Exhibit 10.1

 

SHARE EXCHANGE AGREEMENT

THIS SHARE EXCHANGE AGREEMENT (the “Agreement”) is made as of April 10 2008, by
and among IA Global, Inc., a corporation organized and existing under the laws
of the State of Delaware (the “Company”) and P. Scott Valley and John Engel,
individual citizens of the United States, (collectively the “Sellers”) related
to their ownership of Shift Resources, LLC., (“Shift Resources”), a limited
liability company registered and existing under the laws of Connecticut,
including each of the operations of Shift Resources listed on Schedule I,
Section 2.5 hereto.

P r e l i m i n a r y S t a t e m e n t s

A.        The Company desires to acquire the membership interests of Shift
Resources (the “Shift Resources Membership Interests”) which Shift Resources
Membership Interests equal to 100% of the outstanding equity interests of Shift
Resources on a fully-diluted basis, in exchange for $190,000 of the Company’s
Common Stock, or 826,086 shares of the Company’s common stock, par value US$.01
per share (the “IAO Common Stock)”; and

B.        The parties hereto agree that the shares of IAO Common Stock to be
issued pursuant to this Agreement have an agreed upon value in the transaction
of US$190,000, or US $0.23 per share, the closing price on February 7, 2008, the
close price the day the negotiations were concluded. The parties intend this
transaction to qualify as a tax-free exchange.

NOW, THEREFORE, for and in consideration of the premises, covenants, and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties do
covenant, agree, represent, warrant, and stipulate as follows:

1.

EXCHANGE AGREEMENT

1.1       Issuance of IAO Common Stock. Subject to the terms and conditions set
forth herein, the Company hereby transfers to the Sellers $190,000 of the
Company’s Common Stock, or 826,086 shares of the Company’s common stock, which
includes a restrictive legend, as set forth in Section 2.22. The Company agrees
to issue the common stock within fifteen days of the date the IAO Common Stock
is approved by the American Stock Exchange (“AMEX”).

1.2       Transfer of Shift Resources Membership Interests and Shift Resources
Philippines Common Stock to the Company.  

(a)       Subject to the terms and conditions set forth herein, the Sellers
hereby transfers to the Company 100% of the Membership Interests of Shift
Resources on the Closing Date.

(b)       The Shift Resources Membership Interests delivered to the Company
pursuant to Section 1.2(a) have been duly endorsed in blank or with stock powers
effecting such transfer such that the Company may seek immediate re-registration
of such membership interests into the name of the Company on the books and
records of Shift Resources.

 

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(c)       In addition, Shift Resources will deliver stock certificates
representing 1,000,000 shares of Common Stock of Shift Resources Philippines,
Inc., a Philippines corporation, (“Shift Resources Philippines”) along with
stock powers endorsed in blank or with stock powers effecting such transfer such
that the Company may seek immediate re-registration of such membership interests
into the name of the Company on the books and records of Shift Resources
Philippines.

1.3       Other Consideration.  

(a)       $35,000 in cash paid at closing.

2.

REPRESENTATION AND WARRANTIES OF THE SELLERS AND SHIFT RESOURCES

Except as set forth in the Shift Resources Disclosure Schedule attached hereto
as Exhibit A (the “Shift Resources Disclosure Schedule”), the Sellers, jointly
and severally, represent and warrant to the Company as follows:

2.1       Organization, Execution and Delivery; Valid and Binding Agreements.
The Sellers have duly executed and delivered this Agreement and, assuming that
this Agreement is the legal, valid and binding agreement of the Company, this
Agreement constitutes the valid and binding obligations of the Sellers,
enforceable against each such party, in accordance with its terms.

2.2       Authority; No Breach or Conflicts. The Sellers have all requisite
power and authority and capacity to execute and deliver this Agreement and to
perform their obligations hereunder (including all right, power, capacity and
authority to sell, transfer, and convey the Shift Resources Membership
Interests). The execution, delivery and performance by Sellers and Shift
Resources of this Agreement and the agreements provided for herein, and the
consummation by Sellers of the transactions contemplated hereby and thereby,
will not, with or without the giving of notice or the passage of time or both,
directly or indirectly contravene, conflict or result in a violation of any
provision of the Sellers or Shift Resource’s organizational or formation
documents. The Shift Resources Membership Interests have been validly issued,
fully paid and non-assessable free of any liens or encumbrances provided,
however, that the Shift Resources Membership Interests may be subject to
restrictions on transfer under state or US federal securities laws. The issuance
of the Shift Resources Membership Interests is not subject to any preemptive
rights or rights of first refusal.

2.3       Corporate Matters. Shift Resources (i) is a limited liability company,
duly registered, validly existing, and in good standing under the laws of its
jurisdiction of organization; (ii) has full power and authority to carry on the
businesses in which it is engaged, and to own and use the properties owned and
used by it. Shift Resources is duly qualified as a foreign entity and is in good
standing as a foreign entity in all jurisdictions where the properties owned,
leased or operated by it and relating to the business are located or where the
business is conducted, except where failure to so qualify or be in good standing
is not reasonably likely to have a material adverse effect on the business,
results of operations, prospects or financial condition of the business.

 

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2.4       Capitalization. Section 2.4 of the Shift Resources Disclosure Schedule
sets forth the authorized and issued membership interests of Shift Resources as
of the date hereof. As of the date hereof, there are no outstanding options,
warrants, preemptive rights, indebtedness having general voting rights or debt
convertible into securities having such rights or subscriptions or other rights
agreements or any other outstanding security or agreement entitling the holder
thereof or party thereto to acquire any membership interest of Shift Resources.

2.5       Sellers Share Percentage. The Shift Resources Membership Interests to
be acquired by the Company represent one hundred percent (100.00%) of all of the
issued and outstanding capital stock of Shift Resources on a fully-diluted
basis.

2.6       Subsidiaries. Section 2.6 of the Shift Resources Disclosure Schedule
lists each entity in which Shift Resources owns equity interests, which is Shift
Resources Philippines. Shift Resources Philippines is wholly owned by Shift
Resources, by virtue of direct ownership of forty percent (40%) of the
outstanding common stock of Shift Resources Philippines and an informal indirect
ownership of sixty percent (60%) of the common stock of Shift Resources
Philippines, which 60% is owned of record by Lorna Bondoc. All of the
outstanding shares of capital stock of, Shift Resources Philippines have been
validly issued and are fully paid and non-assessable and such shares or
interests are owned directly or indirectly by Shift Resources, free and clear of
all encumbrances and to the knowledge of Sellers free of any restriction on the
right to vote, sell or otherwise dispose of such capital stock. Except for the
capital stock or other ownership interests of Shift Resources Philippines, Shift
Resources does not beneficially own directly or indirectly any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any person or entity.

2.7       Financial Statements. Section 2.7 of the Shift Resources Disclosure
Schedule sets forth true, correct and complete copies of (i) the internally
prepared unaudited pro forma balance sheet and statement of operations of Shift
Resources Philippines as of December 31, 2006 and 2007, prepared March 3, 2008
(“March 3, 2008 Financial Statements “); (ii) the March 3, 2008 Financial
Statements present fairly the financial position of Shift Resources Philippines
as of the dates thereof and its results of operations for the periods covered
thereby and, were prepared for internal use on a consistent basis Except as set
forth in the March 3, 2008 Financial Statements or Section 2.6 of the Disclosure
Schedule, (i) Shift Resources Philippines has no material liabilities,
contingent or otherwise, other than (a) liabilities incurred in the ordinary
course of business, and (b) obligations under contracts and commitments incurred
in the ordinary course of business and not required to be reflected in the March
3, 2008 Financial Statements; (ii) there has been no material adverse change in
the assets, business, liabilities, properties, prospects, condition (financial
or otherwise) or results of operations of Shift Resources Philippines; (iii)
neither the business, condition or operations of Shift Resources Philippines nor
any of its properties or assets have been materially or adversely affected as a
result of any legislative or regulatory change, any revocation or change in any
franchise, license or right to do business, or any other event or occurrence,
whether or not insured against; (iv) Shift Resources Philippines has not entered
into any material transaction outside of the ordinary course of business or made
any distribution on its capital stock or other ownership interest; and, (v)
Paper.com LLC will forgive the debt of $99,585.25 due by Shift Resources
Philippines, to Paper.com LLC as recorded in the March 3, 2008 Financial
Statements, and (vi) Shift Resources

 

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Philippines will forgive the debt of $96,155.09 due by Paper.com LLC to Shift
Resources Philippines as recorded in the March 3, 2008 Financial Statements.

2.8       Retention of Lorna Bondoc. Sellers agree to make their best efforts to
ensure the retention of Lorna Bondoc, and agree that they will not offer
employment to Lorna Bondoc nor directly or indirectly solicit her employment.

2.9       Due Diligence Information. The due diligence information presented to
the Company by the Sellers in connection with the Company’s due diligence
investigation of Shift Resources and Shift Resources Philippines, including each
of the representations, warranties and covenants of the Sellers in this
Agreement, is complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading, provided however, that all such representations
and warranties relating to Shift Resources Philippines are made by Sellers to
their knowledge.

2.10     Litigation; Compliance with Law. There is no (i) action, suit, claim,
proceeding or investigation pending or, to the best of the Sellers knowledge,
threatened against or affecting Shift Resources or Shift Philippines, at law or
in equity, or before or by any municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign; (ii)
arbitration proceeding relating to Shift Resources or Shift Resources
Philippines pending under collective bargaining agreements or otherwise; or
(iii) governmental inquiry pending or, to the best of Sellers knowledge,
threatened against or affecting Shift Resources or Shift Resources Philippines
(including, without limitation, any inquiry as to the qualification of Shift
Resources Philippines to hold or receive any license or permit), and, to the
best of Sellers knowledge, there is no reasonable basis for any of the
foregoing. Neither Shift Resources nor Shift Resources Philippines is in default
with respect to any governmental order, writ, judgment, injunction or decree
known to or served upon Shift Resources or Shift Resources Philippines of any
court or of any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. There is no action or suit by Shift
Resources or to the knowledge of Sellers by Shift Resources Philippines pending
or threatened against others. Shift Resources and Shift Resources Philippines
have complied in all material respects with all laws, rules, regulations and
orders applicable to its businesses, operations, properties, assets, products
and services, and Shift Resources and Shift Resources Philippines have all
necessary permits, licenses and other authorizations required to conduct its
business as conducted and as proposed to be conducted, except to the extent
failure to comply or obtain any such permits, licenses or authorizations will
not have a material adverse effect. To the knowledge of Sellers, there is no
existing law, rule, regulation or order, and the Sellers are not aware of any
proposed law, rule, regulation or order, which would prohibit or materially
restrict Shift Resources Philippines from, or otherwise materially and adversely
affect Shift Resources Philippines in, conducting its business in any
jurisdiction in which it is now conducting business or in which it proposes to
conduct business.

2.11     Proprietary Information of Third Parties. No third party has claimed or
to the knowledge of Sellers has reason to claim that any person employed by or
affiliated with Shift Resources Philippines has (a) violated or may be violating
to any material extent any of the terms or conditions of his employment,
non-competition or non-disclosure agreement with such third

 

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party, (b) disclosed or may be disclosing or utilized or may be utilizing any
trade secret or proprietary information or documentation of such third party, or
(c) interfered or may be interfering in the employment relationship between such
third party and any of its present or former employees, or has requested
information from Shift Resources or Shift Resources Philippines that suggests
that such a claim might be contemplated. To the best of the Sellers knowledge,
no person employed by or affiliated with Shift Resources Philippines has
improperly utilized or proposes to improperly utilize any trade secret or any
information or documentation proprietary to any former employer, and to the best
of Sellers knowledge, no person employed by or affiliated with Shift Resources
Philippines has violated any confidential relationship which such person may
have had with any third party, in connection with the development, manufacture
or sale of any product or proposed product or the development or sale of any
service or proposed service of Shift Resources Philippines, and Sellers have no
reason to believe there will be any such employment or violation. To the best of
the Sellers knowledge, none of the execution or delivery of this Agreement and
the other related agreements and documents executed in connection herewith, or
the carrying on of the business of Shift Resources Philippines by any officer,
director or key employee of Shift Resources Philippines, or the conduct or
proposed conduct of the business of Shift Resources Philippines, will materially
conflict with or result in a material breach of the terms, conditions or
provisions of or constitute a material default under any contract, covenant or
instrument under which any such person is obligated.

2.12     Title to Assets. Shift Resources Philippines has valid and marketable
title to all of its assets now carried on its books including those reflected in
the most recent balance sheet of Shift Resources which forms a part of the March
3, 2008 Financial Statements, or acquired since the date of such balance sheet
(except personal property disposed of since said date in the ordinary course of
business) free of any liens charges or encumbrances of any kind whatsoever,
except such encumbrances and liens that arise in the ordinary course of business
and do not materially impair Shift Resources Philippines ownership or use of
such property or assets. Shift Resources Philippines does not own any real
property. Shift Resources Philippines is in compliance in all material respects
under all leases for property and assets under which it is operating, and all
said leases are valid and subsisting and are in full force and effect.

2.13     Intellectual Property Assets. Shift Resources Philippines has, or has
rights to use, all patents, patent rights, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names or
copyrights, any applications for such which are in the process of being prepared
and other intellectual property rights and similar rights necessary or material
for use in connection with its business (collectively, “Intellectual Property”).
The Intellectual Property is sufficient to permit Shift Resources Philippines to
conduct its business as presently conducted, without any conflict with or
infringement of the rights of others, and as proposed to be conducted, and,
except as disclosed in Section 2.13 to the Shift Resources Disclosure Schedule,
no claim is pending or, to the best of Sellers knowledge, threatened to the
effect that the operations of Shift Resources Philippines infringe upon or
conflict with the asserted rights of any other person under any Intellectual
Property, and, to the best of Sellers knowledge, there is no basis for any such
claim (whether or not pending or threatened). Except as disclosed in
Section 2.13 to the Shift Resources Disclosure Schedule, no claim is pending or,
to the best of Sellers knowledge, threatened to the effect that any such
Intellectual Property owned or licensed by Shift Resources Philippines, or which
Shift Resources

 

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Philippines otherwise has the right to use, is invalid or unenforceable by Shift
Resources Philippines, and, to the best of the Sellers knowledge, there is no
basis for any such claim (whether or not pending or threatened). To the best of
the Sellers knowledge, all material technical information developed by and
belonging to Shift Resources Philippines that has not been patented has been
kept confidential. Shift Resources Philippines has not granted or assigned to
any other person or entity any right to manufacture, have manufactured or
assemble the products or proposed products or to provide the services or
proposed services of Shift Resources Philippines. Shift Resources Philippines
has no material obligation to compensate any person for the use of any
Intellectual Property nor has Shift Resources Philippines granted to any person
any license or other rights to use in any manner any Intellectual Property of
Shift Resources Philippines.

2.14     Assumptions, Guaranties, etc., of Indebtedness of Other persons. Except
as disclosed in Section 2.14 of the Shift Resources Disclosure Schedule, Shift
Resources Philippines has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable for any material amount of indebtedness of any
other person (including, without limitation, any liability by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in the debtor, or otherwise to assure the creditor
against loss). Shift Resources will forgive the debt of $99,585.25 due by Shift
Resources Philippines to Paper.com LLC as recorded in the March 3, 2008
Financial Statements and Shift Resources Philippines will forgive the debt of
$96,155.09 due by Paper.com LLC to Shift Resources Philippines as recorded in
the March 3, 2008 Financial Statements.

2.15     No Brokers or Finders. No person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or valid claim
against or upon Shift Resources for any commission, fee or other compensation as
a finder or broker arising out of the transactions contemplated by this
Agreement.

2.16     No Material Adverse Change. Since the respective dates as of which
information was given in this Agreement or the Shift Resources Disclosure
Schedules, except as otherwise stated therein: (i) there has been no material
adverse change in the financial condition, or in the results of operations,
affairs or prospects of Shift Resources Philippines, whether or not arising in
the ordinary course of business; and (ii) there have been no transactions
entered into by Shift Resources Philippines, other than those in the ordinary
course of business, which are material to Shift Resources Philippines.

2.17     Ownership of Sellers Shares. The Sellers have good and marketable title
to the membership interests of Shift Resources, and Shift Resources has good and
marketable title to the common stock of Shift Resources Philippines free and
clear of any and all covenants, conditions, restrictions, voting trust
arrangements, security interests, options and adverse claims or rights
whatsoever, except as noted on Shift Resources Disclosure Schedule. Upon
consummation of the purchase contemplated hereby, the Company will acquire from
the Sellers good and marketable title to the Shift Resources membership
interests and the common stock of Shift Resources Philippines, free and clear of
all covenants, conditions, restrictions, voting trust arrangements, security
interests, options and adverse claims or rights whatsoever except as note on the
Shift Resources Disclosure Schedule.

 

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2.18     Investment. Each of the Sellers are acquiring the IAO Common Stock for
his own account and beneficial interest for investment and not for sale or with
a view to, or for resale in connection with, the distribution thereof, have no
present intention of selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the IAO Common Stock
and does not presently have any reason to anticipate a change in such intention.

2.19     Accredited Investors. Sellers are “accredited investors” within the
meaning of Rule 501(a) (1), (2), (3) or (7) of Regulation D under the Securities
Act of 1933, as amended (“Securities Act”).

2.20     Information. Sellers have received all information it has requested
from the Company that it considers necessary or appropriate for deciding whether
to acquire the IAO Common Stock, including, but not limited to, information
meeting the requirements of Rule 502(b) of Regulation D under the Securities
Act. Sellers have had an opportunity to ask questions and receive answers from
the Company regarding the terms of the IAO Common Stock and to obtain any
additional information necessary to verify the accuracy of the information given
to it.

2.21     Experience. Sellers have such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risk of an
investment in the IAO Common Stock and is able to bear the economic risk of such
investment.

2.22     Restricted Securities. Sellers understands that the IAO Common Stock
will be characterized as “restricted securities” under the Securities Act, in as
much as they are being acquired from the Company in a transaction not involving
a public offering and that under the Securities Act and applicable regulations
there under such securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this connection,
Sellers represents that he is familiar with Rule 144 under the Securities Act,
as presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act. The Sellers also understand that the certificates
evidencing the IAO Common Stock will bear the legend set forth below. The
Company will assist the Sellers with the removal of such legend upon request in
accordance with Company practice and US securities laws. Sellers agree not to
sell the IAO Common Stock prior to November 1, 2008.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE HOLDER
FOR ITS OWN ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO THE
DISTRIBUTION OF SUCH SECURITIES. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND COMPLIANCE WITH SUCH
STATE SECURITIES LAWS, (II) IN COMPLIANCE WITH RULE 144 UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, OR (III) UPON THE DELIVERY TO IA GLOBAL, INC.
(THE “COMPANY”) OF AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION AND/ OR COMPLIANCE IS NOT REQUIRED.

 

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2.23     Material Contract Defaults. Shift Resources Philippines is not in
default in any material respect under the terms of any outstanding contract,
agreement, lease, or other commitment which is material to its business,
operations, properties, assets, or financial condition, and there is no event of
default or other event which, with notice or lapse of time or both, would
constitute a default in any material respect under any such contract, agreement,
lease, or other commitment in respect of which Shift Resources Philippines has
not taken adequate steps to prevent such a default from occurring.

2.24     Government Authorizations. Shift Resources Philippines has all
licenses, franchises, permits, and other governmental authorizations that are
legally required to enable them to conduct their business in all material
respects as conducted on the date of this Agreement. No authorization, approval,
consent, or order of, or registration, declaration, or filing with, any court or
other governmental body is required in connection with the consummation by Shift
Resources Philippines of the transactions contemplated hereby.

2.25     Excluded Assets. Section 2.26 of the Shift Resources Disclosure
Schedule lists each entity that Sellers is excluding from this Agreement.

2.26     Services Agreement. The Company agrees to enter into a Services
Agreement in the form of Exhibit 1 hereto with Paper.com LLC simultaneous with
the execution of this Agreement.

2.27     Non-Competition Agreement. The Sellers agree to enter into a
non-competition agreement with Shift Resources Philippines for twenty four (24)
months.

3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Except as set forth on the IAO Disclosure Schedule attached hereto as Exhibit B
(the “IAO Disclosure Schedule”), the Company hereby represents and warrants to
the Sellers as follows:

3.1       Organization, Execution and Delivery; Valid and Binding Agreements.
The Company is an organization that is validly existing and in good standing
under the laws of the State of Delaware. The Company has duly executed and
delivered this Agreement and, assuming that this Agreement is the legal, valid
and binding agreement of the Sellers and Shift Resources, this Agreement
constitutes the valid and binding obligation of the Company, enforceable against
it in accordance with its terms.

3.2       Authority; No Breach or Conflicts. The Company has all requisite power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder (including all right, power, capacity and authority to
issue and sell the IAO Preferred and Common Stock, subject to applicable federal
and state securities law restrictions). The execution, delivery and performance
by the Company of this Agreement and the agreements provided for herein, and the
consummation by the Company of the transactions contemplated hereby and thereby,
will not, with or without the giving of notice or the passage of time or both,
directly or indirectly contravene, conflict or result in a violation of any
provision of the Company’s organizational documents. The IAO Preferred and
Common Stock, when issued in compliance with the provisions of this Agreement,
will be validly issued, fully paid and non-assessable free

 

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of any liens or encumbrances other than any liens or encumbrances created by the
Sellers; provided, however, that the IAO Common Stock may be subject to
restrictions on transfer under state or US federal securities laws. The issuance
of the IAO Common Stock is not subject to any preemptive rights or rights of
first refusal.

3.3       Investment. The Company is acquiring the Shift Resources Ordinary
Shares for its own account and beneficial interest for investment and not for
sale or with a view to, or for resale in connection with, the distribution
thereof, has no present intention of selling (in connection with a distribution
or otherwise), granting any participation in, or otherwise distributing the
Shift Resources Ordinary Shares, and does not presently have any reason to
anticipate a change in such intention.

3.4       The Company Reports; Financial Statements.  

(a)       The Company has made available to Shift Resources each registration
statement, report, proxy statement or information statement prepared by it since
December 31, 2006 (the “Audit Date”) and filed with the US Securities and
Exchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K
for the year ended December 31, 2006, each in the form (including exhibits,
annexes and any amendments thereto) as filed with the SEC. The Company has filed
or furnished all forms, statements, reports and documents required to be filed
or furnished by it with the SEC pursuant to applicable securities statutes,
regulations, policies and rules since the Audit Date (the forms, statements,
reports and documents filed or furnished with the SEC since the Audit Date and
those filed or furnished with the SEC subsequent to the date of this Agreement,
if any, including any amendments thereto, the “Reports”). Except as set forth on
Section 3.4 of the IAO Disclosure Schedule, each of the Reports, at the time of
its filing, complied or will comply in all material respects with the applicable
requirements of the Securities and Exchange Act of 1934, as amended (“Exchange
Act”) and the rules and regulations there under and complied in all material
respects with then applicable accounting standards. As of its respective dates
(or, if amended, as of the date of such amendment), the Reports did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading.

(b)       Each of the consolidated balance sheets included in or incorporated by
reference into the Reports (including the related notes and schedules) fairly
presents the consolidated financial position of the Company and its subsidiaries
as of its date and each of the consolidated statements of income, shareholders’
equity and cash flows included in or incorporated by reference into the Reports
(including any related notes and schedules) fairly presents, or in the case of
Reports filed after the date hereof, will fairly present, the net income, total
shareholders’ equity and net increase in cash and cash equivalents, as the case
may be, of the Company and its respective subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein.

 

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3.5       Due Diligence Information. The due diligence information presented to
the Sellers and Shift Resources by the Company in connection with its due
diligence investigation of the Company is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.

3.6       Litigation; Compliance with Law. Except as disclosed, there is no
(i) action, suit, claim, proceeding or investigation pending or, to the best of
the Company’s knowledge, threatened against or affecting the Company, at law or
in equity, or before or by any municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign; (ii)
arbitration proceeding relating to the Company pending under collective
bargaining agreements or otherwise; or (iii) governmental inquiry pending or, to
the best of the Company’s knowledge, threatened against or affecting the Company
(including, without limitation, any inquiry as to the qualification of the
Company to hold or receive any license or permit), and, to the best of the
Company’s knowledge, there is no reasonable basis for any of the foregoing. The
Company is not in default with respect to any governmental order, writ,
judgment, injunction or decree known to or served upon the Company of any court
or of any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. There is no action or suit by the Company
pending or threatened against others. The Company has complied in all respects
with all laws, rules, regulations and orders applicable to its businesses,
operations, properties, assets, products and services, and the Company has all
necessary permits, licenses and other authorizations required to conduct its
business as conducted and as proposed to be conducted, except to the extent
failure to comply or obtain any such permits, licenses or authorizations will
not have a material adverse effect. There is no existing law, rule, regulation
or order, and the Company is not aware of any proposed law, rule, regulation or
order, which would prohibit or materially restrict the Company from, or
otherwise materially and adversely affect the Company in, conducting its
business in any jurisdiction in which it is now conducting business or in which
it proposes to conduct business.

3.7       Proprietary Information of Third Parties. No third party has claimed
or has reason to claim that any person employed by or affiliated with the
Company has (a) violated or may be violating to any material extent any of the
terms or conditions of his employment, non-competition or non-disclosure
agreement with such third party, (b) disclosed or may be disclosing or utilized
or may be utilizing any trade secret or proprietary information or documentation
of such third party, or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees, or has requested information from the Company that suggests that such
a claim might be contemplated. To the best of the Company’s knowledge, no person
employed by or affiliated with the Company has improperly utilized or proposes
to improperly utilize any trade secret or any information or documentation
proprietary to any former employer, and to the best of the Company’s knowledge,
no person employed by or affiliated with the Company has violated any
confidential relationship which such person may have had with any third party,
in connection with the development, manufacture or sale of any product or
proposed product or the development or sale of any service or proposed service
of the Company, and the Company has no reason to believe there will be any such
employment or violation. To the best of the Company’s knowledge, none of the
execution or delivery of this Agreement and the other related agreements and
documents executed in connection herewith, or the carrying on of the business of
the Company as officers, employees or

 

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agents by any officer, director or key employee of the Company, or the conduct
or proposed conduct of the business of the Company, will materially conflict
with or result in a material breach of the terms, conditions or provisions of or
constitute a material default under any contract, covenant or instrument under
which any such person is obligated.

3.8       Title to Assets. The Company has valid and marketable title to all of
its assets now carried on its books including those reflected in the most recent
balance sheet of the Company which forms a part of the Reports, or acquired
since the date of such balance sheet (except personal property disposed of since
said date in the ordinary course of business) free of any liens charges or
encumbrances of any kind whatsoever, except such encumbrances and liens that
arise in the ordinary course of business and do not materially impair the
Company’s ownership or use of such property or assets. The Company does not own
any real property. The Company is in compliance in all material respects under
all leases for property and assets under which it is operating, and all said
leases are valid and subsisting and are in full force and effect.

3.9       Intellectual Property Assets. The Company has, or has right to use all
patents, patent rights, patent applications, trademarks, trademark applications,
service marks, service mark applications, trade names or copyrights, any
applications for such which are in the process of being prepared and other
intellectual property rights and similar rights necessary or material for use in
connection with its business (collectively, “IAO Intellectual Property”). The
Company owns or possesses adequate licenses or other rights to use all IAO
Intellectual Property necessary or material to the conduct of its business as
conducted, without any conflict with or infringement of the rights of others,
and as proposed to be conducted, and, except as disclosed in Section 3.9 to the
Disclosure Schedule, no claim is pending or, to the best of the Company’s
knowledge, threatened to the effect that the operations of the Company infringe
upon or conflict with the asserted rights of any other person under any IAO
Intellectual Property, and, to the best of the Company’s knowledge, there is no
basis for any such claim (whether or not pending or threatened). Except as
disclosed in Section 3.9 to the Disclosure Schedule, no claim is pending or, to
the best of the Company’s knowledge, threatened to the effect that any such IAO
Intellectual Property owned or licensed by the Company, or which the Company
otherwise has the right to use, is invalid or unenforceable by the Company, and,
to the best of the Company’s knowledge, there is no basis for any such claim
(whether or not pending or threatened). To the best of the Company’s knowledge,
all material technical information developed by and belonging to the Company
that has not been patented has been kept confidential. The Company has not
granted or assigned to any other person or entity any right to manufacture, have
manufactured or assemble the products or proposed products or to provide the
services or proposed services of the Company. The Company has no material
obligation to compensate any person for the use of any Intellectual Property nor
has the Company granted to any person any license or other rights to use in any
manner any IAO Intellectual Property.

3.10     Assumptions, Guaranties, etc. of Indebtedness of Other persons. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable for any material amount of indebtedness of any other person
(including, without limitation, any liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss).

 

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3.11     No Brokers or Finders. No person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or valid claim
against or upon the Company for any commission, fee or other compensation as a
finder or broker arising out of the transactions contemplated by this Agreement.

3.12     No Material Adverse Change. Since the respective dates as of which
information was given in this Agreement or the Disclosure Schedules, except as
otherwise stated therein: (i) there has been no material adverse change in the
financial condition, or in the results of operations, affairs or prospects of
the Company, whether or not arising in the ordinary course of business; and (ii)
there have been no transactions entered into by the Company, other than those in
the ordinary course of business, which are material to the Company.

3.13     Investment. The Company is acquiring the Shift Resources Ordinary
Shares for investment and not for sale or with a view to, or for resale in
connection with, the distribution thereof, has no present intention of selling
(in connection with a distribution or otherwise), granting any participation in,
or otherwise distributing the Shift Resources Ordinary Shares, and does not
presently have any reason to anticipate a change in such intention.

3.14     Information. The Company has received all information requested from
Shift Resources that it considers necessary or appropriate for deciding whether
to acquire the Shift Resources Ordinary Shares. The Company has had an
opportunity to ask questions and receive answers from the Sellers and Shift
Resources regarding the terms of the Shift Resources Ordinary Shares and to
obtain any additional information necessary to verify the accuracy of the
information given to it.

3.15     Material Contract Defaults. The Company is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or financial condition of either of them, and there is no event of
default or other event which, with notice or lapse of time or both, would
constitute a default in any material respect under any such contract, agreement,
lease, or other commitment in respect of which the Company has not taken
adequate steps to prevent such a default from occurring.

3.16     Government Authorizations. The Company has all licenses, franchises,
permits, and other governmental authorizations that are legally required to
enable them to conduct their business in all material respects as conducted on
the date of this Agreement. No authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby.

4.

CONTINUING COVENANTS

From and after the execution and delivery of this Agreement, the parties agree
as follows:

4.1       AMEX Listing. The Company shall have the IAO Common Stock, to be
issued to the Sellers under this Agreement, authorized and approved by AMEX for
listing on AMEX as soon as possible after the execution of this Agreement.

 

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4.2       Registration Statement. The Company agrees it shall, within one
hundred and twenty days following approval of listing of the IAO Common Stock by
AMEX, if necessary under US securities laws, prepare and file with the SEC, at
the Company’s expense, a registration statement, to the extent the Company is
eligible to file on Form S-3, for the re-sale of the IAO Common Stock (the “S-3
Registration Statement”) under the Securities Act by the Sellers. The Company
will use its reasonable efforts to cause such S-3 Registration Statement to
become effective within four (4) months from the initial filing thereof.
            

4.3       Notice of Developments. Each party will give prompt written notice to
the other party of any material adverse development causing a breach or likely
breach of any of its covenants in this Agreement.

5.

INDEMNIFICATION

5.1       Survival of Representations. All of the representations and warranties
of the Company, the Sellers and Shift Resources contained in this Agreement
shall have been accurate as of the date of the Closing Date, and all such
representations and warranties shall survive the Closing Date for a period of
one year, measured from the Closing Date.

5.2       Indemnification.

(a)       The Company shall indemnify and hold harmless the Sellers and Shift
Resources and its officers, directors, agents, employees and affiliates, each
person who controls or the Sellers and Shift Resources (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) (each such
Person, a “Control Person”) and the officers, directors, agents, employees and
affiliates of each such Control Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out
of, or relating to, a breach or breaches of any representation, warranty,
covenant or agreement by the Company under this Agreement.

(b)       The Sellers shall indemnify and hold harmless the Company, its
officers, directors, agents and employees, each Control Person and the officers,
directors, agents and employees of each Control Person, to the fullest extent
permitted by application law, from and against any and all Losses, as incurred,
arising out of, or relating to, a breach or breaches of any representation,
warranty, covenant or agreement by the Sellers and Shift Resources under this
Agreement.

5.3       Conduct of Indemnification Proceedings. If any proceeding shall be
brought or asserted against any person entitled to indemnity (each a
“Proceeding”) hereunder (an “Indemnified Party”), such Indemnified Party
promptly shall notify the person from whom indemnity is sought (the
“Indemnifying Party”) in writing, and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and

 

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only) to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed to pay such fees and expenses; or
(2) the Indemnifying Party shall have failed promptly to assume the defense of
such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense of the
claim against the Indemnified Party but will retain the right to control the
overall Proceedings out of which the claim arose and such counsel employed by
the Indemnified Party shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

All fees and expenses of the Indemnified Party to which the Indemnified Party is
entitled hereunder (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such Proceeding
in a manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten (10) business days of written notice thereof to
the Indemnifying Party.

No right of indemnification under this Section shall be available as to a
particular Indemnified Party if there is a non-appealable final judicial
determination that such Losses arise solely out of the negligence or bad faith
of such Indemnified Party in performing the obligations of such Indemnified
Party under this Agreement or a breach by such Indemnified Party of its
obligations under this Agreement.

5.4       Limitations on Indemnity. Neither the Sellers , on one hand, nor the
Company, on the other hand, shall have any liability for Losses arising under
this Agreement until aggregate liability for Losses arising under this Agreement
or any instrument delivered hereunder exceeds US $25,000, and then only for
Losses exceeding such US $25,000, nor for any aggregate liability for Losses
arising under this Agreement or any instrument delivered hereunder in excess of
US $150,000 and any aggregate liability will be resolved thru the return or
delivery of shares of IA Global Common Stock at the greater of $0.23 per share
or the current market price per share.

 

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5.5       Exclusivity. The indemnity and contribution agreements contained in
this Section 5 are the exclusive remedy that the Indemnified Parties may have to
the Indemnifying Parties.

6.

MISCELLANEOUS

6.1       Remedies Cumulative; Remedies Not Waived. Except as provided in
Section 5.5, no remedy herein conferred upon the parties is intended to be
exclusive of any other remedy and each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise. No course of
dealing between the parties, nor any delay on the part of the parties in
exercising any rights hereunder, shall operate as a waiver of any of the rights
of any of the parties, either individually or in the aggregate.

6.2       Waiver and Amendment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them. This Agreement shall not be changed,
modified or amended except by a writing signed by the parties hereto.

6.3       Assignability. Neither party may assign or transfer this Agreement or
its rights hereunder without the prior written consent of the other party, which
consent shall not be unreasonably withheld.

6.4       Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be sent by registered or certified mail
(return receipt requested and postage prepaid), transmitted by telecopy, or
delivered by hand, by messenger or by a recognized overnight delivery service,
addressed as follows, or to such other address as such party may have from time
to time furnished to the other party in writing:

 

If to the Company:

IA Global, Inc.

101 California Street, Suite 2450

San Francisco, CA 94111

Fax: 1-415-946-8801

 

 

If to the Sellers:

P. Scott Valley and John Engel

199 Elm Street

New Canaan, CT 06840

Fax: 1- 203-652-2510

 

Each such notice or other communication shall for all purposes of this Agreement
be treated as effective or having been given (i) if sent by registered or
certified mail, the earlier of receipt and five (5) business days after
dispatch, (ii) if transmitted by telecopy, on the business day of confirmed
receipt by the addressee thereof, and (iii) if delivered in person or by
overnight courier, on the business day delivered.

 

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6.5       Expenses. Each party shall pay its expenses, including attorneys fees,
in connection with this Agreement and the transaction contemplated hereby.

6.6       Counterparts. This Agreement may be executed in several counterparts,
and each executed copy shall constitute an original instrument, but all such
counterparts shall together constitute but one and the same instrument.

6.7       Headings; Construction. The headings of the several sections,
divisions or subsections of this Agreement shall not be construed to constitute
any part or to affect the meaning of any such sections, divisions or
subsections. The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption of burden of proof shall arise favoring
or not favoring any party by virtue of the authorship of any of the provisions
of this Agreement.

6.8       Severability. If any provision of this Agreement or portion of any
provision, or the application thereof to any person or circumstance, shall, to
any extent, be held invalid or unenforceable, the remainder of this Agreement or
the remainder of such provision and the application thereof to other persons or
circumstances, other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Agreement
shall be valid and be enforced to the fullest extent permitted by law.

6.9       Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of Newark, Delaware. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of Newark, Delaware for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of any of this Agreement), and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper or is an inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by
law. The parties hereby waive all rights to a trial by jury. If either party
shall commence an action or proceeding to enforce any provisions of this
Agreement, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.

 

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6.10     Compliance Required. The obligations of each of the parties arising
pursuant to this Agreement shall be expressly conditioned upon the full
compliance by the other party hereto with the terms set forth herein and in the
ancillary agreements referenced herein.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their respective corporate officers thereunto duly authorized
on the day and year first above written.

THE COMPANY:

 

IA Global, Inc.

 

 

By:

/s/ Derek Schneideman

 

Name:

Derek Schneideman

 

Title:

Chief Executive Officer

 

The Sellers:

 

P. Scott Valley

 

 

By:

/s/ P. Scott Vallely

P. Scott Vallely

 

John Engel

 

 

By:

/s/ John Engel

John Engel

 

Shift Resources, LLC.

 

 

By:

/s/ P. Scott Vallely

P. Scott Vallely, Manager

 

 

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SCHEDULE I

 

Shift Resources ORDINARY SHARES TO BE EXCHANGED

 

Exhibit A

 

Shift Resources Disclosure Schedule

 

Section 2.4                  The membership interests of Shift Resources, LLC, a
Connecticut limited liability company are owned fifty percent (50%) each by John
A. Engel, III and P. Scott Vallely

 

Section 2.6                  Shift Resources owns one hundred percent (100%) of
authorized and outstanding Common Stock of Shift Resources, Inc., a Philippines
corporation as follows:

 

# shares

owner

(Cert #)

399,998

shares owned by Shift Resources, LLC (1)

 

1

Share owned by John A. Engel, III (8)

 

1

Share owned by P. Scott Vallely (9)

 

400,000

subtotal owned directly by Sellers and Shift Resources, LLC

 

598,995

shares owned by Lorna S. Bondoc (2)

 

1

Share owned by Bayani B. Loste (pledged to Lorna S Bondoc) (3)

 

1

Share owned by Lorna S. Bondoc (10)

 

1

Share owned by Byani B. Loste (pledged to Lorna S. Bondoc) (11)

 

1

Share owned by Charise C. Cirales (pledged to Lorna S. Bondoc) (12)

 

1

Share owned by Vincent Barry A Lajura (pledged to Lorna S. Bondoc) (13)

 

600,000

subtotal owned indirectly by Shift Resources, LLC

 

 

At the closing Shift Resources, LLC shall execute blank stock powers for all the
shares, Messrs Engel and Vallely shall execute blank stock powers for
certificates 8 and 9; Lorna S. Bondoc shall execute blank stock powers for
certificates 2, and 10; Bayani B. Loste shall execute blank stock powers for
certificates 3 and 11; Charise C. Cirales shall execute a stock power for
Ceritficate 12; and Vincent Barry A Lajura shall execute a blank stock power for
certificate 13.

 

Section 2.7

Financial Statements

 

Pro-Forma Financial statements dated March 3, 2008

 

Section 2.13

Intellectual Property Assets

 

None.

 

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Section 2.14

Assumptions, Guaranties, etc., of Indebtedness of Other persons

 

None.

 

Section 2.26

Excluded Assets-

 

None.

 

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Exhibit B

 

IAO Disclosure Schedule

 

Section 3.4

IAO Reports

 

None.

 

Section 3.9

IAO Intellectual Property Assets

 

None.

 

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