Exhibit 10.1

 

SHARE EXCHANGE AGREEMENT

 

BY AND AMONG

 

American Education Center Inc.

 

AEC Southern Management Co., LTD

 

AND

 

Persons listed in Exhibit A hereof

 

DATED: November 8, 2016

 

 

 

 

Share Exchange Agreement

 

This Share Exchange Agreement, dated as of November 8, 2016, is made by and
among American Education Center Inc., a Nevada corporation (the “Acquiror
Company” or “AEC Nevada”), AEC Southern Management Co., LTD, a company formed
pursuant to the laws of England and Wales (the “Acquiree Company” or “AEC
England and Wales”), and the persons listed in Exhibit A hereof (collectively,
the “Shareholders”; each, a “Shareholder”).

 

BACKGROUND

 

WHEREAS, two of the Shareholders, Ye Tian and Rongxia Wang, being the owners of
record of one-hundred percent (100%) of the issued share capital of Acquiree
Company (the “Acquiree Company Record Owners”), have agreed to transfer to the
Acquiror Company, and the Acquiror Company has agreed to acquire from the
Shareholders, 10,000 shares of ordinary shares which represent one-hundred
percent (100%) of the issued and outstanding shares of the Acquiree Company’s
ordinary shares (the “Shares”), in exchange for 1,500,000 shares of Acquiror
Company’s common stock (the “Acquiror Company Exchange Shares”) to be issued on
the Closing Date. The Acquiror Company Exchange Shares shall constitute 4.65% of
the Acquiror Company’s issued and outstanding shares of common stock immediately
after the closing of the Share Exchange (as defined herein); and

 

WHEREAS, in connection with the Share Exchange and simultaneously with the
closing of the Share Exchange, the Acquiror Company desires to hire Mr. Yangying
Zou as the chief executive officer of Acquiree Company, and desires to issue to
Mr. Yangying Zou 1,500,000 Shares of Acquiror Company’s common stock (the
“Service Shares”, together with Acquiror Company Exchange Shares, the “Acquiror
Company Shares”) for services to be provided as Acquiree Company’s chief
executive officer immediately following the Closing Date (as defined herein).
The Service Shares shall constitute 4.65% of the Acquiror Company’s issued and
outstanding shares of common stock immediately after the closing of the Share
Exchange.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations and warranties contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:

 

SECTION I
DEFINITIONS

 

Unless the context otherwise requires, the terms defined in this Section 1 will
have the meanings herein specified for all purposes of this Agreement,
applicable to both the singular and plural forms of any of the terms herein
defined.

 

1.1           “Accredited Investor” has the meaning set forth in Regulation D
under the Securities Act and set forth on Exhibit C.

 

1.2           “Acquiree Company” means AEC Southern Management Co., LTD, a
company formed pursuant to the laws of England and Wales.

 

 

 

 

1.3           “Acquiree Company Subsidiaries” means all of the direct and
indirect Subsidiaries of the Acquiree Company, if any, including but not limited
to, AEC Southern Management Limited, a company formed pursuant to the laws of
Hong Kong, and 前海美教 (深圳) 咨询管理有限公司, a wholly owned foreign enterprise organized
under the laws of the People’s Republic of China.

 

1.4           “Acquiror Company” means American Education Center Inc., a Nevada
corporation.

 

1.5           “Acquiror Company Board” means the Board of Directors of the
Acquiror Company.

 

1.6           “Acquiror Company Common Stock” means the Acquiror Company’s
common stock, par value US $0.001 per share.

 

1.7           “Acquiror Company Shares” means the common stock of the Acquiror
Company being issued to the Shareholders pursuant hereto.

 

1.8           “Affiliate” shall mean, with respect to any Person, any other
Person that (a) directly or indirectly, whether through one or more
intermediaries or otherwise, controls or is controlled by or is under common
control with such Person. For purposes of this definition, “control” (including
with correlative meanings “controlled by” and “under common control with”) of a
Person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise. For the purposes of this definition, a
Person shall be deemed to control any of his or her immediate family members.

 

1.9           “Agreement” means this Share Exchange Agreement, including all
Schedules and Exhibits hereto, as this Share Exchange Agreement may be from time
to time amended, modified or supplemented.

 

1.10         “Closing” has the meaning set forth in Section 3.1.

 

1.11         “Closing Date” has the meaning set forth in Section 3.1.

 

1.12         “Code” means the Internal Revenue Code of 1986, as amended.

 

1.13         “Commission” means the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and the Exchange Act.

 

1.14         “Equity Security” means any stock or similar security, including,
without limitation, securities containing equity features and securities
containing profit participation features, or any security convertible into or
exchangeable for, with or without consideration, any stock or similar security,
or any security carrying any warrant, right or option to subscribe to or
purchase any shares of capital stock, or any such warrant or right.

 

1.15         “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended.

 

1.16         “Exchange Act” means the Securities Exchange Act of 1934 or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same will then be in effect.

 

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1.17         “Exhibits” means the several exhibits referred to and identified in
this Agreement.

 

1.18         “GAAP” means, with respect to any Person, United States generally
accepted accounting principles applied on a consistent basis with such Person’s
past practices.

 

1.19         “Governmental Authority” means any federal or national, state or
provincial, municipal or local government, governmental authority, regulatory or
administrative agency, governmental commission, department, board, bureau,
agency or instrumentality, political subdivision, commission, court, tribunal,
official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.

 

1.20         “Indebtedness” means any obligation, contingent or otherwise. Any
obligation secured by a Lien on, or payable out of the proceeds of, or
production from, property of the relevant party will be deemed to be
Indebtedness.

 

1.21         “Intellectual Property” means all industrial and intellectual
property, including, without limitation, all U.S. and non-U.S. patents, patent
applications, patent rights, trademarks, trademark applications, common law
trademarks, Internet domain names, trade names, service marks, service mark
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world.

 

1.22         “Laws” means, with respect to any Person, any U.S. or non-U.S.
federal, national, state, provincial, local, municipal, international,
multinational or other law (including common law), constitution, statute, code,
ordinance, rule, regulation or treaty applicable to such Person.

 

1.23         “Lien” means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any conditional sale
or other title retention agreement, any lease in the nature thereof and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction and including any lien or charge arising by
Law.

 

1.24         “Material Acquiror Company Contract” means any and all agreements,
contracts, arrangements, leases, commitments or otherwise, of the Acquiror
Company, of the type and nature that the Acquiror Company would be required to
file with the Commission.

 

1.25         “Material Adverse Effect” means, any change, effect or circumstance
which, individually or in the aggregate, would reasonably be expected to (a)
have a material adverse effect on the business, assets, financial condition or
results of operations of the Acquiror Company or the Acquiree Company, as the
case may be, in each case taken as a whole or (b) materially impair the ability
of the Acquiror Company or the Acquiree Company, as the case may be, to perform
their obligations under this Agreement, excluding any change, effect or
circumstance resulting from (i) the announcement, pendency or consummation of
the transactions contemplated by this Agreement, (ii) changes in the United
States securities markets generally, or (iii) changes in general economic,
currency exchange rate, political or regulatory conditions in industries in
which the Acquiror Company or the Acquiree Company, as the case may be, operate
or (c) result in litigation, claims, disputes or property loss in excess of
US$50,000 in the future, and that would prohibit or otherwise materially
interfere with the ability of any party to this Agreement to perform any of its
obligations under this Agreement in any material respect.

 

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1.26         “Non-US person” has the meaning set forth in Regulation S under the
Securities Act and set forth on Exhibit B.

 

1.27         “Order” means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any
Governmental Authority.

 

1.28         “Organizational Documents” means (a) the articles or certificate of
incorporation and the by-laws or code of regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the articles or certificate of formation and
operating agreement of a limited liability company; (e) any other document
performing a similar function to the documents specified in clauses (a), (b),
(c) and (d) adopted or filed in connection with the creation, formation or
organization of a Person; and (f) any and all amendments to any of the
foregoing.

 

1.29         “Permitted Liens” means (a) Liens for Taxes not yet payable or in
respect of which the validity thereof is being contested in good faith by
appropriate proceedings and for the payment of which the relevant party has made
adequate reserves; (b) Liens in respect of pledges or deposits under workmen’s
compensation laws or similar legislation, carriers, warehousemen, mechanics,
laborers and material men and similar Liens, if the obligations secured by such
Liens are not then delinquent or are being contested in good faith by
appropriate proceedings conducted and for the payment of which the relevant
party has made adequate reserves; (c) statutory Liens incidental to the conduct
of the business of the relevant party which were not incurred in connection with
the borrowing of money or the obtaining of advances or credits and that do not
in the aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business; and (d) Liens that
would not have a Material Adverse Effect.

 

1.30         “Person” means all natural persons, corporations, business trusts,
associations, companies, partnerships, limited liability companies, joint
ventures and other entities, governments, agencies and political subdivisions.

 

1.31         “Proceeding” means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative or
investigative) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Authority.

 

1.32         “Regulation D” means Regulation D under the Securities Act, as the
same may be amended from time to time, or any successor statute.

 

1.33         “Regulation S” means Regulation S under the Securities Act, as the
same may be amended from time to time, or any successor statute.

 

1.34         “Rule 144” means Rule 144 under the Securities Act, as the same may
be amended from time to time, or any successor statute.

 

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1.35         “Schedules” means the several schedules referred to and identified
herein, setting forth certain disclosures, exceptions and other information,
data and documents referred to at various places throughout this Agreement.

 

1.36         “Section 4(2)” means Section 4(2) under the Securities Act, as the
same may be amended from time to time, or any successor statute.

 

1.37         “Securities Act” means the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same will be in effect at the time.

 

1.38         “Share Exchange” has the meaning set forth in Section 2.1.

 

1.39         “Subsidiary” means, with respect to any Person, any corporation,
limited liability company, joint venture or partnership of which such Person (a)
beneficially owns, either directly or indirectly, more than 50% of (i) the total
combined voting power of all classes of voting securities of such entity, (ii)
the total combined equity interests, or (iii) the capital or profit interests,
in the case of a partnership or limited liability company; or (b) otherwise has
the power to vote or to direct the voting of sufficient securities to elect a
majority of the board of directors or similar governing body.

 

1.40         “Survival Period” has the meaning set forth in Section 10.1.

 

1.41         “Taxes” means all foreign, federal, state or local taxes, charges,
fees, levies, imposts, duties and other assessments, as applicable, including,
but not limited to, any income, alternative minimum or add-on, estimated, gross
income, gross receipts, sales, use, transfer, transactions, intangibles, ad
valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, unemployment, excise,
severance, stamp, occupation, premium, real property, recording, personal
property, federal highway use, commercial rent, environmental (including, but
not limited to, taxes under Section 59A of the Code) or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest, penalties or additions to
tax with respect to any of the foregoing; and “Tax” means any of the foregoing
Taxes.

 

1.42         “Tax Group” means any federal, state, local or foreign
consolidated, affiliated, combined, unitary or other similar group of which the
Acquiror Company is now or was formerly a member.

 

1.43         “Tax Return” means any return, declaration, report, claim for
refund or credit, information return, statement or other similar document filed
with any Governmental Authority with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

 

1.44         “Transaction Documents” means, collectively, all agreements,
instruments and other documents to be executed and delivered in connection with
the transactions contemplated by this Agreement.

 

1.45         “Shares” means the Acquiree Company’s shares of ordinary shares.

 

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1.46         “U.S.” means the United States of America.

 

1.47         “U.S. Dollars” or “US $” means the currency of the United States of
America.

 

1.48         “GBP” means the currency of the United Kingdom.

 

SECTION II
EXCHANGE OF SHARES, ISSUANCE OF SERVICE SHARES AND SHARE CONSIDERATION

 

2.1           Share Exchange. At the Closing, two of the Shareholders, Ye Tian
and Rongxia Wang, being the Acquiree Company Record Owners, shall transfer a
total of 10,000 Shares, representing one-hundred percent (100%) of the issued
and outstanding Shares of the Acquiree Company to the Acquiror Company, and in
consideration therefor, Acquiror Company shall issue 1,500,000 fully paid and
nonassessable Acquiror Company Exchange Shares (the “Share Exchange”) to the
Shareholders, each to receive such amounts of Acquiror Company Exchange Shares
as stated in Exhibit A hereto.

 

2.2           Issuance of Service Shares. In connection with the Share Exchange
and simultaneously with the closing of the Share Exchange, the Acquiror Company
shall engage Mr. Yangying Zou as the chief executive officer of Acquiree
Company, and shall issue to Mr. Yangying Zou, as a consideration for services to
be provided as chief executive officer of Acquiror Company immediately following
the Closing Date, Service Shares in such amounts as stated in Exhibit A hereto.
Following the Closing Date, Acquiree Company and Mr. Yangying Zou shall
separately enter into a Service Agreement as soon as applicable.

 

2.3           Section 368 Reorganization. For U.S. federal income tax purposes,
the Share Exchange is intended to constitute a “reorganization” within the
meaning of Section 368(a)(1)(B) of the Code. The parties to this Agreement
hereby adopt this Agreement as a “plan of reorganization” within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
Notwithstanding the foregoing or anything else to the contrary contained in this
Agreement, the parties acknowledge and agree that no party is making any
representation or warranty as to the qualification of the Share Exchange as a
reorganization under Section 368 of the Code or as to the effect, if any, that
any transaction consummated prior to the Closing Date has or may have on any
such reorganization status. The parties acknowledge and agree that each (i) has
had the opportunity to obtain independent legal and tax advice with respect to
the transaction contemplated by this Agreement, and (ii) is responsible for
paying its own Taxes, including without limitation, any adverse Tax consequences
that may result if the transaction contemplated by this Agreement is not
determined to qualify as a reorganization under Section 368 of the Code.

 

SECTION III
CLOSING DATE

 

3.1           Closing Date. The closing of the Share Exchange (the “Closing”)
shall take place at 10:00 a.m. Eastern Time on the day all of the closing
conditions set forth in Sections 8 and 9 herein 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 office of Acquiror Company, 2 Wall Street Fl. 8, New
York, NY 10005. In no event however, shall the Closing occur after December 31,
2016.

 

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SECTION IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

 

4.1          Generally. Subject to the disclosures contained in the relevant
Schedules attached hereto, each of the Shareholders, severally and not jointly,
hereby represents and warrants to the Acquiror Company as follows:

 

4.1.1        Authority. The Shareholder has the right, power, authority and
capacity to execute and deliver this Agreement and each of the Transaction
Documents to which the Shareholder is a party, to consummate the transactions
contemplated by this Agreement and each of the Transaction Documents to which
the Shareholder is a party, and to perform the Shareholder’s obligations under
this Agreement and each of the Transaction Documents to which the Shareholder is
a party. This Agreement has been, and each of the Transaction Documents to which
the Shareholder is a party will be, duly and validly authorized and approved,
executed and delivered by the Shareholder. Assuming this Agreement and the
Transaction Documents have been duly and validly authorized, executed and
delivered by the parties thereto, this Agreement is, and each of the Transaction
Documents to which the Shareholder is a party have been, duly authorized,
executed and delivered by the Shareholder and constitutes the legal, valid and
binding obligation of the Shareholder, enforceable against the Shareholder in
accordance with their respective terms, except as such enforcement is limited by
general equitable principles, or by bankruptcy, insolvency and other similar
Laws affecting the enforcement of creditors rights generally.

 

4.1.2        No Conflict. Neither the execution or delivery by the Shareholder
of this Agreement or any Transaction Document to which the Shareholder is a
party, nor the consummation or performance by the Shareholder of the
transactions contemplated hereby or thereby will, directly or indirectly, (a)
contravene, conflict with, constitute a default (or an event or condition which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or acceleration of, any agreement or instrument to
which the Shareholder is a party or by which the properties or assets of the
Shareholder are bound; or (b) contravene, conflict with, or result in a
violation of, any Law or Order to which the Shareholder, or any of the
properties or assets of the Shareholder, may be subject.

 

4.1.3        Ownership of Shares. The Shareholder owns, of record and
beneficially, and has good, valid and indefeasible title to and the right to
transfer to the Acquiror Company pursuant to this Agreement, the Shareholder’s
Shares free and clear of any and all Liens. Except as set forth on Schedule
4.1.3, there are no options, rights, voting trusts, stockholder agreements or
any other contracts or understandings to which such Shareholder is a party or by
which the Shareholder or the Shareholder’s Shares are bound with respect to the
issuance, sale, transfer, voting or registration of the Shareholder’s Shares. At
the Closing Date, the Acquiror Company will acquire good, valid and marketable
title to the Shareholder’s Shares free and clear of any and all Liens.

 

4.1.4        Litigation. There is no pending Proceeding against the Shareholder
that involves the Shares or that challenges, or may have the effect of
preventing, delaying or making illegal, or otherwise interfering with, any of
the transactions contemplated by this Agreement and, to the knowledge of the
Shareholder, no such Proceeding has been threatened, and no event or
circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding.

 

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4.1.5        No Brokers or Finders. No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Shareholder for any commission, fee or other compensation as a finder or broker,
or in any similar capacity, and the Shareholder will indemnify and hold the
Acquiror Company harmless against any liability or expense arising out of, or in
connection with, any such claim.

 

4.2          Investment Representations. The Shareholder hereby represents and
warrants, solely with respect to the Acquiror Company as follows:

 

4.2.1        Acknowledgment. The Shareholder understands and agrees that the
Acquiror Company Shares to be issued pursuant to this Agreement and the Share
Exchange have not been registered under the Securities Act or the securities
laws of any state of the U.S. and that the issuance of the Acquiror Company
Shares is being effected in reliance upon an exemption from registration
afforded under Section 4(2) of the Securities Act for transactions by an issuer
not involving a public offering.

 

4.2.2        Status. By its execution of this Agreement, the Shareholder
represents and warrants to the Acquiror Company that the Shareholder is either
(i) an Accredited Investor as defined in Regulation D and as set forth under
Exhibit C hereof or sophisticated to have sufficient knowledge and experience in
financial and business matters to make the Shareholder capable of evaluating the
merits and risks of the prospective investment; or (ii) a “non-US person” as
defined in Regulation S and further makes the representations and warranties to
the Acquiror Company set forth on Exhibit B. Such “non-US person” Shareholder is
not required to be registered as a broker-dealer under Section 15 of the
Exchange Act and such Shareholder is not a broker-dealer, nor an affiliate of a
broker-dealer.

 

4.2.3        Stock Legends. The Shareholder hereby agrees with the Acquiror
Company as follows:

 

(a)          Securities Act Legend. The certificate(s) evidencing the Acquiror
Company Shares issued to the Shareholder, and each certificate issued in
transfer thereof, will bear the following legend:

 

If the Shareholder is a Non-US Person under Regulation S:

 

THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”). THE SECURITIES WERE ISSUED IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO REGULATION S PROMULGATED UNDER
IT. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
UNITED STATES UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT IS NOT REQUIRED.
FURTHER, HEDGING TRANSACTIONS WITH REGARD TO THE SECURITIES MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

 

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If the Shareholder is an Accredited Investor under Regulation D:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.

 

(b)          Other Legends. The certificate(s) representing such Acquiror
Company Shares, and each certificate issued in transfer thereof, will also bear
any other legend required under any applicable Law, including, without
limitation, any U.S. state corporate and state securities law, or contract.

 

(c)          Opinion. The Shareholder will not transfer any or all of the
Acquiror Company Shares absent an effective registration statement under the
Securities Act and applicable state securities law covering the disposition of
the Shareholder’s Acquiror Company Shares, as the case may be, without first
providing the Acquiror Company with an opinion of counsel (which counsel and
opinion are reasonably satisfactory to the Acquiror Company) to the effect that
such transfer will be exempt from the registration and the prospectus delivery
requirements of the Securities Act and the registration or qualification
requirements of any applicable U.S. state securities laws.

 

(d)          Consent. The Shareholder understands and acknowledges that the
Acquiror Company may refuse to transfer the Acquiror Company Shares, unless the
Shareholder comply with this Section 4.2.3. The Shareholder consents to the
Acquiror Company making a notation on its records or giving instructions to any
transfer agent of the Acquiror Company’s Common Stock in order to implement the
restrictions on transfer of the Acquiror Company Shares.

 

4.2.4        Investment Intent. The Shareholder is acquiring the Acquiror
Company Shares for investment in its own account and not with an intent to
resell or otherwise dispose of the Acquiror Company Shares.

 

4.2.5        The Shareholder understands that the Acquiror Company Shares are
being offered and sold to the Shareholder in reliance upon the truth and
accuracy of the representations, warranties, agreements and understandings of
the Shareholder set forth in this Agreement, in order that the Acquiror Company
may determine the applicability and availability of the exemptions from
registration of the Acquiror Company Shares on which the Acquiror Company is
relying.

 

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4.2.6        Waiver of Conflicts. The Shareholder understands that Hunter
Taubman Fischer & Li LLC (“Hunter Taubman”) acts as the legal counsel solely to
the Acquiror Company under this Agreement. Each Shareholder has the opportunity
to seek and receive independent legal advice regarding the transaction
contemplated under this Agreement and has not relied on any advice provided by
Hunter Taubman to enter into this Agreement. The Shareholder knowingly agrees to
waive any conflict of interest of Hunter Taubman in its capacity as counsel for
the Acquiror Company with regard to this Agreement.

 

4.2.7        Non-Public Material Information and Insider Trading. Each
Shareholder acknowledges and agrees that he is expressly prohibited from
purchasing or selling securities of Acquiror Company based on any material
non-public information obtained during the course of performing services to the
Company. In addition, each Shareholder is prohibited from informing, or
"tipping," any other person about such material information. Shareholder also
agrees to comply with Acquiror Company's Insider Trading Policy (“ITP”), as
updated and amended from time to time if any, a copy of which he agrees to
execute if provided to him; and (ii) in the absence of an ITP, only upon prior
consultation with Acquiror Company’s securities counsel.

 

SECTION V
REPRESENTATIONS AND WARRANTIES OF THE ACQUIREE COMPANY

 

Subject to the disclosures contained in the relevant Schedules attached hereto,
the Acquiree Company represents and warrants to the Acquiror Company as follows:

 

5.1           Organization and Qualification. The Acquiree Company is duly
incorporated and validly existing pursuant to the laws of Hong Kong, has all
requisite authority and power (corporate and other), governmental licenses,
authorizations, consents and approvals to carry on its business as presently
conducted, to own, hold and operate its properties and assets as now owned, held
and operated by it, to enter into this Agreement, to carry out the provisions
hereof except where the failure to be so organized, existing and in good
standing or to have such authority or power will not, in the aggregate, have a
Material Adverse Effect. The Acquiree Company is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned or leased makes
such qualification, licensing or domestication necessary, except where the
failure to be so qualified, licensed or domesticated will not have a Material
Adverse Effect. Set forth on Schedule 5.1 is a list of those jurisdictions in
which the Acquiree Company presently conducts its business, owns, holds and
operates its properties and assets.

 

5.2           Subsidiaries. Except as set forth on Schedule 5.2, the Acquiree
Company does not own directly or indirectly, any equity or other ownership
interest in any corporation, partnership, joint venture or other entity or
enterprise.

 

5.3           Organizational Documents. The copies of the Articles of
Organization and the Articles of Incorporation of the Acquiree Company and the
documents which constitute all other Organizational Documents of the Acquiree
Company, that have been delivered to the Acquiror Company prior to the execution
of this Agreement are true and complete and have not been amended or repealed.
The Acquiree Company is not in violation or breach of any of the provisions of
its Organizational Documents.

 

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5.4           Authorization and Validity of this Agreement. The Acquiree Company
has all requisite authority and power (corporate and other), authorizations,
consents and approvals to enter into this Agreement and each of the Transaction
Documents to which the Acquiree Company is a party, to consummate the
transactions contemplated by this Agreement and each of the Transaction
Documents to which the Acquiree Company is a party, to perform its obligations
under this Agreement and each of the Transaction Documents to which the Acquiree
Company is a party, and to record the transfer of the Shares and the delivery of
the new certificates representing the Shares registered in the name of the
Acquiror Company. The execution, delivery and performance by the Acquiree
Company of this Agreement and each of the Transaction Documents to which the
Acquiree Company is a party have been duly authorized by all necessary corporate
action and do not require from the Board of Directors of the Acquiree Company or
the Shareholder any consent or approval that has not been validly and lawfully
obtained. The execution, delivery and performance by the Acquiree Company of
this Agreement and each of the Transaction Documents to which the Acquiree
Company is a party requires no authorization, consent, approval, license,
exemption of or filing or registration with any Governmental Authority or other
Person.

 

5.5           No Violation. Neither the execution nor the delivery by the
Acquiree Company of this Agreement or any Transaction Document to which the
Acquiree Company is a party, nor the consummation or performance by the Acquiree
Company of the transactions contemplated hereby or thereby will, directly or
indirectly, (a) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of the Acquiree Company; (b)
contravene, conflict with, constitute a default (or an event or condition which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or acceleration of, or result in the imposition or
creation of any Lien under, any agreement or instrument to which the Acquiree
Company is a party or by which the properties or assets of the Acquiree Company
are bound; (c) contravene, conflict with, or result in a violation of, any Law
or Order to which the Acquiree Company, or any of the properties or assets owned
or used by the Acquiree Company, may be subject; or (d) contravene, conflict
with, or result in a violation of, the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate
or modify, any licenses, permits, authorizations, approvals, franchises or other
rights held by the Acquiree Company or that otherwise relate to the business of,
or any of the properties or assets owned or used by, the Acquiree Company,
except, in the cases of clauses (b), (c) and (d), for any such contraventions,
conflicts, violations, or other occurrences as would not have a Material Adverse
Effect.

 

5.6           Binding Obligations. Assuming this Agreement and the Transaction
Documents have been duly and validly authorized, executed and delivered by the
parties hereto and thereto other than the Acquiree Company, this Agreement and
each of the Transaction Documents to which the Acquiree Company is a party are
duly authorized, executed and delivered by the Acquiree Company and constitute
the legal, valid and binding obligations of the Acquiree Company, enforceable
against the Acquiree Company in accordance with their respective terms, except
as such enforcement is limited by general equitable principles, or by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors rights generally.

 

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5.7          Capitalization and Related Matters.

 

5.7.1        Capitalization of the Acquiree Company. The Acquiree Company has
10,000 shares of ordinary shares issued and outstanding, share price GBP 1.00
per share, with a capitalization of GBP 10,000. Except as set forth on Schedule
5.7.1, there are no outstanding or authorized options, warrants, calls, purchase
agreements, participation agreements, subscription rights, conversion rights,
exchange rights or other securities or contracts that could require the Acquiree
Company to issue, sell or otherwise cause to become outstanding any of its
authorized but unissued shares of capital stock or any securities convertible
into, exchangeable for or carrying a right or option to purchase shares of
capital stock or to create, authorize, issue, sell or otherwise cause to become
outstanding any new class of capital stock. There are no outstanding
stockholders’ agreements, voting trusts or arrangements, registration rights
agreements, rights of first refusal or other contracts pertaining to the capital
stock of the Acquiree Company. The issuance of all of the Shares described in
this Section 5.7.1 has been in compliance with the laws of Hong Kong. All issued
and outstanding Shares of the Acquiree Company’s capital stock are duly
authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive or similar rights. The owners of the
Shares of the Acquiree Company own, and have good, valid and marketable title
to, all the Shares of the Acquiree Company.

 

5.7.2        No Redemption Requirements. There are no outstanding contractual
obligations (contingent or otherwise) of the Acquiree Company to retire,
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
of, or other ownership interests in, the Acquiree Company or to provide funds to
or make any investment (in the form of a loan, capital contribution or
otherwise) in any other Person.

 

5.8          Compliance with Laws and Other Instruments. Except as would not
have a Material Adverse Effect, the business and operations of the Acquiree
Company have been and are being conducted in accordance with all applicable Laws
and Orders. Except as disclosed in Schedule 5.8, the Acquiree Company has not
received notice of any violation (or any Proceeding involving an allegation of
any violation) of any applicable Law or Order by or affecting the Acquiree
Company and, to the knowledge of the Acquiree Company, no Proceeding involving
an allegation of violation of any applicable Law or Order is threatened or
contemplated. Except as would not have a Material Adverse Effect, the Acquiree
Company is not, and is not alleged to be, in violation of, or (with or without
notice or lapse of time or both) in default under, or in breach of, any term or
provision of its Organizational Documents or of any indenture, loan or credit
agreement, note, deed of trust, mortgage, security agreement or other material
agreement, lease, license or other instrument, commitment, obligation or
arrangement to which the Acquiree Company is a party or by which any of the
Acquiree Company’s properties, assets or rights are bound or affected. To the
knowledge of the Acquiree Company, no other party to any material contract,
agreement, lease, license, commitment, instrument or other obligation to which
the Acquiree Company is a party is (with or without notice or lapse of time or
both) in default thereunder or in breach of any term thereof. The Acquiree
Company is not subject to any obligation or restriction of any kind or
character, nor is there, to the knowledge of the Acquiree Company, any event or
circumstance relating to the Acquiree Company that materially and adversely
affects in any way its business, properties, assets or prospects or that
prohibits the Acquiree Company from entering into this Agreement or would
prevent or make burdensome its performance of or compliance with all or any part
of this Agreement or the consummation of the transactions contemplated hereby or
thereby.

 

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5.9           Certain Proceedings. There is no pending Proceeding that has been
commenced against the Acquiree Company and that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the transactions contemplated in this Agreement. To the Acquiree
Company’s knowledge, no such Proceeding has been threatened.

 

5.10         No Brokers or Finders. No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Acquiree Company for any commission, fee or other compensation as a finder or
broker, or in any similar capacity, and the Acquiree Company will indemnify and
hold the Acquiror Company harmless against any liability or expense arising out
of, or in connection with, any such claim.

 

5.11         Title to and Condition of Properties. Except as would not have a
Material Adverse Effect, the Acquiree Company owns (with good and marketable
title in the case of real property) or holds under valid leases or other rights
to use all real property and equipment necessary for the conduct of the business
of the Acquiree Company as presently conducted, free and clear of all Liens,
except Permitted Liens.

 

5.12         Recommendation by the Board of Directors. The Board of Directors of
the Acquiree Company has, by unanimous written consent, determined that this
Agreement and the transactions contemplated by this Agreement, are advisable and
in the best interests of the Acquiree Company and its Shareholders.

 

5.13         Intellectual Property. The Acquiree Company and its Subsidiaries
own or possess all patents, trademarks, domain names (whether or not registered)
and any patentable improvements or copyrightable derivative works thereof,
websites and intellectual property rights relating thereto, service marks, trade
names, copyrights, licenses and authorizations, and all rights with respect to
the foregoing, which are necessary for the conduct of its business as now
conducted without any conflict with the rights of others.

 

5.14         Due Diligence. The Acquiree Company has had the opportunity to
perform all due diligence investigations of the Acquiror Company and its
business. The Acquiree Company has reviewed sufficient information to allow it
to make the satisfactory evaluation on the merits and risks of the transactions
contemplated by this Agreement. Notwithstanding the foregoing, nothing herein
shall derogate from or otherwise modify the representations and warranties of
the Acquiror Company set forth in this Agreement, on which the Shareholder has
relied in making an exchange of their Shares of the Acquiree Company for the
Acquiror Company Exchange Shares.

 

5.15         Liabilities. Except as indicated in the financial statements or
disclosed within this Agreement and those incurred in the ordinary business
hereto, neither the Acquiree Company or its Subsidiaries, if any, has incurred
any external liabilities, obligations, claims or losses (whether liquidated or
unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise)
which, individually or in the aggregate, are reasonably likely to cause a
Material Adverse Effect.

 

5.16         Adverse Interest. No current officer, director or Person known to
the Acquiree Company or its Subsidiaries to be the record or beneficial owner in
excess of 5% of such entity’s outstanding stock, is a party adverse to the
Acquiree Company or its Subsidiaries or has a material interest adverse to the
Acquiree Company or its Subsidiaries in any material pending Proceeding.

 

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5.17         No Material Adverse Effect. Neither the Acquiree Company nor any of
its Subsidiaries has suffered a Material Adverse Effect.

 

5.18         Licenses. The Acquiree Company possesses from the appropriate
Governmental Authority all licenses, permits, authorizations, approvals,
franchises and rights that are necessary for the Acquiree Company to engage in
its business as currently conducted and to permit the Acquiree Company to own
and use its properties and assets in the manner in which it currently owns and
uses such properties and assets (collectively, “Acquiree Company Permits”). The
Acquiree Company has not received notice from any Governmental Authority or
other Person that there is lacking any license, permit, authorization, approval,
franchise or right necessary for the Acquiree Company to engage in its business
as currently conducted and to permit the Acquiree Company to own and use its
properties and assets in the manner in which it currently owns and uses such
properties and assets. The Acquiree Company Permits are valid and in full force
and effect. No event has occurred or circumstance exists that may (with or
without notice or lapse of time): (a) constitute or result, directly or
indirectly, in a violation of or a failure to comply with any Acquiree Company
Permit; or (b) result, directly or indirectly, in the revocation, withdrawal,
suspension, cancellation or termination of, or any modification to, any Acquiree
Company Permit. The Acquiree Company has not received notice from any
Governmental Authority or any other Person regarding: (a) any actual, alleged,
possible or potential contravention of any Acquiree Company Permit; or (b) any
actual, proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to, any Acquiree Company Permit.
All applications required to have been filed for the renewal of such Acquiree
Company Permits have been duly filed on a timely basis with the appropriate
Persons, and all other filings required to have been made with respect to such
Acquiree Company Permits have been duly made on a timely basis with the
appropriate Persons. All Acquiree Company Permits are renewable by their terms
or in the ordinary course of business without the need to comply with any
special qualification procedures or to pay any amounts other than routine fees
or similar charges, all of which have, to the extent due, been duly paid.

 

5.19         Waiver of Conflicts. The Acquiree Company understands that Hunter
Taubman acts as the legal counsel solely to the Acquiror Company under this
Agreement. Acquiree Company has the opportunity to seek and receive independent
legal advice regarding the transaction contemplated under this Agreement and has
not relied on any advice provided by Hunter Taubman to enter into this
Agreement. The Acquiree Company knowingly agrees to waive any conflict of
interest of Hunter Taubman in its capacity as counsel for the Acquiror Company
with regard to this Agreement.

 

SECTION VI
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR COMPANY

 

Subject to the disclosures contained in the relevant Schedules attached hereto,
the Acquiror Company represents and warrants to the Shareholders and the
Acquiree Company as follows:

 

6.1           Organization and Qualification. The Acquiror Company is duly
organized, validly existing and in good standing under the laws of Nevada, has
all requisite corporate authority and power, governmental licenses,
authorizations, consents and approvals to carry on its business as presently
conducted. Schedule 6.1 sets forth a true, correct and complete list of the
Acquiror Company’s jurisdiction of organization and each other jurisdiction in
which the Acquiror Company presently conducts its business or owns, holds and
operates its properties and assets.

 

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6.2           Subsidiaries. Except as disclosed in Schedule 6.2, the Acquiror
Company does not own, directly or indirectly, any equity or other ownership
interest in any corporation, partnership, joint venture or other entity or
enterprise.

 

6.3           Organizational Documents. True, correct and complete copies of the
Organizational Documents of the Acquiror Company have been delivered to the
Acquiree Company prior to the execution of this Agreement, and no action has
been taken to amend or repeal such Organizational Documents since such date of
delivery. The Acquiror Company is not in violation or breach of any of the
provisions of its Organizational Documents.

 

6.4           Authorization. The Acquiror Company has all requisite authority
and power (corporate and other), governmental licenses, authorizations, consents
and approvals to enter into this Agreement and each of the Transaction Documents
to which the Acquiror Company is a party, to consummate the transactions
contemplated by this Agreement and each of the Transaction Documents to which
the Acquiror Company is a party and to perform its obligations under this
Agreement and each of the Transaction Documents to which the Acquiror Company is
a party. The execution, delivery and performance by the Acquiror Company of this
Agreement and each of the Transaction Documents to which the Acquiror Company is
a party have been duly authorized by all necessary corporate action and do not
require from the Acquiror Company Board any consent or approval that has not
been validly and lawfully obtained. The execution, delivery and performance by
the Acquiror Company of this Agreement and each of the Transaction Documents to
which the Acquiror Company is a party requires no authorization, consent,
approval, license, exemption of or filing or registration with any Governmental
Authority or other Person.

 

6.5           No Violation. Except as set forth on Schedule 6.5, neither the
execution nor the delivery by the Acquiror Company of this Agreement or any
Transaction Document to which the Acquiror Company is a party, nor the
consummation or performance by the Acquiror Company of the transactions
contemplated hereby or thereby will, directly or indirectly, (a) contravene,
conflict with, or result in a violation of any provision of the Organizational
Documents of the Acquiror Company; (b) contravene, conflict with, constitute a
default (or an event or condition which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or acceleration
of, or result in the imposition or creation of any Lien under, any agreement or
instrument to which the Acquiror Company is a party or by which the properties
or assets of the Acquiror Company are bound; (c) contravene, conflict with, or
result in a violation of, any Law or Order to which the Acquiror Company, or any
of the properties or assets owned or used by the Acquiror Company, may be
subject; or (d) contravene, conflict with, or result in a violation of, the
terms or requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel, terminate or modify, any licenses, permits,
authorizations, approvals, franchises or other rights held by the Acquiror
Company or that otherwise relate to the business of, or any of the properties or
assets owned or used by, the Acquiror Company, except, in the case of clauses
(b), (c), or (d), for any such contraventions, conflicts, violations, or other
occurrences as would not have a Material Adverse Effect.

 

6.6           Binding Obligations. Assuming this Agreement and the Transaction
Documents have been duly and validly authorized, executed and delivered by the
parties hereto and thereto other than the Acquiror Company, this Agreement and
each of the Transaction Documents to which the Acquiror Company is a party are
duly authorized, executed and delivered by the Acquiror Company and constitutes
the legal, valid and binding obligations of the Acquiror Company, enforceable
against the Acquiror Company in accordance with their respective terms, except
as such enforcement is limited by general equitable principles, or by
bankruptcy, insolvency and other similar Laws affecting the enforcement of
creditors rights generally.

 

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6.7          Securities Laws. Assuming the accuracy of the representations and
warranties of the Shareholder, contained in Section 4 and Exhibit B (if the
Shareholder is a Non-US person) or Exhibit C (if the Shareholder is an
Accredited Investor), the issuance of the Acquiror Company Shares pursuant to
this Agreement will be when issued in accordance with the terms of this
Agreement, issued in accordance with exemptions from the registration and
prospectus delivery requirements of the Securities Act and the registration
permit or qualification requirements of all applicable state securities laws.

 

6.8          Capitalization and Related Matters.

 

6.8.1        Capitalization. The authorized capital stock of the Acquiror
Company consists of two hundred million (200,000,000) shares: 200,000,000 shares
of the Acquiror Company’s Common Stock are authorized, par value $0.001, of
which 32,350,000 are issued and outstanding prior to the Share Exchange. All
issued and outstanding shares of the Acquiror Company’s Common Stock immediately
prior to the Share Exchange are duly authorized, validly issued, fully paid and
nonassessable, and have not been issued in violation of any preemptive or
similar rights. At the Closing Date, the Acquiror Company will have sufficient
authorized and unissued Acquiror Company’s Common Stock to consummate the
transactions contemplated hereby. There are no outstanding options, warrants,
purchase agreements, participation agreements, subscription rights, conversion
rights, exchange rights or other securities or contracts that could require the
Acquiror Company to issue, sell or otherwise cause to become outstanding any of
its authorized but unissued shares of capital stock or any securities
convertible into, exchangeable for or carrying a right or option to purchase
shares of capital stock or to create, authorize, issue, sell or otherwise cause
to become outstanding any new class of capital stock. There are no outstanding
stockholders’ agreements, voting trusts or arrangements, registration rights
agreements, rights of first refusal or other contracts pertaining to the capital
stock of the Acquiror Company. The issuance of all of the shares of Acquiror
Company’s Common Stock described in this Section 6.8.1 have been in compliance
with U.S. federal and state securities laws and state corporate laws and no
stockholder of the Acquiror Company has any right to rescind or bring any other
claim against the Acquiror Company for failure to comply under the Securities
Act, or state securities laws.

 

6.8.2        No Redemption Requirements. There are no outstanding contractual
obligations (contingent or otherwise) of the Acquiror Company to retire,
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
of, or other ownership interests in, the Acquiror Company or to provide funds to
or make any investment (in the form of a loan, capital contribution or
otherwise) in any other Person.

 

6.8.3        Duly Authorized. The issuance of the Acquiror Company Shares has
been duly authorized and, upon delivery to the Shareholder of certificates
therefor in accordance with the terms of this Agreement, the Acquiror Company
Shares will have been validly issued and fully paid, and will be nonassessable,
have the rights, preferences and privileges specified, will be free of
preemptive rights and will be free and clear of all Liens and restrictions,
other than Liens created by the Shareholder and restrictions on transfer imposed
by this Agreement and the Securities Act.

 

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6.9           Compliance with Laws. The business and operations of the Acquiror
Company, to the knowledge of the Acquiror Company, have been and are being
conducted in accordance with all applicable Laws and Orders. The Acquiror
Company has not received notice of any violation (or any Proceeding involving an
allegation of any violation) of any applicable Law or Order by or affecting the
Acquiror Company and, to the knowledge of the Acquiror Company, no Proceeding
involving an allegation of violation of any applicable Law or Order is
threatened or contemplated. The Acquiror Company is not subject to any
obligation or restriction of any kind or character, nor is there, to the
knowledge of the Acquiror Company, any event or circumstance relating to the
Acquiror Company that materially and adversely affects in any way its business,
properties, assets or prospects or that prohibits the Acquiror Company from
entering into this Agreement or would prevent or make burdensome its performance
of or compliance with all or any part of this Agreement or the consummation of
the transactions contemplated hereby.

 

6.10         Certain Proceedings. There is no pending Proceeding that has been
commenced against the Acquiror Company and that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the transactions contemplated by this Agreement. To the knowledge of the
Acquiror Company, no such Proceeding has been threatened.

 

6.11         No Brokers or Finders. Except as disclosed in Schedule 6.11, no
Person has, or as a result of the transactions contemplated herein will have,
any right or valid claim against the Acquiror Company for any commission, fee or
other compensation as a finder or broker, or in any similar capacity.

 

6.12         Absence of Undisclosed Liabilities. Except as set forth on Schedule
6.12, as hereafter defined, (a) the Acquiror Company has no debt, obligation or
liability (whether accrued, absolute, contingent, liquidated or otherwise,
whether due or to become due, whether or not known to the Acquiror Company)
arising out of any transaction entered into at or prior to the Closing Date or
any act or omission at or prior to the Closing Date, except to the extent set
forth on or reserved against on the Acquiror Company Balance Sheet, (b) any and
all debts, obligations or liabilities with respect to directors and officers of
the Acquiror Company and of the Acquiror Company will be cancelled prior to the
Closing and (c) the Acquiror Company has not incurred any liabilities or
obligations under agreements entered into, in the usual and ordinary course of
business.

 

6.13         Changes. The Acquiror Company has conducted its business in the
usual and ordinary course of business consistent with past practice and has not,
except as disclosed to the Shareholders:

 

6.13.1      Ordinary Course of Business. Entered into any transaction other than
in the usual and ordinary course of business, except for this Agreement and each
of the Transaction Documents;

 

6.13.2      Adverse Changes. Suffered or experienced any change in, or
affecting, its condition (financial or otherwise), properties, assets,
liabilities, business, operations, results of operations or prospects other than
changes, events or conditions in the usual and ordinary course of its business
or those that would not have a Material Adverse Effect;

 

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6.13.3      Loans. Made any loans or advances to any Person other than travel
advances and reimbursement of expenses made to employees, officers and directors
in the ordinary course of business;

 

6.13.4      Liens. Created or permitted to exist any Lien on any material
property or asset of the Acquiror Company, other than Permitted Liens;

 

6.13.5      Capital Stock. Issued, sold, disposed of or encumbered, or
authorized the issuance, sale, disposition or encumbrance of, or granted or
issued any option to acquire any shares of its capital stock or any other of its
securities or any Equity Security, or altered the term of any of its outstanding
securities or made any change in its outstanding shares of capital stock or its
capitalization, whether by reason of reclassification, recapitalization, stock
split, combination, exchange or readjustment of shares, stock dividend or
otherwise;

 

6.13.6      Dividends. Declared, set aside, made or paid any dividend or other
distribution to any of its stockholders;

 

6.13.7      Material Acquiror Company Contracts. Terminated or modified any
Material Acquiror Company Contract, except for termination upon expiration in
accordance with the terms thereof;

 

6.13.8      Claims. Released, waived or cancelled any claims or rights relating
to or affecting the Acquiror Company in excess of US $50,000 in the aggregate or
instituted or settled any Proceeding involving in excess of US $50,000 in the
aggregate;

 

6.13.9      Discharged Liabilities. Paid, discharged or satisfied any claim,
obligation or liability in excess of US $50,000 in the aggregate, except for
liabilities incurred prior to the date of this Agreement in the ordinary course
of business;

 

6.13.10    Indebtedness. Created, incurred, assumed or otherwise become liable
for any Indebtedness in excess of US $50,000 in the aggregate, other than
professional fees;

 

6.13.11    Guarantees. Guaranteed or endorsed in a material amount any
obligation or net worth of any Person;

 

6.13.12    Acquisitions. Acquired the capital stock or other securities or any
ownership interest in, or substantially all of the assets of, any other Person;

 

6.13.13    Accounting. Changed its method of accounting or the accounting
principles or practices utilized in the preparation of its financial statements,
other than as required by GAAP;

 

6.13.14         Agreements. Entered into any agreement, or otherwise obligated
itself, to do any of the foregoing.

 

6.14        Material Acquiror Company Contracts. The Acquiror Company has
provided to the Acquiree Company, prior to the date of this Agreement, true,
correct and complete copies of each written Material Acquiror Company Contract,
including each amendment, supplement and modification thereto.

 

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6.14.1      No Defaults. Each Material Acquiror Company Contract is a valid and
binding agreement of the Acquiror Company that is party thereto, and is in full
force and effect. The Acquiror Company is not in breach or default of any
Material Acquiror Company Contract to which it is a party and, to the knowledge
of the Acquiror Company, no other party to any Material Acquiror Company
Contract is in breach or default thereof. No event has occurred or circumstance
exists that (with or without notice or lapse of time) would (a) contravene,
conflict with or result in a violation or breach of, or become a default or
event of default under, any provision of any Material Acquiror Company Contract
or (b) permit the Acquiror Company or any other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify any Material Acquiror Company
Contract. The Acquiror Company has not received notice of the pending or
threatened cancellation, revocation or termination of any Material Acquiror
Company Contract to which it is a party. There are no renegotiations of, or
attempts to renegotiate, or outstanding rights to renegotiate any material terms
of any Material Acquiror Company Contract.

 

6.15        Employees.

 

6.15.1      Except as set forth on Schedule 6.15.1, the Acquiror Company has no
employees, independent contractors or other Persons providing services to them.
Except as would not have a Material Adverse Effect, the Acquiror Company is in
full compliance with all Laws regarding employment, wages, hours, benefits,
equal opportunity, collective bargaining, the payment of Social Security and
other taxes, and occupational safety and health. The Acquiror Company is not
liable for the payment of any compensation, damages, taxes, fines, penalties or
other amounts, however designated, for failure to comply with any of the
foregoing Laws.

 

6.15.2      No director, officer or employee of the Acquiror Company is a party
to, or is otherwise bound by, any contract (including any confidentiality,
non-competition or proprietary rights agreement) with any other Person that in
any way adversely affects or will materially affect (a) the performance of his
or her duties as a director, officer or employee of the Acquiror Company or (b)
the ability of the Acquiror Company to conduct its business.

 

6.16        Tax Returns and Audits.

 

6.16.1      Tax Returns. The Acquiror Company has filed all material Tax Returns
required to be filed (if any) by or on behalf of the Acquiror Company and has
paid all material Taxes of the Acquiror Company required to have been paid
(whether or not reflected on any Tax Return). No Governmental Authority in any
jurisdiction has made a claim, assertion or threat to the Acquiror Company that
the Acquiror Company is or may be subject to taxation by such jurisdiction;
there are no Liens with respect to Taxes on the Acquiror Company’s property or
assets other than Permitted Liens; and there are no Tax rulings, requests for
rulings, or closing agreements relating to the Acquiror Company for any period
(or portion of a period) that would affect any period after the date hereof.

 

6.16.2      No Adjustments, Changes. Neither the Acquiror Company nor any other
Person on behalf of the Acquiror Company (a) has executed or entered into a
closing agreement pursuant to Section 7121 of the Code or any predecessor
provision thereof or any similar provision of state, local or foreign law; or
(b) has agreed to or is required to make any adjustments pursuant to Section
481(a) of the Code or any similar provision of state, local or foreign law.

 

 19 

 

 

6.16.3      No Disputes. There is no pending audit, examination, investigation,
dispute, proceeding or claim with respect to any Taxes of the Acquiror Company,
nor is any such claim or dispute pending or contemplated. The Acquiror Company
has delivered to the Acquiree Company true, correct and complete copies of all
Tax Returns and examination reports and statements of deficiencies assessed or
asserted against or agreed to by the Acquiror Company, if any, since its
inception and any and all correspondence with respect to the foregoing.

 

6.16.4      Not a U.S. Real Property Holding Corporation. The Acquiror Company
is not and has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code at any time during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code.

 

6.16.5      No Tax Allocation, Sharing. The Acquiror Company is not and has not
been a party to any Tax allocation or sharing agreement.

 

6.16.6      No Other Arrangements. The Acquiror Company is not a party to any
agreement, contract or arrangement for services that would result, individually
or in the aggregate, in the payment of any amount that would not be deductible
by reason of Section 162(m), 280G or 404 of the Code. The Acquiror Company is
not a “consenting corporation” within the meaning of Section 341(f) of the Code.
The Acquiror Company does not have any “tax-exempt bond financed property” or
“tax-exempt use property” within the meaning of Section 168(g) or (h),
respectively of the Code. The Acquiror Company does not have any outstanding
closing agreement, ruling request, request for consent to change a method of
accounting, subpoena or request for information to or from a Governmental
Authority in connection with any Tax matter. During the last two years, the
Acquiror Company has not engaged in any exchange with a related party (within
the meaning of Section 1031(f) of the Code) under which gain realized was not
recognized by reason of Section 1031 of the Code. The Acquiree Company is not a
party to any reportable transaction within the meaning of Treasury Regulation
Section 1.6011-4.

 

6.17         Intentionally Left Blank.

 

6.18         Litigation; Orders. Except as set forth in Schedule 6.18, there is
no Proceeding (whether federal, state, local or foreign) pending or, to the
knowledge of the Acquiror Company, threatened against or affecting the Acquiror
Company or any of Acquiror Company’s properties, assets, business or employees;
and to the knowledge of the Acquiror Company, there is no fact that might result
in or form the basis for any such Proceeding. The Acquiror Company is not
subject to any Orders.

 

6.19         Intentionally Left Blank.

 

6.20         Governmental Inquiries. The Acquiror Company has provided to the
Acquiree Company a copy of each material written inspection report,
questionnaire, inquiry, demand or request for information received by the
Acquiror Company from any Governmental Authority, and the Acquiror Company’s
response thereto, and each material written statement, report or other document
filed by the Acquiror Company with any Governmental Authority.

 

6.21         Bank Accounts and Safe Deposit Boxes. The Acquiror Company does not
have any bank or other deposit or financial account, nor does the Acquiror
Company have any lock boxes or safety deposit boxes.         

 

 20 

 

 

6.22        Intellectual Property. The Acquiror Company does not own, use or
license any Intellectual Property in its business as presently conducted.

 

6.23        Title to Properties. Except as set forth on Schedule 6.23, the
Acquiror Company owns (with good and marketable title in the case of real
property) or holds under valid leases the rights to use all real property,
equipment and other personal property necessary for the conduct of its business
as presently conducted, free and clear of all Liens, except Permitted Liens.

 

6.24        Stock Option Plans; Employee Benefits.

 

6.24.1      Except as set forth on Schedule 6.24.1,the Acquiror Company has no
stock option plans providing for the grant by the Acquiror Company of stock
options to directors, officers, employees or contractors.

 

6.24.2      The Acquiror Company has no employee benefit plans or arrangements
covering their present and former employees or providing benefits to such
persons in respect of services provided to the Acquiror Company.

 

6.24.3      Neither the consummation of the transactions contemplated hereby
alone, nor in combination with another event, with respect to each director,
officer, employee and consultant of the Acquiror Company, will result in (a) any
payment (including, without limitation, severance, unemployment compensation or
bonus payments) becoming due from the Acquiror Company, (b) any increase in the
amount of compensation or benefits payable to any such individual or (c) any
acceleration of the vesting or timing of payment of compensation payable to any
such individual. No agreement, arrangement or other contract of the Acquiror
Company provides benefits or payments contingent upon, triggered by, or
increased as a result of a change in the ownership or effective control of the
Acquiror Company.

 

6.25        Money Laundering Laws. The operations of the Acquiror Company is and
has been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or
enforced by any Governmental Authority (collectively, the “Money Laundering
Laws”) and no Proceeding involving the Acquiror Company with respect to the
Money Laundering Laws is pending or, to the knowledge of the Acquiror Company,
threatened.

 

6.26        Board Recommendation. The Acquiror Company Board, by unanimous
written consent, has determined that this Agreement and the transactions
contemplated by this Agreement are advisable and in the best interests of the
Acquiror Company’s stockholders and has duly authorized this Agreement and the
transactions contemplated by this Agreement.

 

6.27        Certain Registration Matters. The Acquiror Company has not granted
or agreed to grant any person any rights (including “piggy-back registration
rights) to have any securities of the Acquiror Company registered with the
Commission or any other Governmental Authority that have not been satisfied.

 

 21 

 

 

SECTION VII

COVENANTS AND AGREEMENTS OF THE PARTIES

 

7.1           Corporate Examinations and Investigations. Prior to the Closing,
each party shall be entitled, through its employees and representatives, to make
such investigations and examinations of the books, records and financial
condition of the Acquiree Company and the Acquiror Company as each party may
reasonably request. In order that each party may have the full opportunity to do
so, the Acquiree Company, the Acquiror Company and the Acquiree Company Record
Owners shall furnish each party and its representatives during such period with
all such information concerning the affairs of the Acquiree Company or the
Acquiror Company as each party or its representatives may reasonably request and
cause the Acquiree Company or the Acquiror Company and their respective
officers, employees, consultants, agents, accountants and attorneys to cooperate
fully with each party’s representatives in connection with such review and
examination and to make full disclosure of all information and documents
requested by each party and/or its representatives. Any such investigations and
examinations shall be conducted at reasonable times and under reasonable
circumstances, with copies thereof to be provided to each party and/or its
representatives upon request.

 

7.2           Cooperation; Consents. Prior to the Closing, each party shall
cooperate with the other parties and shall (i) in a timely manner make all
necessary filings with, and conduct negotiations with, all authorities and other
Persons the consent or approval of which, or the license or permit from which is
required for the consummation of the Share Exchange and (ii) provide to each
other party such information as the other party may reasonably request in order
to enable it to prepare such filings and to conduct such negotiations.

 

7.3           Conduct of Business. Subject to the provisions hereof, from the
date hereof through the Closing, each party hereto shall (i) conduct its
business in the ordinary course and in such a manner so that the representations
and warranties contained herein shall continue to be true and correct in all
material respects as of the Closing as if made at and as of the Closing and (ii)
not enter into any material transactions or incur any material liability (except
in the ordinary course of its business) not required or specifically
contemplated hereby, without first obtaining the written consent of the Acquiree
Company and the holders of a majority of voting stock of the Acquiree Company,
on the one hand, and the Acquiror Company and the holders of a majority of the
Acquiror Company Common Stock, on the other hand. Without the prior written
consent of the Acquiree Company, the Acquiree Company Record Owners or the
Acquiror Company, except as required or specifically contemplated hereby, each
party shall not undertake or fail to undertake any action if such action or
failure would render any of said warranties and representations untrue in any
material respect as of the Closing.

 

7.4           Litigation. From the date hereof through the Closing, each party
hereto shall promptly notify the representative of the other parties of any
known Proceeding which after the date hereof are threatened or commenced against
such party or any of its affiliates or any officer, director, employee,
consultant, agent or Acquiree Company Record Owners thereof, in their capacities
as such, which, if decided adversely, could reasonably be expected to have a
Material Adverse Effect upon the condition (financial or otherwise), assets,
liabilities, business, operations or prospects of such party or any of its
Subsidiaries.

 

7.5           Notice of Default. From the date hereof through the Closing, each
party hereto shall give to the representative of the other parties prompt
written notice of the occurrence or existence of any event, condition or
circumstance occurring which would constitute a violation or breach of this
Agreement by such party or which would render inaccurate in any material respect
any of such party’s representations or warranties herein.

 

 22 

 

 

7.6           Public Disclosure. Except to the extent previously disclosed or to
the extent the parties are required by applicable law or regulation to make
disclosure, prior to Closing, no party shall issue any statement or
communication to the public regarding the transaction contemplated herein
without the consent of the other party, which consent shall not be unreasonably
withheld. To the extent a party hereto believes it is required by law or
regulation to make disclosure regarding the transaction, it shall, if possible,
immediately notify the other party prior to such disclosure and provide the
opportunity for the other party to make reasonable comments to such disclosure.

 

7.7           No Loans or Advances.  Except for loans and advances outstanding
as of the Closing Date or such loans and advances that are in compliance with
the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated
thereunder, the Acquiree Company will not make any loans, advances or other
extensions of credit to the executive officers or directors of the Acquiree
Company, any Subsidiary or any family member or Affiliate of any of such
executive officers or directors.

 

SECTION VIII
CONDITIONS PRECEDENT OF THE ACQUIROR COMPANY

 

The Acquiror Company’s obligation to acquire the Shares and to take the other
actions required to be taken by the Acquiror Company at the Closing Date is
subject to the satisfaction, at or prior to the Closing Date, of each of the
following conditions (any of which may be waived by the Acquiror Company, in
whole or in part):

 

8.1           Accuracy of Representations. The representations and warranties of
the Acquiree Company and the Acquiree Company Record Owners set forth in this
Agreement or in any Schedule or certificate delivered pursuant hereto that are
not qualified as to materiality shall be true and correct in all material
respects as of the date of this Agreement except to the extent a representation
or warranty is expressly limited by its terms to another date and without giving
effect to any supplemental Schedule.

 

8.2           No Force Majeure Event. There shall not have been any delay,
error, failure or interruption in the conduct of the business of the Acquiree
Company, or any loss, injury, delay, damage, distress, or other casualty, due to
force majeure including but not limited to (a) acts of God; (b) fire or
explosion; (c) war, acts of terrorism or other civil unrest; or (d) national
emergency.

 

8.3           Consents. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by the Acquiree Company and/or the Shareholders for the authorization,
execution and delivery of this Agreement and the consummation by them of the
transactions contemplated by this Agreement, shall have been obtained and made
by the Acquiree Company or the Acquiree Company Record Owners, as the case may
be, except where the failure to receive such consents, waivers, approvals,
authorizations or orders or to make such filings would not have a Material
Adverse Effect on the Acquiree Company or the Acquiror Company.

 

 23 

 

 

8.4           Certificate of Officer. The Acquiree Company will have delivered
to the Acquiror Company a certificate executed by the Officer of the Acquiree
Company, certifying the satisfaction of the conditions specified in Sections
8.1, 8.2, and 8.3 relating to the Acquiree Company.

 

8.5           Documents. The Acquiree Company and the Acquiree Company Record
Owners must deliver to the Acquiror Company at the Closing:

 

8.5.1        certificate evidencing the number of Shares held by each Acquiree
Company Record Owner, along with executed transfer forms transferring such
Acquiree Company Exchange Shares to the Acquiror Company together with a
certified copy of a board resolution of the Acquiree Company approving the
registration of the transfer of such shares to Acquiror Company (subject to
Closing and payment of stamp duty);

 

8.5.2        a Secretary’s Certificate, dated the Closing Date certifying
attached copies of (A) the Organizational Documents of the Acquiree Company, (B)
the resolutions of the Board of Directors of the Acquiree Company approving this
Agreement and the transactions contemplated hereby; and (C) the incumbency of
each authorized officer of the Acquiree Company signing this Agreement and any
other agreement or instrument contemplated hereby to which the Acquiree Company
is a party;

 

8.5.3        each of the Transaction Documents to which the Acquiree Company
and/or the Acquiree Company Record Owners is a party, duly executed;

 

8.5.4        such other documents as the Acquiror Company may reasonably request
for the purpose of (A) evidencing the accuracy of any of the representations and
warranties of the Acquiree Company and the Acquiree Company Record Owners
pursuant to Section 8.1, (B) evidencing the performance of, or compliance by the
Acquiree Company and the Acquiree Company Record Owners with, any covenant or
obligation required to be performed or complied with by the Acquiree Company or
the Acquiree Company Record Owners, as the case may be, (C) evidencing the
satisfaction of any condition referred to in this Section 8, or (D) otherwise
facilitating the consummation or performance of any of the transactions
contemplated by this Agreement.

 

8.6           No Proceedings. There must not have been commenced or threatened
against the Acquiree Company or the Acquiree Company Record Owners, or against
any Affiliate thereof, any Proceeding (which Proceeding remains unresolved as of
the Closing Date) (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the transactions contemplated by this
Agreement, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the transactions contemplated by
this Agreement.

 

8.7           No Claim Regarding Stock Ownership or Consideration. There must
not have been made or threatened by any Person any claim asserting that such
Person (a) is the holder of, or has the right to acquire or to obtain beneficial
ownership of the Shares or any other stock, voting, equity, or ownership
interest in, the Acquiree Company, or (b) is entitled to all or any portion of
the Acquiror Company Exchange Shares.

 

 24 

 

 

SECTION IX
CONDITIONS PRECEDENT OF THE ACQUIREE COMPANY AND THE SHAREHOLDERS

 

The Acquiree Company Record Owners’ obligation to transfer the Shares and the
obligations of the Acquiree Company to take the other actions required to be
taken by the Acquiree Company in advance of or at the Closing Date are subject
to the satisfaction, at or prior to the Closing Date, of each of the following
conditions (any of which may be waived by the Acquiree Company and the Acquiree
Company Record Owners jointly, in whole or in part):

 

9.1           Accuracy of Representations. The representations and warranties of
the Acquiror Company set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto that are not qualified as to materiality
shall be true and correct in all material respects as of the date of this
Agreement except to the extent a representation or warranty is expressly limited
by its terms to another date and without giving effect to any supplemental
Schedule.

 

9.2           No Force Majeure Event. There shall not have been any delay,
error, failure or interruption in the conduct of the business of the Acquiror
Company, or any loss, injury, delay, damage, distress, or other casualty, due to
force majeure including but not limited to (a) acts of God; (b) fire or
explosion; (c) war, acts of terrorism or other civil unrest; or (d) national
emergency.

 

9.3           Consents. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by the Acquiror Company for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated by
this Agreement, shall have been obtained and made by the Acquiror Company,
except where the failure to receive such consents, waivers, approvals,
authorizations or orders or to make such filings would not have a Material
Adverse Effect on the Acquiree Company or the Acquiror Company.

 

9.4           Certificate of Officer. The Acquiror Company will have delivered
to the Acquiree Company a certificate, dated the Closing Date, executed by an
officer of the Acquiror Company, certifying the satisfaction of the conditions
specified in Sections 9.1, 9.2, and 9.3 relating to the Acquiror Company.

 

9.5           Documents. The Acquiror Company must have caused the following
documents to be delivered to the Acquiree Company and/or the Acquiree Company
Record Owners:

 

9.5.1        share certificates evidencing a total of 1,500,000 shares of
Acquiror Company Shares being issued to the Acquiree Company Record Owners
pursuant hereto;

 

9.5.2        a Secretary’s Certificate, dated the Closing Date certifying
attached copies of (A) the Organizational Documents of the Acquiror Company, (B)
the resolutions of the Acquiror Company Board approving this Agreement and the
transactions contemplated hereby; and (C) the incumbency of each authorized
officer of the Acquiror Company signing this Agreement and any other agreement
or instrument contemplated hereby to which the Acquiror Company is a party;

 

9.5.3        each of the Transaction Documents to which the Acquiror Company is
a party, duly executed;

 

 25 

 

 

9.5.4        such other documents as the Acquiree Company may reasonably request
for the purpose of (i) evidencing the accuracy of any representation or warranty
of the Acquiror Company pursuant to Section 9.1, (ii) evidencing the performance
by the Acquiror Company of, or the compliance by the Acquiror Company with, any
covenant or obligation required to be performed or complied with by the Acquiror
Company, (iii) evidencing the satisfaction of any condition referred to in this
Section 9, or (iv) otherwise facilitating the consummation of any of the
transactions contemplated by this Agreement.

 

9.6           No Proceedings. Since the date of this Agreement, there must not
have been commenced or threatened against the Acquiror Company, or against any
Affiliate thereof, any Proceeding (which Proceeding remains unresolved as of the
date of this Agreement) (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the transactions contemplated hereby, or
(b) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the transactions contemplated hereby.

 

9.7           No Claim Regarding Stock Ownership or Consideration. There must
not have been made or threatened by any Person any claim asserting that such
Person (a) is the holder of, or has the right to acquire or to obtain beneficial
ownership of the Acquiror Company Common Stock or any other stock, voting,
equity, or ownership interest in, the Acquiror Company, or (b) is entitled to
all or any portion of the Acquiror Company Shares.

 

9.8           Intentionally Left Blank.

 

SECTION X
INDEMNIFICATION; REMEDIES

 

10.1         Survival. All representations, warranties, covenants, and
obligations in this Agreement shall expire eighteen (18) months following the
date this Agreement is executed (the “Survival Period”). The right to payment of
damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement, with
respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations.

 

10.2         Breach by the Shareholders. Nothing in this Section 10 shall limit
the Acquiror Company’s right to pursue any appropriate legal or equitable remedy
against a Shareholder with respect to any damages from and after the execution
of this Agreement, until the expiration of the Survival Period, arising,
directly or indirectly, from or in connection with: (a) any breach by the
Shareholder of any representation or warranty made by the Shareholder in this
Agreement or in any certificate delivered by such Shareholder pursuant to this
Agreement or (b) any breach by the Shareholder of any covenants or obligation in
this Agreement required to be performed by the Acquiror Company on or prior to
the Closing Date or after the Closing Date.

 

 26 

 

 

SECTION XI
GENERAL PROVISIONS

 

11.1        Expenses. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated by this Agreement, including all fees and
expenses of agents, representatives, counsel, and accountants. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.

 

11.2        Confidentiality.

 

11.2.1      The Acquiror Company, the Shareholders and the Acquiree Company will
maintain in confidence, and will cause their respective directors, officers,
employees, agents, and advisors to maintain in confidence, any written, oral, or
other information obtained in confidence from another party in connection with
this Agreement or the transactions contemplated by this Agreement, unless (a)
such information is already known to such party or to others not bound by a duty
of confidentiality or such information becomes publicly available through no
fault of such party, (b) the use of such information is necessary or appropriate
in obtaining any consent or approval required for the consummation of the
transactions contemplated by this Agreement, or (c) the furnishing or use of
such information is required by or necessary or appropriate in connection with
legal proceedings.

 

11.2.2      In the event that any party is required to disclose any information
of another party pursuant to clause (b) or (c) of Section 11.2.1, the party
requested or required to make the disclosure (the “disclosing party”) shall
provide the party that provided such information (the “providing party”) with
prompt notice of any such requirement so that the providing party may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 11.2. If, in the absence of a protective order or
other remedy or the receipt of a waiver by the providing party, the disclosing
party is nonetheless, in the opinion of counsel, legally compelled to disclose
the information of the providing party, the disclosing party may, without
liability hereunder, disclose only that portion of the providing party’s
information which such counsel advises is legally required to be disclosed,
provided that the disclosing party exercises its reasonable efforts to preserve
the confidentiality of the providing party’s information, including, without
limitation, by cooperating with the providing party to obtain an appropriate
protective order or other relief assurance that confidential treatment will be
accorded the providing party’s information.

 

11.2.3      If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy all of such written information
each party has regarding the other party.

 

 27 

 

 

11.3         Notices. All notices, demands, consents, requests, instructions and
other communications to be given or delivered or permitted under or by reason of
the provisions of this Agreement or in connection with the transactions
contemplated hereby shall be in writing and shall be deemed to be delivered and
received by the intended recipient as follows: (i) if personally delivered, on
the business day of such delivery (as evidenced by the receipt of the personal
delivery service), (ii) if mailed certified or registered mail return receipt
requested, two (2) business days after being mailed, (iii) if delivered by
overnight courier (with all charges having been prepaid), on the business day of
such delivery (as evidenced by the receipt of the overnight courier service of
recognized standing), or (iv) if delivered by facsimile or electronic
transmission, on the business day of such delivery if sent by 6:00 p.m. in the
time zone of the recipient, or if sent after that time, on the next succeeding
business day (as evidenced by the printed confirmation of delivery generated by
the sending party’s telecopier machine). If any notice, demand, consent,
request, instruction or other communication cannot be delivered because of a
changed address of which no notice was given (in accordance with this Section
11.3), or the refusal to accept same, the notice, demand, consent, request,
instruction or other communication shall be deemed received on the second
business day after the day notice is sent (as evidenced by a sworn affidavit of
the sender). All such notices, demands, consents, requests, instructions and
other communications will be sent to the following addresses or facsimile
numbers as applicable.

 

If to Acquiror Company:
American Education Center Inc.

2 Wall Street, Fl. 8

New York, NY 10005

Attention: Max P. Chen

Telephone No.: 631-721-7306

with a copy, which shall not constitute
notice, to:
Hunter Taubman Fischer & Li LLC

1450 Broadway, 26th Floor

New York, NY 10018

Attention: Louis E. Taubman

Telephone No.: (212) 732-7184

   

If to the Acquiree Company or Shareholders:
AEC Southern Management Co., LTD

RM 101, Maple House, 118 High Street, Purley,
London, England, UK, CR8 2AD

Attention: Ye Tian

 

 

11.4         Arbitration. Any dispute or controversy under this Agreement shall
be settled exclusively by arbitration in the City of New York, County of New
York in accordance with the rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitration award in any court having
jurisdiction.

 

11.5         Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.

 

11.6         Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.

 

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11.7         Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party against whom the enforcement of such
amendment is sought.

 

11.8         Assignments, Successors, and No Third-Party Rights. No party may
assign any of its rights under this Agreement without the prior consent of the
other parties. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.

 

11.9         Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

 

11.10       Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to “Section” or “Sections” refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement 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.

 

11.11       Governing Law. This Agreement will be governed by the laws of the
State of New York without regard to conflicts of laws principles.

 

11.12       Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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SIGNATURE PAGE OF ACQUIROR COMPANY

 

IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange
Agreement as of the date first written above.

 

Acquiror Company:       American Education Center, Inc.   A Nevada Corporation  
    Signed: Max P. Chen   By: Max P. Chen   Title: President and Chairman of the
Board  

 

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SIGNATURE PAGE OF ACQUIREE COMPANY

 

IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange
Agreement as of the date first written above.

 

Acquiree Company:       AEC Southern Management Co., LTD   A company formed
pursuant to the laws of England and Wales       Signed: /s/ Ye Tian   By: Ye
Tian   Title: Sole Director and Majority Shareholder  

 

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SIGNATURE PAGE OF SHAREHOLDERS

 

IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange
Agreement as of the date first written above.

 

Shareholders:       Signed: /s/ Yangying Zou   Name: Yangying Zou       Address:
             

 

Shareholders:     Signed: /s/ Ye Tian   Signed: /s/ Rongxia Wang Name: Ye Tian  
Name: Rongxia Wang       Address:   Address:                  

 

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Exhibit A

 

Shareholders of Acquiror Company post-closing of the Share Exchange

 

No.  Name  Shares of
Acquiree
Company   No. of Acquiror Company Shares to
be received upon closing of the Share
Exchange  1  Ye Tian   5,100    750,000  2  Rongxia Wang   4,900    750,000  3 
Yangying Zou   0    1,500,000     Total:   10,000    3,000,000 

 

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Exhibit B

 

NON U.S. PERSON REPRESENTATIONS

 

The Shareholder indicating that it is not a U.S. person, severally and not
jointly, further represents and warrants to the Acquiror Company as follows:

 

1.At the time of (a) the offer by the Acquiror Company and (b) the acceptance of
the offer by such person or entity, of the Acquiror Company Shares, such person
or entity was outside the United States.

 

2.Such person or entity is acquiring the Acquiror Company Shares for such
Shareholder’s own account, for investment and not for distribution or resale to
others and is not purchasing the Acquiror Company Shares for the account or
benefit of any U.S. person, or with a view towards distribution to any U.S.
person, in violation of the registration requirements of the Securities Act.

 

3.Such person or entity will make all subsequent offers and sales of the
Acquiror Company Shares either (x) outside of the United States in compliance
with Regulation S; (y) pursuant to a registration under the Securities Act; or
(z) pursuant to an available exemption from registration under the Securities
Act. Specifically, such person or entity will not resell the Acquiror Company
Shares to any U.S. person or within the United States prior to the expiration of
a period commencing on the Closing Date and ending on the date that is one year
thereafter (the “Distribution Compliance Period”), except pursuant to
registration under the Securities Act or an exemption from registration under
the Securities Act.

 

4.Such person or entity has no present plan or intention to sell the Acquiror
Company Shares in the United States or to a U.S. person at any predetermined
time, has made no predetermined arrangements to sell the Acquiror Company Shares
and is not acting as a Distributor of such securities.

 

5.Neither such person or entity, its Affiliates nor any Person acting on behalf
of such person or entity, has entered into, has the intention of entering into,
or will enter into any put option, short position or other similar instrument or
position in the U.S. with respect to the Acquiror Company Shares at any time
after the Closing Date through the Distribution Compliance Period except in
compliance with the Securities Act.

 

6.Such person or entity consents to the placement of a legend on any certificate
or other document evidencing the Acquiror Company Shares substantially in the
form set forth in Section 4.2.3.

 

7.Such person or entity is not acquiring the Acquiror Company Shares in a
transaction (or an element of a series of transactions) that is part of any plan
or scheme to evade the registration provisions of the Securities Act.

 

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8.Such person or entity has sufficient knowledge and experience in finance,
securities, investments and other business matters to be able to protect such
person’s or entity’s interests in connection with the transactions contemplated
by this Agreement.

 

9.Such person or entity has consulted, to the extent that it has deemed
necessary, with its tax, legal, accounting and financial advisors concerning its
investment in the Acquiror Company Shares.

 

10.Such person or entity understands the various risks of an investment in the
Acquiror Company Shares and can afford to bear such risks for an indefinite
period of time, including, without limitation, the risk of losing its entire
investment in the Acquiror Company Shares.

 

11.Such person or entity has had access to the Acquiror Company’s publicly filed
reports with the SEC and has been furnished during the course of the
transactions contemplated by this Agreement with all other public information
regarding the Acquiror Company that such person or entity has requested and all
such public information is sufficient for such person or entity to evaluate the
risks of investing in the Acquiror Company Shares.

 

12.Such person or entity has been afforded the opportunity to ask questions of
and receive answers concerning the Acquiror Company and the terms and conditions
of the issuance of the Acquiror Company Shares.

 

13.Such person or entity is not relying on any representations and warranties
concerning the Acquiror Company made by the Acquiror Company or any officer,
employee or agent of the Acquiror Company, other than those contained in this
Agreement.

 

14.Such person or entity will not sell or otherwise transfer the Acquiror
Company Shares unless either (A) the transfer of such securities is registered
under the Securities Act or (B) an exemption from registration of such
securities is available.

 

15.Such person or entity represents that the address furnished on its signature
page to this Agreement is the principal residence if he is an individual or its
principal business address if it is a corporation or other entity.

 

16.Such person or entity understands and acknowledges that the Acquiror Company
Shares have not been recommended by any federal or state securities commission
or regulatory authority, that the foregoing authorities have not confirmed the
accuracy or determined the adequacy of any information concerning the Acquiror
Company that has been supplied to such person or entity and that any
representation to the contrary is a criminal offense.

 

 35 

 

 

EXHIBIT C

 

Definition of “Accredited Investor”

 

The term “accredited investor” means:

 

1.Any bank as defined in section 3(a)(2) of the Securities Act, or any savings
and loan association or other institution as defined in section 3(a)(5)(A) of
the Securities Act whether acting in its individual or fiduciary capacity; any
broker or dealer registered pursuant to section 15 of the Securities Exchange
Act of 1934; any insurance company as defined in section 2(a)(13) of the
Securities Act; any investment company registered under the Investment Company
Act of 1940 (the “Investment Company Act”) or a business development company as
defined in section 2(a)(48) of that Act; any Small Business Investment Company
licensed by the U.S. Small Business Administration under section 301(c) or (d)
of the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of $5,000,000; any employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 (“ERISA”) if the investment decision is made by a plan fiduciary, as
defined in section 3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors;

 

2.Any private business development company as defined in section 202(a)(22) of
the Investment Advisers Act of 1940;

 

3.Any organization described in section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;

 

4.Any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or general
partner of a general partner of that issuer;

 

5.Any natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $1,000,000;

 

6.Any natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person's spouse in excess
of $300,000 in each of those years and has a reasonable expectation of reaching
the same income level in the current year;

 

7.Any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii); and

 

8.Any entity in which all of the equity owners are accredited investors.

 

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Schedules of Share Exchange Agreement

 

In connection with the Share Exchange Agreement dated as of November 8, 2016
(the “SEA”) made by and among American Education Center Inc., a Nevada
corporation (the “Acquiror Company” or “AEC Nevada”), AEC Southern Management
Co., LTD, a company formed pursuant to the laws of England and Wales (the
“Acquiree Company” or “AEC England and Wales”), and the persons listed
in Exhibit A hereof (collectively, the “Shareholders”; each, a “Shareholder”),
being the owners of record of one-hundred percent (100%) of the issued share
capital of Acquiree Company, the Schedule is hereby delivered as contemplated
under the SEA setting forth the respective exceptions to the representations and
warranties and covenants of the Acquiror Company, the Acquiree Company and the
Shareholders, as the case may be.

 

The section numbers in this Schedule correspond to the respective section
numbers in the SEA; provided, however, that any information disclosed herein
under any section number (including appendices) shall be deemed to be disclosed
and incorporated in any other sections of the SEA where it is reasonably
apparent on the face of such disclosure that such information applies to such
other sections. Express references to a specific document do not purport to be
complete and are qualified in their entirety by the document itself. The
disclosure of any information shall not be deemed to constitute an
acknowledgment that such information is material or required by the SEA,
including in order to render a representation true or correct, nor shall such
information be deemed to establish a standard of materiality for purposes of the
SEA. Capitalized terms used in this Schedule shall have the meanings ascribed to
them in the SEA, unless otherwise defined herein.

 

Certain information contained in this Schedule may constitute material
confidential information relating to the Acquiror Company, Company and the
Shareholder. Such information may not be used for any purpose other than in
consummate the transactions contemplated by the SEA.

 

Schedule 4.1.3Shareholder’s Ownership of Shares

 

Schedule 5.1Acquiree’s Organization and Qualification

 

The Acquiree Company is a company incorporated pursuant to the laws of England
and Wales. It presently conducts its business, owns, holds and operates its
properties and assets in England and Wales.

 

Schedule 5.2Acquiree’s Subsidiaries

 

All of the direct and indirect Subsidiaries of the Acquiree Company, if any,
include but not limited to, AEC Southern Management Limited, a company formed
pursuant to the laws of Hong Kong, and前海美教 (深证) 咨询管理有限公司, a wholly owned foreign
enterprise organized under the laws of the People’s Republic of China.

 

Schedule 5.7.1Acquiree’s Contracts

 

Schedule 5.8Acquiree’s Compliance with Laws and Other Instruments

 

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Schedule 6.1Acquiror Company’s Organization and Qualification

 

The Acquiror Company is a corporation incorporated in the State of Nevada. It
presently conducts its business in the United States, and is headquartered in
New York, NY.

 

Schedule 6.2Acquiror Company’s Subsidiaries

 

All of the direct and indirect Subsidiaries of the Acquiror Company, if any,
include but not limited to, American Education Center, Inc., a New York
corporation.

 

Schedule 6.5Acquiror Company’s Compliance with Laws

 

Schedule 6.11Acquiror Company’s Brokers or Finders

 

Schedule 6.12Acquiror Company’s Undisclosed Liabilities

 

Schedule 6.15.1Acquiror Company’s Employees and Independent Contractors

 

Schedule 6.18Acquiror Company’s Litigation; Orders

 

Schedule 6.23Acquiror Company’s Properties

 

Schedule 6.24.1Stock Option Plans

 

The Acquiror Company maintains an Equity Incentive Plan adopted in November
2015, for providing for the grant by the Acquiror Company of stock options to
directors, officers, employees or contractors.

 

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