FIRST AMENDMENT TO THE EXCHANGE AGREEMENT
EXHIBIT
2.5
FIRST
AMENDMENT TO THE
THIS
FIRST AMENDMENT TO THE EXCHANGE AGREEMENT, dated as of August 14, 2006 (this
"Amendment") is entered into by and among Cyber Merchants Exchange, Inc.,
a
California corporation ("Cyber"),
KI
Equity Partners II, LLC, a Delaware limited liability company (“KI
Equity”),
Prime
Fortune Enterprises Limited, an international business company incorporated
in
the British Virgin Islands ("Prime"),
Prime
shareholders Prime Corporate Developments Limited (“Prime Corporate”), ▇▇▇▇
▇▇▇▇▇ and ▇▇▇ ▇▇▇ Wan (the “Prime
Shareholders”),
Infosmart Group Limited, an international business company incorporated in
the
British Virgin Islands (“Infosmart”),
the
Infosmart Shareholders (as defined below) and Hamptons Investment Group Ltd.
(“HIG”),
to
amend the Exchange Agreement (the "Exchange Agreement"), dated as of July
7,
2006 and entered into by and among Cyber, KI Equity, Prime, the Prime
Shareholders and HIG. Capitalized terms used in this Amendment without
definition shall have the respective meanings given to them in the Exchange
Agreement.
WHEREAS,
on July
7, 2006, Cyber, KI Equity, Prime, the Prime Shareholders and HIG entered
into
the Exchange Agreement for Cyber to acquire all of the issued capital stock
of
Prime (the “Prime Shares”) from the Prime Shareholders in exchange for 1,000,000
shares of Cyber’s Series A Preferred Stock, and the Prime Shareholders desired
to transfer and contribute all of their Prime Shares and equity ownership
of
Prime to Cyber in exchange for the 1,000,000 shares of Cyber’s Series A
Preferred Stock;
WHEREAS,
Prime’s
issued capital shares consist of 1,000 shares, $1.00 par value per share,
and
that such capital shares are held as follows: 713 shares held by Prime
Corporate, 212 shares held by ▇▇▇▇▇ ▇▇▇▇ (“▇▇▇▇ ▇▇▇▇”) and 75 shares held by ▇▇▇
▇▇▇ Wan;
WHEREAS,
on
July
7, 2006, Prime solely owned all of Infosmart Group Limited’s (“Infosmart”)
issued capital shares;
WHEREAS,
after
the execution of the Exchange Agreement, the board of directors of Prime
and
Infosmart decided to re-structure certain shareholdings in Infosmart and
to
dissolve Prime as soon as practicable after the Closing of the Transaction,
so
that after the re-structuring, Prime would no longer own 100% of Infosmart’s
issued capital shares and so that Prime Corporate, ▇▇▇▇ ▇▇▇▇ and ▇▇▇ ▇▇▇
Wan
would replace Prime as the direct owners of 100% of the issued capital shares
and equity ownership of Infosmart (the “Re-structuring”);
WHEREAS,
pursuant to the Re-structuring, on August 11, 2006, Prime’s board of directors
approved and adopted resolutions for the Company to transfer the one issued
share of Infosmart owned by Prime (such one share being 100% of the issued
capital shares of Infosmart) to Prime shareholder ▇▇▇▇ ▇▇▇▇▇ in exchange
for a
cash payment
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of
$1.00
(the “Prime Transfer”), and that pursuant to such resolutions, Prime transferred
the one Infosmart share to ▇▇▇▇ ▇▇▇▇▇ on August 11, 2006 in exchange for
the
$1.00 cash payment;
WHEREAS,
on
August 11, 2006 and concurrently with the Prime Transfer, Infosmart’s board of
directors adopted and approved resolutions for the Company to issue a total
of
999 new shares in Infosmart to Prime Corporate, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇ Wan,
as
follows: 713 shares to Prime Corporate, 211 shares to ▇▇▇▇ ▇▇▇▇▇, and 75
shares
to ▇▇▇ ▇▇▇ Wan, in exchange for a cash payment by Prime Corporate, ▇▇▇▇ ▇▇▇▇▇
and ▇▇▇ ▇▇▇ Wan of $1.00 per Infosmart share that each receives (the “Infosmart
Share Issuance”) or an aggregate total payment of $999 for such shares, and that
on August 11, 2006, the Company issued the 999 Infosmart shares to Prime
Corporate, ▇▇▇▇ ▇▇▇▇ and ▇▇▇ ▇▇▇ Wan and received the $999 cash payment,
pursuant to such resolutions;
WHEREAS,
as a
result of the Prime Transfer and the Infosmart Share Issuance, Prime Corporate,
▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇ Wan currently own 100% of the issued capital shares
of
Infosmart, with each of them now owning the same number of Infosmart shares
as
the number of Prime shares that each currently owns;
WHEREAS,
pursuant
to the Exchange Agreement and this Amendment, immediately prior to the Closing
of the Transaction, Infosmart (instead of Prime) will be issuing the HIG
Shares
to HIG as payment for its services as a finder in connection with the
Transaction, and thus Prime Corporate, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇ Wan and HIG (the
“Infosmart Shareholders”) shall be the Infosmart shareholders exchanging with
Cyber their Infosmart shares, which shall be 100% of the issued capital shares
of Infosmart (the “Infosmart Shares”);
WHEREAS,
each of
the undersigned parties now wish to amend the Exchange Agreement to reflect
(1)
that the shares of capital stock to be exchanged with Cyber pursuant to the
Exchange Agreement will consist of the Infosmart Shares (instead of the Prime
Shares), (2) that the Infosmart Shareholders (instead of the Prime
Shareholders), will be the transferring such shares to Cyber in exchange
for
Cyber’s issuance of the Series A Preferred Stock to the Infosmart Shareholders,
and (3) that Infosmart and the Infosmart Shareholders will be replacing Prime
and the Prime Shareholders as a parties to the Exchange Agreement and will
be
assuming all of Prime’s and the Prime Shareholders’ obligations,
representations, warranties, liabilities and responsibilities under the Exchange
Agreement.
NOW
THEREFORE
in
consideration of valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, each of the undersigned hereby agrees as
follows:
1. Substitution
of Parties to the Exchange Agreement.
The
Exchange Agreement shall be amended so that the term “Company”, which is
currently defined in the Exchange Agreement as “Prime Fortune Enterprises
Limited, an international business company incorporated in the British Virgin
Islands” shall instead be defined as
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“Infosmart
Group Limited, an international business company incorporated in the British
Virgin Islands” so that all of the obligations, representations, warranties,
liabilities and responsibilities of Prime under the Exchange Agreement shall
now
be the obligations, representations, warranties, liabilities and
responsibilities of Infosmart.
2. Acknowledgment
of Substitution of Exchanging Party.
The
undersigned parties agree and acknowledge that the Infosmart Shareholders
shall
replace the Prime Shareholders as the exchanging party to the Exchange Agreement
that will transfer and contribute all of their Infosmart Shares to Cyber
in
exchange for Cyber’s issuance to the Infosmart Shareholders of 1,000,000 shares
of Cyber’s Series A Preferred Stock, and that all of the obligations,
representations, warranties, liabilities and responsibilities of the Prime
Shareholders under the Exchange Agreement shall now be the obligations,
representations, warranties, liabilities and responsibilities of the Infosmart
Shareholders.
3. Amendment
of Prime’s Disclosure Schedules and Schedule 1.1.
The
Prime Disclosure Schedules to the Exchange Agreement and Schedule 1.1 to
the
Exchange Agreement shall be amended and restated in their entirety and replaced
by Infosmart’s Amended and Restated Disclosure Schedules to the Exchange
Agreement and Schedule 1.1, copies of which are attached as Exhibit
“A”
hereto.
4. Scope
of Amendment.
All
other terms and provisions of the Exchange Agreement not expressly modified
by
this Amendment shall remain in full force and effect and are hereby expressly
ratified and confirmed.
5. Section
Headings; Construction.
The
headings of sections in this Amendment are provided for convenience only
and
will not affect its construction or interpretation. All words used in this
Amendment will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
6. Counterparts.
This
Amendment may be executed in counterparts, each of which shall be deemed
an
original and each of which shall constitute
one
and the same instrument.
7. Governing
Law.
This
Amendment shall be governed by and construed in accordance with the laws
of the
State of California, USA, regardless of the laws that might otherwise govern
under applicable principles of conflicts of law thereof.
8. Rules
of Construction.
The
parties hereto agree that they have been represented by counsel during the
negotiation and execution of this Amendment and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an
-3-
agreement
or other document will be construed against the party drafting
such
agreement or document.
9. Arbitration.
Any
disputes or claims arising under or in connection with this Amendment or
the
transactions contemplated hereunder shall be resolved by binding arbitration.
Notice of a demand to arbitrate a dispute by either party shall be given
in
writing to the other at their last known address. Arbitration shall be commenced
by the filing by a party of an arbitration demand with the American Arbitration
Association (“AAA”)
in its
office in Los Angeles, California USA. The arbitration and resolution of
the
dispute shall be resolved by a single arbitrator appointed by the AAA pursuant
to AAA rules. The arbitration shall in all respects be governed and conducted
by
applicable AAA rules, and any award and/or decision shall be conclusive and
binding on the parties. The arbitration shall be conducted in Los Angeles,
California USA. The arbitrator shall supply a written opinion supporting
any
award, and judgment may be entered on the award in any court of competent
jurisdiction. Each party shall pay its own fees and expenses for the
arbitration, except that any costs and charges imposed by the AAA and any
fees
of the arbitrator for his services shall be assessed against the losing party
by
the arbitrator. In the event that preliminary or permanent injunctive relief
is
necessary or desirable in order to prevent a party from acting contrary to
this
Amendment or to prevent irreparable harm prior to a confirmation of an
arbitration award, then either party is authorized and entitled to commence
a
lawsuit solely to obtain equitable relief against the other pending the
completion of the arbitration in a court having jurisdiction over the parties.
All rights and remedies of the parties shall be cumulative and in addition
to
any other rights and remedies obtainable from arbitration.
[Signature
pages follow]
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IN
WITNESS WHEREOF, the parties have caused this First Amendment to the Exchange
Agreement to be duly executed as of the date first written above.
CYBER
MERCHANTS EXCHANGE, INC.
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇, President
KI
EQUITY
PARTNERS II, LLC
By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Manager
INFOSMART
GROUP LIMITED (“INFOSMART”)
By:
/s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇
▇▇▇▇, Director
PRIME
FORTUNE ENTERPRISES LIMITED (“PRIME”)
By:
/s/ Sze Po Nei
Sze
Po
Nei, Director
PRIME
SHAREHOLDERS:
PRIME
CORPORATE DEVELOPMENTS LIMITED
By:
/s/ Sze Po Nei
Sze
Po
Nei, Director
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/s/
▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇, Individually
/s/
▇▇▇
▇▇▇ ▇▇▇
▇▇▇
▇▇▇
▇▇▇, Individually
HAMPTONS
INVESTMENT GROUP LIMITED
By:
/s/ ▇▇▇ ▇▇▇ Sui
▇▇▇
▇▇▇
Sui, William, Director
INFOSMART
SHAREHOLDERS:
PRIME
CORPORATE DEVELOPMENTS LIMITED
By:
/s/ Sze Po Nei
Sze
Po
Nei, Director
/s/
▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇, Individually
/s/
▇▇▇
▇▇▇ ▇▇▇
▇▇▇
▇▇▇
▇▇▇, Individually
HAMPTONS
INVESTMENT GROUP LIMITED
By:
/s/ ▇▇▇ ▇▇▇ Sui
▇▇▇
▇▇▇
Sui, William, Director
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EXHIBIT
“A”
INFOSMART
GROUP LIMITED
AMENDED
AND RESTATED PRIME DISCLOSURE SCHEDULES
AND
SCHEDULE 1.1 TO THE EXCHANGE AGREEMENT