Document:

EXHIBIT 10.5

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS WARRANT NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

	Warrant No.: 004	
Number of Shares: 500,000

	Date of Issuance: March 23, 2015	
(subject to adjustment)

 

 

MULTIMEDIA PLATFORMS, INC.

A Nevada Corporation

 

 

Common Stock Purchase Warrant

 

MULTIMEDIA PLATFORMS, INC., a Nevada corporation (the “Company”), for value received, hereby certifies that Brio Capital Master Fund LTD (the “Initial Holder”, or its registered assigns (the Initial Holder or such registered assigns shall be referred to as the “Registered Holder” or “Holder”)), is entitled, subject to the terms set forth below, to purchase from the Company at any time on or after the Exercise Date and on or before the Expiration Date (as hereinafter defined), in whole or in part Five Hundred Thousand (500,000) [166,667 per $50,000 investment] shares (as adjusted from time to time pursuant to the provisions of this Warrant) of the Company’s common stock, $0.01 par value per share (“Common Stock”), at an Exercise Price equal the lesser of: (i) $0.75 or (ii) 85% of the exercise price of the warrants issued at the next equity or convertible debt financing with gross proceeds to the Company of no less than One Million Dollars ($1,000,000) (a “Subsequent Financing”) following this Offering (the “Exercise Price”). The shares purchasable upon exercise of this Warrant are sometimes hereinafter referred to as the “Warrant Stock”. “Exercise Date” means any date subsequent to the issuance date hereof and prior to the Expiration Date on which the Registered Holder elects by written notice to the Company for this Warrant to become exercisable. In the event that no warrants are issued in the next financing, the Warrants shall be reset downward, but not upward, to the price of common stock (or conversion price or exercise price) of Common Stock Equivalents at any subsequent financing. “Common Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

This Warrant is issued pursuant to that certain Securities Purchase Agreement, dated as of March 23, 2015, by and among each of the parties named therein, pursuant to which the Registered Holder, or its assignor, acquired certain Units comprised of Notes and Warrants (the “Purchase Agreement”). Capitalized terms not otherwise used herein shall be as defined in the Purchase Agreement.

 

1. Exercise.

 

(a) Manner of Exercise. This Warrant may be exercised by the Registered Holder, in whole or in part with the purchase/exercise form appended hereto as Exhibit A (the “Notice of Exercise”) duly executed by such Registered Holder or by such Registered Holder’s duly authorized attorney, at the principal office of the Company, or at such other office or agency as the Company may designate in writing, accompanied by payment in full of the Exercise Price payable in respect of the number of shares of Warrant Stock purchased upon such exercise. The Exercise Price may be paid by cash, check, or wire transfer in immediately available funds.

 

	 
	
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(b) Effective Time of Exercise. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Section 1(a) above. At such time, the person or persons in whose name or names any certificates for Warrant Stock shall be issuable upon such exercise as provided in Section 1(c) below shall be deemed to have become the holder or holders of record of the Warrant Stock represented by such certificates.

 

(c) Delivery to Holder. As soon as practicable after the exercise of this Warrant, in whole or in part, and in any event within seven (7) calendar days thereafter, the Company at its expense will cause to be issued in the name of, and delivered to, the Registered Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct, certificates for Warrant Stock purchased hereunder which shall be transmitted by the Company’s transfer agent to the Registered Holder by (i) crediting the account of the Registered Holder’s broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the resale of the Warrant Stock by the Holder or (B) the Warrant Stock are eligible for resale without volume or manner-of-sale limitations pursuant to Rule 144, or (ii) if the conditions specified in (i)(A) or (i)(B) are not satisfied, by physical delivery to the address specified by the Registered Holder in the Notice of Exercise.

 

In the event the Company fails to deliver a certificate for the number of shares of Warrant Stock to which such Registered Holder is entitled within seven (7) calendar days after the exercise of this Warrant, the Registered Holder shall be entitled to a penalty equaling one percent (1.0%) of the number of Warrant Stock issuable in accordance with the exercise of the Warrant for each ten (10) calendar day period commencing after such seven (7) calendar day period. It is expressly understood that the foregoing penalty provision is in addition to, and not to the exclusion of, any and all remedies available to the Registered Holder as set forth herein and in the Purchase Agreement.

 

(d) Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Registered Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Stock, deliver to Registered Holder a new Warrant evidencing the rights of Registered Holder to purchase the unpurchased Warrant Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. The Registered Holder shall not be required to deliver the original of this Warrant in order to effect an exercise hereunder.

 

(e) Cashless Exercise. If the Warrant Stock is not registered pursuant to an effective Registration Statement filed with the SEC at the time of exercise, then during the exercise period and prior to the Expiration Date this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Stock equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the VWAP on the trading day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Stock that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the trading market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a trading day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time), (b) if the OTC Bulletin Board is not a trading market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by Company.

 

	 
	
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(f) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 1(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 1(f) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 1(f), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 1(f), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Warrant held by the Holder and the Beneficial Ownership Limitation provisions of this Section 1(f) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(f) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

2. Adjustments.

 

(a) Stock Splits and Dividends. If outstanding shares of the Company’s Common Stock shall be subdivided into a greater number of shares or a dividend in Common Stock shall be paid in respect of Common Stock, then the Exercise Price in effect immediately prior to such subdivision or at the record date of such dividend shall simultaneously with the effectiveness of such subdivision or immediately after the record date of such dividend be proportionately reduced. If outstanding shares of Common Stock shall be combined into a smaller number of shares, then the Exercise Price in effect immediately prior to such combination shall, simultaneously with the effectiveness of such combination, be proportionately increased. When any adjustment is required to be made in the Exercise Price, the number of shares of Warrant Stock purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Exercise Price in effect immediately prior to such adjustment, by (ii) the Exercise Price in effect immediately after such adjustment.

 

	 
	
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(b) Reclassification, Etc. In case of any reclassification or change of the outstanding securities of the Company or of any reorganization of the Company (or any other corporation the stock or securities of which are at the time receivable upon the exercise of this Warrant) or any similar corporate reorganization on or after the date hereof, then and in each such case the holder of this Warrant, upon the exercise hereof at any time after the consummation of such reclassification, change, reorganization, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the exercise hereof prior to such consummation, the stock or other securities or property to which such holder would have been entitled upon such consummation if such holder had exercised this Warrant immediately prior thereto, all subject to further adjustment as provided in Section 2(a); and in each such case, the terms of this Section 2 shall be applicable to the shares of stock or other securities properly receivable upon the exercise of this Warrant after such consummation

 

(c) Adjustment Certificate. When any adjustment is required to be made in the Warrant Stock or the Exercise Price pursuant to this Section 2, the Company shall promptly mail to the Registered Holder a certificate setting forth (i) a brief statement of the facts requiring such adjustment, (ii) the Exercise Price after such adjustment and (iii) the kind and amount of stock or other securities or property into which this Warrant shall be exercisable after such adjustment.

 

3. Transfers.

 

(a) Unregistered Security. Each holder of this Warrant acknowledges that this Warrant and the Warrant Stock have not been registered under the Securities Act, and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an effective registration statement under the Act as to this Warrant or such Warrant Stock and registration or qualification of this Warrant or such Warrant Stock under any applicable U.S. federal or state securities law then in effect or (ii) an opinion of counsel, reasonably satisfactory to the Company, that such registration or qualification is not required. Each certificate or other instrument for Warrant Stock issued upon the exercise of this Warrant shall bear a legend substantially to the foregoing effect.

 

(b) Transferability. Subject to the provisions of Section 3(a) hereof, this Warrant and all rights hereunder (including Registration Rights as provided above and in the Purchase Agreement) are transferable, in whole or in part, upon surrender of the Warrant with a properly executed assignment (in the form of Exhibit B hereto) at the principal office of the Company. The Company shall, upon receipt of a transfer notice and appropriate documentation, register any Transfer on the Company’s Warrant Register; provided, however, that the Company may require, as a condition to such Transfer, an opinion reasonably satisfactory to the Company that said Transfer does not require registration pursuant one or more exemptions provided under the Securities Act.

 

(c) Warrant Register. The Company will maintain a register containing the names and addresses of the Registered Holders of this Warrant. Until any transfer of this Warrant is made in the warrant register, the Company may treat the Registered Holder of this Warrant as the absolute owner hereof for all purposes; provided, however, that if this Warrant is properly assigned in blank, the Company may (but shall not be required to) treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. Any Registered Holder may change such Registered Holder’s address as shown on the warrant register by written notice to the Company requesting such change.

 

4. No Impairment. The Company will not, by amendment of its charter or through reorganization, consolidation, merger, dissolution, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment.

 

	 
	
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5. Termination. This Warrant (and the right to purchase securities upon exercise hereof) shall terminate four (4) years from the date of issuance of this Warrant (the “Expiration Date”).

 

6. Notices of Certain Transactions. In case:

 

(a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or

 

(b) of any reclassification of the capital stock of the Company, or

 

(c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company ((a), (b) and (c) of this Section 6 being referred to herein as a “Liquidation Event”), then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reclassification, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon such reclassification, dissolution, liquidation or winding-up) are to be determined. Such notice shall be mailed at least ten (10) days prior to the record date or effective date for the event specified in such notice. Failure to so notify a holder shall not invalidate any such action.

 

7. Reservation of Stock. The Company will at all times reserve and keep available out of its authorized but unissued stock, solely for the issuance and delivery upon the exercise of this Warrant and other similar Warrants, such number of its duly authorized shares of Common Stock as from time to time shall be issuable upon the exercise of this Warrant and other similar Warrants. All of the shares of Common Stock issuable upon exercise of this Warrant and other similar Warrants, when issued and delivered in accordance with the terms hereof and thereof, will be duly authorized, validly issued, fully paid and non-assessable, subject to no lien or other encumbrance other than restrictions on transfer arising under applicable securities laws and restrictions imposed by Section 3 hereof.

 

8. Exchange of Warrants. Upon the surrender by the Registered Holder of any Warrant or Warrants, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 3 hereof, issue and deliver to or upon the order of such Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of such Registered Holder or as such Registered Holder (upon payment by such Registered Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered.

 

9. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

 

10. Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, electronic mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery, electronic mail or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, if sent by electronic mail with confirmed receipt, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.

 

	 
	
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If to the Company:

 

Multimedia Platforms, Inc.

2929 East Commercial Blvd., Suite Ph-D

Fort Lauderdale, Florida 33308

Attn: Robert A. Blair, Chief Executive Officer

 

With a copy to (which shall not constitute notice):

 

________________________

 

________________________

 

Facsimile: (_____)___ - ______

Attention: _______________, Esq.

 

If to the Holder: At the address set forth on the Holder’s Signature to the Purchase Agreement

 

11. No Rights as Stockholder. Until the exercise of this Warrant, the Registered Holder of this Warrant shall not have or exercise any rights by virtue hereof as a stockholder of the Company.

 

12. Representations of Registered Holder. The Registered Holder hereby represents and acknowledges to the Company that:

 

(a) It understands that this Warrant and the Warrant Stock will be “restricted securities” as such term is used in the rules and regulations under the Securities Act and that such securities have not been and will not be registered under the Securities Act or any state securities law, and that such securities must be held indefinitely unless registration is effected (it being acknowledged and agreed by the Company that the Warrant Stock constitutes “Registrable Securities”) or transfer can be made pursuant to appropriate exemptions;

 

(b) the Registered Holder has read, and fully understands, the terms of this Warrant set forth on its face and the attachments hereto, including the restrictions on transfer contained herein;

 

(c) the Registered Holder is purchasing for investment for its own account and not with a view to or for sale in connection with any distribution of this Warrant and the Warrant Stock and it has no intention of selling such securities in a public distribution in violation of the federal securities laws or any applicable state securities laws; provided that nothing contained herein will prevent the Registered Holder from transferring such securities in compliance with the terms of this Warrant and the applicable federal and state securities laws; and

 

(d) the Company may affix the following legend (in addition to any other legend(s), if any, required by applicable state corporate and/or securities laws) to certificates for shares issued upon exercise of this Warrant:

 

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE LAW, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (ii) THE BORROWER RECEIVES AN OPINION OF LEGAL COUNSEL REASONABLY SATISFACTORY TO THE BORROWER STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (iii) THE BORROWER OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.”

 

	 
	
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13. No Fractional Shares. No fractional shares will be issued in connection with any exercise hereunder. In lieu of any fractional shares which would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the fair market value of one such share on the date of exercise, as determined in good faith by the Company’s Board of Directors.

 

14. Amendment or Waiver. Any term of this Warrant may be amended or waived upon written consent of the Company and the holder of this Warrant.

 

15. Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

16. Governing Law. This Warrant shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law. In the event of a dispute between the parties relating to enforcement of this Warrant, the substantially victorious party shall receive reimbursement of legal fees and court fees.

 

[Remainder of Page Intentionally Left Blank]

 

	 
	
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and delivered by its authorized officer as of the date first above written.

 

 

		 		MULTIMEDIA PLATFORMS, INC., a Nevada corporation	 
		 		 	 	 
				Signed: 		 
		 		By:	Robert A. Blair	 
		 		Title:	Chief Executive Officer	 
		 		 	 	 
	Company Address:	Multimedia Platforms, Inc.			
		
2929 East Commercial Blvd., Suite Ph-D
Fort Lauderdale, Florida 33308

			
		
Attn: Robert Blair, Chief Executive Officer

			

  

[SIGNATURE PAGE TO MULTIMEDIA PLATFORMS, INC. COMMON STOCK PURCHASE WARRANT]

 

	 
	
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EXHIBIT A

 

PURCHASE/EXERCISE FORM

 

	To: 	
 

	
MULTIMEDIA PLATFORMS, INC.

	
Dated: ________________

 

The undersigned holder, pursuant to the provisions set forth in the attached Warrant No. ___, hereby exercises the right to purchase shares of Common Stock covered by such Warrant. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Form of Exercise Price. The undersigned holder intends that payment of the Exercise Price shall be made as:

 

	
_____________

	
a “Cash Exercise” with respect to ____________________ shares of Warrant Stock;

	
 

	
 

	
_____________

	
a “Cashless Exercise” pursuant to Section 1(e) with respect to _____________ shares of Warrant Stock, pursuant to which _________ shares of Warrant Stock are to be delivered in accordance with the formula provided in Section 1(e).

 

2. Payment of Exercise Price. The Holder shall pay the aggregate Exercise Price in the sum of $                               to the Company in accordance with the terms of the Warrant.

 

The undersigned acknowledges that it has reviewed the representations and warranties contained in Section 12 of the Warrant and by its signature below hereby makes such representations and warranties to the Company.

 

	 	Signature: 		 
	 	 	 	 
		
Name (print): 

		 
	 	 		 
	 	Title (if applic.) 		 
				
	 	Company (if applic.): 	 	 

 

	 
	
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EXHIBIT B

 

ASSIGNMENT FORM

 

 

FOR VALUE RECEIVED, _________________________________________ hereby sells, assigns and with respect to the number of shares transfers all of the rights of the undersigned under the attached Warrant No. of Common Stock covered thereby set forth below, to:

 

	
Name of Assignee 

	
 

	
Address/Fax Number 

	
 

	
No. of Shares

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

	Dated:______________________	Signature: 		 
	 	 		 
				
	 			 
	 	Witness:		 

 

 

10EXHIBIT 10.1

 

EXCHANGE AGREEMENT

 

BY AND AMONG

 

SLEEPAID HOLDING CO., 

 

YUGOSU INVESTMENT LIMITED 

 

AND

 

THE YUGOSU STOCKHOLDERS 

 

Dated April 15, 2015

 

	 
	
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TABLE OF CONTENTS  

	
 

		
Page

	
	
 

			
	
ARTICLE I EXCHANGE OF SECURITIES

	 	6	 
	
 

	
 

			
 

	
	
Section 1.1

	
The Exchange

	 	 	
6

	 
	
Section 1.2

	
Exchange Ratio

	 	 	
6

	 
			 	 	 	 
	
ARTICLE II THE CLOSING

	 	 	7	 
	
 

	
 

			
 

	
	
Section 2.1

	
Closing Date

	 	 	
7

	 
	
Section 2.2

	
Transactions at Closing

	 	 	
7

	 
			 	 	 	 
	
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SHC AND CROWN EQUITY

	 	 	9	 
	
 

	
 

			
 

	
	
Section 3.1

	
Organization and Qualification

	 	 	
9

	 
	
Section 3.2

	
Authorization

	 	 	
9

	 
	
Section 3.3

	
Validity and Effect of Agreement

	 	 	
9

	 
	
Section 3.4

	
No Conflict

	 	 	
9

	 
	
Section 3.5

	
Required Filings and Consents

	 	 	
9

	 
	
Section 3.6

	
Capitalization

	 	 	
10

	 
	
Section 3.7

	
Status of Common Stock

	 	 	
10

	 
	
Section 3.8

	
Financial Statements

	 	 	
10

	 
	
Section 3.9

	
No Undisclosed Assets or Liabilities

	 	 	
10

	 
	
Section 3.10

	
No Contract Rights or Commitments

	 	 	
11

	 
	
Section 3.11

	
No Intellectual Property Rights or Infringement

	 	 	
11

	 
	
Section 3.12

	
Litigation

	 	 	
11

	 
	
Section 3.13

	
Taxes

	 	 	
11

	 
	
Section 3.14

	
Books and Records

	 	 	
11

	 
	
Section 3.15

	
Insurance

	 	 	
11

	 
	
Section 3.16

	
Compliance

	 	 	
11

	 
	
Section 3.17

	
Absence of Certain Changes

	 	 	
12

	 
	
Section 3.18

	
Material Transactions or Affiliations

	 	 	
12

	 
	
Section 3.19

	
Employees

	 	 	
12

	 
	
Section 3.20

	
Previous Sales of Securities

	 	 	
13

	 
	
Section 3.21

	
Principals of CTI

	 	 	
13

	 
	
Section 3.22

	
Tax-Free Exchange

	 	 	
13

	 
	
Section 3.23

	
Brokers and Finders

	 	 	
13

	 
	
Section 3.24

	
Disclosure

	 	 	
13

	 
			 	 	 	 
	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF YIL

	 	 	14	 
	
 

	
 

			
 

	
	
Section 4.1

	
Organization and Qualification

	 	 	
14

	 

  

	 
	
2

	

  

	
Section 4.2

	
Authorization; Validity and Effect of Agreement

	 	14	 
	
Section 4.3

	
No Conflict

	 	 	
14

	 
	
Section 4.4

	
Required Filings and Consents

	 	 	
14

	 
	
Section 4.5

	
Capitalization

	 	 	
14

	 
	
Section 4.7

	
Financial Statements

	 	 	
15

	 
	
Section 4.8

	
No Undisclosed Liabilities

	 	 	
15

	 
	
Section 4.9

	
Litigation

	 	 	
15

	 
	
Section 4.10

	
Taxes

	 	 	
15

	 
	
Section 4.11

	
Compliance

	 	 	
15

	 
	
Section 4.12

	
Absence of Certain Changes

	 	 	
16

	 
	
Section 4.13

	
Previous Sales of Securities

	 	 	
16

	 
	
Section 4.14

	
Principals of YIL

	 	 	
16

	 
	
Section 4.15

	
Brokers and Finders

	 	 	
17

	 
			 	 	 	 
	
ARTICLE V REPRESENTATIONS AND WARRANTIES OF EACH SELLER

	 	 	17	 
	
 

				
	
Section 5.1

	
Authority and Validity

	 	 	
17

	 
	
Section 5.2

	
Validity

	 	 	
17

	 
	
Section 5.3

	
No Breach or Violation

	 	 	
17

	 
	
Section 5.4

	
Consents and Approvals

	 	 	
17

	 
	
Section 5.5

	
Title

	 	 	
17

	 
	
Section 5.6

	
Investor Status

	 	 	
17

	 
	
Section 5.7

	
No Government Review

	 	 	
18

	 
	
Section 5.8

	
Investment Intent

	 	 	
18

	 
	
Section 5.9

	
Restrictions on Transfer

	 	 	
18

	 
	
Section 5.10

	
Informed Investment

	 	 	
18

	 
	
Section 5.11

	
Access to Information

	 	 	
18

	 
	
Section 5.12

	
Reliance on Representations

	 	 	
19

	 
	
Section 5.13

	
No General Solicitation

	 	 	
19

	 
	
Section 5.14

	
Placement and Finder's Fees

	 	 	
19

	 
			 	 	 	 
	
ARTICLE VI CERTAIN COVENANTS

	 	 	19	 
	
 

				
	
Section 6.1

	
Conduct of Business by SHC

	 	 	
19

	 
	
Section 6.2

	
Access to Information

	 	 	
19

	 
	
Section 6.3

	
Confidentiality; No Solicitation

	 	 	
20

	 
	
Section 6.4

	
Further Assurances

	 	 	
20

	 
	
Section 6.5

	
Public Announcements

	 	 	
21

	 
	
Section 6.6

	
Notification of Certain Matters

	 	 	
21

	 
	
Section 6.7

	
Financial Statements

	 	 	
21

	 
	
Section 6.8

	
Tax-Free Exchange Status

	 	 	
21

	 
	
Secton 6.9

	
Waiver of Claims

	 	 	
21

	 

  

	 
	
3

	

  

	
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE EXCHANGE

	 		22	 
	
 

	 	 		 
	
Section 7.1

	
Conditions to Obligations of YIL

	 	 	
22

	 
	
Section 7.2

	
Conditions to Obligations of SHC

	 	 	
23

	 
			 	 	 	 
	
ARTICLE VIII INDEMNIFICATION

	 	 	24	 
	
 

		 	 		 
	
Section 8.1

	
Indemnification by SHC

	 	 	
24

	 
	
Section 8.2

	
Indemnification by YIL

	 	 	
24

	 
	
Section 8.3

	
Indemnification Procedures for Third-Party Claim

	 	 	
24

	 
	
Section 8.4

	
Indemnification Procedures for Non-Third Party Claims

	 	 	
25

	 
	
Section 8.5

	
Limitations on Indemnification

	 	 	
 26

	 
			 	 	 	 
	
ARTICLE IX TERMINATION

	 	 	26	 
	
 

		 	 		 
	
Section 9.1

	
Termination

	 	 	
26

	 
	
Section 9.2

	
Procedure and Effect of Termination

	 	 	
27

	 
			 	 	 	 
	
ARTICLE X MISCELLANEOUS

	 	 	27	 
	
 

	 	 		 
	
Section 10.1

	
Entire Agreement

	 	 	
27

	 
	
Section 10.2

	
Amendment and Modifications

	 	 	
27

	 
	
Section 10.3

	
Extensions and Waivers

	 	 	
27

	 
	
Section 10.4

	
Successors and Assigns

	 	 	
27

	 
	
Section 10.5

	
Survival of Representations, Warranties and Covenants

	 	 	
27

	 
	
Section 10.6

	
Headings; Definitions

	 	 	
28

	 
	
Section 10.7

	
Severability

	 	 	
28

	 
	
Section 10.8

	
Specific Performance

	 	 	
28

	 
	
Section 10.9

	
Notices

	 	 	
28

	 
	
Section 10.10

	
Governing Law

	 	 	
29

	 
	
Section 10.11

	
Consent to Jurisdiction

	 	 	
29

	 
	
Section 10.12

	
Counterparts

	 	 	
29

	 
	
Section 10.13

	
Certain Definitions

	 	 	
29

	 

 

	 
	
4

	

 

EXHIBITS AND SCHEDULES

 

	
Exhibit A

	
Stock Power and Assignment

	 	32	 
		 	 		 
	
Schedule I

	
Schedule of YIL Shares to be exchanged for Common Stock

	 	 	
33

	 

  

	 
	
5

	

  

EXCHANGE AGREEMENT

 

THIS EXCHANGE AGREEMENT (the "Agreement"), is made and entered into as of April 15, 2015, by and among Sleepaid Holding Co., a Nevada corporation ("SHC") and Yugosu Investment Limited, a Hong Kong corporation ("YIL"), and the stockholder of YIL set forth on the signature pages to this Agreement (the "Seller"), with respect to the following facts:

 

RECITALS:

 

A. Seller owns 100% of the issued and outstanding shares of common stock of YIL, par value HK$1.00 per share (the "YIL Shares"), as set forth on Schedule I to this Agreement, respectively;

 

B. SHC desires to acquire from Seller, and Seller desires to sell and transfer to SHC, all of the YIL Shares owned by Seller on the Closing Date in exchange for the issuance and delivery by SHC of 9,770,000 shares of Common Shares, par value $0.001 per share, of SHC ("SHC Exchange Shares"), in restricted form, for the 10,000 shares issued and outstanding of YIL (the "Exchange Ratio"), on the terms and conditions set forth below (the "Exchange") ;

 

C. It is intended that, for federal income tax purposes, the Exchange shall qualify as an exchange described in Section 351 of the of the Internal Revenue Code of 1986, as amended (the "Code") and a reorganization described in Section 368 of the Code.

 

NOW, THEREFORE, in consideration of the foregoing premises and representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

ARTICLE I 

 

EXCHANGE OF SECURITIES

 

Section 1.1  The Exchange. On the terms and subject to the conditions of this Agreement, on the Closing Date, SHC shall issue and deliver to the Seller the SHC Exchange Shares and Seller shall sell, transfer and deliver to SHC, 10,000 YIL Shares along with a duly executed share assignment endorsed in favor of SHC.

 

Section 1.2  Exchange Ratio.

 

(a) SHC currently has outstanding 230,000 shares of common stock (“Common Stock”), par value $0.001, and no shares of preferred stock issued and outstanding. At closing, the total issued and outstanding shares of Common Stock of SHC shall be 10,000,000, after the issuance of the SHC Exchange Shares.

 

	 
	
6

	

  

(b) If between the date of this Agreement and the Closing Date, there shall be any other change in the number of shares of outstanding capital stock of either SHC or YIL, the Exchange Ratio shall be adjusted such that immediately following the Closing, the aggregate number of shares of Common Stock issued to each represents the percentage ownership set forth above.

 

ARTICLE II 

 

THE CLOSING

 

Section 2.1  Closing Date. The closing of the Exchange and the other transactions contemplated by this Agreement (the "Closing") shall take place at the offices of McDowell Odom LLP, 28494 Westinghouse Place, Suite 305, Valencia, CA 91355 at 10:00 a.m. on April 15, 2015, or at such other location, date and time as SHC and YIL may agree. The time and date upon which the Closing actually occurs being referred to herein as the "Closing Date").

 

Section 2.2  Transactions at Closing. At the Closing, the following transactions shall take place simultaneously and no transaction shall be deemed to have been completed or any document delivered until all such transactions have been completed and all required documents delivered:

 

(a) SHC shall deliver the following documents and take the following actions:

 

(i) Validly executed stock certificate corresponding to the SHC Exchange Shares issued in the name of the Seller;

 

(ii)  Instructions directing its transfer agent to register the allotment of the SHC Exchange Shares to the Seller;

 

(iii) True copies of all consents and waivers obtained by SHC, in accordance with the provisions of Section 7.1 below;

 

(iv) Certificate of good standing from the Secretary of State of the State of Nevada, dated at or about the Closing Date, to the effect that SHC is in good standing under the laws of said state;

 

(v)  Certified copy of the Certificate of Incorporation of SHC, as certified by the Secretary of State of the State of Nevada at or about the Closing Date;

 

(vi) Secretary's certificate duly executed by SHC's secretary attaching and attesting to the accuracy of: (a) the bylaws of SHC, (b) the resolutions of SHC's board of directors hereto issuing and allotting the SHC Exchange Shares and approving the transactions contemplated hereby, including the Exchange, appointing the designees of YIL as directors of SHC, and (c) an incumbency certificate signed by all of the executive officers of SHC dated at or about the Closing Date;

 

	 
	
7

	

  

(vii) An officer's certificate duly executed by SHC's chief executive officer to the effect that the conditions set forth in Section 7.1(a) below have been satisfied, dated as of the date of the Closing;

 

(viii) All corporate books and records of SHC; and

 

(ix) Such other documents and instruments as YIL may reasonably request.

 

(b) YIL shall deliver or cause to be delivered the following documents and/or shall take the following actions:

 

(i) YIL shall deliver to SHC share certificates in the name of SHC in respect of all YIL Shares and shall register YIL Shares in the name of SHC in the shareholders register of YIL;

 

(ii)  Certified copy of the Certificate of Incorporation of YIL, as amended to date certified by the Secretary of State of Hong Kong at or about the Closing Date;

 

(iii) Secretary's certificate duly executed by YIL's secretary attaching and attesting to the accuracy of: (a) the bylaws of YIL, (b) the resolutions of YIL's board of directors, approving the transactions contemplated hereby, including the Exchange, and (c) an incumbency certificate signed by all of the executive officers of YIL dated at or about the Closing Date;

 

(iv) An officer's certificate duly executed by YIL's chief executive officer of YIL to the effect that the conditions set forth in Section 7.2(a) below have been satisfied, dated as of the date of the Closing;

 

(v)  True copies of all consents and waivers obtained by YIL, in accordance with the provisions of Section 7.1 below; and

 

(vi) Copies of all corporate books and records of YIL, including a complete listing of shareholders and financial records.

 

(c) The Seller shall deliver the following documents:

 

(i) to SHC, duly executed share assignments in the form attached hereto as Exhibit A effecting the immediate and unconditional sale, assignment and irrevocable transfer of YIL Securities to SHC, free and clear of any liens, or any other third party rights of any kind and nature, whether voluntarily incurred or arising by operation of law;

 

(ii)  to YIL, as agent for SHC, all share certificates in respect of YIL Shares.

 

	 
	
8

	

  

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF SHC

 

SHC hereby makes the following representations and warranties to YIL and Seller:

 

Section 3.1  Organization and Qualification. SHC is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with the corporate power and authority to own and operate its business as presently conducted, except where the failure to be or have any of the foregoing would not have a Material Adverse Effect. SHC is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of their activities makes such qualification necessary, except for such failures to be so qualified or in good standing as would not have a Material Adverse Effect. SHC has no subsidiaries and is not a participant in any joint venture, partnership, or similar arrangement.

 

Section 3.2  Authorization. SHC has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Exchange.

 

Section 3.3  Validity and Effect of Agreement. This Agreement has been duly and validly executed and delivered by SHC and, assuming that it has been duly authorized, executed and delivered by the other parties hereto, constitutes a legal, valid and binding obligation of SHC, in accordance with its terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally.

 

Section 3.4  No Conflict. Neither the execution and delivery of this Agreement by SHC nor the performance by such party of its respective obligations hereunder, nor the consummation of the Exchange, will: (i) conflict with SHC's Certificate of Incorporation or Bylaws; (ii) violate any statute, law, ordinance, rule or regulation, applicable to SHC or any of the properties or assets of SHC; or (iii) violate, breach, be in conflict with or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation of SHC, or result in the creation or imposition of any Lien upon any properties, assets or business of SHC under, any Contract or any order, judgment or decree to which SHC is a party or by which it or any of its assets or properties is bound or encumbered except, in the case of clauses (ii) and (iii), for such violations, breaches, conflicts, defaults or other occurrences which, individually or in the aggregate, would not have a material adverse effect on its obligation to perform its covenants under this Agreement.

 

Section 3.5  Required Filings and Consents. The execution and delivery of this Agreement by SHC does not, and the performance of this Agreement by SHC will not, require any consent, approval, authorization or permit of, or filing with or notification to, Governmental Authority with respect to SHC except: (i) compliance with applicable requirements of the Securities Act, the Exchange Act and state securities laws ("Blue Sky Laws"); and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on SHC, or would not prevent or materially delay consummation of the Exchange or otherwise prevent the parties hereto from performing their respective obligations under this Agreement.

 

	 
	
9

	

  

Section 3.6  Capitalization. The authorized capital stock of SHC consists of 65,000,000 shares of Common Stock, par value $0.001 per share, of which 230,000 shares are issued and outstanding, and 10,000,000 shares of preferred stock, par value $0.001 per share, of which none are issued and outstanding. Except for the transactions contemplated by this Agreement or as otherwise described herein, there are no other share capital, preemptive rights, convertible securities, outstanding warrants, options or other rights to subscribe for, purchase or acquire from SHC any shares of capital stock of SHC and there are no contracts or commitments providing for the issuance of, or the granting of rights to acquire, any shares of capital stock of SHC or under which SHC is, or may become, obligated to issue any of its securities. All shares of capital stock of SHC outstanding as of the date of this Agreement have been duly authorized and validly issued, are fully paid and nonassessable, and are free of preemptive rights. As of the Closing Date (as defined herein), there will be no more than 230,000 shares of Common Stock issued or outstanding prior to the Exchange and no shares issued and outstanding of preferred stock.

 

Section 3.7  Status of SHC Series Exchange Shares. The SHC Exchange Shares, when issued and allotted at the Closing in exchange for YIL Shares, in restricted form, will be duly authorized, validly issued, fully paid, nonassessable, and free of any preemptive rights, will be issued in compliance with all applicable laws concerning the issuance of securities, and will have the rights, preferences, privileges, and restrictions set forth in SHC's charter and bylaws, and will be free and clear of any Liens of any kind and duly registered in the name of the Seller, in SHC's stockholders ledger.

 

Section 3.8  Financial Statements. The financial statements (the "SHC Financial Statements") provided to YIL have been (or will be) prepared in accordance with any applicable law and prepared from, and are in accordance with, the books and records of SHC, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the financial positions and the results of operations and cash flows of SHC as of the dates thereof or for the periods presented therein (subject, in the case of unaudited statements, to normal year-end audit adjustments not material in amount).

 

Section 3.9  No Undisclosed Assets or Liabilities. Except as disclosed in the SHC Financial Statements, SHC does not have any liabilities, indebtedness or obligations, whether known or unknown, absolute, accrued, contingent or otherwise, and whether due or to become due (collectively, "Liabilities"), and, there is no existing condition, situation or set of circumstances that could reasonably be expected to result in such a Liability, including without limitation any liabilities for foreign, federal, state, local or other taxes (including deficiencies, interest and penalties). As of the Closing Date, SHC shall have no properties or assets of any kind, whether real personal or intangible and whether owned or leased (other than cash, cash equivalents or marketable securities) and no Liabilities.

  

	 
	
10

	

 

Section 3.10 No Contract Rights or Commitments. On the Closing Date, there will not be any Contract to which SHC is a party or by which any of its assets or properties are bound.

 

Section 3.11 No Intellectual Property Rights or Infringement. SHC does not own, has not obtained the right to use, and has not violated nor otherwise trespassed upon any patents, trademarks, service marks, trade names, copyrights, and applications, licenses and rights with respect to the foregoing, and/or any trade secrets, including know-how, inventions, designs, processes, works of authorship, computer programs and/or technical data and/or information.

 

Section 3.12 Litigation. There is no Action pending or threatened against SHC that, individually or in the aggregate, directly or indirectly, would be reasonably likely to have a Material Adverse Effect, nor is there any outstanding judgment, decree or injunction, in each case against SHC, that, individually or in the aggregate, has or would be reasonably likely to have a Material Adverse Effect.

 

Section 3.13 Taxes. SHC has filed with the appropriate tax authorities all tax returns required to be filed by it or on behalf of it, and SHC does not owe any material Taxes due and owing by it, regardless of whether required to be shown or reported on a tax return, including Taxes required to be withheld by it. No deficiency for a material Tax has been asserted in writing or otherwise, to SHC's Knowledge, against SHC or with respect to any of its assets, except for asserted deficiencies that either (i) have been resolved and paid in full or (ii) are being contested in good faith. There are no material Liens for Taxes upon SHC's assets.

 

Section 3.14 Books and Records. The books and records, financial and others, of SHC are in all material respects complete and correct and have been maintained in accordance with good business accounting practices.

 

Section 3.15 Insurance. SHC has no insurable properties and SHC does not maintain any insurance covering its assets, business, equipment, properties, operations, employees, officers, or directors. To SHC's knowledge, since SHC's inception there has not been any damage, destruction or loss, which could have been deemed as an "Insurance Event".

 

Section 3.16 Compliance. SHC is in compliance with all foreign, federal, state and local laws and regulations of any Governmental Authority, except to the extent that failure to comply would not, individually or in the aggregate, have a Material Adverse Effect. SHC has not received any notice asserting a failure, or possible failure, to comply with any such law or regulation, the subject of which notice has not been resolved as required thereby or otherwise to the satisfaction of the party sending the notice, except for such failure as would not, individually or in the aggregate, have a Material Adverse Effect. SHC does not, and is not require to, hold any permits, licenses or franchises from Governmental Authorities.

 

	 
	
11

	

  

Section 3.17 Absence of Certain Changes. Since March 31, 2015, except as expressly permitted or required by this Agreement or with the consent of YIL, SHC has not:

 

(a) sold or otherwise issued any shares of capital stock except as described herein;

 

(b) acquired any assets or incurred any Liabilities;

 

(c) amended its certificate of incorporation or bylaws;

 

(d) waived any rights of value which in the aggregate are extraordinary or material considering the business of SHC;

 

(e) made any material change in its method of management, operation or accounting;

 

(f) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee;

 

(g) granted or agreed to grant any options, warrants or other rights for its stocks, bonds or other corporate securities calling for the issuance thereof, which option, warrant or other right has not been cancelled as of the Closing Date;

 

(h) borrowed or agreed to borrow any funds or incurred or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business;

 

(i) become subject to any law or regulation which materially and adversely affects, or in the future may adversely affect, the business, operations, properties, assets or condition of SHC or become subject to any change or development in, or effect on, SHC that has or could reasonably be expected to have a Material Adverse Effect; or

 

(j) entered into any agreement to take any action described in clauses (a) through (i) above.

 

Section 3.18 Material Transactions or Affiliations. There is no contract, agreement or arrangement between SHC and any person who was, at the time of such contract, agreement or arrangement an officer, director or person owning of record, or known by SHC to own beneficially, five percent or more of the issued and outstanding Common Stock and which is to be performed in whole or in part after the date hereof except as provided in Schedule IV attached hereto. SHC has no commitment, whether written or oral, to lend any funds to, borrow any money from or enter into any other material transactions with, any such affiliated person.

 

Section 3.19 Employees. SHC has no employees other than its officers and directors. SHC has no liabilities and/or debts towards any such officers and directors. SHC has no agreement, obligation or commitment with respect to the election of any individual or individuals to SHC's board of directors.

 

	 
	
12

	

  

Section 3.20 Previous Sales of Securities. Since inception, SHC has sold Common Stock to investors only in reliance upon applicable exemptions from the registration requirements under any applicable law including the laws of the United States and any applicable states and all such sales were made in accordance with the laws of said jurisdictions. Except as provided in this Agreement, SHC has not granted or agreed to grant any registration rights, including piggyback rights, to any Person or entity.

 

Section 3.21 Principals of SHC. During the past five years, no officer or director of SHC has been:

 

(a) the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

(b) the subject of any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

(c) the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

 

(d) found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

Section 3.22 Tax-Free Exchange. SHC has not taken any action, nor does SHC know of any fact, that is reasonably likely to prevent the Exchange from qualifying as a "reorganization" within the meaning of Section 351 or 368 of the Code.

 

Section 3.23 Brokers and Finders. Neither SHC nor any of its officers, directors, employees or managers, has employed any broker, finder, advisor or consultant, or incurred any liability for any investment banking fees, brokerage fees, commissions or finders' fees, advisory fees or consulting fees in connection with the Exchange for which SHC has or could have any liability.

 

Section 3.24 Disclosure. As of the Closing Date, there is no known material fact or information relating to the business, condition (financial or otherwise), affairs, operations or assets of SHC and/or its subsidiaries that has not been disclosed in writing to YIL and/or Seller by SHC. No representation or warranty of SHC in this Agreement or any statement or document delivered in connection herewith or therewith, contained or will contain any untrue statement of a material fact or fail to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

 

	 
	
13

	

  

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF YIL

 

YIL hereby makes the following representations and warranties to SHC:

 

Section 4.1  Organization and Qualification. YIL is duly organized and validly existing under the laws of its jurisdiction of organization, with the corporate power and authority to own and operate its business as presently conducted, except where the failure to be or have any of the foregoing would not have a Material Adverse Effect. YIL is duly qualified as a foreign corporation to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except for such failures to be so qualified as would not have a Material Adverse Effect. YIL has one wholly-owned subsidiary known as Guangzhou Smart Fame Commerical and Trading Co. Ltd. incorporated under the laws of the PRC as a limited company on June 25, 2013.

 

Section 4.2  Authorization; Validity and Effect of Agreement. YIL has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Exchange. This Agreement has been duly and validly executed and delivered by YIL and, assuming that it has been duly authorized, executed and delivered by the other parties hereto, constitutes a legal, valid and binding obligation of YIL, in accordance with its terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally.

 

Section 4.3  No Conflict. Neither the execution and delivery of this Agreement by YIL nor the performance by YIL of its obligations hereunder, nor the consummation of the Exchange, will: (i) conflict with YIL's Certificate of Incorporation; (ii) violate any statute, law, ordinance, rule or regulation, applicable to YIL or any of its properties or assets; or (iii) violate, breach, be in conflict with or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation of YIL, or result in the creation or imposition of any Lien upon any properties, assets or business of YIL under, any Material Contract or any order, judgment or decree to which SHC is a party or by which it or any of its assets or properties is bound or encumbered except, in the case of clauses (ii) or (iii), for such violations, breaches, conflicts, defaults or other occurrences which, individually or in the aggregate, would not have a Material Adverse Effect on its obligation to perform its covenants under this Agreement.

 

Section 4.4  Required Filings and Consents. The execution and delivery of this Agreement by YIL do not, and the performance of this Agreement by YIL will not require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, with respect to YIL, except: (i) compliance with applicable requirements of the Securities Act, the Exchange Act, and Blue Sky Laws; and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on YIL, or materially delay consummation of the Exchange or otherwise prevent the parties hereto from performing their obligations under this Agreement.

 

Section 4.5  Capitalization. The authorized capital stock of YIL consists of 10,000 shares of Common Stock par value HK$1.00, of which 10,000 shares are issued and outstanding. All YIL Shares outstanding as of the date of this Agreement have been duly authorized and validly issued, are fully paid and nonassessable, and are free of preemptive rights.

 

	 
	
14

	

  

Section 4.7  Financial Statements. YIL has previously furnished to SHC true and complete copies of its audited balance sheet of YIL for the period ended December 31, 2014 and the related statements of operations, shareholders equity and cash flows for the 2-year period through December 31, 2014 (all of such financial statements of YIL collectively, the "YIL Financial Statements"). The YIL Financial Statements (including the notes thereto) present fairly in all material respects the financial position and results of operations and cash flows of YIL at the date or for the period set forth therein, in each case in accordance with GAAP applied on a consistent basis throughout the periods involved (except as otherwise indicated therein). The YIL Financial Statements have been prepared from and in accordance with the books and records of YIL and its subsidiaries, as applicable. YIL acknowledges and understands that the YIL Financial Statements must be audited and reviewed as required by the rules and regulations of the SEC in a timely fashion so that SHC, when it becomes subject to the SEC reporting obligations, will remain current in its reporting obligations and that this audit and review process is an on-going obligation which will continue after the Closing. It is understood by YIL that time is of the essence with regard to the audited financial statements and pro forma financial statements required to be filed with the SEC.

 

Section 4.8  No Undisclosed Liabilities. Except as disclosed in the YIL Financial Statements, YIL has no material liabilities, indebtedness or obligations, except those that have been incurred in the ordinary course of business, whether absolute, accrued, contingent or otherwise, and whether due or to become due, and to the Knowledge of YIL, there is no existing condition, situation or set of circumstances that could reasonably be expected to result in such a liability, indebtedness or obligation. Properties and Assets.YIL has good and marketable title to, valid leasehold interests in, or the legal right to use, all of the assets, properties and leasehold interests reflected in the most recent YIL Financial Statements, except for those sold or otherwise disposed of since the date of such YIL Financial Statements in the ordinary course of business consistent with past practice.

 

Section 4.9  Litigation. There is no Action pending or threatened against YIL that, individually or in the aggregate, directly or indirectly, would be reasonably likely to have a Material Adverse Effect, nor is there any outstanding judgment, decree or injunction, in each case against YIL, that, individually or in the aggregate, has or would be reasonably likely to have a Material Adverse Effect.

 

Section 4.10 Taxes. YIL has filed with the appropriate tax authorities all tax returns required to be filed by it or on behalf of it and is unaware of any material Taxes due and owing by it, regardless of whether required to be shown or reported on a tax return, including Taxes required to be withheld by it. No deficiency for a material Tax has been asserted in writing or otherwise, to YIL's Knowledge, against YIL or with respect to any of its assets, except for asserted deficiencies that either (i) have been resolved and paid in full or (ii) are being contested in good faith. There are no material Liens for Taxes upon YIL's assets.

   

Section 4.11 Compliance. To YIL's Knowledge, YIL is in compliance with all federal, state and local laws and regulations of any Governmental Authority applicable to its operations or with respect to which compliance is a condition of engaging in the business thereof, except to the extent that failure to comply would not, individually or in the aggregate, have a Material Adverse Effect. YIL has not received any notice asserting a failure, or possible failure, to comply with any such law or regulation, the subject of which notice has not been resolved as required thereby or otherwise to the satisfaction of the party sending the notice, except for such failure as would not, individually or in the aggregate, have a Material Adverse Effect. To YIL's Knowledge, YIL holds all permits, licenses and franchises from Governmental Authorities required to conduct its business as it is now being conducted, except for such failures to have such permits, licenses and franchises that would not, individually or in the aggregate, have a Material Adverse Effect.

 

	 
	
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Section 4.12 Absence of Certain Changes. Since the date of the most recent YIL Financial Statements, (i) there has been no change or development in, or effect on, YIL that has or could reasonably be expected to have a Material Adverse Effect, (ii) YIL has not sold, transferred, disposed of, or agreed to sell, transfer or dispose of, any material amount of its assets other than in the ordinary course of business, (iii) YIL has not paid any dividends or distributed any of its assets to any of its shareholders, (iv) YIL has not acquired any material amount of assets except in the ordinary course of business, nor acquired or merged with any other business, (v) YIL has not waived or amended any of its respective material contractual rights except in the ordinary course of business, and (vi) YIL has not entered into any agreement to take any action described in clauses (i) through (v) above.

 

Section 4.13 Previous Sales of Securities. Since inception, YIL has sold the YIL Common Stock to accredited investors only in reliance upon applicable exemptions from the registration requirements under any applicable law and all such sales were made in accordance with the laws of said jurisdictions and all required filings have been filed. YIL has not granted or agreed to grant any registration rights, including piggyback rights, to any Person or entity.

 

Section 4.14 Principals of YIL. During the past five years, no officer or director of YIL has been:

 

(a) the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

(b) the subject of any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

(c) the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

 

(d) found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

	 
	
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Section 4.15 Brokers and Finders. YIL has not, nor to YIL's Knowledge have any of its officers, directors, employees or managers, employed any broker, finder, advisor or consultant, or incurred any liability for any investment banking fees, brokerage fees, commissions or finders' fees, advisory fees or consulting fees in connection with the Exchange for which YIL has or could have any liability.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby makes the following representations and warranties to YIL and SHC:

 

Section 5.1 Authority and Validity. Seller has all requisite power to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by, this Agreement.

 

Section 5.2  Validity. Upon the execution and delivery of each other document to which Seller is a party (assuming due execution and delivery by each other party thereto) each such other document will be the legal, valid and binding obligations of such Seller, enforceable against Seller in accordance with their respective terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally.

 

Section 5.3  No Breach or Violation. The execution, delivery and performance by Seller of this Agreement and each other document to which it is a party, and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with (i) the certificate of incorporation or bylaws of Seller, if applicable, or (ii) any agreement to which Seller is a party, or by which Seller or Seller's Assets are bound or affected.

 

Section 5.4  Consents and Approvals. No consent, approval, authorization or order of, registration or filing with, or notice to, any Government Authority or any other Person is necessary to be obtained, made or given by Seller in connection with the execution, delivery and performance by Seller of this Agreement or any other document to which it is a party or for the consummation by Seller of the transactions contemplated hereby or thereby.

 

Section 5.5  Title. YIL Shares to be delivered by Seller in connection with the transactions contemplated herein are, and at the Closing will be owned, of record and beneficially, solely by Seller, free and clear of any Lien and represent Seller's entire ownership interest in YIL.

 

Section 5.6  Investor Status. Seller is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D under the Securities Act and / or is a non-U.S. citizen not living in the United States and is acquiring the shares under an exemption from registration under Regulation S of the Securities Act.

 

	 
	
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Section 5.7  No Government Review. Seller understands that neither the SEC nor any securities commission or other Governmental Authority of any state, country or other jurisdiction has approved the issuance of the Common Stock or passed upon or endorsed the merits of the Common Stock or the Exchange Agreement or any of the other documents relating to the Exchange (collectively, the "Offering Documents"), or confirmed the accuracy of, determined the adequacy of, or reviewed the Exchange Agreement or the other Offering Documents.

 

Section 5.8  Investment Intent. The shares of Common Stock are being acquired by Seller for Seller's own account for investment purposes only, not as a nominee or agent and not with a view to the resale or distribution of any part thereof, and Seller has no present intention of selling, granting any participation in or otherwise distributing the same. Seller further represents that Seller does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or third person with respect to any of YIL Shares.

 

Section 5.9  Restrictions on Transfer. Seller understands that the shares of SHC Common Stock have not been registered under the Securities Act or registered or qualified under any foreign or state securities law, and may not be, directly or indirectly, sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act and registration or qualification under applicable state securities laws or the availability of an exemption therefrom. In any case where such an exemption is relied upon by Seller from the registration requirements of the Securities Act and the registration or qualification requirements of such state securities laws, Seller shall furnish SHC with an opinion of counsel stating that the proposed sale or other disposition of such securities may be effected without registration under the Securities Act and will not result in any violation of any applicable state securities laws relating to the registration or qualification of securities for sale, such counsel and opinion to be reasonably satisfactory to SHC. Seller acknowledges that it is able to bear the economic risks of an investment in the Common Stock for an indefinite period of time, and that its overall commitment to investments that are not readily marketable is not disproportionate to its net worth.

 

Section 5.10 Informed Investment. Seller has made such investigations in connection herewith as it deemed necessary or desirable so as to make an informed investment decision without relying upon YIL for legal or tax advice related to this investment. In making its decision to acquire the Common Stock, Seller has not relied upon any information other than information contained in this Agreement and in the other Offering Documents.

 

Section 5.11 Access to Information. Seller acknowledges that it has had access to and has reviewed all documents and records relating to SHC that it has deemed necessary in order to make an informed investment decision with respect to an investment in SHC; that it has had the opportunity to ask representatives of SHC certain questions and request certain additional information regarding the terms and conditions of such investment and the finances, operations, business and prospects of SHC and has had any and all such questions and requests answered to its satisfaction; and that based on the foregoing it understands the risks and other considerations relating to an investment in SHC.

 

	 
	
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Section 5.12 Reliance on Representations. Seller understands that the shares of SHC Common Stock are being offered and sold to it in reliance on specific exemptions from the registration and/or public offering requirements of the U.S. federal and state securities laws and that SHC and YIL are relying in part upon the truth and accuracy of, and such Seller's compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Seller set forth herein in order to determine the availability of such exemptions and the eligibility of such Seller to acquire the SHC Common Stock. Seller represents and warrants to SHC and YIL that any information Seller has heretofore furnished or furnishes herewith to SHC and YIL is complete and accurate, and further represents and warrants that it will notify and supply corrective information to SHC and YIL immediately upon the occurrence of any change therein occurring prior to YIL's issuance of the SHC Common Stock. Within five (5) days after receipt of a request from YIL, Seller will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which YIL is subject.

 

Section 5.13 No General Solicitation. Seller is unaware of, and in deciding to participate in the transactions contemplated hereby is in no way relying upon, and did not become aware of the transactions contemplated hereby through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media, or broadcast over television or radio or the internet, in connection with the transactions contemplated hereby.

 

Section 5.14 Placement and Finder's Fees. No agent, broker, investment banker, finder, financial advisor or other person acting on behalf of Seller or under its authority is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, in connection with the transactions contemplated hereby, and no person is entitled to any fee or commission or like payment in respect thereof based in any way on any agreements, arrangements or understanding made by or on behalf of Seller.

 

ARTICLE VI

 

CERTAIN COVENANTS

 

Section 6.1  Conduct of Business by SHC. Except (i) as expressly permitted or required by this Agreement, or (ii) with the consent of YIL, during the period commencing with the date of this Agreement and continuing until the Closing Date, SHC shall conduct (directly and/or indirectly, including through subsidiaries, other than subsidiaries that will be disposed of prior to Closing, and subject to the provisions hereof) its trade and business, and preserve intact its business organizations.

 

Section 6.2  Access to Information. At all times prior to the Closing or the earlier termination of this Agreement in accordance with the provisions of Article IX, and in each case subject to Section 6.3 below, each party hereto shall provide to the other party (and the other party's authorized representatives) reasonable access during normal business hours and upon reasonable prior notice to the premises, properties, books, records, assets, liabilities, operations, contracts, personnel, financial information and other data and information of or relating to such party (including without limitation all written proprietary and trade secret information and documents, and other written information and documents relating to intellectual property rights and matters), and will cooperate with the other party in conducting its due diligence investigation of such party, provided that the party granted such access shall not interfere unreasonably with the operation of the business conducted by the party granting access, and provided that no such access need be granted to privileged information or any agreements or documents subject to confidentiality agreements.

 

	 
	
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Section 6.3  Confidentiality; No Solicitation. Each party shall hold, and shall cause its respective Affiliates and representatives to hold, all Confidential Information made available to it in connection with the Exchange in strict confidence, shall not use such information except for the sole purpose of evaluating the Exchange and shall not disseminate or disclose any of such information other than to its directors, officers, managers, employees, shareholders, interest holders, Affiliates, agents and representatives, as applicable, who need to know such information for the sole purpose of evaluating the Exchange (each of whom shall be informed in writing by the disclosing party of the confidential nature of such information and directed by such party in writing to treat such information confidentially). The above limitations on use, dissemination and disclosure shall not apply to Confidential Information that (i) is learned by the disclosing party from a third party entitled to disclose it; (ii) becomes known publicly other than through the disclosing party or any third party who received the same from the disclosing party, provided that the disclosing party had no Knowledge that the disclosing party was subject to an obligation of confidentiality; (iii) is required by law or court order to be disclosed by the parties; or (iv) is disclosed with the express prior written consent thereto of the other party. The parties shall undertake all necessary steps to ensure that the secrecy and confidentiality of such information will be maintained. In the event a party is required by court order or subpoena to disclose information which is otherwise deemed to be confidential or subject to the confidentiality obligations hereunder, prior to such disclosure, the disclosing party shall: (i) promptly notify the non-disclosing party and, if having received a court order or subpoena, deliver a copy of the same to the non-disclosing party; (ii) cooperate with the non-disclosing party, at the expense of the non-disclosing party, in obtaining a protective or similar order with respect to such information; and (iii) provide only that amount of information as the disclosing party is advised by its counsel is necessary to strictly comply with such court order or subpoena.

 

Section 6.4  Further Assurances. Each of the parties hereto agrees to use its best efforts before and after the Closing Date to take or cause to be taken all action, to do or cause to be done, and to assist and cooperate with the other party hereto in doing, all things necessary, proper or advisable under applicable laws to consummate and make effective, in the most expeditious manner practicable, the Exchange, including, but not limited to: (i) satisfying the conditions precedent to the obligations of any of the parties hereto; (ii) obtaining all waivers, consents and approvals from other parties necessary for the consummation of the Exchange, (iii) making all filings with, and obtain all consents, approvals and authorizations that are required to be obtained from, Governmental Authorities, (iv) defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the performance of the obligations hereunder; and (v) executing and delivering such instruments, and taking such other actions, as the other party hereto may reasonably require in order to carry out the intent of this Agreement.

 

	 
	
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Section 6.5  Public Announcements. SHC, Seller and YIL shall consult with each other before issuing any press release or otherwise making any public statements with respect to the Exchange or this Agreement, and shall not issue any other press release or make any other public statement without prior consent of the other parties, except as may be required by law or, with respect to SHC, by obligations pursuant to rule or regulation of the Exchange Act, the Securities Act, any rule or regulation promulgated thereunder or any rule or regulation of the Financial Authority Regulatory Authority (“FINRA”).

 

Section 6.6  Notification of Certain Matters. Each party hereto shall promptly notify the other party in writing of any events, facts or occurrences that would result in any breach of any representation or warranty or breach of any covenant by such party contained in this Agreement.

 

Section 6.7  Financial Statements. YIL shall use its best efforts to have its accountant consent to SHC's use of and reliance on the YIL Financial Statements as may be required in connection with any filings made by SHC under the United States federal securities laws.  

 

Section 6.8  Tax-Free Exchange Status. The parties hereto shall take (or refrain from taking) any and all actions necessary to ensure that, for United States federal income tax purposes: (i) the Exchange shall qualify as a reorganization within the meaning of Sections 368(a)(1)(B) of the Code, and (ii) that the tax consequences to the shareholders of both companies are minimized. 

 

Section 6.9  Waiver of Claims. Seller for itself, its shareholders, its heirs, executors, administrators, attorneys and assigns, hereby releases and acknowledges full accord, satisfaction, discharge and settlement of, and further irrevocably and unconditionally forever releases, remises, and acquits YIL, SHC and any of its present or former officers, directors, shareholders, employees, agents, affiliates, parents, subsidiaries, predecessors, successors, attorneys and assigns (the "YIL Released Parties") of and from any and all manner of actions, causes of action, arbitrations, controversies, expenses, damages, liabilities, demands, claims, counterclaims, cross-claims, obligations, losses, costs, promises, covenants, agreements, and suits of any kind or nature, whether known or unknown, whether contingent or fixed, whether developed or undeveloped, in law or equity, in tort or in contract from the beginning of time through the date of the full execution of this Agreement and the attachments and schedules hereto, which he may have or claim to have against YIL Released Parties.Seller expressly acknowledges that such claims released and discharged by this Section include, but are not limited to, any and all claims against YIL Released Parties for remuneration, compensation or benefits (including but not limited to fees, salary, expense reimbursements, commissions, stock, options or warrants for stock, success fees, insurance or other benefits, or any other form of remuneration, compensation or benefits of any kind) and any and all other claims of any kind and nature arising prior to execution of this Agreement and the attachments and schedules hereto, which relate in any way to YIL. This release shall extend to all claims, known and unknown. Seller is aware of, and specifically waives the provisions of Section 1542 of the Civil Code of the State of California, which states as follows:

 

	
"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor"

  

	 
	
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ARTICLE VII 

 

CONDITIONS TO CONSUMMATION OF THE EXCHANGE

 

Section 7.1  Conditions to Obligations of YIL. The obligations of YIL and Seller to consummate the Exchange shall be subject to the fulfillment, or written waiver by YIL, at or prior to the Closing, of each of the following conditions:

 

(a) SHC shall have delivered to YIL each of the documents required by Section 2.2(a) of this Agreement;

 

(b) The representations and warranties of SHC set out in this Agreement shall be true and correct in all material respects at and as of the time of the Closing as though such representations and warranties were made at and as of such time;

 

(c) SHC shall have performed and complied in all material respects with all covenants, conditions, obligations and agreements required by this Agreement to be performed or complied with by such parties on or prior to the Closing Date;

 

(d) All consents, approvals, permits, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Governmental Authority or Person as provided herein shall have been obtained;

 

(e) YIL shall have completed a due diligence review of the business, operations, financial condition and prospects of SHC and shall have been satisfied with the results of its due diligence review in its sole and absolute discretion;

 

(f) There has been no Material Adverse Effect on the business, condition or prospects of SHC until the Closing Date;

 

(g) SHC shall have had no Material changes in the business operations;

 

(h) Holders of 100% of YIL Shares shall have become party to the Exchange; and

 

(i) The outstanding shares of Common Stock of SHC prior to the Closing shall not exceed 230,000 shares.

 

	 
	
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Section 7.2  Conditions to Obligations of SHC. The obligations of SHC to consummate the Exchange shall be subject to the fulfillment, or written waiver by SHC, at or prior to the Closing of each of the following conditions:

 

(a) YIL shall have delivered to SHC each of the documents required by Section 2.2(b) of this Agreement;

 

(b) Seller shall have delivered to SHC the documents required by Section 2.2(c) of this Agreement;

 

(c) The representations and warranties of YIL and Seller set out in this Agreement shall be true and correct in all material respects at and as of the time of the Closing as though such representations and warranties were made at and as of such time;

 

(d) YIL shall have performed and complied in all material respects with all covenants, conditions, obligations and agreements required by this Agreement to be performed or complied with by YIL on or prior to the Closing Date;

 

(e) All consents, approvals, permits, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Governmental Authority or Person as provided herein shall have been obtained;

 

(f) SHC shall have completed a due diligence review of the business, operations, financial condition and prospects of YIL and shall have been satisfied with the results of its due diligence review in its sole and absolute discretion;

 

(g) There has been no Material Adverse Effect on the business, condition or prospects of YIL until the Closing Date;

 

(h) YIL shall have paid all of the costs and expenses of YIL associated with the transactions contemplated herein;

 

(i) Holders of 100% of YIL Shares shall have become party to the Exchange; and

 

(j) The outstanding shares of Common Stock of YIL prior to the Closing shall not exceed 10,000 shares.

 

	 
	
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ARTICLE VIII

 

INDEMNIFICATION

 

Section 8.1  Indemnification by SHC.

 

(a) Notwithstanding any other indemnification provision hereunder, SHC (the "Indemnifying Party") shall, severally and jointly, indemnify and hold harmless YIL and its officers, directors and employees and Seller (each an "Indemnified Party"), from and against any and all demands, claims, actions or causes of action, judgments, assessments, losses, liabilities, damages or penalties and reasonable attorneys' fees and related disbursements (collectively, "Claims") suffered by such Indemnified Party resulting from or arising out of (i) any inaccuracy in or breach of any of the representations or warranties made by the Indemnifying Party at the time they were made, and, except for representations and warranties that speak as of a specific date or time (which need only be true and correct as of such date or time), on and as of the Closing Date, (ii) any breach or nonfulfillment of any covenants or agreements made by the Indemnifying Party, (iii) any misrepresentation made by the Indemnifying Party, in each case as made herein or in the Schedules or Exhibits annexed hereto or in any closing certificate, schedule or any ancillary certificates or other documents or instruments furnished by the Indemnifying Party pursuant hereto or in connection with the Exchange, (iv) any untimely filing of or inaccuracy in, any SEC Document, and (v) the operations and liabilities of SHC and/or any of its subsidiaries, whether known or unknown, arising out of any action, omission and/or period of time preceding the Closing Date, including but not limited to any taxes levied with respect to same.

  

Section 8.2  Indemnification by YIL.

 

(a) Notwithstanding any other indemnification provision hereunder, YIL and Seller (each, the "Indemnifying Party") shall, severally and jointly, indemnify and hold harmless SHC and each of its officers, directors, attorneys, accountants and employees (each an "Indemnified Party"), from and against any and all demands, claims, actions or causes of action, judgments, assessments, losses, liabilities, damages or penalties and reasonable attorneys' fees and related disbursements (collectively, "Claims") suffered by such Indemnified Party resulting from or arising out of (i) any inaccuracy in or breach of any of the representations or warranties made by the Indemnifying Party at the time they were made, and, except for representations and warranties that speak as of a specific date or time (which need only be true and correct as of such date or time), on and as of the Closing Date, (ii) any breach or nonfulfillment of any covenants or agreements made by the Indemnifying Party, or (iii) any misrepresentation made by the Indemnifying Party, in each case as made herein or in the Schedules or Exhibits annexed hereto or in any closing certificate, schedule or any ancillary certificates or other documents or instruments furnished by the Indemnifying Party pursuant hereto or in connection with the Exchange.

 

Section 8.3 Indemnification Procedures for Third-Party Claim.

 

(a) Upon obtaining knowledge of any Claim by a third party which has given rise to, or is expected to give rise to, a claim for indemnification hereunder, the Indemnified Party shall give written notice ("Notice of Claim") of such claim or demand to the Indemnifying Party, specifying in reasonable detail such information as the Indemnified Party may have with respect to such indemnification claim (including copies of any summons, complaint or other pleading which may have been served on it and any written claim, demand, invoice, billing or other document evidencing or asserting the same). No failure or delay by the Indemnified Party in the performance of the foregoing shall reduce or otherwise affect the obligation of the Indemnifying Party to indemnify and hold the Indemnified Party harmless, except to the extent that such failure or delay shall have actually adversely affected the Indemnifying Party's ability to defend against, settle or satisfy any Claims for which the Indemnified Party entitled to indemnification hereunder.

  

	 
	
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(b) If the claim or demand set forth in the Notice of Claim given by an Indemnified Party pursuant to Section 8.1 hereof is a claim or demand asserted by a third party, the Indemnifying Party shall have fifteen (15) days after the date on which Notice of Claim is given to notify Indemnified Party in writing of their election to defend such third party claim or demand on behalf of the Indemnified Party. If the Indemnifying Party elects to defend such third party claim or demand, Indemnified Party shall make available to the Indemnifying Party and its agents and representatives all records and other materials that are reasonably required in the defense of such third party claim or demand and shall otherwise cooperate with, and assist the Indemnifying Party in the defense of, such third party claim or demand. So long as the Indemnifying Party is defending such third party claim in good faith, the Indemnified Party shall not pay, settle or compromise such third party claim or demand. If the Indemnifying Party elects to defend such third party claim or demand, the Indemnified Party shall have the right to participate in the defense of such third party claim or demand, at such Indemnified Party's own expense. In the event, however, that such Indemnified Party reasonably determines that representation by counsel to the Indemnifying Party of both the Indemnifying Party and such Indemnified Party could reasonably be expected to present counsel with a conflict of interest, then the Indemnified Party may employ separate counsel to represent or defend it in any such action or proceeding and the Indemnifying Party will pay the fees and expenses of such counsel. If the Indemnifying Party does not elect to defend such third party claim or demand or does not defend such third party claim or demand in good faith, the Indemnified Party shall have the right, in addition to any other right or remedy it may have hereunder, at the Indemnifying Party's expense, to defend such third party claim or demand; provided, however, that (i) such Indemnified Party shall not have any obligation to participate in the defense of, or defend, any such third party claim or demand; (ii) such Indemnified Party's defense of or its participation in the defense of any such third party claim or demand shall not in any way diminish or lessen the obligations of the Indemnifying Party under the agreements of indemnification set forth in this Article VII; and (iii) such Indemnified Party may not settle any claim without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

 

(c) The Indemnifying Party and the other Indemnified Parties, if any, shall cooperate fully in all aspects of any investigation, defense, pre-trial activities, trial, compromise, settlement or discharge of any claim in respect of which indemnity is sought pursuant to this Article VIII, including, but not limited to, by providing the other party with reasonable access to employees and officers (including as witnesses) and other information.

 

(d) Except for third party claims being defended in good faith, the Indemnifying Party shall satisfy its obligations under this ARTICLE VIII in respect of a valid claim for indemnification hereunder that is not contested by YIL in good faith in cash within thirty (30) days after the date on which Notice of Claim is given.

 

Section 8.4  Indemnification Procedures for Non-Third Party Claims. In the event any Indemnified Party should have an indemnification claim against the Indemnifying Party under this Agreement that does not involve a claim by a third party, the Indemnified Party shall promptly deliver notice of such claim to the Indemnifying Party in writing and in reasonable detail. The failure by any Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it may have to such Indemnified Party, except to the extent that the Indemnifying Party has been actually prejudiced by such failure. If the Indemnifying Party does not notify the Indemnified Party within fifteen (15) Business Days following its receipt of such notice that the Indemnifying Party disputes such claim, such claim specified by the Indemnifying Party in such notice shall be conclusively deemed a liability of the Indemnifying Party under this Article VIII and the Indemnifying Party shall pay the amount of such liability to the Indemnified Party on demand, or in the case of any notice in which the amount of the claim is estimated, on such later date when the amount of such claim is finally determined. If the Indemnifying Party disputes its liability with respect to such claim in a timely manner, YIL and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved pursuant to Section 10.11.

  

	 
	
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Section 8.5  Limitations on Indemnification. No claim for indemnification under this Article VIII shall be asserted by, and no liability for such indemnify shall be enforced against, the Indemnifying Party to the extent the Indemnified Party has theretofore received indemnification or otherwise been compensated for such Claim. In the event that an Indemnified Party shall later collect any such amounts recovered under insurance policies with respect to any Claim for which it has previously received payments under this Article VIII from the Indemnifying Party, such Indemnified Party shall promptly repay to the Indemnifying Party such amount recovered.

 

ARTICLE IX 

 

TERMINATION

 

Section 9.1  Termination. This Agreement may be terminated at any time prior to the Closing:

 

(a) by mutual consent of SHC and YIL;

 

(b) by YIL, if the Closing shall not have occurred on or before May 31, 2015 or if any of the conditions to the Closing set forth in Section 7.1 shall have become incapable of fulfillment by May 31, 2015 and shall not have been waived in writing by YIL; provided, however, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to YIL if its action or failure to act has been a principal cause of or resulted in the failure of the Exchange to occur on or before such date and such action or failure to act constitutes a breach of this Agreement;

 

(c) by SHC, if the Closing shall not have occurred on or before May 31, 2015 or if any of the conditions to the Closing set forth in Section 7.2 shall have become incapable of fulfillment by May 31, 2015 and shall not have been waived in writing by SHC; provided, however, that the right to terminate this Agreement under this Section 9.1(c) shall not be available to SHC if its action or failure to act has been a principal cause of or resulted in the failure of the Exchange to occur on or before such date and such action or failure to act constitutes a breach of this Agreement;

 

(d) by SHC or YIL if any Governmental or judicial Authority shall have issued an injunction, order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting any material portion of the Exchange and such injunction, order, decree, ruling or other action shall have become final and nonappealable;

 

(e) by YIL, in the event that the procedures detailed under Section 1.2(d) shall not have been completed or fully consummated and fewer than 100% in interest of YIL shareholders shall have become a party to the Exchange.

 

	 
	
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Section 9.2  Procedure and Effect of Termination. In the event of termination of this Agreement pursuant to Section 9.1 hereof, written notice thereof shall forthwith be given by the terminating party to the other party, and, except as set forth below, this Agreement shall terminate and be void and have no effect and the Exchange shall be abandoned without any further action by the parties hereto; provided that, if such termination shall result from the failure of a party to perform a covenant, obligation or agreement in this Agreement or from the breach by SHC or YIL of any representation or warranty contained herein, such party shall be fully liable for any and all damages incurred or suffered by the other party as a result of such failure or breach. The provisions of Section 6.3, Section 6.5, Section 9.2, and ARTICLE VIII and ARTICLE X hereof (with the exception of Section 10.5 only) shall survive the termination of this Agreement for any reason whatsoever.

 

ARTICLE X 

 

MISCELLANEOUS

 

Section 10.1 Entire Agreement. This Agreement and the Schedules and Exhibits hereto contain the entire agreement between the parties and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

 

Section 10.2 Amendment and Modifications. This Agreement may not be amended, modified or supplemented except by an instrument or instruments in writing signed by the party against whom enforcement of any such amendment, modification or supplement is sought.

 

Section 10.3 Extensions and Waivers. At any time prior to the Closing, the parties hereto entitled to the benefits of a term or provision may (a) extend the time for the performance of any of the obligations or other acts of the parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document, certificate or writing delivered pursuant hereto, or (c) waive compliance with any obligation, covenant, agreement or condition contained herein. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument or instruments in writing signed by the party against whom enforcement of any such extension or waiver is sought. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement.

 

Section 10.4 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided, however, that no party hereto may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other party hereto. Except as provided in Article VIII, nothing in this Agreement is intended to confer upon any person not a party hereto (and their successors and assigns) any rights, remedies, obligations or liabilities under, or by reason of, this Agreement.

 

Section 10.5 Survival of Representations, Warranties and Covenants. The representations and warranties contained herein shall survive the Closing and shall thereupon terminate two (2) years from the Closing. All covenants and agreements contained herein which by their terms contemplate actions following the Closing shall survive the Closing and remain in full force and effect in accordance with their terms.

  

	 
	
27

	

 

Section 10.6 Headings; Definitions. The Section and Article headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. All references to Sections or Articles contained herein mean Sections or Articles of this Agreement unless otherwise stated. All capitalized terms defined herein are equally applicable to both the singular and plural forms of such terms.

 

Section 10.7 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is held to be invalid or unenforceable to any extent, the remainder of this Agreement shall remain in full force and effect and shall be reformed to render the Agreement valid and enforceable while reflecting to the greatest extent permissible the intent of the parties.

 

Section 10.8 Specific Performance. The parties hereto agree that in the event that any party fails to consummate the Exchange in accordance with the terms of this Agreement, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine. It is accordingly agreed that the parties shall be entitled to specific performance in such event, without the necessity of proving the inadequacy of money damages as a remedy, in addition to any other remedy at law or in equity.

 

Section 10.9 Notices. All notices hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax, email or other electronic transmission service to the appropriate address or number as set forth below (or any other address duly notified by a party hereto pursuant to the provisions of this Section 10.9).

 

	
If to SHC:

	
with a copy to:

	
Sleepaid Holding Co.

	
McDowell Odom LLP

	
41 Bobolonk Lane

	
28494 Westinghouse Place Suite 305

	
Levittown, NY 11756

	
Valencia, CA 91355

	
Attn: Wai Riggs Cheung

	
Attn: Claudia J. McDowell, Esq.

	
Phone:

	
Phone: (661) 449-9630

	
Fax:

	
Fax: (818) 475-1819

	
Email: 

	
Email:  claudia@mcdowellodom.com

	 	 
	 	 
	
If to YIL and Sellers:

	
with a copy to:

	
Yugosu Investment Limited

	 
	
Rm 10 Wellborne Commercial Centre

	 
	
8 Java Road

	 
	
North Point, Hong Kong

	 
	
Attn: Tao Wang, CEO

	 

  

	 
	
28

	

 

Section 10.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflicts of laws principles.

 

Section 10.11 Consent to Jurisdiction. Any action, suit or other legal proceeding which is commenced to resolve any matter arising under or relating to any provision of this Agreement shall be commenced only in a state or federal court of competent jurisdiction the State of Nevada, and the parties hereto each consent to the jurisdiction of such a court.

 

Section 10.12 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.

 

Section 10.13 Certain Definitions. As used herein:

 

(a) "Affiliate" shall have the meanings ascribed to such term in Rule 12b‐2 of the Exchange Act;

 

(b) "Business Day" shall mean any day other than a Saturday, Sunday or a day on which federally chartered financial institutions are not open for business in the City of Las Vegas, Nevada;

 

(c) "Confidential Information" shall mean the existence and contents of this Agreement and the Schedules and Exhibits hereto, and all proprietary technical, economic, environmental, operational, financial and/or business information or material of one party which, prior to or following the Closing Date, has been disclosed by YIL, on the one hand, or SHC, on the other hand, in written, oral (including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other;

 

(d) "Contract" shall mean any oral, written or implied contracts, agreements, licenses, instruments, indentures leases, powers of attorney, guaranties, surety arrangements or other commitments of any kind;

 

(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;

 

(f) "GAAP" shall mean generally accepted accounting principles in the United States as in effect on the date or for the period with respect to which such principles are applied;

 

(g) "Governmental Authority" shall mean any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission or court, whether domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof;

  

	 
	
29

	

 

(h) "Knowledge" shall mean (i) with respect to an individual, knowledge of a particular fact or other matter, if such individual is aware of such fact or other matter, and (ii) with respect to a Person that is not an individual, knowledge of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, knowledge of such fact or other matter;

 

(i) "Lien" shall mean any security or other property interest or right, claim, lien, pledge, option, charge, security interest, contingent or conditional sale, or proxy, pre-emptive rights, first refusal rights, participation rights, or other title claim or retention agreement, interest or other right or claim of third parties, whether perfected or not perfected, voluntarily incurred or arising by operation of law, and including any agreement (other than this Agreement) to grant or submit to any of the foregoing in the future;

 

(j) "Material Adverse Effect" shall mean any adverse effect on the business, condition (financial or otherwise) or results of operation of the applicable entity;

 

(k)  "Material Contract" shall mean any Contract, other than equipment and furniture leases entered into in the ordinary course of business, the liabilities or commitments associated therewith exceed, in the case of YIL, $100,000 individually or $500,000 in the aggregate;

 

(l) "Person" shall mean any individual, corporation, partnership, association, trust or other entity or organization, including a governmental or political subdivision or any agency or institution thereof;

 

(m) "SEC" shall mean the Securities and Exchange Commission;

 

(n) "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder; and

 

(o) "Taxes" shall mean all taxes (whether U.S. federal, state, local or Israeli or other non-U.S.) based upon or measured by income and any other tax whatsoever, including, without limitation, gross receiSHC, profits, sales, levies, imposts, deductions, charges, rates, duties, use, occupation, value added, ad valorem, transfer, franchise, withholding, payroll and social security, employment, excise, stamp duty or property taxes, together with any interest, penalties, charges or fees imposed with respect thereto.

  

	 
	
30

	

 

IN WITNESS WHEREOF, each of the parties have caused this Agreement to be signed by their respective officers hereunto duly authorized, all as of the date first written above.

 

 

		
SLEEPAID HOLDING CO.

		 	 	
		By:	
/s/ Wai Riggs Cheung

	
 

		Name:	
Wai Riggs Cheung

	
 

		Title:	
CEO

	
 

		 	 	
		
YUGOSU INVESTMENTS LIMITED

		 	 	
		By:	
 /s/ Tao Wang

	
 

		Name:	
Tao Wang

	
 

		Title:	
CEO

	
 

		 	 	
		
SELLER:

		
AMAX Deluxe Limited

		 	 	
		By:	
/s/ Tao Wang

	
 

		Name:	
Tao Wang

	
 

		Title:	
CEO

	
 

  

	 
	
31

	

  

 EXHIBIT A

 

STOCK POWER

 

(see attached) 

  

	 
	
32

	

  

Schedule I

 

Exchange of YIL Shares for SHC Common Shares 

 

	
Name of Shareholder

	 	YIL Shares Outstanding on the Closing Date	 	 	SHC Exchange Shares to be Issued at Closing To YIL Shareholders	 
	
AMAX Deluxe Limited

	 		
10,000

	 	 		
9,770,000

	 
		 	 	 	 	 	 	 	 
	
Total

	 	 	
10,000

	 	 	 	
9,770,000

	 

  

 

33

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