SHARE EXCHANGE AGREEMENT
Exhibit
2.1
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 Electron S&T 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:
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
Electron S&T 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.
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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 Registrar & 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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(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:
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2.01
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Organization.
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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.
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2.02
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Approval
of Agreement; Enforceability.
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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.
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.
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;
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(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.
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.
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;
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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.
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.
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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;
(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.
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.
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6
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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 Concept’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.
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.
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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.
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 Northeast 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.
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;
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8
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(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.
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.
5.06 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 Electron S&T 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.
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:
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(i)
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Carry
on its business in substantially the same manner as it has
heretofore;
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(ii)
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Maintain
in full force and effect insurance, if any, comparable in amount
and in
scope of coverage to that now maintained by
it;
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(iii)
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Perform
in all material respects all of its obligations under material
contracts,
leases, and instruments relating to or affecting its assets, properties,
and business;
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(iv)
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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;
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(v)
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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
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(vi)
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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.
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9
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(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:
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(i)
|
Make
any change in its Articles of Incorporation, Bylaws or constituent
documents;
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(ii)
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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
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(iii)
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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”).
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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.
(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.
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10
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(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.
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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.
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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.
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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.
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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.
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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.
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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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(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.
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11
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(c)
Other
Representations, Warranties and Covenants.
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1.
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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.
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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.
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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.
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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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6.
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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.
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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.
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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.
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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.
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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.
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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.
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12
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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.
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 Electron S&T 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
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 Electron S&T communication, or one day after the date
so sent by overnight courier.
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13
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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 Electron S&T 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]
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14
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IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as
of the date first above written.
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EASTERN
CONCEPT DEVELOPMENT LTD.
|
||
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By:
/s/ Xxxxx Xxxxxxx
|
By:
/s/ Xxxxx Xxx
|
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Name:
Xxxxx Xxxxxxx
|
Name:
Xxxxx Xxx
|
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Title:
Chief Executive Officer
|
Title:
Director
|
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XXXXX
XXXXXXX
|
REPRESENTATIVE
OF THE EASTERN CONCEPT SHAREHOLDERS
|
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|
/s/
Xxxxx Xxxxxxx
|
/s/
Xxxxx Xxx
|
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(In
His Individual Capacity)
|
(In
His Representative Capacity)
|
|
|
FOSHAN
WANZHI ELECTRON S&T TECHNOLOGY CO., LTD.
|
REPRESENTATIVE
OF THE FOSHAN SHAREHOLDERS
|
|
|
By:
/s/ Xxx Xxxx
|
/s/
Xxx Xxxx
|
|
|
Name:
Xxx Xxxx
|
(In
His Representative Capacity)
|
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|
Title:
Director
|
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15
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