Exhibit 10.1
SHARE EXCHANGE AGREEMENT
Heng Xing Technology Group Development Limited
FOR THE EXCHANGE OF
CAPITAL STOCK
OF
CHINA INTERNATIONAL ENTERPRISES CORP.
DATED AS OF JANUARY 31, 2005
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SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of January 31, 2005, (the
"Agreement") by and among CHINA INTERNATIONAL ENTERPRISES CORP., a Delaware
corporation ("CIEC"), Heng Xing Technology Group Development Limited
(hereinafter "XHT"), incorporated under the laws of the British Virgin Islands,
and all of the shareholders of XHT, whose names and addresses are set forth on
Exhibit A attached hereto ("SHAREHOLDERS")
WHEREAS, CIEC is a newly formed Delaware corporation;
WHEREAS, SHAREHOLDERS own 100% of the issued and outstanding shares of
Common Stock, par value $1.00 per share, of XHT (the " XHT Shares");
WHEREAS, XHT owns 100% of the issued and outstanding shares of Shenzhen
Hengtaifeng Technology Co., Ltd., (hereinafter referred to as "HFT") a company
organized under the laws of China, located at ▇▇. ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇-▇▇▇▇ Industrial Park, Nanshan District, Shenzhen, 518057, P.R.
China; and
WHEREAS, SHAREHOLDERS believe it is in their best interest to exchange the
XHT Shares for shares of the Common Stock, par value $.001 per share, of CIEC
("CIEC Shares"), and CIEC believes it is in its best interests to acquire the
XHT Shares in exchange for CIEC Shares, upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the parties desire this to be a tax-free exchange under the
United States Internal Revenue Code of 1986, as amended, as of the date of this
Agreement;
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
EXCHANGE OF SHARES FOR COMMON STOCK
Section 1.1 Agreement to Exchange Shares for Common Stock. On the Closing
Date (as hereinafter defined) and upon the terms and subject to the conditions
set forth in this Agreement, SHAREHOLDERS shall sell, assign, transfer, convey
and deliver the XHT Shares (representing 50,000 XHT Shares or 100% of the issued
and outstanding XHT Shares), to CIEC, and CIEC shall accept the XHT Shares from
the SHAREHOLDERS in exchange for the issuance to the SHAREHOLDERS of the number
of CIEC Shares set forth opposite the names of the SHAREHOLDERS on Exhibit A
hereto.
Section 1.2 Capitalization. On the Closing Date, immediately before the
transactions to be consummated pursuant to this Agreement, CIEC shall have
authorized (a) Sixty Million (60,000,000) CIEC Shares, of which 1,080,000 CIEC
Shares have been issued and will be outstanding, and (b) One Million (1,000,000)
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shares of Preferred Stock, par value .001 per share, none of which shares shall
be issued and outstanding.
Section 1.3 Closing. The closing of the exchange to be made pursuant to
this Agreement (the "Closing") shall take place at 10:00 a.m. E.S.T. on the
second business day after the conditions to closing set forth in Articles VI and
VII have been satisfied or waived, or at such other time and date as the parties
hereto shall agree in writing (the "Closing Date"), at the offices of Guzov
Ofsink ▇▇▇▇▇, LLC, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. At
the Closing, SHAREHOLDERS shall deliver to CIEC the stock certificates
representing 100% of the XHT Shares, duly endorsed in blank for transfer or
accompanied by appropriate stock powers duly executed in blank. In full
consideration and exchange for the XHT Shares, CIEC shall issue and exchange
with SHAREHOLDERS 9,000,000 CIEC Shares , representing 83.33% of the issued and
outstanding common stock of CIEC giving effect to the issuance of the CIEC
Shares pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CIEC
CIEC hereby jointly and severally represents, warrants and agrees as
follows:
Section 2.1 Corporate Organization
a. CIEC is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, and has all requisite corporate power
and authority to own its properties and assets and to conduct its business as
now conducted and is duly qualified to do business in good standing in each
jurisdiction in which the nature of the business conducted by CIEC or the
ownership or leasing of its properties makes such qualification and being in
good standing necessary, except where the failure to be so qualified and in good
standing will not have a material adverse effect on the business, operations,
properties, assets, condition or results of operation of CIEC (a "CIEC Material
Adverse Effect");
b. Copies of the Articles of Incorporation and By-laws of CIEC, with
all amendments thereto to the date hereof, have been furnished to XHT, and such
copies are accurate and complete as of the date hereof. The minute books of CIEC
are current as required by law, contain the minutes of all meetings of the Board
of Directors of CIEC from its date of incorporation to the date of this
Agreement, and adequately reflect all material actions taken by the Board of
Directors of CIEC.
Section 2.2 Capitalization of CIEC. The authorized capital stock of CIEC
consists of Sixty Million (60,000,000) Shares of common stock, $0.001 par value
per share, of which 1,080,000 shares are issued and outstanding, and One Million
(1,000,000) Shares of Preferred Stock, par value per share .001 authorized, none
of which shares are issued or outstanding. The parties agree that they have been
informed of the issuances of these CIEC Shares, and that all such issuances will
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be in accordance with the provisions of this Agreement. All of the CIEC Shares
to be issued immediately after the Closing have been duly authorized and will be
validly issued, fully paid and non-assessable and no personal liability will
attach to the ownership thereof. The CIEC Shares are the sole outstanding shares
of capital stock of CIEC, and there are no outstanding options, warrants,
agreements, commitments, conversion rights, preemptive rights or other rights to
subscribe for, purchase or otherwise acquire any shares of capital stock or any
un-issued or treasury shares of capital stock of CIEC, except as set forth on
Schedule 2.2 hereto.
Section 2.3 Subsidiaries and Equity Investments. CIEC has no subsidiaries
or equity interest in any corporation, partnership or joint venture, except as
set forth in Schedule 2.3 hereto.
Section 2.4 Authorization and Validity of Agreements. CIEC has all
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by CIEC and the
consummation by CIEC of the transactions contemplated hereby have been duly
authorized by all necessary corporate action of CIEC, and no other corporate
proceedings on the part of CIEC are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby.
Section 2.5 No Conflict or Violation. The execution, delivery and
performance of this Agreement by CIEC does not and will not violate or conflict
with any provision of the Articles of Incorporation or By-laws of CIEC, and does
not and will not violate any provision of law, or any order, judgment or decree
of any court or other governmental or regulatory authority, nor violate nor will
result in a breach of or constitute (with due notice or lapse of time or both) a
default under, or give to any other entity any right of termination, amendment,
acceleration or cancellation of, any contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
CIEC is a party or by which it is bound or to which any of their respective
properties or assets is subject, nor will it result in the creation or
imposition of any lien, charge or encumbrance of any kind whatsoever upon any of
the properties or assets of CIEC, nor will it result in the cancellation,
modification, revocation or suspension of any of the licenses, franchises,
permits to which CIEC is bound.
Section 2.6 Consents and Approvals. Schedule 2.6 sets forth a true and
complete list of each consent, waiver, authorization or approval of any
governmental or regulatory authority, domestic or foreign, or of any other
person, firm or corporation, and each declaration to or filing or registration
with any such governmental or regulatory authority, that is required in
connection with the execution and delivery of this Agreement by CIEC or the
performance by CIEC of its obligations hereunder.
Section 2.7 Absence of Certain Changes or Events. Since its inception and
except as set forth on Schedule 2.7:
a. CIEC has operated in the ordinary course of business consistent with
past practice and there has not been any material adverse change in
the assets, properties, business, operations, prospects, net income
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or condition, financial or otherwise of CIEC. As of the date of this
Agreement, CIEC does not know or have reason to know of any event,
condition, circumstance or prospective development which threatens
or may threaten to have a material adverse effect on the assets,
properties, operations, prospects, net income or financial condition
of CIEC;
b. there has not been any declaration, setting aside or payment of
dividends or distributions with respect to shares of capital stock
of CIEC or any redemption, purchase or other acquisition of any
capital stock of CIEC or any other of CIEC'S securities; and
c. there has not been an increase in the compensation payable or to
become payable to any director or officer of CIEC.
Section 2.8 Tax Matters. All returns, reports, or information returns or
other documents (including any relating or supporting information) required to
be filed before the Closing in respect of CIEC has been filed, are true,
complete and correct and filed timely and CIEC has paid, accrued or otherwise
adequately reserved for the payment of all Taxes required to be paid in respect
of the periods covered by such returns and has adequately reserved for the
payment of all Taxes with respect to periods ended on or before the Closing for
which tax returns have not yet been filed. All Taxes of CIEC have been paid or
adequately provided for and CIEC does not know or have any reason to know of any
proposed additional tax assessment against CIEC not adequately provided for in
the Financial Statements. No deficiency for any Taxes has been asserted or
assessed by a taxing authority against CIEC and there is no outstanding audit
examination, deficiency or refund litigation with respect to any Taxes of CIEC.
In the ordinary course, CIEC makes adequate provision on its books for the
payment of Taxes (including for any fiscal period which will include the date of
this Agreement) owed by CIEC. CIEC has not executed an extension or waiver of
any statute of limitations on the assessment or collection of tax that is
currently in effect.
To the best of the knowledge of CIEC, there are no outstanding or
contingent tax liabilities for incorrect treatment of income and expenses of
CIEC. CIEC has not (a) waived any statute of limitations; (b) agreed to any
extension of the period for assessment or collection; or (c) executed or filed
any power of attorney with respect to any Taxes, which waiver, agreement or
power of attorney is currently in force.
"Taxes" shall, for purposes of this Agreement, mean all taxes, however
denominated, including any interest, penalties or addition to tax that may
become payable in respect thereof, imposed by any governmental body which taxes
shall include, without limiting the generality of the foregoing, all income
taxes, payroll and employee withholding taxes, unemployment insurance, social
security, sales and use taxes, excise taxes, franchise taxes, receipts taxes,
occupations taxes, real and personal property taxes, stamp taxes, transfer
taxes, ▇▇▇▇▇▇▇'▇ compensation taxes and any other obligation of the same or a
similar nature.
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Section 2.9. Absence of Undisclosed Liabilities. Except as set forth on
Schedule 2.9, CIEC has no indebtedness or liability, absolute or contingent,
known or unknown.
Section 2.10. Interests in Real Property. CIEC does not own any item of
real property nor does it rent any property other than as set forth in Schedule
2.10(a). Attached as Schedule 2.10(b) is a list of all accounts payable and
liabilities as of CIEC as of the date of this Agreement.
Section 2.11 Personal Property. CIEC owns all personal property ("CIEC
Personal Property") purported to be owned by it as of the date hereof, in each
case free and clear of all liens, except for those liens described in Schedule
2.11.
Section 2.12 Compliance with Law. The operations of CIEC have been
conducted in accordance with all applicable laws, regulations, orders and other
requirements of all courts and other governmental or regulatory authorities
having jurisdiction over CIEC and its assets, properties and operations. CIEC
has not received notice of any violation of any such law, regulation, order or
other legal requirement, and is not in default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign,
applicable to CIEC or any of its assets, properties or operations.
Section 2.13. Litigation. Except as set forth on Schedule 2.13, there are
no claims, actions, suits, proceedings, labor disputes or investigations pending
or, to the best knowledge of CIEC, threatened before any federal, state or local
court or governmental or regulatory authority, domestic or foreign, or before
any arbitrator of any nature, brought by or against CIEC or any of its officers,
directors, employees, agents or affiliates involving, affecting or relating to
any assets, properties or operations of CIEC or the transactions contemplated by
this Agreement, nor is any basis known to it for any such action, suit,
proceeding or investigation. Schedule 2.13 sets forth a list and a summary
description of all such pending actions, suits, proceedings, disputes or
investigations. Neither CIEC nor any of its assets or properties is subject to
any order, writ, judgment, award, injunction or decree of any country, judicial,
state or local court or governmental or regulatory authority or arbitrator.
Section 2.14 Contracts. Schedule 2.14 sets forth a true and complete list
of all material contracts, agreements and other instruments to which CIEC is a
party or otherwise relating to or affecting any of its assets, properties or
operations.
Section 2.15 Employee Plans. Schedule 2.15 lists every pension, savings,
retirement, severance health, insurance or other employee benefit plan
(collectively referred to herein as the "Plans") which CIEC maintains, or has
any obligation to contribute to and CIEC is in compliance with such Plans.
Section 2.16 Insurance. Schedule 2.16 lists the insurance and the
aggregate coverage amount and type and generally applicable deductibles of all
policies of title, liability, fire, casualty, business interruption, workers'
compensation, disability and other forms of insurance insuring the properties,
assets and operations of the business of CIEC.
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Section 2.17 Labor Matters. CIEC is not a party to any outstanding
employment agreements or contracts with officers, directors or employees that
are not terminable at will, or that provide for the payment of any bonus or
commission.
Section 2.18 Related Party Transactions. Except as set forth on Schedule
2.18, no shareholder or affiliate of CIEC has borrowed any moneys from or has
outstanding any indebtedness or other similar obligations to CIEC. Except as set
forth in Schedule 2.18, no shareholder or affiliate of CIEC, nor any officer or
employee of any of them (i) owns any direct or indirect interest of any kind in,
or controls or is a director, officer, employee or partner of, or consultant to,
or lender to or borrower from or has the right to participate in the profits of,
any person which is (a) a competitor, supplier, customer, landlord, tenant,
creditor or debtor of CIEC, (b) engaged in a business related to the business of
CIEC, or (c) a participant in any transaction to which CIEC is a party or is a
party to any contract with CIEC.
Section 2.19 Banks. Schedule 2.19 contains a complete and correct list of
the names and locations of all banks in which CIEC has accounts or safe deposit
boxes and the names of all persons authorized to draw thereon or to have access
thereto. Except as set forth on Schedule 2.19, no person holds a power of
attorney to act on behalf of CIEC.
Section 2.20 Disclosure. This Agreement, the schedules hereto and any
certificate attached hereto or delivered in accordance with the terms hereby by
or on behalf of CIEC in connection with the transactions contemplated by this
Agreement, when taken together, do not contain any untrue statement of a
material fact or omit any material fact necessary in order to make the
statements contained herein and/or therein not misleading.
Section 2.21 Survival. Each of the representations and warranties set
forth in this Article II shall be deemed represented and made by CIEC at the
Closing as if made at such time and shall survive the Closing for a period
terminating on the second anniversary of the date of this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XHT AND SHAREHOLDERS
XHT, as to itself and as to HFT, and each of the SHAREHOLDERS, severally,
represent, warrant and agree as follows:
Section 3.1 Corporate Organization.
a. XHT is a corporation duly organized, validly existing and
in good standing under the laws of the Territory of the British
Virgin Islands and has all requisite corporate power and authority
to own its properties and assets and to conduct its business as now
conducted and is duly qualified to do business in good standing in
each jurisdiction in where the nature of the business conducted by
XHT or the ownership or leasing of its properties makes such
qualification and being in good standing necessary, except where the
failure to be so qualified and in good standing will not have a
material adverse effect on the business, operations, properties,
assets, condition or results of operation of XHT (an "XHT Material
Adverse Effect").
b. Copies of the Articles of Incorporation and By-laws of XHT,
with all amendments thereto to the date hereof, have been furnished
to CIEC, and such copies are accurate and complete as of the date
hereof. The minute books of XHT are current as required by law,
contain the minutes of all meetings of the Board of Directors of
XHT, and committees of the Board of Directors of XHT from the date
of incorporation to the date of this Agreement, and adequately
reflect all material actions taken by the Board of Directors and
committees of the Board of Directors of XHT.
Section 3.2 Capitalization of XHT; Title to the XHT Shares. The authorized
capital stock of XHT consists of 50,000 shares of common stock, $1.00 par value
per share, of which 100 shares are issued and outstanding. The XHT Shares are
the sole outstanding shares of capital stock of XHT, and there are no
outstanding options, warrants, agreements, commitments, conversion rights,
preemptive rights or other rights to subscribe for, purchase or otherwise
acquire any shares of capital stock or any un-issued or treasury shares of
capital stock of XHT.
Section 3.3 Subsidiaries and Equity Investments.
a. Schedule 3.3 sets forth: (i) the name of each corporation
of which XHT will own at the date of Closing, directly or
indirectly, shares of capital stock having in the aggregate 10% or
more of the total combined voting power of the issued and
outstanding shares of capital stock entitled to vote generally in
the election of directors of such corporation (hereinafter referred
to collectively as "Subsidiaries" and individually as a
"Subsidiary") (ii) the name of each corporation, partnership, joint
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venture or other entity (other than the Subsidiaries) in which XHT
has, or pursuant to any agreement has the right to acquire at any
time by any means, directly or indirectly, an equity interest or
investment; (iii) in the case of each of such corporations described
in clauses (i) and (ii) above, (A) the jurisdiction of
incorporation, (B) the capitalization thereof and the percentage of
each class of capital voting stock owned by XHT, (C) a description
of any contractual limitations on the holder's ability to vote or
alienate such securities, (D) a description of any outstanding
options or other rights to acquire securities of such corporation,
and (E) a description of any other contractual provision to which
XHT is subject which would materially limit or impair any of XHT's
ownership of such entity or interest or its ability to effectively
exercise the full rights of ownership of such entity or interest;
and (iv) in the case of each of such unincorporated entities,
information substantially equivalent to that provided pursuant to
clause (iii) above with regard to corporate entities.
b. Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to
own its properties and assets and to conduct its business as now
conducted. Each Subsidiary is duly qualified to do business as a
foreign corporation in every jurisdiction in which the character of
the properties owned or leased by it or the nature of the business
conducted by it makes such qualification necessary and is duly
qualified to do business in good standing in each jurisdiction in
where the nature of the business conducted by XHT or the ownership
or leasing of its properties makes such qualification and being in
good standing necessary, except where the failure to be so qualified
and in good standing will not have a material adverse effect on the
business, operations, properties, assets, condition or results of
operation of XHT. All the outstanding shares of capital stock of
each Subsidiary have been duly authorized and validly issued, are
fully paid and non-assessable. XHT owns of record and beneficially
such amounts of securities of the Subsidiaries as are identified in
Schedule 3.3 hereto and, aside from the items identified in Schedule
3.3, XHT owns such securities free and clear of any liens, claims,
charges, security interests or other legal or equitable
encumbrances, limitations or restrictions. There are no outstanding
options, warrants, agreements, conversion rights, preemptive rights
or other rights to subscribe for, purchase or otherwise acquire any
issued or unissued shares of capital stock of any Subsidiary.
Section 3.4 Authorization and Validity of Agreements. XHT has all
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by XHT and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no other corporate proceedings on the part of XHT
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by each
SHAREHOLDER which is not a natural person ("Entity Shareholder") and the
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consummation of the transactions contemplated hereby by each Entity Shareholder
have been duly authorized by all necessary action by the Entity Shareholder and
no other proceedings on the part of XHT or any SHAREHOLDER are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
Section 3.5 No Conflict or Violation. Except as otherwise set forth on
Schedule 3.5, the execution, delivery and performance of this Agreement by XHT
or any SHAREHOLDER does not and will not violate or conflict with any provision
of the constating documents of XHT, and does not and will not violate any
provision of law, or any order, judgment or decree of any court or other
governmental or regulatory authority, nor violate nor will result in a breach of
or constitute (with due notice or lapse of time or both) a default under or give
to any other entity any right of termination, amendment, acceleration or
cancellation of any contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which XHT is a
party or by which it is bound or to which any of its respective properties or
assets is subject, nor will result in the creation or imposition of any lien,
charge or encumbrance of any kind whatsoever upon any of the properties or
assets of XHT, nor will result in the cancellation, modification, revocation or
suspension of any of the licenses, franchises, permits to which XHT is bound.
Section 3.6 XHT Financial Statements. XHT has heretofore furnished to CIEC
audited financial statements of HTF as of and for the years ended on December
31, 2002 and December 31, 2003, accompanied by the reports thereon of HTF's
auditors, and the unaudited financial statements of HTF for the period ended
September 30, 2004 (the "HTF Financial Statements"). The HTF Financial
Statements, including the notes thereto:
a. were prepared in accordance with United States generally
accepted accounting principles ("US GAAP"); and
B. present fairly, in all material respects, the financial
position, results of operations and changes in financial
position of HTF as of such dates and for the periods then
ended.
Section 3.7. Absence of Certain Changes or Events. Since December 30,
2003, and except:
i. as contemplated by this Agreement; or
ii. as set forth on Schedule 3.7:
a. XHT and HFT have operated in the ordinary course of business
consistent with past practice and there has not been any material
adverse change in the assets, properties, business, operations,
prospects, net income or condition, financial or otherwise of
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either. XHT does not know or has reason to know of any event,
condition, circumstance or prospective development which threatens
or may threaten to have a material adverse effect on the assets,
properties, operations, prospects, net income or financial condition
of XHT or HFT;
b. There has not been any substantive change in any method of
accounting or accounting practice of XHT or HFT;
c. there have not been any declaration, setting aside or payment of
dividends or distributions with respect to shares of capital stock
of XHT or HFT or any redemption, purchase or other acquisition of
any capital stock of XHT or HFT or any other of their securities;
and
d. there has not been increase in the compensation payable or to become
payable to any director, officer or employee of XHT or HFT other
than pursuant to employment agreements or consistent with prior past
practices.
Section 3.8 Tax Matters. All returns, reports, or information return or
other document (including any relating or supporting information) required to be
filed before the Closing in respect of XHT and HFT have been filed, and each has
paid, accrued or otherwise adequately reserved for the payment of all Taxes
required to be paid in respect of the periods covered by such returns and has
adequately reserved for the payment of all Taxes with respect to periods ended
on or before the Closing for which tax returns have not yet been filed.
To the best of the knowledge of XHT and the SHAREHOLDERS, there are no
outstanding or contingent tax liabilities for incorrect treatment of income and
expenses of XHT or HFT. Neither XHT, noir HFT has (a) waived any statute of
limitations; (b) agreed to any extension of the period for assessment or
collection; or (c) executed or filed any power of attorney with respect to any
Taxes, which waiver, agreement or power of attorney is currently in force.
Section 3.9 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 3.9, XHT and HFT have no indebtedness or liability, absolute or
contingent, known or unknown, which is not shown or provided for on the balance
sheet of HTF as of September 30, 2004 (the "HTF Balance Sheet Date"), other than
liabilities incurred or accrued in the ordinary course of business since the HTF
Balance Sheet Date. Except as shown in such balance sheet as of the HTF Balance
Sheet Date or in the notes to the HTF Financial Statements, XHT and HFT are not
directly or indirectly liable upon or with respect to (by discount, repurchase
agreements or otherwise), or obligated in any other way to provide funds in
respect of, or to guarantee or assume, any debt, obligation or dividend of any
person, except endorsements in the ordinary course of business in connection
with the deposit of items for collection.
Section 3.10 Interests in Real Property. HFT owns all real property
purported to be owned by it as of the date hereof, in each case free and clear
of all liens, except for those liens described in Schedule 3.10.
Section 3.11 Compliance with Law. The operations of XHT and HFT have been
conducted in accordance with all applicable laws, regulations, orders and other
requirements of all courts and other governmental or regulatory authorities
having jurisdiction over XHT, HFT and their assets, properties and operations,
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including, without limitation, all such laws, regulations, orders and
requirements promulgated by or relating to consumer protection, equal
opportunity, health, environmental protection, architectural barriers to the
handicapped, fire, zoning and building and occupation safety except where such
non-compliance would not have a XHT Material Adverse Effect. XHT and HFT have
not received notice of any violation of any such law, regulation, order or other
legal requirement, and is not in default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign,
applicable to XHT or HFT or any of their assets, properties or operations.
Section 3.12 Litigation. Except as disclosed in Schedule 3.12, there are
no claims, actions, suits, proceedings, labor disputes or investigations pending
or, to the best of the XHT'S knowledge, threatened before any federal, state or
local court or governmental or regulatory authority, domestic or foreign, or
before any arbitrator of any nature, brought by or against XHT, HFT or any of
their officers, directors, employees, agents or affiliates involving, affecting
or relating to any assets, properties or operations of XHT or HFT or the
transactions contemplated by this Agreement, nor is any basis known to XHT for
any such action, suit, proceeding or investigation. Schedule 3.12 sets forth a
list and a summary description of all such pending actions, suits, proceedings,
disputes or investigations. Neither XHT, HFT, nor any of their assets or
properties is subject to any order, writ, judgment, award, injunction or decree
of any federal, state or local court or governmental or regulatory authority or
arbitrator, that would have a XHT Material Adverse Effect on its assets,
properties, operations, prospects, net income or financial condition or which
would or might interfere with the transactions contemplated by this Agreement.
Section 3.13 Investment Intent. The CIEC Shares will be acquired hereunder
solely for the account of the SHAREHOLDERS, for investment, and not with a view
to the resale or distribution thereof.
Section 3.14 Disclosure. This Agreement, the schedules hereto and any
certificate attached hereto or delivered in accordance with the terms hereby by
or on behalf of XHT or the SHAREHOLDERS in connection with the transactions
contemplated by this Agreement, when taken together, do not contain any untrue
statement of a material fact or omit any material fact necessary in order to
make the statements contained herein and/or therein not misleading.
Section 3.15 Survival. Each of the representations and warranties set
forth in this Article III shall be deemed represented and made by XHT and the
SHAREHOLDERS at the Closing as if made at such time and shall survive the
Closing for a period terminating on the second anniversary.
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ARTICLE IV
COVENANTS
Section 4.1 Certain Changes and Conduct of Business.
a. From and after the date of this Agreement and until the Closing
Date, XHT and HFT shall conduct their business solely in the ordinary
course consistent with past practices and, in a manner consistent with all
representations, warranties or covenants of XHT, and without the prior
written consent of CIEC, XHT and HFT will not, except as required or
permitted pursuant to the terms hereof:
i. make any material change in the conduct of its businesses and/or
operations or enter into any transaction other than in the ordinary
course of business consistent with past practices;
ii. make any change in its Articles of Incorporation or By-laws; issue
any additional shares of capital stock or equity securities or grant
any option, warrant or right to acquire any capital stock or equity
securities or issue any security convertible into or exchangeable
for its capital stock or alter in any material term of any of its
outstanding securities or make any change in its outstanding shares
of capital stock or its capitalization, whether by reason of a
reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, stock dividend or otherwise;
iii. A. incur, assume or guarantee any indebtedness for borrowed
money, issue any notes, bonds, debentures or other corporate
securities or grant any option, warrant or right to purchase
any thereof, except pursuant to transactions in the ordinary
course of business consistent with past practices; or
B. issue any securities convertible or exchangeable for debt
securities of XHT or HFT;
iv. make any sale, assignment, transfer, abandonment or other conveyance
of any of its assets or any part thereof, except pursuant to
transactions in the ordinary course of business consistent with past
practice;
v. subject any of its assets, or any part thereof, to any lien or
suffer such to be imposed other than such liens as may arise in the
ordinary course of business consistent with past practices by
operation of law which will not have an XHT Material Adverse Effect;
13
vi. acquire any assets, raw materials or properties, or enter into any
other transaction, other than in the ordinary course of business
consistent with past practices;
vii. enter into any new (or amend any existing) employee benefit plan,
program or arrangement or any new (or amend any existing)
employment, severance or consulting agreement, grant any general
increase in the compensation of officers or employees (including any
such increase pursuant to any bonus, pension, profit-sharing or
other plan or commitment) or grant any increase in the compensation
payable or to become payable to any employee, except in accordance
with pre-existing contractual provisions or consistent with past
practices;
viii. make or commit to make any material capital expenditures;
ix. pay, loan or advance any amount to, or sell, transfer or lease any
properties or assets to, or enter into any agreement or arrangement
with, any of its affiliates;
x. guarantee any indebtedness for borrowed money or any other
obligation of any other person;
xi. fail to keep in full force and effect insurance comparable in amount
and scope to coverage maintained by it (or on behalf of it) on the
date hereof;
xii. take any other action that would cause any of the representations
and warranties made by it in this Agreement not to remain true and
correct in all material aspect;
xiii. make any material loan, advance or capital contribution to or
investment in any person;
xiv. make any material change in any method of accounting or accounting
principle, method, estimate or practice;
xv. settle, release or forgive any claim or litigation or waive any
right;
xvi. commit itself to do any of the foregoing.
b. From and after the date of this Agreement, XHT and HFT will:
1. continue to maintain, in all material respects, its properties in
14
accordance with present practices in a condition suitable for its
current use;
2. file, when due or required, federal, state, foreign and other tax
returns and other reports required to be filed and pay when due all
taxes, assessments, fees and other charges lawfully levied or
assessed against it, unless the validity thereof is contested in
good faith and by appropriate proceedings diligently conducted;
3. continue to conduct its business in the ordinary course consistent
with past practices;
4. keep its books of account, records and files in the ordinary course
and in accordance with existing practices; and
5. continue to maintain existing business relationships with suppliers.
Section 4.2 Access to Properties and Records. CIEC shall afford XHT'S
accountants, counsel and authorized representatives, and XHT shall afford to
CIEC'S accountants, counsel and authorized representatives full access during
normal business hours throughout the period prior to the Closing Date (or the
earlier termination of this Agreement) to all of such parties' properties,
books, contracts, commitments and records and, during such period, shall furnish
promptly to the requesting party all other information concerning the other
party's business, properties and personnel as the requesting party may
reasonably request, provided that no investigation or receipt of information
pursuant to this Section 4.2 shall affect any representation or warranty of or
the conditions to the obligations of any party.
Section 4.3 Negotiations. From and after the date hereof until the earlier
of the Closing or the termination of this Agreement, no party to this Agreement
nor its officers or directors (subject to such director's fiduciary duties) nor
anyone acting on behalf of any party or other persons shall, directly or
indirectly, encourage, solicit, engage in discussions or negotiations with, or
provide any information to, any person, firm, or other entity or group
concerning any merger, sale of substantial assets, purchase or sale of shares of
capital stock or similar transaction involving any party,. A party shall
promptly communicate to any other party any inquiries or communications
concerning any such transaction which they may receive or of which they may
become aware of.
Section 4.4 Consents and Approvals. The parties shall:
i. use their reasonable commercial efforts to obtain all
necessary consents, waivers, authorizations and approvals of
all governmental and regulatory authorities, domestic and
foreign, and of all other persons, firms or corporations
required in connection with the execution, delivery and
performance by them of this Agreement; and
15
ii. diligently assist and cooperate with each party in preparing
and filing all documents required to be submitted by a party
to any governmental or regulatory authority, domestic or
foreign, in connection with such transactions and in obtaining
any governmental consents, waivers, authorizations or
approvals which may be required to be obtained connection with
such transactions.
Section 4.5 Public Announcement. Unless otherwise required by applicable
law, the parties hereto shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
and shall not issue any such press release or make any such public statement
prior to such consultation..
Section 4.6 Stock Issuance. From and after the date of this Agreement
until the Closing Date, neither CIEC nor XHT shall issue any additional shares
of its capital stock.
Section 4.7 Notwithstanding anything to the contrary contained herein, it
is herewith understood and agreed that both CIEC and XHT may enter into and
conclude agreements and/or financing transactions as same relate to and/or are
contemplated by any separate written agreements either: (a) annexed hereto as
exhibits; or (b) entered into by XHT with CIEC executed by both parties
subsequent to the date hereof. These Agreements shall become, immediately upon
execution, part of this Agreement and subject to all warranties, representations
and conditions contained herein.
Section 4.8 Prior to the Closing CIEC shall adopt By-laws of CIEC which
shall contain provisions to the effect that (a) so long as a nominee of American
Union Securities, Inc. ("AUS") is entitled to have one designee of AUS elected
as a director of CIEC (the "AUS Nominee"), CIEC shall not issue or commit to
issue any securities without the consent of the AUS Nominee and (b) such By-law
provision shall not be amended or deleted without the consent of AUS. The AUS
Nominee shall have been duly elected as a director of CIEC on or prior to the
Closing Date.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF XHT
The obligations of XHT to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of the
following conditions, any one or more of which may be waived by XHT in its sole
discretion:
Section 5.1 Representations and Warranties of CIEC. All representations
and warranties made by CIEC in this Agreement shall be true and correct on and
as of the Closing Date as if again made by CIEC as of such date.
Section 5.2 Agreements and Covenants. CIEC shall have performed and
complied in all material respects to all agreements and covenants required by
16
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
Section 5.3 Consents and Approvals. Consents, waivers, authorizations and
approvals of any governmental or regulatory authority, domestic or foreign, and
of any other person, firm or corporation, required in connection with the
execution, delivery and performance of this Agreement shall be in full force and
effect on the Closing Date.
Section 5.4 No Violation of Orders. No preliminary or permanent injunction
or other order issued by any court or governmental or regulatory authority,
domestic or foreign, nor any statute, rule, regulation, decree or executive
order promulgated or enacted by any government or governmental or regulatory
authority, which declares this Agreement invalid in any respect or prevents the
consummation of the transactions contemplated hereby, or which materially and
adversely affects the assets, properties, operations, prospects, net income or
financial condition of CIEC shall be in effect; and no action or proceeding
before any court or governmental or regulatory authority, domestic or foreign,
shall have been instituted or threatened by any government or governmental or
regulatory authority, domestic or foreign, or by any other person, or entity
which seeks to prevent or delay the consummation of the transactions
contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement.
Section 5.5 Other Closing Documents. XHT shall have received such other
certificates, instruments and documents in confirmation of the representations
and warranties of CIEC or in furtherance of the transactions contemplated by
this Agreement as XHT or its counsel may reasonably request.
Section 5.6 Audited Financial Statements. XHT acknowledges that CIEC has
no operating history and will not provide any audited financial statements.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF CIEC
The obligations of CIEC to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, at or before the Closing Date, of
the following conditions, any one or more of which may be waived by CIEC in its
sole discretion,.
Section 6.1 Representations and Warranties of XHT. All representations and
warranties made by XHT in this Agreement shall be true and correct on and as of
the Closing Date as if again made by XHT on and as of such date.
Section 6.2 Agreements and Covenants. XHT shall have performed and
complied in all material respects to all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
Section 6.3 Consents and Approvals. All consents, waivers, authorizations
and approvals of any governmental or regulatory authority, domestic or foreign,
17
and of any other person, firm or corporation, required in connection with the
execution, delivery and performance of this Agreement, shall have been duly
obtained and shall be in full force and effect on the Closing Date.
Section 6.4 No Violation of Orders. No preliminary or permanent injunction
or other order issued by any court or other governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, domestic or foreign, that declares this Agreement invalid
or unenforceable in any respect or which prevents the consummation of the
transactions contemplated hereby, or which materially and adversely affects the
assets, properties, operations, prospects, net income or financial condition of
XHT and its subsidiaries, taken as a whole, shall be in effect; and no action or
proceeding before any court or government or regulatory authority, domestic or
foreign, shall have been instituted or threatened by any government or
governmental or regulatory authority, domestic or foreign, or by any other
person, or entity which seeks to prevent or delay the consummation of the
transactions contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement.
Section 6.5. Other Closing Documents. CIEC shall have received such other
certificates, instruments and documents in confirmation of the representations
and warranties of XHT or in furtherance of the transactions contemplated by this
Agreement as CIEC or its counsel may reasonably request.
ARTICLE VII
TERMINATION AND ABANDONMENT
SECTION 7.1 Methods of Termination. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time before the
Closing:
a. By the mutual written consent of SHAREHOLDERS, CIEC and XHT;
b. By XHT, upon a material breach of any representation,
warranty, covenant or agreement on the part of CIEC set forth
in this Agreement, or if any representation or warranty of
CIEC shall become untrue, in either case such that any of the
conditions set forth in Article V hereof would not be
satisfied (a "CIEC Breach"), and such breach shall, if capable
of cure, have not been cured within ten (10) days after
receipt by the party in breach of a notice from the
non-breaching party setting forth in detail the nature of such
breach;
c. By CIEC, upon a material breach of any representation,
warranty, covenant or agreement on the part of XHT or the
SHAREHOLDERS set forth in this Agreement, or, if any
18
representation or warranty of XHT or the SHAREHOLDERS shall
become untrue, in either case such that any of the conditions
set forth in Article VI hereof would not be satisfied (a "XHT
Breach"), and such breach shall, if capable of cure, not have
been cured within ten (10) days after receipt by the party in
breach of a written notice from the non-breaching party
setting forth in detail the nature of such breach;
d. By either XHT or CIEC, if the Closing shall not have
consummated before ninety (90) days after the date hereof;
provided, however, that this Agreement may be extended by
written notice of either CIEC or XHT, if the Closing shall not
have been consummated as a result of XHT or CIEC having failed
to receive all required regulatory approvals or consents with
respect to this transaction or as the result of the entering
of an order as described in this Agreement; and further
provided, however, that the right to terminate this Agreement
under this Section 7.1(d) shall not be available to any party
whose failure to fulfill any obligations under this Agreement
has been the cause of, or resulted in, the failure of the
Closing to occur on or before this date.
e. By either CIEC or XHT if a court of competent jurisdiction or
governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or
taken any other action (which order, decree or ruling the
parties hereto shall use its best efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the
transactions contemplated by this Agreement.
Section 7.2 Procedure Upon Termination. In the event of termination and
abandonment of this Agreement by CIEC or XHT pursuant to Section 7.1, written
notice thereof shall forthwith be given to the other parties and this Agreement
shall terminate and the transactions contemplated hereby shall be abandoned,
without further action. If this Agreement is terminated as provided herein, no
party to this Agreement shall have any liability or further obligation to any
other party to this Agreement; provided, however, that no termination of this
Agreement pursuant to this Article VII shall relieve any party of liability for
a breach of any provision of this Agreement occurring before such termination.
19
ARTICLE VIII
POST-CLOSING AGREEMENTS
Section 8.1 Consistency in Reporting. Each party hereto agrees that:
i. the transaction is intended to qualify as a tax-free
transaction under the Code;
ii. if the characterization of any transaction contemplated in
this agreement or any ancillary or collateral transaction is
challenged, each party hereto will testify, affirm and ratify
that the characterization contemplated in such agreement was
with the characterization intended by the party; provided,
however, that nothing herein shall be construed as giving rise
to any obligation if the reporting position is determined to
be incorrect by final decision of a court of competent
jurisdiction.
Section 8.2 Indemnification.
a. Obligation of CIEC to Indemnify. CIEC hereby agrees to indemnify,
defend and hold harmless XHT, the SHAREHOLDERS and their respective
directors, officers, equity holders, agents, affiliates, successors
and permitted assigns or each of them from and against, and shall
pay and/or reimburse the foregoing persons for, any and all losses,
liabilities, claims, obligations, damages and costs and expenses
(including reasonable attorneys' fees and disbursements and other
costs incurred or sustained by an Indemnitee (as defined below) in
connection with the investigation, defense or prosecution of any
such claim or any action or proceeding between the Indemnitee and
the Indemnifying Party (as defined below) or between the Indemnitee
and any third party or otherwise), whether or not involving a
third-party claim (collectively, "Losses"), relating to or arising
out of the breach of any representation, warranty, covenant or
agreement of CIEC hereunder.
b. Obligation of XHT to Indemnify. XHT and the SHAREHOLDERS shall
jointly and severally indemnify, defend and hold harmless CIEC and
its directors, officers, shareholders, agents, affiliates,
successors and permitted assigns from and against, and shall pay
and/or reimburse the foregoing persons for, any and all Losses
relating to or arising out of the breach of any representation,
warranty, covenant or agreement of XHT or the SHAREHOLDERS contained
in this Agreement.
c. Notice to Indemnifying Party. If any party (the "Indemnitee")
receives notice of any claim or the commencement of any action or
proceeding with respect to which the other party (or parties) is
obligated to provide indemnification (the "Indemnifying Party")
pursuant to Sections 8.2(a) or 8.2(b) hereof, the Indemnitee shall
give the Indemnifying Party written notice thereof within a
reasonable period of time following the Indemnitee's receipt of such
notice. Such notice shall describe the claim in reasonable detail
and shall indicate the amount (estimated if necessary) of the Losses
that have been or may be sustained by the Indemnitee. The
Indemnifying Party may, subject to the other provisions of this
Section 8.2(c), compromise or defend, at such Indemnifying Party's
own expense and by such Indemnifying Party's own counsel, any such
matter involving the asserted liability of the Indemnitee in respect
20
of a third-party claim. If the Indemnifying Party elects to
compromise or defend such asserted liability, it shall within thirty
(30) days (or sooner, if the nature of the asserted liability so
requires) notify the Indemnitee of its intent to do so, and the
Indemnitee, shall reasonably cooperate, at the request and
reasonable expense of the Indemnifying Party, in the compromise of,
or defense against, such asserted liability. The Indemnifying Party
will not be released from any obligation to indemnify the Indemnitee
hereunder with respect to a claim without the prior written consent
of the Indemnitee, unless the Indemnifying Party delivers to the
Indemnitee a duly executed agreement settling or compromising such
claim with no monetary liability to or injunctive relief against the
Indemnitee and a complete release of the Indemnitee with respect
thereto. The Indemnifying Party shall have the right to conduct and
control the defense of any third-party claim made for which it has
been provided notice hereunder. All costs and fees incurred with
respect to any such claim will be borne by the Indemnifying Party.
The Indemnitee will have the right to participate, but not control,
at its own expense, the defense or settlement of any such claim;
provided, that if the Indemnitee and the Indemnifying Party shall
have conflicting claims or defenses, the Indemnifying Party shall
not have control of such conflicting claims or defenses and the
Indemnitee shall be entitled to appoint a separate counsel for such
claims and defenses at the cost and expense of the Indemnifying
Party. If the Indemnifying Party chooses to defend any claim, the
Indemnitee shall make available to the Indemnifying Party any books,
records or other documents within its control that are reasonably
required for such defense.
d. Adjustment to Indemnification. Notwithstanding anything contained in
this Section 8.2 to the contrary, no Indemnifying Party will be
obligated to indemnify an Indemnitee and hold it harmless from and
against any punitive, consequential or indirect damages, or any
asserted or established claim for any damages which provides for
recovery based on any multiple of losses, multiple of lost profits
or multiple of lost anticipated profits. The determination of any
loss for which indemnification may be claimed under this Section 8.2
shall be net of any tax (or other) benefit derived, insurance
proceeds or third party reimbursement received or recoverable (but
adjusted for any tax incurred as a result of the receipt of such
amounts) by the party bearing such liability, claim, lien,
encumbrance, charge, fine or penalty as a result thereof. The sole
remedy of the parties hereto for any and all claims of the nature
described in this Section 8.2 hereof shall be the indemnity set
forth in such section.
Section 8.3 Registration of Resale of CIEC Shares by SHAREHOLDERS. Within
a reasonable time after the Closing Date, CIEC shall file a registration
statement with the SEC to to register for resale all of the CIEC Shares acquired
by the SHAREHOLDERS pursuant to this Agreement. CIEC shall bear all costs in
connection such registration of the CIEC Shares, except underwriting discounts
and commissions. CIEC shall use its best efforts to have the registration
statement declared effective by the SEC within 150 days after the Closing Date
21
and to keep such registration statement effective for a period ending two years
after the Closing Date. CIEC and the SHAREHOLDERS agree to exchange all
customary indemnification covenants in connection with the registration
statement and to provide all necessary cooperation in connection with the
preparation and filing of the registration statement.
Section 8.4 AUS Nominee and Board Observer Rights. For a period commencing
on the Closing Date and ending on the first anniversary thereof, AUS shall be
entitled to nominate for election to the Board of Directors of CIEC one person.
CIEC and the SHAREHOLDERS shall cause the nominee to be elected on or prior to
the Closing Date, and if for any reason from time to time AUS shall desire to
change the AUS Nominee, to use their best efforts to promptly elect the new
designee of AUS. So long as the AUS and its officers, directors and employees
continues to own CIEC Shares which constitute 5% or more of the outstanding CIEC
Shares and a designee of AUS is not then a director of CIEC, CIEC agrees that
AUS shall have the right to appoint a non-voting representative (the "Observer")
to attend meetings of the Board of Directors of CIEC, to change the
representative so appointed at any time and, upon the resignation of such
representative for any reason, to reappoint such a representative. CIEC shall
provide the Observer with a copy of any materials to be distributed or discussed
at such meetings at the same time as provided to members of the Board. Nothing
herein shall require CIEC to change the place or time of any meeting for which
notice has been provided by CIEC to the Observer simultaneously with that
provided to CIEC's directors
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Survival of Provisions. The respective representations,
warranties, covenants and agreements of each of the parties to this Agreement
(except covenants and agreements which are expressly required to be performed
and are performed in full on or before the Closing Date) shall survive the
Closing Date and the consummation of the transactions contemplated by this
Agreement, subject to Sections 2.21, 3.15 and 8.2. In the event of a breach of
any of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach available to it under the provisions of this
Agreement or otherwise, whether at law or in equity, regardless of any
disclosure to, or investigation made by or on behalf of such party on or before
the Closing Date.
Section 9.2 Publicity. No party shall cause the publication of any press
release or other announcement with respect to this Agreement or the transactions
contemplated hereby without the consent of the other parties, unless a press
release or announcement is required by law. If any such announcement or other
disclosure is required by law, the disclosing party agrees to give the
non-disclosing parties prior notice and an opportunity to comment on the
proposed disclosure.
Section 9.3 Successors and Assigns. . This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors and assigns; provided, however, that no party shall assign or
22
delegate any of the obligations created under this Agreement without the prior
written consent of the other parties.
Section 9.4 Investment Bankers, Financial Advisors, Brokers and Finders.
a. CIEC represents and warrants to XHT that it has not employed
the services of a broker or finder in connection with this
Agreement or any of the transactions contemplated hereby.
b. XHT represents and warrants to CIEC that except for Warner
Technology and Investment Corp. ("Warner") and AUS, it has not
employed the services of an investment banker, financial
advisor, broker and finder in connection with this Agreement
and transaction. Warner and AUD have received for a nominal
consideration an allocation of shares of CIEC. XHT
acknowledges and agrees that, except for such allocation of
shares, XHT is solely responsible for all fees of XHT and HTF
in connection herewith and therewith.
Section 9.5 Fees and Expenses. Except as otherwise expressly provided in
this Agreement, all legal and other fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees, costs or expenses.
Section 9.6 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and delivered personally or sent by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses:
If to XHT, to:
▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇ Technology Group Development Limited, and
Shenzhen Hengtaifeng Technology Co., Ltd.
▇▇. ▇ ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Hi-tech Industrial Park
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ P.R. China
with a copy to:
American Union Securities, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
23
If to CIEC, to:
China International Enterprises Corp.
▇▇. ▇ ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Hi-tech Industrial Park
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ P.R. China
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇
with a copy to:
American Union Securities, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other persons or at such other addresses as shall be furnished by any
party by like notice to the others, and such notice or communication shall be
deemed to have been given or made as of the date so delivered or mailed. No
change in any of such addresses shall be effective insofar as notices under this
Section 9.6 are concerned unless such changed address is located in the United
States of America and notice of such change shall have been given to such other
party hereto as provided in this Section 9.6.
Section 9.7 Entire Agreement. This Agreement, together with the exhibits
hereto, represents the entire agreement and understanding of the parties with
reference to the transactions set forth herein and no representations or
warranties have been made in connection with this Agreement other than those
expressly set forth herein or in the exhibits, certificates and other documents
delivered in accordance herewith. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and
agreements between the parties relating to the subject matter of this Agreement
and all prior drafts of this Agreement, all of which are merged into this
Agreement. No prior drafts of this Agreement and no words or phrases from any
such prior drafts shall be admissible into evidence in any action or suit
involving this Agreement.
Section 9.8 Severability. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible so as to be valid and enforceable.
Section 9.9 Titles and Headings. The Article and Section headings
contained in this Agreement are solely for convenience of reference and shall
24
not affect the meaning or interpretation of this Agreement or of any term or
provision hereof.
Section 9.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
Section 9.11 Convenience of Forum; Consent to Jurisdiction. The parties to
this Agreement, acting for themselves and for their respective successors and
assigns, without regard to domicile, citizenship or residence, hereby expressly
and irrevocably elect as the sole judicial forum for the adjudication of any
matters arising under or in connection with this Agreement, and consent and
subject themselves to the jurisdiction of, the courts of the State of New Jersey
located in County of New York, and/or the United States District Court for the
Southern District of New York, in respect of any matter arising under this
Agreement. Service of process, notices and demands of such courts may be made
upon any party to this Agreement by personal service at any place where it may
be found or giving notice to such party as provided in Section 9.6.
Section 9.12 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereto, this being in addition to any
other remedy to which they are entitled at law or in equity.
Section 9.13 Governing Law. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of New Jersey
without giving effect to the choice of law provisions thereof.
Section 9.14 Third Party Beneficiary. AUS is a third party beneficiary of
this Agreement. Except for AUS, no person is a third party beneficiary of this
Agreement.
25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HENG XING TECHNOLOGY GROUP
DEVELOPMENT LIMITED
By: /s/ ▇▇ ▇▇▇▇
----------------------
Title: Authorized Signatory
CHINA INTERNATIONAL
ENTERPRISES CORP.
By: /s/ ▇▇ ▇▇▇▇ Qing
----------------------
▇▇ ▇▇▇▇ Qing
Title: Chief Executive Officer
By: /s/ ▇▇ ▇▇▇▇ Qing
----------------------
▇▇ ▇▇▇▇ Qing
/s/ Qiu ▇▇▇▇ ▇▇▇▇▇
----------------------
Qiu ▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇
----------------------
▇▇▇▇ ▇▇▇▇
26
EXHIBIT A
Name and Address Number of XHT Shares Number of CIEC Shares
of SHAREHOLDER Being Exchanged to be Received
-------------- ---------------------
▇▇ ▇▇▇▇ Qing 60 5,400,000
Suite 2911-2912, 29th Floor
Two International Finance Centre
▇▇. ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Qiu ▇▇▇▇ ▇▇▇▇▇ 30 2,700,000
Building 86-306
Yuanling Xincun
Futian District
Shenzhen, PRC
▇▇▇▇ ▇▇▇▇ 10 900,000
▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇
▇▇
SCHEDULES
2.2 None
2.3 None
2.6 None
2.7 None
2.9 None
2.11 None
2.13 None
2.14 None
2.15 None
2.16 None
2.18 None
2.19 None
3.3 XHT owns 1005 of HFT, a corporation formed in Shenzhen Province, China
3.5 None
3.7 None
3.10 None
3.12 None
28