Exhibit 10.3

 

SUBSCRIPTION AND INVESTMENT REPRESENTATION AGREEMENT

 

INTAC International, Inc.

Unit 6-7, 32/F., Laws Commercial Plaza

788 Cheung Sha Wan Road

Kowloon, Hong Kong

 

Attention:  Wei Zhou, Chief Executive Officer

 

Dear Mr. Zhou:

 

This Subscription and Investment Representation Agreement (this “Agreement”) is
entered into as of the date set forth on the signature page hereof by and
between INTAC International, Inc., a Nevada corporation (together with its
successors and permitted assigns, the “Company”), and the undersigned accredited
investor (together with its successors and permitted assigns, the “Investor”).

 

The Investor desires to purchase from the Company and the Company desires to
sell to the Investor, on the terms and conditions set forth in this Agreement,
eight hundred thousand (800,000) shares of the common stock, $.001 par value per
share (the “Common Stock”), of the Company.

 

On the terms and conditions of this Subscription and Investment Representation
Agreement (the “Agreement”), the Investor proposes to make an investment in the
Company as follows:

 

1.  Subscription.   Subject to the terms and conditions hereof, Investor hereby
irrevocably subscribes to purchase eight hundred thousand (800,000) shares (the
“Shares”) of Common Stock of the Company at a price of U.S.$15.00 per share.  In
so doing, Investor is hereby delivering to the Company, for the Company’s
benefit, a check, draft, money order or wire transfer payable to the order of
“INTAC International, Inc.” in the amount of U.S.$12,000,000.00, the aggregate
purchase price payable in respect of the purchase of the Shares.  The Company
will deliver a stock certificate representing the Shares purchased by the
Investor within ten business days after receipt of the purchase price.

 

2.  Representations and Warranties of the Company.  The Company represents and
warrants to the Investor as follows:

 

(a)  The Company is a corporation duly organized and validly existing under the
laws of the State of Nevada.

 

(b)  As of the date hereof, the entire authorized capital stock of the Company
consists of (1) One Hundred Million (100,000,000) shares of Common Stock, of
which Twenty Million One Hundred Eighty-Nine Thousand Four Hundred and
Fifty-Five (20,189,455) shares are issued and outstanding on the date hereof
prior to the offering made hereby, and (2) Ten Million

 

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(10,000,000) shares of Preferred Stock, of which no shares are issued and
outstanding on the date hereof.  All of the issued and outstanding shares are
duly authorized, validly issued, fully paid, and nonassessable. The Shares to be
issued to the Investor in the offering will be, when issued and paid for in
accordance with the terms of this Agreement, validly issued, fully paid and
nonassessable.

 

(c)  The Company has full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder.  This Agreement
constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms and conditions.

 

3.  Representations and Warranties of Investor.  Investor hereby represents and
warrants to the Company as follows:

 

(a)  The offer and sale of the Shares to Investor is made in reliance upon
Investor’s representation to the Company, which, by Investor’s execution of this
Agreement, Investor hereby confirms, that the Shares are being acquired for
investment for Investor’s own account, not as a nominee or agent, and not with a
view to the sale or distribution of any part thereof, and that Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same.  By executing this Agreement, Investor further represents
that Investor has no contract, undertaking, agreement or arrangement with any
person to sell, transfer, or grant participation rights to such person or to any
third person, with respect to any of the Shares and has no present intention to
enter into any such contract, undertaking, agreement or arrangement.

 

(b)  Investor understands and acknowledges that the Offering of the Shares has
not and will not be registered under the Securities Act of 1933, as amended (the
“Securities Act”), on the grounds that the offering and sale of the Shares are
exempt from registration pursuant to the provisions of Section 4(2) and/or Rule
506 of Regulation D of the Securities Act, and that the Company’s reliance upon
such exemption is, in part, predicated upon Investor’s representations set forth
in this Agreement.

 

(c)  Investor covenants that in no event will Investor dispose of any of the
Shares, or any part thereof, unless and until (i) there is an effective
Registration Statement under the Securities Act covering the proposed
disposition and such disposition is made in accordance with such Registration
Statement, and (ii) Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and, if reasonably requested
by the Company, Investor shall have furnished the Company with an opinion of
counsel satisfactory in form and substance to the Company and the Company’s
counsel to the effect that (A) such disposition will not require registration
under the Securities Act and (B) appropriate action necessary for compliance
with the Securities Act and any applicable state, local or foreign law has been
taken. In addition, the Investor agrees that the Investor will comply with the
contractual lock-up period imposed upon Investor under this Agreement.

 

(d)  Investor represents that Investor (i) has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of Investor’s prospective

 

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investment in the Shares; (ii) has received from the Company all the information
he has requested and considers necessary or appropriate for deciding whether to
purchase the Shares; (iii) has had an opportunity to ask questions and receive
answers from the Company regarding the Company, its business, operations, market
potential, capitalization, financial condition and prospects, and the terms and
conditions of the offering of the Shares; (iv) has the ability to bear the
economic risks of Investor’s prospective investment; and (v) is able, without
materially impairing his financial condition, to hold the Shares for an
indefinite period of time and to suffer complete loss on his investment.

 

(e)  Investor represents that he is a bona fide resident of the state or country
indicated herein, and if Investor is an individual, Investor is at least 21
years of age. Investor further represents that he has no present intention of
becoming a resident of any other state or jurisdiction.

 

(f)  If Investor’s purchase of the Shares is subject to regulation by the
government of a sovereign jurisdiction other than the United States, Investor
has complied with all laws and regulations governing the purchase and sale of
the Shares imposed by such sovereign jurisdiction.

 

(g)  Investor has received and read or reviewed, and is thoroughly familiar
with, the Company’s filings with the Securities and Exchange Commission (the
“SEC Filings”), particularly the information set forth under the captions
“Business Risk Factors” and “Cautionary Statement Regarding Forward-Looking
Statements” found in the Company’s Annual Report on Form 10-KSB for the year
ended December 31, 2003 and Investor is aware of the high degree of risk
involved in making an investment in the Company; it being understood, however,
that this representation does not constitute a waiver of any rights that
Investor has under the Securities Act, any applicable state securities act or
the rules and regulations promulgated thereunder.

 

(h)  Investor has had the opportunity to review, at the Company’s offices or
otherwise, any materials available to the Company relating to the Company or any
other matters or items discussed in or accompanying the SEC Filings.  The
Company has answered all inquiries from Investor, and given Investor the
opportunity to obtain any additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) requested by the Investor necessary to verify the accuracy of any
information set forth in this Agreement, the SEC Filings, or otherwise.

 

(i)  Investor understands that he is purchasing the Shares only in reliance upon
the information set forth in this Agreement.  Investor acknowledges that, except
as set forth in this Agreement, no representations or warranties have been made
to Investor or the Investor’s advisors by the Company or by any persons acting
on their behalf with respect to the business of the Company, the financial
condition of the Company or any other aspect of or related to a purchase of the
Shares, and that Investor has not relied upon any information concerning this
transaction, written or oral.

 

(j)  Investor acknowledges and is aware of the following:

 

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(i)  The Shares are a highly speculative investment that involves a substantial
risk of loss by Investor of his entire investment in the Company.

 

(ii) There are substantial restrictions on the transferability of the Shares. 
The Shares will only be registered under the Securities Act only pursuant to the
terms and conditions of Section 8 of this Agreement; accordingly, there may be
no public market for the Shares; Investor may not be able to avail himself of
the provisions of Rule 144 under the Securities Act with respect to the resale
of the Shares; and the Investor may have to hold the Shares indefinitely and may
not be able to liquidate his investment in the Company.

 

(iii)     No federal or state agency has made any finding or determination as to
the fairness of the offering of the Shares for investment or any recommendation
or endorsement of the Shares.

 

(iv) The Company, its officers, directors, agents or employees or any other
person, have not represented, guaranteed or warranted to Investor, expressly or
by implication, any of the following:

 

*    the approximate or exact length of time that Investor will be required to
remain an owner of the Shares;

 

*    the amount of or type of consideration, profit or loss to be realized, if
any, as a result of an investment in the Company; or

 

*    the likelihood that the Company’s business plan will succeed.

 

(k)  Investor has neither distributed nor disclosed, directly or indirectly, any
of the Company’s confidential information, including, without limitation, the
information contained in any contract or agreement to which the Company is a
party, to anyone other than his legal, tax, accounting or other advisors for
their use solely in that capacity for Investor, and no one other than the
undersigned and his legal, tax, accounting or other advisors, if any, has used
the confidential information.

 

(l)  Investor represents and warrants to the Company that he is an “accredited
investor” within the meaning of SEC Rule 501(a) of Regulation D, as presently in
effect, under the definition set forth in the box initialed below by the
Investor.

 

o  1. Any bank as defined in section 3(a)(2) of the Act, or any savings and loan
association or other institution as defined in section 3(a)(5)(A) of the 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(13) of the Act; any investment company
registered under the Investment Company Act of 1940 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

 

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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 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;

 

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

 

o  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;

 

o  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;

 

o  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;

 

o  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;

 

o  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

 

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

 

The foregoing statements are true and accurate to the best of my information and
belief, and I will promptly notify the Company of any changes.

 

(m) At no time was Investor presented with or solicited by any publicly issued
or circulated newspaper, mail, radio, television or other form of general
advertising or solicitation in connection with the Shares.

 

(n) In addition, Investor has been advised that Rule 144 promulgated by the SEC
under the Securities Act, which permits certain limited sales of unregistered
securities, may not be presently available with respect to the Shares and, in
any event, requires that the Shares be held for a minimum of one (1) year, and
in certain cases two (2) years, after they have been purchased and paid for
(within the meaning of SEC Rule 144), before they may be resold under SEC Rule
144.

 

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(o)  Investor agrees that the Company may rely on the representations found in
this Section 3.  Investor further agrees that he will furnish to the Company
such further information as the Company may deem relevant in determining whether
the undersigned is an “accredited investor” within the meaning of Rule 501(a)
and whether the undersigned’s proposed investment may have any adverse legal
effects, and the undersigned authorizes the Company and its agents to confirm,
as necessary, with the undersigned’s tax adviser, investment counselor, lawyer,
accountant, banker or other financial representative named below, such
information as the Company may deem relevant in making such determination.

 

(p)  The foregoing representations and warranties are true and accurate as of
the date hereof and shall survive the Closing of the purchase of the Shares.  If
in any respect such representations and warranties shall not be true and
accurate prior to the Closing Date, Investor shall give written notice of such
fact to the Company, specifying which representations and warranties are not
true and accurate and the reasons therefor.

 

4.   Indemnification.  Investor recognizes that the sale of the Shares to
Investor will be based upon his representations and warranties set forth in
Paragraph 3 hereof, and Investor agrees to indemnify and to hold harmless the
Company, each of its officers and directors, and each person who controls the
Company, from and against any and all loss, damage, liability or expense,
including costs and reasonable attorneys’ fees, to which they may be subject or
which they may incur by reason of, or in connection with, any misrepresentation
made by Investor in this Agreement, any breach by Investor of his warranties or
failure by Investor to fulfill any covenants or agreements set forth herein or
arising out of the sale or distribution of any such shares by Investor in
violation of the Securities Act or other applicable securities laws.  All
representations, warranties, and covenants and the indemnification contained in
this Agreement shall survive the acceptance of this subscription and the
issuance to Investor of the Shares.

 

5.   Confidentiality.  Investor hereby covenants and agrees to maintain the
confidential status of all Confidential Information (as defined below), and not
to use, directly or indirectly, any such Confidential Information for any
purpose other than to evaluate an investment in the Company, and not to
disclose, directly or indirectly, any such Confidential Information to any third
party.  For the purposes of this Agreement, “Confidential Information” means all
business, financial, technical and other information about the Company,
designated as confidential or proprietary, or information which, by the nature
of the circumstances surrounding the disclosure, ought in good faith to be
treated as confidential, including, without limitation, the confidential
information provided to the Investor.

 

6.   Acknowledgment.  Investor acknowledges and understands that he may receive
or may be provided confidential or otherwise non-public information about the
Company that may constitute material, non-public information concerning the
Company, and that he is obligated to refrain from (a) selling any shares of
common stock beneficially owned or held by him and (b) otherwise trading in the
Company’s securities, at any time during which Investor is in possession of
non-public, material information concerning the Company.

 

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7.   Restrictive Legends.  Investor understands and agrees that the following
restrictions and limitations are applicable to his purchase and any resale or
other transfer he may make of the Shares:

 

(a)  The Shares shall not be sold or otherwise transferred unless they are
registered under the Securities Act and applicable state securities laws or are
exempt therefrom.

 

(b)  Legends in substantially the following form will be placed on each
certificate evidencing the Shares:

 

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.  THE SHARES HAVE
BEEN ACQUIRED FOR PRIVATE INVESTMENT AND MAY NOT BE OFFERED FOR SALE OR SOLD IN
THE ABSENCE OF  (i) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR
(ii) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED. THE SHARES REPRESENTED HEREBY ARE SUBJECT TO A SUBSCRIPTION AND
INVESTMENT REPRESENTATION AGREEMENT AND MAY NOT BE SOLD, PLEDGED, ENCUMBERED OR
OTHERWISE TRANSFERRED OR DISPOSED OF, EXCEPT IN ACCORDANCE WITH THE TERMS
THEREOF, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND
WILL BE PROVIDED UPON REQUEST TO THE COMPANY.

 

8.   (a)  Registration Rights.  As soon as practicable, but in no event later
than the forty-fifth day following the Closing Date, as such term is defined in
Section 13 of this Agreement (the “Filing Deadline”), the Company shall prepare
and file with the Securities and Exchange Commission (the “Commission”) a
Registration Statement on Form S-3 as a “shelf” registration statement under
Rule 415 under the Securities Act (“Rule 415”) covering the resale of the
Shares.

 

(b)  Effectiveness.  The Company shall use its best efforts to cause the
Registration Statement to become effective as soon as practicable following the
filing thereof.  The Company shall respond promptly to any and all comments made
by the staff of the Commission on the Registration Statement, and shall promptly
submit to the Commission, within two (2) business days after the Company learns
that no review of the Registration Statement will be made by the staff of the
Commission or that the staff of the Commission has no further comments on the
Registration Statement, as the case may be, a request for acceleration of the
effectiveness of the Registration Statement to a time and date not later than
three (3) Business Days after the submission of such request; provided that at
any time prior to the end of the Registration Deadline, the Company may delay
its request for effectiveness for a period of up to ten days if the Company is
required to file an Exchange Act report within such ten (10) day period that
would require an amendment to the Registration Statement or a supplement to the
Prospectus to be used in connection with the Registration Statement.  The
Company will maintain the

 

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effectiveness of the Registration Statement until the earlier to occur of (i)
the date on which all of the Registrable Securities eligible for resale
thereunder have been publicly sold pursuant to either the Registration Statement
or Rule 144 and (ii) the date on which all of the Registrable Securities
remaining to be sold under the Registration Statement (in the reasonable opinion
of counsel to the Holder) may be immediately sold to the public under Rule 144
or 144(k) or any successor provision within a three month period (the period
beginning on the Closing Date and ending on the earlier to occur of (i) or (ii)
above being referred to herein as the “Registration Period”).

 

(c)                                  Allowed Delay.  The Company may delay the
disclosure of material non-public information, and suspend the availability of
the Registration Statement, for no more than (i) five (5) consecutive Business
Days or (ii) twenty (20) calendar days in any twelve (12) month period, in the
event of a proposed merger, reorganization or similar transaction involving the
Company, as long as its board of directors (A) has determined, upon the advice
of counsel, that such information would be required to be disclosed in an
offering registered under the Securities Act and (B) reasonably deems it in the
Company’s best interests not to disclose such information publicly (an “Allowed
Delay”). The Company shall promptly (i) notify each Holder in writing of the
existence of material non-public information giving rise to an Allowed Delay
(but in no event, without the prior written consent of such Holder, shall the
Company disclose to such Holder any of the facts or circumstances regarding any
material non-public information), (ii) advise each Holder in writing to cease
all sales under the Registration Statement until the termination of the Allowed
Delay and (iii) notify each Holder in writing immediately upon the termination
or expiration of an Allowed Delay.

 

9.   No Waiver. Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by Investor, Investor does not thereby
or in any other manner waive any rights granted to Investor under federal or
state securities laws.

 

10.  Assignment.  Investor agrees not to transfer or assign this Agreement, or
any of his interest therein.

 

11.  No Revocation.  Investor acknowledges and agrees that his subscription for
Shares, made by the execution and delivery of this Agreement by Investor, is
irrevocable and shall survive the death or incapacity of Investor.

 

12.  Closing.  The closing of the purchase and sale of the Shares (the
“Closing”) shall take place contemporaneously with the parties’ execution of
this Agreement (the “Closing Date”). Execution by the Company hereunder shall
constitute its written acknowledgment of the receipt of and payment for the full
purchase price for the Shares.

 

13.  Miscellaneous.

 

(a)  All notices or other communications to the Company given or made hereunder
shall be in writing and shall be delivered or mailed by registered or certified
mail, return receipt requested, postage prepaid, to Chief Executive Officer,
INTAC International, Inc., Unit 6-7, 32/F., Laws Commercial Plaza, 788 Cheung
Sha Wan Road, Kowloon, Hong Kong, with a copy to the Chief Financial Officer,
12221 Merit Drive, Suite 1350, Dallas, Texas  75251, or such

 

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other principal executive offices of the Company as shall then be in existence. 
All notices or other communications to the Investor given or made hereunder
shall be in writing and shall be delivered to Investor by registered or
certified mail, return receipt requested, postage prepaid, to the Investor’s
address as set forth on the signature page to this Agreement.

 

(b)  Notwithstanding the place where this Agreement may be executed by any of
the parties hereto, the parties expressly agree that all of the terms and
provisions hereof shall be construed in accordance with and governed by the laws
of the State of Nevada applicable to agreements made and to be wholly performed
therein.

 

(c)  This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by an
instrument in writing executed by all parties.

 

(d)  This Agreement shall be binding upon the heirs, estates, legal
representatives, successors and assigns of the parties hereto.

 

(e)  All terms used herein shall be deemed to include the masculine, feminine
and neuter, and the singular and plural as the context requires.  Captions
herein are for convenience of reference only and shall not alter or affect the
meaning or construction of the paragraphs hereof to which they relate.

 

(f)  Each of the parties hereto agree to execute such other documents,
instruments or agreements as shall be reasonably necessary, appropriate or
required to evidence the intent of the parties hereto.

 

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IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed,
this Subscription and Investment Representation Agreement this 12 day of May,
2004.

 

 

INVESTOR

 

 

 

Thomas Crown Investments Limited

 

 

 

By:

/s/ Geraldo Cesar Mercer Guimaraes

 

 

Name:

Geraldo Cesar Mercer Guimaraes

 

 

Title:

Directors

 

 

 

 

 

Address:

Unit 3, 20th Floor, Golden Centre

 

 

 

188 Des Voeux Road Central

 

 

 

Hong Kong, China

 

 

 

 

 

 

 

 

Agreed and Accepted:

 

 

 

 

 

 

INTAC INTERNATIONAL, INC.

 

 

 

 

 

 

 

By:

/s/ Wei Zhou

 

 

 

Wei Zhou, Chief Executive Officer

 

 

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