, pledges, encumbrances,
charges, restrictions, or claims of any kind, nature, or description, the
Eastern Concept Share Capital, and AXIO agrees to acquire such share capital
on
such date by issuing and delivering in exchange therefore to the Eastern Concept
Shareholder the AXIO Common Stock. All shares of AXIO Common Stock to be issued
and delivered pursuant to this Agreement shall be appropriately adjusted to
take
into account any stock split, stock dividend, reverse stock split,
recapitalization, or similar change in the AXIO Common Stock which may occur
between the date of the execution of this Agreement and the Closing
Date.
1.02
Delivery of Eastern Concept Share Capital by the Eastern Concept Shareholder.
The transfer of the Eastern Concept Share Capital by the Eastern Concept
Shareholder shall be effected by the delivery to AXIO at the Closing (as set
forth in Section 1.05 hereof) of an endorsement of the share capital in the
name
of AXIO followed by registration of the same in the name of AXIO with the
appropriate government entity of the SAR of Hong Kong.
1.03
Operation as Wholly-Owned Subsidiary. After giving effect to the transaction
contemplated hereby, AXIO will own one hundred percent (100%) of all of the
share capital of Eastern Concept and Eastern Concept will be a wholly-owned
subsidiary of AXIO operating under the name “Eastern Concept, Ltd.,” a
corporation organized and existing under the laws of the Hong Kong SAR of the
People’s Republic of China. Upon the acquisition of Foshan by a
wholly-owned subsidiary of Eastern Concept, Foshan will become a wholly-owned
indirect subsidiary of AXIO operating under the name “Foshan Wanzhi Electronic
Technology Co., Ltd.,” a corporation organized and existing under the laws of
the People’s Republic of China.
1.04
Further Assurances. At the Closing and from time to time thereafter, the Eastern
Concept Shareholder shall execute such additional instruments and take such
other action as AXIO may reasonably request, without undue cost to the Eastern
Concept Shareholder in order to more effectively sell, transfer, and assign
clear title and ownership in the Eastern Concept Share Capital to
AXIO.
1.05
Closing and Parties. The Closing contemplated hereby shall be held at a mutually
agreed upon time and place on or before October 18, 2007, or on another date
to
be agreed to in writing by the parties (the "Closing Date”). The Agreement may
be closed at any time following approval by a majority of Board of Directors
of
AXIO and by a majority of the Board of Directors of the Eastern Concept and
the
approval of the Eastern Concept Shareholder. The Closing may be accomplished
by
wire, express mail, overnight courier, conference telephone call or as otherwise
agreed to by the respective parties or their duly authorized
representatives.
1.06
Closing Events.
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(a)
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AXIO
Deliveries. Subject to fulfillment or waiver of the conditions set
forth
in Article IV, AXIO shall deliver to the Eastern Concept Shareholder
at
Closing all the following:
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(i)
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(ii)
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Incumbency
and specimen signature certificates dated the Closing Date with respect
to
the officers of AXIO executing this Agreement and any other document
delivered pursuant hereto on behalf of
AXIO;
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(iii)
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Copies
of the resolutions/consents of AXIO’s board of directors and shareholder
minutes or consents authorizing the execution and performance of
this
Agreement and the contemplated transactions, certified by the secretary
or
an assistant secretary of AXIO as of the Closing
Date;
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(iv)
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The
certificate contemplated by Section 4.01, duly executed by the chief
executive officer of AXIO;
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(v)
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The
certificate contemplated by Section 4.02, dated the Closing Date,
signed
by the chief executive officer of
AXIO;
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(vi)
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Certificates
for 35,351,667 shares of AXIO Common Stock issued in the name of
the
Eastern Concept
Shareholder; and
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(vii)
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AXIO shall
have transferred all responsibilities and authorization to Eastern
Concept’s counsel and/or the newly appointed officers of AXIO regarding
the contact and dealing with Guardian Regiatrar & Transfer,
Inc.
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(viii)
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In
addition to the above deliveries, AXIO shall take all steps and actions
as
the Eastern Concept Shareholder may reasonably request or as may
otherwise
be reasonably necessary to consummate the transactions contemplated
hereby.
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2
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(b)
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Eastern
Concept Deliveries. Subject to fulfillment or waiver of the conditions
set
forth in Article V, the Concept Shareholders shall deliver to
AXIO at Closing all the following:
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(i)
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Incumbency
and specimen signature certificates dated the Closing Date with respect
to
the officers executing this Agreement and any other document delivered
pursuant;
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(ii)
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Copies
of resolutions/consents of the board of directors of Eastern Concept
authorizing the execution and performance of this Agreement and the
contemplated transactions, certified by the secretary or an assistant
secretary of Eastern Concept as of the Closing
Date;
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(iii)
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The
certificate contemplated by Section 5.01, executed by the Eastern
Concept
Shareholder; and
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(iv)
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The
certificate contemplated by Section 5.02, dated the Closing Date,
signed
by the chief executive officer of Eastern
Concept.
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(v)
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In
addition to the above deliveries, Eastern Concept and/or the Eastern
Concept Shareholder shall take all steps and actions as AXIO may
reasonably request or as may otherwise be reasonably necessary to
consummate the transactions contemplated hereby, including the delivery
of
the Eastern Concept Share Capital duly endorsed in favor of
AXIO.
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1.07
Director and Officer Resignations.
At
Closing, the current Board of Directors of AXIO shall appoint such director
nominees as may be designated by the Eastern Concept Shareholder to fill
vacancies on the Board of Directors of AXIO, and, thereafter, the current
directors of AXIO shall resign. In addition, at closing all officers of AXIO
shall tender their resignations to the Board of Directors, and new officers
of
AXIO shall be appointed by the newly appointed Board of Directors of
AXIO. All such director and officer resignations shall be in
compliance with the Securities Exchange Act of 1934, as amended, and pursuant
to
a previously filed Information Statement on Schedule 14F-1 filed by
AXIO.
ARTICLE
II
REPRESENTATIONS,
COVENANTS AND WARRANTIES OF AXIO, ETC.
As
an
inducement to, and to obtain the reliance of the Eastern Concept Shareholder
and
Eastern Concept, AXIO and Xxxxxxx, jointly and severally, represent, promise
and
warrant as follows:
2.01 Organization.
AXIO
is,
and will be at Closing, a corporation duly organized, validly existing, and
in
good standing under the laws of the State of Delaware and has the corporate
power and is and will be duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, and there are no other
jurisdictions in which it is not so qualified in which the character and
location of the assets owned by it or the nature of the material business
transacted by it requires qualification, except where failure to do so would
not
have a material adverse effect on its business, operations, properties, assets
or condition. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not, violate any provision of AXIO’s Articles of
Incorporation or Bylaws, or other agreement to which it is a party or by which
it is bound.
2.02 Approval
of Agreement; Enforceability.
AXIO
has
full power, authority, and legal right and has taken, or will take, all action
required by law, its Articles of Incorporation, Bylaws, and otherwise to execute
and deliver this Agreement and to consummate the transactions herein
contemplated. The board of directors of AXIO has authorized and
approved the execution, delivery, and performance of this Agreement. This
Agreement, when delivered in accordance with the terms hereof, will constitute
the valid and binding obligation of AXIO and Xxxxxxx enforceable in accordance
with its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally,
the
enforcement of creditors’ rights and remedies. The
AXIO shareholders will not have dissenter’s rights with respect to any of the
transactions contemplated herein.
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2.03 Capitalization.
The
authorized capitalization of AXIO consists of 50,000,000 shares of common stock,
$0.001 par value, of which 14,648,333 were issued and outstanding immediately
prior to Closing. There are 5,000,000 authorized shares of blank check preferred
stock, $.001 par value, and no shares outstanding. There are, and at the
Closing, there will be no outstanding subscriptions, options, warrants,
convertible securities, calls, rights, commitments or agreements calling for
or
requiring issuance or transfer, sale or other disposition of any shares of
capital stock of the Company or calling for or requiring the issuance of any
securities or rights convertible into or exchangeable (including on a contingent
basis) for shares of capital stock. All of the outstanding shares of
AXIO are duly authorized, validly issued, fully paid and non-assessable and
not
issued in violation of the preemptive or other right of any
person. There are no dividends due, to be paid or in arrears with
respect to any of the capital stock of Company.
2.04 Financial
Statements.
(i) AXIO
has previously delivered to Eastern Concept an audited balance sheet of AXIO
as
of December 31, 2006, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the fiscal year ended December 31, 2006,
including the notes thereto, and an unaudited balance sheet of AXIO as of June
30, 2007, and the related unaudited statements of operations, stockholders’
equity (deficit), and cash flows for the fiscal quarter ended June 30, 2007
(collectively the “Financial Statements”) and the accompanying auditor’s report
to the effect that such audited financial statements contain all adjustments
(all of which are normal recurring adjustments) necessary to present fairly
the
results of operations and financial position for the periods and as of the
dates
indicated.
(ii) The
Financial Statements of AXIO delivered pursuant to Section 2.04(i) have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved as explained in the notes
to such financial statements. The AXIO Financial Statements present fairly,
in
all material respects, as of the closing date, the financial position of AXIO.
AXIO will not have, as of the Closing Date, any liabilities, obligations or
claims against it (absolute or contingent), and all assets reflected on such
financial statements present fairly the assets of AXIO in accordance with
generally accepted accounting principles.
(iii) AXIO
has filed or will file as the Closing Date its tax returns required to be filed
for its two most recent fiscal years and will pay all taxes due
thereon. All such returns and reports are accurate and correct in all
material respects. AXIO has no liabilities with respect to the
payment of any federal, state, county, local, or other taxes (including any
deficiencies, interest, or penalties) accrued for or applicable to the period
ended on the closing date and all such dates and years and periods prior thereto
and for which AXIO may at said date have been liable in its own right or as
transferee of the assets of, or as successor to, any other corporation or
entity, except for taxes accrued but not yet due and payable, and to the best
knowledge of AXIO, no deficiency assessment or proposed adjustment of any such
tax return is pending, proposed or contemplated. None of such income
tax returns has been examined or is currently being examined by the Internal
Revenue Service and no deficiency assessment or proposed adjustment of any
such
return is pending, proposed or contemplated. AXIO has not made any
election pursuant to the provisions of any applicable tax laws (other than
elections that relate solely to methods of accounting, depreciation, or
amortization) that would have a material adverse affect on AXIO, its financial
condition, its business as presently conducted or proposed to be conducted,
or
any of its respective properties or material assets. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any tax return of AXIO.
2.05 Information.
The
information concerning AXIO set forth in this Agreement is complete and accurate
in all respects and does not contain any untrue statement of a fact or omit
to
state a fact required to make the statements made, in light of the circumstances
under which they were made, not misleading. AXIO shall cause the
information delivered by it pursuant hereto to the Eastern Concept Shareholder
to be updated after the date hereof up to and including the Closing
Date.
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2.06 Absence
of Certain Changes or Events.
Except
as
set forth in this Agreement, since the date of the most recent AXIO balance
sheet described in Section 2.04 and included in the information referred to
in
Section 2.05:
(a) There
has not been: (i) any adverse change in the business, operations, properties,
level of inventory, assets, or condition of AXIO; or (ii) any damage,
destruction, or loss to AXIO (whether or not covered by insurance) adversely
affecting the business, operations, properties, assets, or conditions of
AXIO;
(b) AXIO
has not: (i) amended its Articles of Incorporation or Bylaws; (ii) declared
or
made, or agreed to declare or make, any payment of dividends or distributions
of
any assets of any kind whatsoever to stockholders or purchased or redeemed,
or
agreed to purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material considering the
business of AXIO; (iv) made any material change in its method of management,
operation, or accounting; (v) entered into any other material transactions;
(vi)
made any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any present
or
former officer or employee; (vii) increased the rate of compensation payable
or
to become payable by it to any of its officers or directors or any of its
employees whose monthly compensation exceeds $1,000; or (viii) made any increase
in any profit-sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement made to,
for, or with its officers, directors, or employees;
(c) AXIO
has not: (i) granted or agreed to grant any options, warrants, or other rights
for its stocks, bonds, or other corporate securities calling for the issuance
thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent) except
liabilities
incurred
in the ordinary course of business; (iii) paid any material obligation or
liability (absolute or contingent) other than current liabilities reflected
in
or shown on the most recent AXIO balance sheet and current liabilities incurred
since that date in the ordinary course of business; (iv) sold or transferred,
or
agreed to sell or transfer, any of its material assets, properties, or rights
(except assets, properties, or rights not used or useful in its business which,
in the aggregate have a value of less than $5,000 or canceled, or agreed to
cancel, any debts or claims (except debts and claims which in the aggregate
are
of a value of less than $5,000); (v) made or permitted any amendment or
termination of any contract, agreement, or license to which it is a party if
such amendment or termination is material, considering the business of AXIO;
or
(vi) issued, delivered, or agreed to issue or deliver any stock, bonds, or
other
corporate securities including debentures (whether authorized and unissued
or
held as treasury stock); and
(d) AXIO
has not become subject to any law, order, investigation, inquiry, grievance
or
regulation which materially and adversely affects, or in the future would be
reasonably expected to adversely affect, the business, operations, properties,
assets, or condition of AXIO.
2.07 Litigation
and Proceedings.
There
are
no material actions, suits, claims, or administrative or other proceedings
pending, asserted or unasserted, threatened by or against AXIO or adversely
affecting AXIO or its properties, at law or in equity, before any court or
other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. AXIO is not in default of any judgment,
order, writ, injunction, decree, award, rule, or regulation of any court,
arbitrator, or governmental agency or instrumentality.
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2.08 Compliance
With Laws; Government Authorization.
(a)
AXIO
and its officers and directors have complied with all federal, state, county
and
local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business, including
federal and state securities laws. AXIO and its officers, directors
and beneficial owners are not under investigation by any federal, state, county
or local authorities, including the Commission. AXIO and its officers, directors
and beneficial owners have not received notification from any federal, state,
county, or local authorities, including the Commission, that it or
any of its officers or directors will be the subject of a legal action or that
the Commission’s Division of Enforcement will be recommending to the Commission
that a Federal District Court or Commission administrative action or any other
action be filed or taken against AXIO and its officers, directors and beneficial
owners.
(b) AXIO
has all licenses, franchises, permits, and other governmental authorizations
that are legally required to enable it to conduct its business in all material
respects as conducted on the date of this Agreement. No
authorization, approval, consent, or order of, or registration, declaration,
or
filing with, any court or other governmental body is required in connection
with
the execution and delivery by AXIO of this Agreement and the consummation by
AXIO of the transactions contemplated hereby.
2.09 Securities
and Exchange Commission Compliance of AXIO. AXIO has a class of
securities registered pursuant to Section 12 of the Securities Exchange Act
of
1934, as amended (“Exchange Act”) and has complied in all respects with Rule
14(a) and 14(c) of the Exchange Act, and with Sections 13 and 15(d) of the
Exchange Act, and AXIO, its management and beneficial owners have complied
in
all respects with Sections 13(d) and 16(a) of the Exchange Act.
2.10 Contract
Defaults.
AXIO
is
not in default under the terms of any outstanding contract, agreement, lease,
or
other commitment, and there is no event of default or other event which, with
notice or lapse of time or both, would constitute a default in any respect
under
any such contract, agreement, lease, or other commitment.
2.11 No
Conflict With Other Instruments.
The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, or constitute an event of default under, any material indenture,
mortgage, deed of trust, or other material contract, agreement, or instrument
to
which AXIO is a party or to which any of its properties or operations are
subject.
2.12 Subsidiary.
AXIO
beneficially owns all of the outstanding capital stock of Axiom First
Corporation and Axiom Second Corporation, and it does not own either
beneficially or of record any equity interest in any other company. Axiom First
Corporation owns all of the capital stock of Axiom Second Corporation, which
owns legal title to the real estate and improvements which are located at 00
Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx. AXIO does not have a predecessor as
that term is defined under generally accepted accounting principles or
Regulation S-X promulgated by the Securities and Exchange
Commission.
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2.13 AXIO
Documents.
AXIO
has
delivered to the Eastern Concept Shareholder copies of the following documents,
which are collectively referred to as the "AXIO Documents" and which consist
of
the following dated as of the date of execution of this Agreement, all certified
by a duly authorized officer of AXIO as complete, true, and
accurate:
(a) A
copy of the Articles of Incorporation and Bylaws of AXIO in effect as of the
date of this Agreement;
(b) A
copy of resolutions adopted by the board of directors of AXIO approving this
Agreement and the transactions herein contemplated;
(c) A
document setting forth a description of any material adverse change in the
business, operations, property, inventory, assets, or condition of AXIO since
the most recent AXIO balance sheet required to be provided pursuant to Section
2.04 hereof, updated to the Closing Date;
2.14 Quotation
on the OTC Bulletin Board. AXIO’s Common Stock is quoted in good
standing on the OTC Bulletin Board under the symbol “AXIO” and AXIO will retain
such quotation and standing on the OTC Bulletin Board until the Closing of
the
transactions contemplated herein, without a penalty such as receipt of an “E” or
otherwise being penalized by NASD or the OTCBB.
2.15 Delivery
of Shareholder List. Upon execution of this agreement, AXIO shall
deliver a certified shareholder list from its transfer agent setting forth
the
name of each AXIO shareholder, the number of shares held by each, dated as
of a
date within fifteen days of closing and whether such shares held are restricted
securities. In connection therewith, AXIO represents that none of its
shareholders are nominees for any other person.
2.16 Liabilities,
Indebtedness, etc.
As
of the
Closing Date, AXIO shall not have any assets, liabilities or indebtedness as
such terms are defined by Generally Accepted Accounting Principles.
ARTICLE
III
REPRESENTATIONS,
COVENANTS, WARRANTIES OF THE EASTERN CONCEPT SHAREHOLDERS AND EASTERN
CONCEPT
As
an
inducement to, and to obtain the reliance of AXIO, the Eastern Concept
Shareholder and Easter Concept, jointly and severally, represent and warrant
as
follows:
3.01 Organization.
Eastern
Concept is, and will be on the Closing Date, a corporation duly organized and
validly existing under the laws of the Hong Kong SAR of the People’s Republic of
China, and has the corporate power and is and will be duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being
conducted, and there are no other jurisdictions in which it is not so qualified
in which the character and location of the assets owned by it or the nature
of
the material business transacted by it requires qualification, except where
failure to do so would not have a material adverse effect on its business,
operations, properties, assets or condition of Eastern Concept. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with the terms hereof
will not, violate any provision of Eastern Concept’s constituent documents, or
other material agreement to which it is a party or by which it is bound, nor
will they violate any laws, rules or policies of the government of the Hong
Kong
SAR of the People’s Republic of China.
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3.02 Approval
of Agreement; Enforceability.
Eastern
Concept has full power, authority, and legal right and has taken, or will take,
all action required by law, its constituent documents, or otherwise to execute
and deliver this Agreement and to consummate the transactions herein
contemplated. The board of directors of Eastern Concept has authorized and
approved the execution, delivery, and performance of this Agreement and the
transactions contemplated hereby, subject to the approval of the Eastern Concept
Shareholder, which has been obtained, and compliance with any laws, rules or
policies of the government of the Hong Kong SAR of the People’s Republic of
China. This Agreement, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Eastern Concept
Shareholder and Eastern Concept enforceable in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.
3.03 Financial
Statements.
(a) Eastern
Concept has previously delivered to AXIO a copy of an audited balance sheet
of
Eastern Concept as of August 7, 2007 and the related audited statements of
operations, cash flows, and share capital for the period from June 29, 2007
(Inception) through August 7, 2007, with cash and cash equivalents of
approximately US$1.3 million, including the notes thereto to the effect that
such financial statements contain all adjustments (all of which are normal
recurring adjustments) necessary to present fairly the results of operations
and
financial position for the periods and as of the dates indicated.
(b) The
audited financial statements delivered pursuant to Section 3.03(a) have been
prepared in accordance with generally accepted accounting principles
consistently applied in the United States, throughout the periods involved.
The
financial statements of Eastern Concept present fairly, as of their respective
dates, the financial position of Eastern Concept. Eastern Concept did
not have, as of the date of any such balance sheets, except as and to the extent
reflected or reserved against therein, any liabilities or obligations (absolute
or contingent) which should be reflected in any financial statements or the
notes thereto prepared in accordance with generally accepted accounting
principles in the United States, and all assets reflected therein present fairly
the assets of Eastern Concept, in accordance with generally accepted accounting
principles in the United States. The statements of revenue and expenses and
cash
flows present fairly the financial position and results of operations of Eastern
Concept as of their respective dates and for the respective periods covered
thereby.
3.04 Outstanding
Warrants and Options.
Eastern
Concept has no issued warrants or options, calls, or commitments of any nature
relating to the Eastern Concept Share Capital, except as previously disclosed
in
writing to AXIO.
3.05 Information.
The
information concerning the Eastern Concept set forth in this Agreement is
complete and accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading. The Eastern Concept shall cause the information
required to be delivered by them pursuant to this Agreement to AXIO to be
updated after the date hereof up to and including the Closing Date.
3.06 Absence
of Certain Changes or Events.
Except
as
set forth in this Agreement, since the date of the most recent Eastern Concept
balance sheet described in Section 3.03 and included in the information referred
to in Section 3.05:
(a)
There
has not been: (i) any material adverse change in the business, operations,
properties, level of inventory, assets, or condition of Eastern Concept ; or
(ii) any damage, destruction, or loss to Eastern Concept materially and
adversely affecting the business, operations, properties, assets, or conditions
of Eastern Concept;
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(b) Eastern
Concept has not: (i) amended its constituent documents; (ii) declared or made,
or agreed to declare or make, any payment of dividends or distributions of
any
assets of any kind whatsoever to holders of share capital or purchased or
redeemed, or agreed to purchase or redeem, any of its share capital; (iii)
waived any rights of value which in the aggregate are extraordinary and material
considering the business of Eastern Concept; (iv) made any material change
in
its method of accounting; (v) entered into any other material transactions
other
than those contemplated by this Agreement; (vi) made any material accrual or
material arrangement for or payment of bonuses or special compensation of any
kind or any severance or termination pay to any present or former officer or
employee; or (vii) made any material increase in any profit-sharing, bonus,
deferred compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement made to, for, or with their officers, directors,
or employees;
(c) Eastern
Concept has not (i) granted or agreed to grant any options, warrants, or other
rights for its share capital, bonds, or other corporate securities calling
for
the issuance thereof, except as previously disclosed in writing to AXIO; (ii)
borrowed or agreed to borrow any funds or incurred, or become subject to, any
material obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material obligation
or liability (absolute or contingent) other than current liabilities reflected
in or shown on the most recent Eastern Concept balance sheet and current
liabilities incurred since that date in the ordinary course of business; (iv)
sold or transferred, or agreed to sell or transfer, any of its material assets,
properties, or rights, or agreed to cancel any material debts or claims; (v)
made or permitted any amendment or termination of any contract, agreement,
or
license to which it is a party if such amendment or termination is material,
considering the business of Eastern Concept; or (vi) issued, delivered, or
agreed to issue or deliver any share capital, bonds, or other corporate
securities including debentures (whether authorized and unissued or held as
treasury stock); and
(d) To
the best knowledge of Eastern Concept, it has not become subject to any law
or
regulation which materially and adversely affects, or in the future would be
reasonably expected to adversely affect, the business, operations, properties,
assets, or condition of Eastern Concept.
3.07 Litigation
and Proceedings.
There
are
no material actions, suits, or proceedings pending or, to the knowledge of
Eastern Concept, threatened by or against Eastern Concept or adversely affecting
Eastern Concept, at law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of
any
kind. Eastern Concept does not have any knowledge of any default on
its part with respect to any judgment, order, writ, injunction, decree, award,
rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality.
3.08 Material
Contract Defaults.
Eastern
Concept is not in default in any material respect under the terms of any
outstanding contract, agreement, lease, or other commitment which is material
to
the business, operations, properties, assets, or condition of Eastern Concept,
and there is no event of default or other event which, with notice or lapse
of
time or both, would constitute a default in any material respect under any
such
contract, agreement, lease, or other commitment in respect of which Eastern
Concept has not taken adequate steps to prevent such a default from
occurring.
3.09 No
Conflict With Other Instruments.
The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, or constitute an event of default under, any material indenture,
mortgage, deed of trust or other material contract, agreement, or instrument
to
which Eastern Concept is a party or to which any of its properties or operations
are subject.
9
3.10 Governmental
Authorizations.
Eastern
Concept has all licenses, franchises, permits, and other governmental
authorizations that are legally required to enable it to conduct its business
in
all material respects as conducted on the date of this Agreement. No
authorization, approval, consent, or order of, or registration, declaration,
or
filing with, any court or other governmental body is required in connection
with
the execution and delivery by Eastern Concept of this Agreement and the
consummation by Eastern Concept of the transactions contemplated
hereby.
3.11 Compliance
With Laws and Regulations.
Eastern
Concept has complied with all applicable statutes and regulations of any
governmental entity or agency thereof having jurisdiction over Eastern Concept,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets, or condition of Eastern
Concept or except to the extent that noncompliance would not result in the
occurrence of any material liability for Eastern Concept. The consummation
of
this transaction will comply with all applicable laws, rules and policies of
the
government of the People’s Republic of China.
3.12 Subsidiaries.
Except
as
disclosed in the financial statements of Section 3.04 hereof, Eastern Concept
does not own beneficially or of record equity securities in any subsidiary
that
has not been previously disclosed to AXIO.
3.13 Eastern
Concept Documents.
Eastern
Concept has delivered to AXIO the following documents, which are collectively
referred to as the "Eastern Concept Documents" and which consist of the
following dated as of the date of execution of this Agreement, all certified
by
the Chief Executive Officer of Eastern Concept as complete, true, and
accurate:
(a) A
copy of all of Eastern Conept’s constituent documents and all amendments thereto
in effect as of the date of this Agreement;
(b) Copies
of resolutions adopted by the board of directors of Eastern Concept approving
this Agreement and the transactions herein contemplated;
(c) A
document setting forth a description of any material adverse change in the
business, operations, property, inventory, assets, or condition of Eastern
Concept since the most recent Eastern Concept balance sheet required to be
provided pursuant to Section 3.04 hereof, updated to the Closing
Date;
ARTICLE
IV
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE EASTERN CONCEPT SHAREHOLDERS AND EASTERN
CONCEPT
The
obligations of the Eastern Concept Shareholder and Eastern Concept under this
Agreement are subject to the satisfaction or waiver, at or before the Closing
Date, of the following conditions:
4.01 Accuracy
of Representations.
The
representations and warranties made by AXIO in this Agreement were true when
made and shall be true at the Closing Date with the same force and effect as
if
such representations and warranties were made at and as of the Closing Date,
and
AXIO shall have performed or complied with all covenants and conditions required
by this Agreement to be performed or complied with by AXIO prior to or at the
Closing. The Eastern Concept Shareholder shall be furnished with a
certificate, signed by a duly authorized officer of AXIO and dated the Closing
Date, to the foregoing effect.
10
4.02 Officer's
Certificate.
The
Eastern Concept Shareholder shall have been furnished with a certificate dated
the Closing Date and signed by the duly authorized Chief Executive Officer
of
AXIO to the effect that to such officer's best knowledge no litigation,
proceeding, investigation, or inquiry is pending or, to the best knowledge
of
AXIO threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this
Agreement. Furthermore, based on a certificate of good standing, and
AXIO’s own documents and information, the certificate shall represent, to the
best knowledge of the officer, that:
(a) This
Agreement has been duly approved by AXIO’s board of directors and has been duly
executed and delivered in the name and on behalf of AXIO by its duly authorized
officer pursuant to, and in compliance with, authority granted by the board
of
directors of AXIO pursuant to a majority consent;
(b) There
have been no adverse changes in AXIO up to and including the date of the
certificate;
(c) All
conditions required by this Agreement have been met, satisfied, or performed
by
AXIO;
(d) All
authorizations, consents, approvals, registrations, reports, schedules and/or
filings with any governmental body including the Securities and Exchange
Commission, agency, or court have been obtained or will be obtained by AXIO
and
all of the documents obtained by AXIO are in full force and effect or, if not
required to have been obtained, will be in full force and effect by such time
as
may be required; and
(e) There
is no claim action, suit, proceeding, inquiry, or investigation at law or in
equity by any public board or body pending or threatened against AXIO, wherein
an unfavorable decision, ruling, or finding could have an adverse effect on
the
financial condition of AXIO, the operation of AXIO, or the transactions
contemplated herein, or any agreement or instrument by which AXIO is bound
or in
any way contests the existence of AXIO.
4.03 No
Litigation.
As
of the
Closing, there shall not be pending any litigation to which AXIO, the Eastern
Concept Shareholder, or Eastern Concept is a party and which is reasonably
likely to have a material adverse effect on the business of AXIO or the
contemplated transactions.
4.04 Results
of Due Diligence Investigation.
The
Eastern Concept Shareholder shall be satisfied with the results of their due
diligence investigation of AXIO, in his sole discretion.
4.05 AXIO
Shall Have No Assets or Liabilities as of Closing.
As
of the
Closing, AXIO shall have no assets or liabilities as such term is defined by
U.S. generally accepted accounting principles.
4.06.
AXIO’s Outstanding Capital Stock at Closing.
As
of the
Closing, the total outstanding capital stock of AXIO shall consist of 50,000,000
shares of common stock, after giving effect to the 35,351,667 share issuance
contemplated hereby, and there shall be no options, warrants, employee
compensation or other rights to issue common stock or preferred stock issued
or
outstanding.
11
4.07 AXIO
Shall Have Filed and Mailed a Schedule 14F-1.
AXIO
shall have filed with the Commission and mailed to its shareholders of record
an
Information Statement on Schedule 14F-1, and ten days shall have passed since
the date on which it was mailed to shareholders of record.
4.08
Delivery of Leak-Out Agreement
Xxxxxxx
and the Northeaat Nominee Trust shall have executed and delivered to Eastern
Concept a Leak-Out Agreement which limits the ability of Xxxxxxx and the
Northeast Nominee Trust to sell any portion of the 1,000,000 share block of
AXIO
common stock held by the trust for a period of one year from the date thereof,
the limit being to sales of 10,000 shares per day on an absolute basis per
day.
4.09 No
Material Adverse Change.
There
shall not be any change in, or effect on, either of Eastern Concept’s or AXIO’s
assets, financial condition, operating results, customer and employee relations,
or business prospects or the financial statements previously supplied by Eastern
Concept or AXIO which is, or may reasonably be expected to be, materially
adverse to the business, operations (as now conducted), assets, prospects or
condition (financial or otherwise), of Eastern Concept or AXIO or to the
contemplated transactions.
4.10. AXIO’s
Over-The-Counter Bulletin Board Quotation.
As
of the
Closing, the common stock of AXIO shall be quoted on NASD’s Over-The-Counter
Bulletin Board, and shall be in good standing without an “E” or any other
penalty being imposed by NASD or the OTCBB.
4.11 Good
Standing.
The
Eastern Concept Shareholder shall have received a certificate of good standing
from the appropriate authority, dated as of the date within five days prior
to
the Closing Date, certifying that AXIO is in good standing as a corporation
in
the State of Delaware.
4.12
AXIO’s Disposal of Subsidiaries
AXIO
shall have disposed of Axiom First Corporation and Axiom Second Corporation,
which is the legal owner of 80 Xxxxxxx Street, Chicopee, MA, including disposal
of any liabilities and/or mortgages associated with such building.
4.13 AXIO’s
Responsibility for filing Form 10-QSB
AXIO
shall have acknowledged in writing to Eastern Concept its responsibility to
prepare and file, and bear the cost of, AXIO’s Form 10-QSB for the quarter ended
September 30, 2007, which must be filed with the Commission on or about November
14, 2007.
4.14 Other
Items.
The
Eastern Concept Shareholder shall have received from AXIO such other documents,
legal opinions, certificates, or instruments relating to the transactions
contemplated hereby as the Eastern Concept Shareholder may reasonably
request.
12
ARTICLE
V
CONDITIONS
PRECEDENT TO OBLIGATIONS OF AXIO
The
obligations of AXIO under this Agreement are subject to the satisfaction, at
or
before the Closing Date, of the following conditions:
5.01 Accuracy
of Representations.
The
representations and warranties made by the Eastern Concept Shareholder and
Eastern Concept in this Agreement were true when made and shall be true at
the
Closing Date with the same force and affect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and the Eastern Concept Shareholder and/or Eastern
Concept shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by them prior to
or
at the Closing. AXIO shall be furnished with a certificate, signed by
the Eastern Concept Shareholder and dated the Closing Date, to the foregoing
effect.
5.02 Officer's
Certificate.
AXIO
shall have been furnished with a certificate dated the Closing Date and signed
by the duly authorized Chief Executive Officer of Eastern Concept to the effect
that no litigation, proceeding, investigation, or inquiry is pending or, to
the
best knowledge of Eastern Concept , threatened, which might result in an action
to enjoin or prevent the consummation of the transactions contemplated by this
Agreement. Furthermore, based on Eastern Concept’s own documents, the
certificate shall represent, to the best knowledge of the officer,
that:
(a) This
agreement has been duly approved by Eastern Concept’s board of directors and
stockholders and has been duly executed and delivered in the name and on behalf
of Eastern Concept by its duly authorized officer pursuant to, and in compliance
with, authority granted by the board of directors of Eastern
Concept;
(b) Except
as provided or permitted herein, there have been no material adverse changes
in
Eastern Concept up to and including the date of the certificate;
(c) All
material conditions required by this Agreement have been met, satisfied, or
performed by Eastern Concept and/or the Eastern Concept
Shareholder;
(d) All
authorizations, consents, approvals, registrations, and/or filings with any
governmental body, agency, or court required in connection with the execution
and delivery of the documents by Eastern Concept and/or the Eastern Concept
Shareholder have been obtained and are in full force and effect or, if not
required to have been obtained will be in full force and effect by such time
as
may be required; and
(e) There
is no material action, suit, proceeding, inquiry, or investigation at law or
in
equity by any public board or body pending or threatened against Eastern
Concept, wherein an unfavorable decision, ruling, or finding would have a
material adverse affect on the financial condition of Eastern Concept, the
operation of Eastern Concept, for the transactions contemplated herein, or
any
material agreement or instrument by which Eastern Concept is bound or would
in
any way contest the existence of Eastern Concept.
13
5.03 No
Litigation.
As
of the
Closing, there shall not be pending any litigation to which AXIO, any of the
Eastern Concept Shareholder or Eastern Concept is a party and which is
reasonably likely to have a material adverse effect on the business of Eastern
Concept or the contemplated transactions.
5.04 Results
of Due Diligence Investigation.
AXIO
shall be satisfied with the results of its due diligence investigation of
Eastern Concept, in its sole discretion.
5.05 No
Material Adverse Change.
There
shall not be any change in, or effect on, Eastern Concept’s or AXIO’s assets,
financial condition, operating results, customer and employee relations, or
business prospects or the financial statements previously supplied by Eastern
Concept or AXIO which is, or may reasonably be expected to be, materially
adverse to the business, operations (as now conducted), assets, prospects or
condition (financial or otherwise), of the Eastern Concept Shareholder
or Eastern Concept or to the contemplated transactions.
5.07 Other
Items.
AXIO
shall have received from the Eastern Concept Shareholder and/or the Eastern
Concept such other documents, legal opinions, certificates, or instruments
relating to the transactions contemplated hereby as AXIO may
reasonably request.
ARTICLE
VI
COVENANTS
RELATING TO FOSHAN
6.01 Entry
into a Binding Agreement to Acquire Foshan
Eastern
Concept, either by itself or through a wholly owned subsidiary, hereby agrees
with AXIO, Foshan, and the Foshan Shareholders that, after the closing under
this Agreement, Eastern Concept or such subsidiary shall execute a binding
agreement with the Foshan Shareholders, as promptly as practicably, to acquire
all of the issued and outstanding share capital of Foshan from the Foshan
Shareholders for an aggregate purchase price of approximately $1.3
million. The Foshan Shareholders hereby agree to these terms and
agree to sign a binding agreement with Eastern Concept.
6.02
After the closing of the acquisition contemplated in Article 6.01 hereof, Foshan
shall be an indirect wholly owned subsidiary of AXIO, and shall continue
business under the name of “Foshan Wanzhi Electronic Technology Co., Ltd., a
corporation organized and existing under the laws of the People’s Republic of
China.
6.03
The
Eastern Concept Shareholder shall pay an amount equal to $262,500 as
additional consideration to Northeast Nominee Trust against delivery
of a receipt and satisfaction.
14
ARTICLE
VII
SPECIAL
COVENANTS
7.01 Activities
of AXIO and Eastern Concept
(a) From
and after the date of this Agreement until the Closing Date and except as set
forth in the respective documents to be delivered by AXIO and Eastern Concept
pursuant hereto or as permitted or contemplated by this Agreement, AXIO and
Eastern Concept will each:
(i) Carry
on its business in substantially the same manner as it has
heretofore;
(ii)
Maintain in full force and effect insurance, if any, comparable in amount and
in
scope of coverage to that now maintained by it;
(iii)
Perform in all material respects all of its obligations under material
contracts, leases, and instruments relating to or affecting its assets,
properties, and business;
(iv)
Use
its best efforts to maintain and preserve its business organization intact,
to
retain its key employees, and to maintain its relationships with its material
suppliers and customers;
(v) Duly
and timely file for all taxable periods ending on or prior to the Closing Date
all tax returns required to be filed by or on behalf of such entity or for
which
such entity may be held responsible and shall pay, or cause to pay, all taxes
required to be shown as due and payable on such returns, as well as all
installments of tax due and payable during the period commencing on the date
of
this Agreement and ending on the Closing Date; and
(vi)
Fully comply with and perform in all material respects all obligations and
duties imposed on it by all laws and all rules, regulations, and orders imposed
by governmental authorities.
(b) From
and after the date of this Agreement and except as provided herein until the
Closing Date, AXIO and Eastern Concept will each not:
(i) Make
any change in its Articles of Incorporation, Bylaws or constituent
documents;
(ii) Enter
into or amend any material contract, agreement, or other instrument of any
of
the types described in such party's documents, except that a party may enter
into or amend any contract, agreement, or other instrument in the ordinary
course of business; and
(iii)
Enter into any agreement for the sale of AXIO securities or a merger or sale
of
substantially all of the assets of AXIO without the prior written approval
of
Eastern Concept. The provisions governing such exclusivity are set
forth in that certain Letter of Intent dated October 1, 2007, between Eastern
Concept and AXIO, among others (the “Letter of Intent”).
7.02 Access
to Properties and Records.
Until
the
Closing Date, Eastern Concept and AXIO will afford to the other party's officers
and authorized representatives and attorneys full access to the properties,
books, and records of the other party in order that each party may have full
opportunity to make such reasonable investigation as it shall desire to make
of
the affairs of Eastern Concept or AXIO and will furnish the other party with
such additional financial and other information as to the business and
properties of
Eastern
Concept or AXIO as each party shall from time to time reasonably
request. Additional provisions governing such business review are set
forth in paragraph 4 of the Letter of Intent.
7.03 Indemnification
by Eastern Concept and the Eastern Concept Shareholder.
(a) Eastern
Concept will indemnify and hold harmless AXIO and its directors and officers,
and each person, if any, who controls AXIO within the meaning of the Securities
Act from and against any and all losses, claims, damages, expenses, liabilities,
or other actions to which any of them may become subject under applicable law
(including the Securities Act and the Securities Exchange Act) and will
reimburse them for any legal or other expenses reasonably incurred by them
in
connection with investigating or defending any claims or actions, whether or
not
resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities, or actions arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact contained in any of the
representations, covenants and warranties set forth herein; or (ii) the breach
of any covenant or agreement set forth herein. The indemnity set
forth herein shall survive the consummation of the transactions herein for
a
period of one year.
15
(b) The
Eastern Concept Shareholder will indemnify and hold harmless AXIO, its directors
and officers, and each person, if any, who controls AXIO within the meaning
of
the Securities Act from and against any and all losses, claims, damages,
expenses, liabilities, or other actions to which any of them may become subject
under applicable law (including the Securities Act and the Securities Exchange
Act) and will reimburse them for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any claims or actions,
whether or not resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities, or actions arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact contained in any of
the
representations, covenants and warranties set forth herein; or (ii) the breach
of any covenant or agreement set forth herein. The indemnity set
forth herein shall survive the consummation of the transactions herein for
a
period of one year.
7.04
Indemnification by AXIO and Xxxxxxx.
(a) AXIO
will indemnify and hold harmless Eastern Concept, the Eastern Concept
Shareholder, and Eastern Concept’s directors and officers, and each person, if
any, who controls Eastern Concept within the meaning of the Securities Act
from
and against any and all losses, claims, damages, expenses, liabilities, or
actions to which any of them may become subject under applicable law (including
the Securities Act and the Securities Exchange Act) and will reimburse them
for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any claims or actions, whether or not resulting
in
liability, insofar as such losses, claims, damages, expenses, liabilities,
or
actions arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact contained in any of the
representations, covenants and warranties set forth herein; or (ii) the breach
of any covenant or agreement set forth herein. The indemnity set
forth herein shall survive the consummation of the transactions herein for
a
period of one year.
(b) Xxxxxxx
will indemnify and hold harmless Eastern Concept, the Eastern Concept
Shareholder, and Eastern Concept’s directors and officers, and each person, if
any, who controls Eastern Concept within the meaning of the Securities Act
from
and against any and all losses, claims, damages, expenses, liabilities, or
other
actions to which any of them may become subject under applicable law (including
the Securities Act and the Securities Exchange Act) and will reimburse them
for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any claims or actions, whether or not resulting
in
liability, insofar as such losses, claims, damages, expenses, liabilities,
or
actions arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in any of the representations,
covenants and warranties set forth herein; or (ii) the breach of any covenant
or
agreement set forth herein. The indemnity set forth herein shall
survive the consummation of the transactions herein for a period of one
year.
7.05 The
Issuance of AXIO Common Stock.
AXIO
and
the Eastern Concept Shareholder understand and agree that the consummation
of
this Agreement, including the issuance of the AXIO Common Stock to the Eastern
Concept Shareholder as contemplated hereby, constitutes the offer and sale
of
securities under the Securities Act and applicable state statutes. AXIO and
the
Eastern Concept Shareholder agree that such transactions shall be consummated
in
reliance on an exemption from registration pursuant to the Securities Act of
1933, as amended (the “Act”), provided by Regulation S. Such exemption is based
on the following representations, warranties and covenants made by the Eastern
Concept Shareholder.
(a) Regulation
S Representations, Warranties and Covenants.
The
Eastern Concept Shareholder represents and warrants to, and covenants with,
AXIO
as follows:
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(1)
|
The
Eastern Concept Shareholder is not a U.S. person and is not acquiring
the
shares of common stock of AXIO for the account or for the benefit
of any
U.S. person and are not a U.S. person who purchased the shares of
common
stock in a transaction that did not require registration under the
Act.
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|
(2)
|
The
Eastern Concept Shareholder agrees to resell such common stock only
in
accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from
registration.
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(3)
|
The
Eastern Concept Shareholder agrees not to engage in hedging transactions
with regard to such securities unless in compliance with the
Act.
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|
(4)
|
The
Eastern Concept Shareholder consents to the certificate for the shares
of
common stock of AXIO to contain a legend to the effect that transfer
is
prohibited except in accordance with the provisions of Regulation
S,
pursuant to registration under the Act, or pursuant to an available
exemption from registration, and that hedging transactions involving
the
shares of common stock may not be conducted unless in compliance
with the
Act.
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|
(5)
|
The
Eastern Concept Shareholder acknowledges that AXIO has agreed to
refuse to
register any transfer of the shares of common stock not made in accordance
with the provisions of Regulation S, pursuant to registration under
the
Act, or pursuant to an available exemption from
registration.
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|
(6)
|
The
Eastern Concept Shareholder covenants and represents and warrants
in favor
of AXIO that all of the representations and warranties set forth
herein
shall be true and correct at the time of Closing as if made on that
date.
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16
(b) In
connection with the transaction contemplated by this Agreement, AXIO shall
file,
with its counsel, such notices, applications, reports, or other instruments
as
may be deemed necessary or appropriate in an effort to document reliance on
such
exemptions, and the appropriate regulatory authority in the countries where
the
Eastern Concept Shareholder resides unless an exemption requiring no filing
is
available in such jurisdictions, all to the extent and in the manner as may
be
deemed by such Parties to be appropriate.
7.06 Securities
Filings.
AXIO
shall be responsible for the preparation and filing of all Securities Act and
Exchange Act filings that may result from the transactions contemplated in
this
Agreement, although counsel for the Eastern Concept Shareholder may assist
with
the preparation and filing.
7.07 Sales
of Securities under Rule 144, If Applicable.
(a) AXIO
will use its best efforts to at all times satisfy the current public information
requirements of Rule 144 promulgated under the Act.
(b) If
any certificate representing any such restricted stock is presented to AXIO’s
transfer agent for registration or transfer in connection with any sales
theretofore made under Rule 144, provided such certificate is duly endorsed
for
transfer by the appropriate person(s) or accompanied by a separate stock power
duly executed by the appropriate person(s) in each case with reasonable
assurances that such endorsements are genuine and effective, and is accompanied
by an opinion of counsel satisfactory to AXIO and its counsel that such transfer
has complied with the requirements of Rule 144, as the case may be, AXIO will
promptly instruct its transfer agent to allow such transfer and to issue one
or
more new certificates representing such shares to the transferee and, if
appropriate under the provisions of Rule 144, as the case may be, free of any
stop transfer order or restrictive legend.
(c) Other
Representations, Warranties and Covenants.
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(1)
|
The
Eastern Concept Shareholder has been furnished with and have carefully
read the periodic reports on Forms 10-KSB, 10-QSB and 8-K filed by
AXIO
with the Securities and Exchange Commission during the preceding
three
years. With respect to individual or partnership tax and other
economic considerations involved in this investment, the Eastern
Concept
Shareholder confirms that they are not relying on AXIO (or any agent
or
representative of AXIO). The Eastern Concept Shareholder has
carefully considered and have, to the extent such persons believe
such
discussion necessary, discussed with their own legal, tax, accounting
and
financial advisers the suitability of an investment in the common
stock
for such particular tax and financial
situation.
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|
(2)
|
The
Eastern Concept Shareholder acknowledges that AXIO may be considered
a
“shell company” in the context of the transaction with no operations and
no significant assets and that, as a result, the consideration for
the
Shares far exceeds the value of the Shares under any recognized criteria
of value. The Eastern Concept Shareholder further acknowledges
that they are aware of the quoted prices for AXIO’s common stock on the
OTC Bulletin Board but understand there is no active trading market
for
such shares, quotations on the OTCBB represent inter-dealer prices
without
retail xxxx-up, xxxx-down, or commission, and may not represent actual
transactions, and there is no liquid trading market for AXIO’s common
stock. As a result, there can be no assurance that the Eastern
Concept Shareholder will be able to sell the common
stock.
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|
(3)
|
The
Eastern Concept Shareholder has had an opportunity to inspect relevant
documents relating to the organization and business of AXIO. The
Eastern
Concept Shareholder acknowledges that all documents, records and
books
pertaining to this investment which such Eastern Concept Shareholder
has
requested has been made available for inspection by such Eastern
Concept
Shareholder and their respective attorney, accountant or other
adviser(s).
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(4)
|
The
Eastern Concept Shareholder and/or their respective advisor(s) has/have
had a reasonable opportunity to ask questions of, and receive answers
and
request additional relevant information from, the officers of AXIO
concerning the transactions contemplated by this
Agreement.
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(5)
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The
Eastern Concept Shareholder confirms that they are not acquiring
the
common stock as a result of or subsequent to any advertisement, article,
notice or other communication published in any newspaper, magazine
or
similar media or broadcast over television or radio or presented
at any
seminar.
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17
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(6)
|
The
Eastern Concept Shareholder, by reason of such persons’ business or
financial experience, has the capacity to protect their own interests
in
connection with the transactions contemplated by this
Agreement.
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(7)
|
Except
as set forth in this Agreement, the Eastern Concept Shareholder represents
that no representations or warranties have been made to them by AXIO,
any
officer director, agent, employee, or affiliate of AXIO, and such
Eastern
Concept Shareholder has not relied on any oral representation by
AXIO or
by any of its officers, directors or agents in connection with their
decision to acquire the common
stock.
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(8)
|
The
Eastern Concept Shareholder represents that neither they nor any
of their
affiliates is subject to any of the events described in Section 262(b)
of
Regulation A promulgated under the
Act.
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(9)
|
The
Eastern Concept Shareholder has adequate means for providing for
their
current financial needs and contingencies, are able to bear the
substantial economic risks of an investment in the AXIO common stock
for
an indefinite period of time, has no need for liquidity in such investment
and, at the present time, could afford a complete loss of such
investment.
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(10)
|
The
Eastern Concept Shareholder has such knowledge and experience in
financial, tax and business matters so as to enable them to use the
information made available to them in connection with the transaction
to
evaluate the merits and risks of an investment in the AXIO common
stock
and to make an informed investment decision with respect
thereto.
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(11)
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The
Eastern Concept Shareholder understands that the AXIO common stock
constitutes “restricted securities” that have not been registered under
the Securities Act or any applicable state securities law and they
are
acquiring the same as principals for their own account for investment
purposes and not for distribution. The Eastern Concept Shareholder
acknowledges that the common stock has not been registered under
the Act
or under any the securities act of any state or country. The
Eastern Concept Shareholder understands further that in absence of
an
effective registration statement, the common stock can only be
sold pursuant to some exemption from
registration.
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(12)
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The
Eastern Concept Shareholder recognizes that investment in the AXIO
common
stock involves substantial risks. The Eastern Concept
Shareholder acknowledges that they have reviewed the risk factors
identified in the periodic reports filed by AXIO with the Securities
and
Exchange Commission. The Eastern Concept Shareholder further
confirm that they are aware that no federal or state agencies have
passed
upon this transaction or made any finding or determination as to
the
fairness of this investment.
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(13)
|
The
Eastern Concept Shareholder acknowledges that each stock certificate
representing the common stock shall contain a legend substantially
in the
following form:
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THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) PURSUANT TO AN EXEMPTION FROM REGISTRATION AFFORDED BY
REGULATION S AND HAVE NOT BEEN REGISTERED UNDER APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR
PURSUANT TO AVAILABLE EXEMPTIONS FROM SUCH REGISTRATION, PROVIDED THAT THE
PURCHASER DELIVERS TO THE COMPANY AN OPINION OF COUNSEL (WHICH OPINION AND
COUNSEL ARE REASONABLY SATISFACTORY TO THE COMPANY) CONFIRMING THE AVAILABILITY
OF SUCH EXEMPTION. THE HOLDER AGREES TO REFRAIN FROM HEDGING
TRANSACTIONS PURSUANT TO THE REQUIREMENTS OF REGULATION S.
7.08 Securities
Filings.
The
Eastern Concept Shareholder, as the controlling shareholder of AXIO following
Closing, shall cause AXIO to timely prepare and file all Securities Act and
Exchange Act filings that may result from or be required in connection with
the
transactions contemplated in this Agreement.
7.09 No
Reverse Stock Split
The
parties hereto agree that AXIO shall not consummate a reverse stock split or
any
similar reclassification or combination of its common stock for a period of
one
year from October 1, 2007.
7.10 Securities
Opinions
AXIO
agrees that, after the Closing, Xxxxx X. Xxxxxxxxxxxx, Esq. shall be empowered
to render securities opinions to AXIO’s transfer agent, and his Rule 144
opinions shall generally be acceptable to its general counsel and transfer
agent. Instructions to this effect will be on file with the transfer
agent.
18
ARTICLE
VIII
MISCELLANEOUS
8.01 Brokers.
No
broker’s or finder’s fee will be paid in connection with the transaction
contemplated by this Agreement.
8.02 No
Representation Regarding Tax Treatment.
No
representation or warranty is being made by any party to any other party
regarding the treatment of this transaction for federal or state income
taxation. Each party has relied exclusively on its own legal,
accounting, and other tax adviser regarding the treatment of this transaction
for federal and state income taxes and on no representation, warranty, or
assurance from any other party or such other party's legal, accounting, or
other
adviser.
8.03 Governing
Law.
This
Agreement shall be governed by, enforced and construed under and in accordance
with the laws of the State of Nevada without giving effect to principles of
conflicts of law thereunder. All controversies, disputes or claims
arising out of or relating to this Agreement shall be resolved by binding
arbitration. The arbitration shall be conducted in accordance with
the commercial arbitration rules of any competent arbitration panel to be agreed
upon by the parties. Each arbitrator shall possess such experience
in, and knowledge of, the subject area of the controversy or claim so as to
qualify as an “expert” with respect to such subject matter. The
prevailing party shall be entitled to receive its reasonable attorney’s fees and
all costs relating to the arbitration. Any award rendered by
arbitration shall be final and binding on the Parties, and judgment thereon
may
be entered in any court of competent jurisdiction.
8.04 Notices.
Any
notices or other communications required or permitted hereunder shall be
sufficiently given if personally delivered, if sent by facsimile or telecopy
transmission or other electronic communication confirmed by registered or
certified mail, postage prepaid, or if sent
by
prepaid overnight courier addressed as follows:
If
to
Axiom III, Inc., to:
0000
Xxxxxx Xxxx
Xxxxxxxxx,
XX 00000
If
to
Eastern Concept , to:
x/x
00xx Xxxxx,
Xxx
Xxxx House
00
Xxxxxxxxx Xxxx
Xxxxxxx,
Xxxx Xxxx
19
or
such
other addresses as shall be furnished in writing by any party in the manner
for
giving notices, hereunder, and any such notice or communication shall be deemed
to have been given as of the date so delivered or sent by facsimile or telecopy
transmission or other electronic communication, or one day after the date so
sent by overnight courier.
8.05 Attorney's
Fees.
In
the
event that any party institutes any action or suit to enforce this Agreement
or
to secure relief from any default hereunder or breach hereof, the breaching
party or parties shall reimburse the non-breaching party or parties for all
costs, including reasonable attorneys' fees, incurred in connection therewith
and in enforcing or collecting any judgment rendered therein.
8.06 Document;
Knowledge.
Whenever,
in any section of this Agreement, reference is made to information set forth
in
the documents provided by AXIO or the Eastern Concept Shareholder, such
reference is to information specifically set forth in such documents and clearly
marked to identify the section of this Agreement to which the information
relates. Whenever any representation is made to the "knowledge" of
any party, it shall be deemed to be a representation that no officer or director
of such party, after reasonable investigation, has any knowledge of such
matters.
8.07 Entire
Agreement.
This
Agreement represents the entire agreement between the Parties relating to the
subject matter hereof. All previous agreements between the Parties,
whether written or oral, have been merged into this Agreement. This
Agreement alone fully and completely expresses the agreement of the Parties
relating to the subject matter hereof. There are no other courses of
dealing, understandings, agreements, representations, or warranties, written
or
oral, except as set forth herein.
8.08 Survival,
Termination.
The
representations, warranties, and covenants of the respective Parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated for a period of one year from the Closing Date, unless otherwise
provided herein.
8.09 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument. In addition, facsimile or electronic signatures shall have the
same
legally binding effect as original signatures.
8.10 Amendment
or Waiver.
Every
right and remedy provided herein shall be cumulative with every other right
and
remedy, whether conferred herein, at law, or in equity, and such remedies may
be
enforced concurrently, and no waiver by any party of the performance of any
obligation by the other shall be construed as a waiver of the same or any other
default then, theretofore, or thereafter occurring or existing. At
any time prior to the Closing Date, this Agreement may be amended by a writing
signed by all Parties hereto, with respect to any of the terms contained herein,
and any term or condition of this Agreement may be waived or the time for
performance thereof may be extended by a writing signed by the party or parties
for whose benefit the provision is intended.
[Remainder
of Page Intentionally Left Blank]
20
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as
of the date first above written.
AXIOM
III,
INC. EASTERN
CONCEPT DEVELOPMENT LTD.
By /s/
Xxxxx
Xxxxxxx
By /s/ Xxxxx Xxx
Name: Xxxxx
Xxxxxxx
Name: Xxxxx Xxx
Title:
Chief Executive
Officer
Title: Director
XXXXX
XXXXXXX REPRESENTATIVE
OF THE
EASTERN CONCEPT SHAREHOLDERS
/s/
Xxxxx
Xxxxxxx
/s/ Xxxxx Xxx
(In
His
Individual
Capacity)
(In His Representative Capacity)
FOSHAN
WANZHI
ELECTRONIC REPRESENTATIVE
OF THE
TECHNOLOGY
CO.,
LTD.
FOSHAN SHAREHOLDERS
By /s/
Xxx
Xxxx
/s/ Xxxx Xxxx
Name: Xxx
Xxxx
(In His Representative Capacity)
Title: Director
21
