Exhibit 2.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "AGREEMENT") is made this 5th day of
July 2011 by and among XcelMobility, Inc. (f/k/a Advanced Messaging Solutions,
Inc.), a Nevada corporation ("PUBCO"), on the one hand, and Shenzhen CC Power
Corporation, a company organized under the laws of the People's Republic of
China ("CC Power"), CC Mobility Limited, a company organized under the laws of
Hong Kong (the "COMPANY") and the shareholders of the Company as set forth on
Exhibit A attached hereto (the "SELLING SHAREHOLDERS"), on the other hand.
BACKGROUND:
A. The respective Boards of Directors of Pubco and the Company have
determined that an acquisition of the Company's outstanding shares by Pubco
through a voluntary share exchange with the Selling Shareholders (the
"EXCHANGE"), upon the terms and subject to the conditions set forth in this
Agreement, would be fair and in the best interests of their respective
shareholders, and such boards of directors have approved such Exchange, pursuant
to which shares of capital stock of the Company issued and outstanding
immediately prior to the Effective Time (as defined in Section 1.04) and all
securities convertible or exchangeable into capital stock of the Company (the
"SHARES") will be exchanged (including by reservation for future issuances) for
the right to receive shares of common stock of Pubco (the "EXCHANGE SHARES")
representing at Closing no less than 50.5% of the issued and outstanding shares
of Pubco.
B. Pubco, CC Power, the Company, and the Selling Shareholders, desire to
make certain representations, warranties, covenants and agreements in connection
with the Exchange and also to prescribe various conditions to the Exchange.
C. For federal income tax purposes, the parties intend that the Exchange
shall qualify as a reorganization under the provisions of Section 368(a)(1)(B)
of the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE EXCHANGE
1.01 SHARE EXCHANGE. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Nevada Revised Statutes ("NEVADA
STATUTES"), at the Closing (as hereinafter defined), the parties shall do the
following:
(a) The Selling Shareholders will sell, convey, assign, and transfer the
Shares to Pubco by delivering to Pubco a stock certificate issued in the name of
Pubco evidencing the Shares (the "SHARES CERTIFICATE"). The Shares transferred
to Pubco at the Closing shall constitute 100% of the issued and outstanding
equity interests of the Company; and
(b) As consideration for its acquisition of the Shares, Pubco shall issue
the Exchange Shares to the Selling Shareholders by delivering share certificates
registered in the name of the Selling Shareholders, or their nominees,
evidencing the Exchange Shares (the "EXCHANGE SHARES CERTIFICATES") in such
percentages attributable to each Selling Shareholder as set forth on Exhibit A
hereto. The Exchange Shares issued shall equal no less than 50.5% of the
outstanding shares of Pubco's common stock at the time of Closing.
(c) For federal income tax purposes, the Exchange is intended to constitute
a "reorganization" within the meaning of Section 368 of the Code, and the
parties shall report the transactions contemplated by the this Agreement
consistent with such intent and shall take no position in any Tax filing or
legal proceeding inconsistent therewith. The parties to this Agreement hereby
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
None of Pubco, the Company, CC Power or the Selling Shareholders have taken or
failed to take, and after the Effective Time, Pubco shall not take or fail to
take, any action which reasonably could be expected to cause the Exchange to
fail to qualify as a "reorganization" within the meaning of Section 368(a) of
the Code.
1.02 EFFECT OF THE EXCHANGE. The Exchange shall have the effects set forth
in the applicable provisions of the Nevada Statutes.
1.03 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Article
VI and subject to the satisfaction or waiver of the conditions set forth in
Article V, the closing of the Exchange (the "CLOSING") will take place at 10:00
a.m. U.S. Pacific Standard Time on the business day within thirty (30) days of
satisfaction of the conditions set forth in Article V (or as soon as practicable
thereafter following satisfaction or waiver of the conditions set forth in
Article V) (the "CLOSING DATE"), at the offices of Xxxxxxxxx Xxxxxxx, LLP, 0000
X Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxxxx, unless another date, time or place
is agreed to in writing by the parties hereto.
1.04 EFFECTIVE TIME OF EXCHANGE. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article V, the parties
shall make all filings or recordings required under Nevada Statutes and Hong
Kong law. The Exchange shall become effective at such time as is permissible in
accordance with Nevada Statutes and Hong Kong law (the time the Exchange becomes
effective being the "EFFECTIVE TIME"). Pubco and the Company shall use
reasonable efforts to have the Closing Date and the Effective Time to be the
same day.
1.05 DIRECTORS AND OFFICERS. On or before the Closing Date, Pubco shall
cause the appointment of the individuals as set forth on Schedule 1.05 to be
directors of Pubco and the concurrent resignation of the directors and officers
of Pubco as set forth on Schedule 1.05.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in
the disclosure schedule delivered by the Company to Pubco at the time of
execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), the Company, CC
Power and their respective subsidiaries, and Selling Shareholders, jointly and
severally, represent and warrant to Pubco as follows:
(a) Organization, Standing and Corporate Power. The Company, and its
respective subsidiaries, including a certain wholly foreign owned enterprise
organized under the laws of the People's Republic of China to be created at or
prior to Closing in accordance with Section 5.02(h) herein ("PRC SUB"), and CC
Power (collectively referred to herein as the "EXISTING COMPANY ENTITIES") are
each duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable) and has the
requisite corporate power and authority and all government licenses,
authorizations, permits, consents and approvals required to own, lease and
operate its properties and carry on its business as now being conducted. Each
Existing Company Entity is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of their respective
businesses or the ownership or leasing of their respective properties makes such
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qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) would
not have a material adverse effect (as defined in Section 8.02).
(b) Subsidiaries. Except for CC Power and a certain wholly foreign owned
enterprise to be created at or prior to Closing in accordance with Section
5.02(h) herein, the Company does not own directly or indirectly, any equity or
other ownership interest in any company, corporation, partnership, joint venture
or otherwise.
(c) Capital Structure. The number of shares and type of all authorized,
issued and outstanding capital stock of the Company, CC Power and PRC Sub, and
all shares of capital stock reserved for issuance under the Company's various
option and incentive plans is specified on Schedule 2.01(c). Except as set forth
in Schedule 2.01(c), no shares of capital stock or other equity securities of
the Existing Company Entities are issued, reserved for issuance or outstanding.
All outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no outstanding bonds, debentures, notes or other indebtedness
or other securities of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters.
Except as set forth in Schedule 2.01(c), there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Existing Company Entities are a party or
by which they are bound obligating any Existing Company Entity to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity or voting securities of the Company or obligating the
Company to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding contractual obligations, commitments, understandings or
arrangements of the Company to repurchase, redeem or otherwise acquire or make
any payment in respect of any shares of capital stock of the Company. There are
no agreements or arrangements pursuant to which the Company is or could be
required to register shares of Company common stock or other securities under
the Securities Act of 1933, as amended and the rules and regulations promulgated
thereunder (the "SECURITIES ACT") or other agreements or arrangements with or
among any security holders of the Company with respect to securities of the
Company.
(d) Corporate Authority; Noncontravention. The Selling Shareholders and
each Existing Company Entity have all requisite corporate and other power and
authority to enter into this Agreement and to consummate the Exchange. The
execution and delivery of this Agreement by each Existing Company Entity and the
consummation by each of them of the transactions contemplated hereby have been
(or at Closing will have been) duly authorized by all necessary corporate action
on the part of each Existing Company Entity. This Agreement has been duly
executed and when delivered by the Selling Shareholders and each Existing
Company Entity, shall constitute a valid and binding obligation of the Selling
Shareholders and each such Existing Company Entity, enforceable against the
Selling Shareholders and each such Existing Company Entity and its shareholders,
as applicable, in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
hereof will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put" right with
respect to any obligation or to a loss of a material benefit under, or result in
the creation of any lien upon any of the properties or assets of the Existing
Company Entities under, (i) the certificate or articles of incorporation, bylaws
or other organizational or charter documents of any of the Existing Company
Entities, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to any of the Existing Company Entities, their properties or assets,
or (iii) subject to the governmental filings and other matters referred to in
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the following sentence, any judgment, order, decree, statute, law, ordinance,
rule, regulation or arbitration award applicable to the Existing Company
Entities, their properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, breaches, violations, defaults, rights, losses or
liens that individually or in the aggregate could not have a material adverse
effect with respect to the Existing Company Entities or could not prevent,
hinder or materially delay the ability of the Existing Company Entities to
consummate the transactions contemplated by this Agreement.
(e) Governmental Authorization. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notice to, any
United States, People's Republic of China ("PRC") or Hong Kong court,
administrative agency or commission, or other federal, state or local government
or other governmental authority, agency, domestic or foreign (a "GOVERNMENTAL
ENTITY"), is required by or with respect to the Selling Shareholders or the
Existing Company Entities in connection with the execution and delivery of this
Agreement by the Selling Shareholders or the Existing Company Entities or the
consummation by the Selling Shareholders or the Existing Company Entities of the
transactions contemplated hereby, except, with respect to this Agreement, any
filings under the Securities Act or Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder (the "EXCHANGE ACT") and
any registrations, notices or filings required to be made in order to comply
with the currency and exchange control requirements imposed by the Chinese and
Hong Kong governments and/or PRC or Hong Kong law, if any.
(f) Financial Statements.
(i) Pubco has received a copy of the unaudited consolidated financial
statements of the Existing Company Entities for the fiscal years ended December
31, 2010 and 2009 and unaudited financial statements for the three-months ended
March 31, 2011 (collectively, the "FINANCIAL STATEMENTS"). The Financial
Statements fairly present the financial condition of the Existing Company
Entities at the dates indicated and the results of their operations and cash
flows for the periods then ended and, except as indicated therein, reflect all
claims against, debts and liabilities of the Existing Company Entities, fixed or
contingent, and of whatever nature.
(ii) Since March 31, 2011 (the "BALANCE SHEET DATE"), there has been no
material adverse change in the assets or liabilities, or in the business or
condition, financial or otherwise, or in the results of operations or prospects,
of the Existing Company Entities, whether as a result of any legislative or
regulatory change, revocation of any license or rights to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation, act of God, public force or otherwise and no material adverse
change in the assets or liabilities, or in the business or condition, financial
or otherwise, or in the results of operation or prospects, of the Existing
Company Entities except in the ordinary course of business.
(iii) Since the Balance Sheet Date, the Existing Company Entities have not
suffered any damage, destruction or loss of physical property (whether or not
covered by insurance) affecting its condition (financial or otherwise) or
operations (present or prospective), nor have the Existing Company Entities
except as disclosed in writing to Pubco, issued, sold or otherwise disposed of,
or agreed to issue, sell or otherwise dispose of, any capital stock or any other
security of the Existing Company Entities and have not granted or agreed to
grant any option, warrant or other right to subscribe for or to purchase any
capital stock or any other security of the Existing Company Entities or have
incurred or agreed to incur any indebtedness for borrowed money.
(g) Absence of Certain Changes or Events. Except as set forth on Schedule
2.01(g), since the Balance Sheet Date, the Existing Company Entities have
conducted their business only in the ordinary course consistent with past
practice, and there is not and has not been any:
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(i) material adverse change with respect to the Existing Company Entities;
(ii) event which, if it had taken place following the execution of this
Agreement, would not have been permitted by Section 3.01 without prior consent
of Pubco;
(iii) condition, event or occurrence which could reasonably be expected to
prevent, hinder or materially delay the ability of the Existing Company Entities
to consummate the transactions contemplated by this Agreement;
(iv) incurrence, assumption or guarantee by the Existing Company Entities
of any indebtedness for borrowed money other than in the ordinary course and in
amounts and on terms consistent with past practices or as disclosed to Pubco in
writing;
(v) creation or other incurrence by the Company of any lien on any asset
other than in the ordinary course consistent with past practices;
(vi) transaction or commitment made, or any contract or agreement entered
into, by the Existing Company Entities relating to their assets or business
(including the acquisition or disposition of any assets) or any relinquishment
by the Existing Company Entities of any contract or other right, in either case,
material to the Existing Company Entities, other than transactions and
commitments in the ordinary course consistent with past practices and those
contemplated by this Agreement;
(vii) labor dispute, other than routine, individual grievances, or, to the
knowledge of the Existing Company Entities, any activity or proceeding by a
labor union or representative thereof to organize any employees of any Existing
Company Entity or any lockouts, strikes, slowdowns, work stoppages or threats by
or with respect to such employees;
(viii) payment, prepayment or discharge of liability other than in the
ordinary course of business or any failure to pay any liability when due;
(ix) write-offs or write-downs of any assets of the Existing Company
Entities;
(x) creation, termination or amendment of, or waiver of any right under,
any material contract of the Existing Company Entities;
(xi) damage, destruction or loss having, or reasonably expected to have, a
material adverse effect on the Existing Company Entities;
(xii) other condition, event or occurrence which individually or in the
aggregate could reasonably be expected to have a material adverse effect or give
rise to a material adverse change with respect to the Existing Company Entities;
or
(xiii) agreement or commitment to do any of the foregoing.
(h) Certain Fees. No brokerage or finder's fees or commissions are or will
be payable by the Existing Company Entities to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other person
with respect to the transactions contemplated by this Agreement.
(i) Litigation; Labor Matters; Compliance with Laws.
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(i) There is no suit, action or proceeding or investigation pending or, to
the knowledge of each of the Existing Company Entities, threatened against or
affecting any of the Existing Company Entities or any basis for any such suit,
action, proceeding or investigation that, individually or in the aggregate,
could reasonably be expected to have a material adverse effect with respect to
the Existing Company Entities or prevent, hinder or materially delay the ability
of the Existing Company Entities to consummate the transactions contemplated by
this Agreement, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Existing Company
Entities having, or which, insofar as reasonably could be foreseen by the
Existing Company Entities, in the future could have, any such effect.
(ii) Each of the Existing Company Entities is not a party to, or bound by,
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it the subject of
any proceeding asserting that it has committed an unfair labor practice or
seeking to compel it to bargain with any labor organization as to wages or
conditions of employment nor is there any strike, work stoppage or other labor
dispute involving it pending or, to its knowledge, threatened, any of which
could have a material adverse effect with respect to such Existing Company
Entity.
(iii) The conduct of the business of the Existing Company Entities complies
with all statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees or arbitration awards applicable thereto.
(j) Benefit Plans. Except as disclosed to Pubco in writing, each of the
Existing Company Entities is not a party to any Benefit Plan under which such
Existing Company Entity currently has an obligation to provide benefits to any
current or former employee, officer or director of the Existing Company Entity.
As used herein, "BENEFIT PLAN" shall mean any employee benefit plan, program, or
arrangement of any kind, including any defined benefit or defined contribution
plan, stock ownership plan, executive compensation program or arrangement, bonus
plan, incentive compensation plan or arrangement, profit sharing plan or
arrangement, deferred compensation plan, agreement or arrangement, supplemental
retirement plan or arrangement, vacation pay, sickness, disability, or death
benefit plan (whether provided through insurance, on a funded or unfunded basis,
or otherwise), medical or life insurance plan providing benefits to employees,
retirees, or former employees or any of their dependents, survivors, or
beneficiaries, employee stock option or stock purchase plan, severance pay,
termination, salary continuation, or employee assistance plan.
(k) Certain Employee Payments. No Existing Company Entity is a party to any
employment agreement which could result in the payment to any current, former or
future director or employee of the Existing Company Entities of any money or
other property or rights or accelerate or provide any other rights or benefits
to any such employee or director as a result of the transactions contemplated by
this Agreement, whether or not (i) such payment, acceleration or provision would
constitute a "parachute payment" (within the meaning of Section 280G of the
Code), or (ii) some other subsequent action or event would be required to cause
such payment, acceleration or provision to be triggered.
(l) Tax Returns and Tax Payments.
(i) The Existing Company Entities have timely filed with the appropriate
taxing authorities all Tax Returns required to be filed by them (taking into
account all applicable extensions). All such Tax Returns are true, correct and
complete in all respects. All Taxes due and owing by the Existing Company
Entities have been paid (whether or not shown on any Tax Return and whether or
not any Tax Return was required). The Existing Company Entities are not
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currently beneficiaries of any extension of time within which to file any Tax
Return or pay any Tax. No claim has ever been made in writing or otherwise
addressed to the Existing Company Entities by a taxing authority in a
jurisdiction where the Existing Company Entities do not file Tax Returns that
they are or may be subject to taxation by that jurisdiction. The unpaid Taxes of
the Existing Company Entities did not, as of the Balance Sheet Date, exceed the
reserve for Tax liability (excluding any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set forth on the face
of the Financial Statements (rather than in any notes thereto). Since the
Balance Sheet Date, the Existing Company Entities have not incurred any
liability for Taxes outside the ordinary course of business consistent with past
custom and practice. As of the Closing Date, the unpaid Taxes of the Existing
Company Entities will not exceed the reserve for Tax liability (excluding any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the books and records of the Existing Company
Entities.
(ii) No material claim for unpaid Taxes has been made or become a lien
against the property of any of the Existing Company Entities or is being
asserted against any of the Existing Company Entities, no audit of any Tax
Return of any of the Existing Company Entities is being conducted by a tax
authority, and no extension of the statute of limitations on the assessment of
any Taxes has been granted by any of the Existing Company Entities and is
currently in effect. The Existing Company Entities have withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party.
(iii) As used herein, "TAXES" shall mean all taxes of any kind, including,
without limitation, those on or measured by or referred to as income, gross
receipts, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium value added,
property or windfall profits taxes, customs, duties or similar fees, assessments
or charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any governmental authority,
domestic or foreign. As used herein, "TAX RETURN" shall mean any return, report
or statement required to be filed with any governmental authority with respect
to Taxes.
(m) Environmental Matters. The Existing Company Entities are in compliance
with all Environmental Laws in all material respects. The Existing Company
Entities have not received any written notice regarding any violation of any
Environmental Laws, including any investigatory, remedial or corrective
obligations. Each of the Existing Company Entities holds all permits and
authorizations required under applicable Environmental Laws, unless the failure
to hold such permits and authorizations would not have a material adverse effect
on such Existing Company Entity, and are is compliance with all terms,
conditions and provisions of all such permits and authorizations in all material
respects. No releases of Hazardous Materials have occurred at, from, in, to, on
or under any real property currently or formerly owned, operated or leased by
any of the Existing Company Entities or any predecessor thereof and no Hazardous
Materials are present in, on, about or migrating to or from any such property
which could result in any liability to the Existing Company Entities. The
Existing Company Entities have not transported or arranged for the treatment,
storage, handling, disposal, or transportation of any Hazardous Material to any
off-site location which could result in any liability to any Existing Company
Entities. The Existing Company Entities have no liability, absolute or
contingent, under any Environmental Law that if enforced or collected would have
a material adverse effect on the Existing Company Entities. There are no past,
pending or threatened claims under Environmental Laws against any of the
Existing Company Entities and none of the Existing Company Entities is aware of
any facts or circumstances that could reasonably be expected to result in a
liability or claim against the Existing Company Entities pursuant to
Environmental Laws. "ENVIRONMENTAL LAWS" means all applicable foreign, federal,
state and local statutes, rules, regulations, ordinances, orders, decrees and
common law relating in any manner to contamination, pollution or protection of
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human health or the environment, and similar state laws. "HAZARDOUS MATERIAL"
means any toxic, radioactive, corrosive or otherwise hazardous substance,
including petroleum, its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the foregoing
characteristics, which in any event is regulated under any Environmental Law.
(n) Material Agreements.
(i) Schedule 2.01(n) lists the following contracts and other agreements
("MATERIAL AGREEMENTS") to which the Existing Company Entities are a party: (a)
any agreement (or group of related agreements) for the lease of real or personal
property, including capital leases, to or from any person providing for annual
lease payments in excess of $25,000; (b) any licensing agreement, or any
agreement forming a partnership, strategic alliances, profit sharing or joint
venture; (c) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money in
excess of $25,000, or under which a security interest has been imposed on any of
its assets, tangible or intangible; (d) any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation, severance, or other
material plan or arrangement for the benefit of its current or former officers
and managers or any of the Existing Company Entities' employees; (e) any
employment or independent contractor agreement providing annual compensation in
excess of $25,000 or providing post-termination or severance payments or
benefits or that cannot be cancelled without more than 30 days' notice; (f) any
agreement with any current or former officer, director, shareholder or affiliate
of the Existing Company Entities; (g) any agreements relating to the acquisition
(by merger, purchase of stock or assets or otherwise) by the Existing Company
Entities of any operating business or material assets or the capital stock of
any other person; (h) any agreements for the sale of any of the assets of the
Existing Company Entities, other than in the ordinary course of business; (i)
any outstanding agreements of guaranty, surety or indemnification, direct or
indirect, by the Existing Company Entities; (j) any royalty agreements, licenses
or other agreements relating to Intellectual Property (excluding licenses
pertaining to "off-the-shelf" commercially available software used pursuant to
shrink-wrap or click-through license agreements on reasonable terms for a
license fee of no more than $10,000); and (k) any other agreement under which
the consequences of a default or termination could reasonably be expected to
have a material adverse effect on the Existing Company Entities.
(ii) The Existing Company Entities have made available to Pubco either an
original or a correct and complete copy of each written Material Agreement.
Except as set forth on Schedule 2.01(n), with respect to each Material Agreement
to which the Existing Company are a party thereto: (a) the agreement is the
legal, valid, binding, enforceable obligation of the Existing Company Entities
and is in full force and effect in all material respects, subject to bankruptcy
and equitable remedies exceptions; (b)(X) the Existing Company Entities are not
in material breach or default thereof, and (Y) no event has occurred which, with
notice or lapse of time, would constitute a material breach or default of, or
permit termination, modification, or acceleration under, the Material Agreement;
and (c) the Existing Company Entities have not repudiated any material provision
of the agreement.
(o) Accounts Receivable. All of the accounts receivable of each of the
Existing Company Entities that are reflected on the Financial Statements or the
accounting records of such Existing Company Entity as of the Closing Date
(collectively, the "ACCOUNTS RECEIVABLE") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business and are not subject to any defenses,
counterclaims, or rights of set off other than those arising in the ordinary
course of business and for which adequate reserves have been established. The
Accounts Receivable are fully collectible to the extent not reserved for on the
balance sheet on which they are shown.
(p) Properties & Tangible Assets.
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(i) Each Existing Company Entity has valid land use rights for all real
property that is material to its business and good, clear and marketable title
to all the tangible properties and tangible assets reflected in the latest
balance sheet as being owned by such Existing Company Entity or acquired after
the date thereof which are, individually or in the aggregate, material to such
Existing Company Entity's business (except properties sold or otherwise disposed
of since the date thereof in the ordinary course of business), free and clear of
all material liens, encumbrances, claims, security interest, options and
restrictions of any nature whatsoever. Any real property and facilities held
under lease by any Existing Company Entity are held by them under valid,
subsisting and enforceable leases of which such Existing Company Entity is in
compliance, except as could not, individually or in the aggregate, have or
reasonably be expected to result in a material adverse effect.
(ii) Each Existing Company Entity has good and marketable title to, or in
the case of leased property, a valid leasehold interest in, the office space,
computers, equipment and other material tangible assets which are material to
its business. Except as set forth on Schedule 2.01(p), each such tangible asset
is in all material respects in good operating condition and repair (subject to
normal wear and tear), is suitable for the purposes for which it presently is
used, and, except as to leased assets, free and clear of any and all security
interests. None of the Existing Company Entities have any knowledge of any
dispute or claim made by any other person concerning such right, title and
interest in such tangible assets.
(q) Intellectual Property.
(i) As used in this Agreement, "INTELLECTUAL PROPERTY" means all right,
title and interest in or relating to all intellectual property, whether
protected, created or arising under the laws of the United States or any other
jurisdiction or under any international convention, including, but not limited
to the following: (a) service marks, trademarks, trade names, trade dress, logos
and corporate names (and any derivations, modifications or adaptations thereof),
Internet domain names and Internet websites (and content thereof), together with
the goodwill associated with any of the foregoing, and all applications,
registrations, renewals and extensions thereof (collectively, "MARKS"); (b)
patents and patent applications, including all continuations, divisionals,
continuations-in-part and provisionals and patents issuing thereon, and all
reissues, reexaminations, substitutions, renewals and extensions thereof
(collectively, "PATENTS"); (c) copyrights, works of authorship and moral rights,
and all registrations, applications, renewals, extensions and reversions thereof
(collectively, "COPYRIGHTS"); (d) confidential and proprietary information,
trade secrets and non-public discoveries, concepts, ideas, research and
development, technology, know-how, formulae, inventions (whether or not
patentable and whether or not reduced to practice), compositions, processes,
techniques, technical data and information, procedures, designs, drawings,
specifications, databases, customer lists, supplier lists, pricing and cost
information, and business and marketing plans and proposals, in each case
excluding any rights in respect of any of the foregoing that comprise or are
protected by Patents (collectively, "TRADE SECRETS"); and (e) Technology. For
purposes of this Agreement, "TECHNOLOGY" means all Software, information,
designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how,
research and development, technical data, programs, subroutines, tools,
materials, specifications, processes, inventions (whether or not patentable and
whether or not reduced to practice), apparatus, creations, improvements and
other similar materials, and all recordings, graphs, drawings, reports,
analyses, and other writings, and other embodiments of any of the foregoing, in
any form or media whether or not specifically listed herein. Further, for
purposes of this Agreement, "SOFTWARE" means any and all computer programs,
whether in source code or object code; databases and compilations, whether
machine readable or otherwise; descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing; and all
documentation, including user manuals and other training documentation, related
to any of the foregoing.
9
(ii) Schedule 2.01(q) sets forth a list and description of the Intellectual
Property required for the Existing Company Entities to operate, or used or held
for use by the Existing Company Entities, in the operation of its business,
including, but not limited to (a) all issued Patents and pending Patent
applications, registered Marks, pending applications for registration of Marks,
unregistered Marks, registered Copyrights of the Existing Company Entities and
the record owner, registration or application date, serial or registration
number, and jurisdiction of such registration or application of each such item
of Intellectual Property, (b) all Software developed by or for the Existing
Company Entities and (c) any Software not exclusively owned by the Existing
Company Entities and incorporated, embedded or bundled with any Software listed
in clause (b) above (except for commercially available software and so-called
"shrink wrap" software licensed to the Existing Company Entities on reasonable
terms through commercial distributors or in consumer retail stores for a license
fee of no more than $10,000).
(iii) The Existing Company Entities are the exclusive owner of or has a
valid and enforceable right to use all Intellectual Property listed for the
Existing Company Entities in Schedule 2.01(q) (and any other Intellectual
Property required to be listed in Schedule 2.01(q)) as the same are used, sold,
licensed and otherwise commercially exploited by the Existing Company Entities,
free and clear of all liens, security interests, encumbrances or any other
obligations to others, and no such Intellectual Property has been abandoned. The
Intellectual Property owned by the Existing Company Entities and the
Intellectual Property licensed to them pursuant to valid and enforceable written
license agreements include all of the Intellectual Property necessary and
sufficient to enable the Existing Company Entities to conduct its business in
the manner in which such business is currently being conducted. The Intellectual
Property owned by the Existing Company Entities and its rights in and to such
Intellectual Property are valid and enforceable.
(iv) The Existing Company Entities have not received, and are not aware of,
any written or oral notice of any reasonable basis for an allegation against the
Existing Company Entities of any infringement, misappropriation, or violation by
the Existing Company Entities of any rights of any third party with respect to
any Intellectual Property, and the Existing Company Entities are not aware of
any reasonable basis for any claim challenging the ownership, use, validity or
enforceability of any Intellectual Property owned, used or held for use by the
Existing Company Entities. The Existing Company Entities do not have any
knowledge (a) of any third-party use of any Intellectual Property owned by or
exclusively licensed to the Existing Company Entities, (b) that any third-party
has a right to use any such Intellectual Property, or (c) that any third party
is infringing, misappropriating, or otherwise violating (or has infringed,
misappropriated or violated) any such Intellectual Property.
(v) The Existing Company Entities have not infringed, misappropriated or
otherwise violated any Intellectual Property rights of any third parties, and
the Existing Company Entities are not aware of any infringement,
misappropriation or violation of any third party rights which will occur as a
result of the continued operation of the Existing Company Entities as presently
operated and/or the consummation of the transaction contemplated by this
Agreement.
(vi) Each Existing Company Entity has taken adequate security measures to
protect the confidentiality and value of its Trade Secrets (and any confidential
information owned by a third party to whom the Company has a confidentiality
obligation).
(vii) The consummation of the transactions contemplated by this Agreement
will not adversely affect the right of the Existing Company Entities to own or
use any Intellectual Property owned, used or held for use by them.
10
(viii) All necessary registration, maintenance, renewal and other relevant
filing fees in connection with any of the Intellectual Property owned by the
Existing Company Entities and listed (or required to be listed) on Schedule
2.01(q) have been timely paid and all necessary registrations, documents,
certificates and other relevant filings in connection with such Intellectual
Property have been timely filed with the relevant governmental authorities in
the United States or foreign jurisdictions, as the case may be, for the purpose
of maintaining such Intellectual Property and all issuances, registrations and
applications therefor. There are no annuities, payments, fees, responses to
office actions or other filings necessary to be made and having a due date with
respect to any such Intellectual Property within ninety (90) days after the date
of this Agreement.
(r) Board Recommendation. The Board of Directors of the Company has
unanimously determined that the terms of the Exchange are fair to and in the
best interests of the sole stockholder of the Company and recommended that the
Selling Shareholders approve the Exchange.
(s) Compliance With Anti-Corruption Laws. None of the Existing Company
Entities nor to the knowledge of the Existing Company Entities, any director,
officer, agent, employee or other person acting on behalf of the Existing
Company Entities has, in the course of its actions for, or on behalf of, the
Existing Company Entities (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any applicable Hong Kong or PRC laws; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
(t) OFAC. None of the Existing Company Entities, nor to the knowledge of
the Existing Company Entities, any director, officer, agent, employee, affiliate
or person acting on behalf of the Existing Company Entities, is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department.
(u) Undisclosed Liabilities. Each of the Existing Company Entities has no
liabilities or obligations of any nature (whether fixed or unfixed, secured or
unsecured, known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Financial Statements incurred in the ordinary course of business or such
liabilities or obligations disclosed in Schedule 2.01(g).
(v) Money Laundering Laws. The operations of the Existing Company Entities
are and have been conducted at all times in compliance with the money laundering
statutes of applicable jurisdictions, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or
enforced by any applicable governmental agency (collectively, the "MONEY
LAUNDERING LAWS") and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Existing
Company Entities with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Existing Company Entities, threatened.
(w) Other Representations and Warranties Relating to CC Power.
(i) All material consents, approvals, authorizations or licenses required
under PRC law for the due and proper establishment and operation of CC Power
have been duly obtained from the relevant PRC governmental authorities and are
in full force and effect.
11
(ii) All filings and registrations with the PRC governmental authorities
required in respect of CC Power and its capital structure and operations
including, without limitation, the registration with the Ministry of Commerce,
the State Administration of Industry and or their respective local divisions of
Commerce, the State Administration of Foreign Exchange, tax bureau and customs
authorities have been duly completed in accordance with the relevant PRC rules
and regulations, except where, the failure to complete such filings and
registrations does not, and would not, individually or in the aggregate, have a
material adverse effect.
(iii) CC Power has complied with all relevant PRC laws and regulations
regarding the contribution and payment of its registered share capital, the
payment schedule of which has been approved by the relevant PRC governmental
authorities. There are no outstanding commitments made by the Company or any
subsidiary to sell any equity interest in CC Power.
(iv) CC Power has not received any letter or notice from any relevant PRC
governmental authority notifying it of revocation of any licenses or
qualifications issued to it or any subsidy granted to it by any PRC governmental
authority for non-compliance with the terms thereof or with applicable PRC laws,
or the lack of compliance or remedial actions in respect of the activities
carried out by CC Power, except such revocation as does not, and would not,
individually or in the aggregate, have a material adverse effect.
(v) CC Power has conducted its business activities within the permitted
scope of business or has otherwise operated its business in compliance with all
relevant legal requirements and with all requisite licenses and approvals
granted by competent PRC governmental authorities other than such non-compliance
that do not, and would not, individually or in the aggregate, have a material
adverse effect. As to licenses, approvals and government grants and concessions
requisite or material for the conduct of any material part of CC Power's
business which is subject to periodic renewal, the Company has no knowledge of
any reasons related to the CC Power for which such requisite renewals will not
be granted by the relevant PRC governmental authorities.
(vi) With regard to employment and staff or labor, CC Power has complied
with all applicable PRC laws and regulations in all material respects, including
without limitation, laws and regulations pertaining to welfare funds, social
benefits, medical benefits, insurance, retirement benefits, pensions or the
like, other than such non-compliance that do not, and would not, individually or
in the aggregate, have a material adverse effect.
(x) Ownership of Stock. The Selling Shareholders own all of the issued and
outstanding shares of capital stock of the Company, free and clear of all liens,
claims, rights, charges, encumbrances, and security interests of whatsoever
nature or type.
(y) Full Disclosure. All of the representations and warranties made by the
Existing Company Entities and Selling Shareholders in this Agreement, and all
statements set forth in the certificates delivered by the Existing Company
Entities at the Closing Date pursuant to this Agreement, are true, correct and
complete in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make such
representations, warranties or statements, in light of the circumstances under
which they were made, misleading. The copies of all documents furnished by the
Existing Company Entities and Selling Shareholders pursuant to the terms of this
Agreement are complete and accurate copies of the original documents. The
schedules, certificates, and any and all other statements and information,
whether furnished in written or electronic form, to Pubco or its representatives
by or on behalf of any of the Existing Company Entities or their affiliates in
connection with the negotiation of this Agreement and the transactions
12
contemplated hereby do not contain any material misstatement of fact or omit to
state a material fact or any fact necessary to make the statements contained
therein not misleading.
2.02 REPRESENTATIONS AND WARRANTIES OF PUBCO. Except as set forth in the
disclosure schedule delivered by Pubco to the Company at the time of execution
of this Agreement (the "PUBCO DISCLOSURE SCHEDULE"), Pubco represents and
warrants to the Company, CC Power and the Selling Shareholders as follows:
(a) Organization, Standing and Corporate Power. Pubco is duly organized,
validly existing and in good standing under the laws of the State of Nevada, and
has the requisite corporate power and authority and all government licenses,
authorizations, permits, consents and approvals required to own, lease and
operate its properties and carry on its business as now being conducted. Pubco
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect with
respect to Pubco. Shares of common stock of Pubco, par value $0.001 ("PUBCO
COMMON STOCK"), trade on the OTC Bulletin Board under the symbol "XCLL."
(b) Subsidiaries. Pubco does not own directly or indirectly, any equity or
other ownership interest in any company, corporation, partnership, joint venture
or otherwise.
(c) Capital Structure of Pubco. As of the date of this Agreement, the
authorized capital stock of Pubco consists of 100,000,000 shares of Pubco Common
Stock, $0.001 par value, and no shares of Pubco Common Stock are issuable upon
the exercise of outstanding warrants, convertible notes, options and otherwise.
Except as set forth above, no shares of capital stock or other equity securities
of Pubco are issued, reserved for issuance or outstanding. All outstanding
shares of capital stock of Pubco are, and all shares which may be issued
pursuant to this Agreement will be, when issued, duly authorized, validly
issued, fully paid and nonassessable, not subject to preemptive rights, and
issued in compliance with all applicable state and federal laws concerning the
issuance of securities. Except as set forth above, there are no outstanding
bonds, debentures, notes or other indebtedness or other securities of Pubco
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote). Except as set forth above, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Pubco is a party or by which
any of them is bound obligating Pubco to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
securities of Pubco or obligating Pubco to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other equity
securities of Pubco or obligating Pubco to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding contractual obligations,
commitments, understandings or arrangements of Pubco or any of its subsidiaries
to repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock of Pubco or any of its subsidiaries. There are no
agreements or arrangements pursuant to which Pubco is or could be required to
register shares of Pubco Common Stock or other securities under the Securities
Act or other agreements or arrangements with or among any security holders of
Pubco with respect to securities of Pubco.
(d) Corporate Authority; Noncontravention. Pubco has all requisite
corporate and other power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Pubco and the consummation by Pubco of the
transactions contemplated by this Agreement have been (or at Closing will have
been) duly authorized by all necessary corporate action on the part of Pubco.
This Agreement has been duly executed and when delivered by Pubco, shall
13
constitute a valid and binding obligation of Pubco, enforceable against Pubco in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity. The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or result in
the creation of any lien upon any of the properties or assets of Pubco under,
(i) its articles of incorporation, bylaws or other charter documents of Pubco,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license applicable
to Pubco, its properties or assets, or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to Pubco, its properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, breaches, violations, defaults,
rights, losses or liens that individually or in the aggregate could not have a
material adverse effect with respect to Pubco or could not prevent, hinder or
materially delay the ability of Pubco to consummate the transactions
contemplated by this Agreement.
(e) Government Authorization. No consent, approval, order or authorization
of, or registration, declaration or filing with, or notice to, any Governmental
Entity, is required by or with respect to Pubco in connection with the execution
and delivery of this Agreement by Pubco, or the consummation by Pubco of the
transactions contemplated hereby, except, with respect to this Agreement, any
filings under the Nevada Statutes, the Securities Act or the Exchange Act.
(f) SEC Documents; Undisclosed Liabilities. Pubco has timely filed all
reports, schedules, forms, statements and other documents as required by the
Securities and Exchange Commission (the "SEC") and Pubco has delivered or made
available to the Company all reports, schedules, forms, statements and other
documents filed with the SEC (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "PUBCO SEC DOCUMENTS"). As of their respective dates, the Pubco SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Pubco SEC
Documents, and none of the Pubco SEC Documents (including any and all
consolidated financial statements included therein) as of such date contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent revised or superseded by a subsequent filing
with the SEC (a copy of which has been provided to the Company prior to the date
of this Agreement), none of the Pubco SEC Documents, to the knowledge of Pubco's
management, contains any untrue statement of a material fact or omits to state
any material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of Pubco included in such Pubco SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with U.S. generally accepted accounting principles
(except, in the case of unaudited consolidated quarterly statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Pubco and its consolidated
subsidiaries as of the dates thereof and the consolidated results of operations
and changes in cash flows for the periods then ended (subject, in the case of
unaudited quarterly statements, to normal year-end audit adjustments as
determined by Pubco's independent accountants). Except as set forth in the Pubco
SEC Documents, at the date of the most recent audited financial statements of
Pubco included in the Pubco SEC Documents, Pubco has not incurred any
14
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect with respect to Pubco.
(g) Absence of Certain Changes or Events. Except as disclosed in the Pubco
SEC Documents or as set forth on Schedule 2.02(g), since the date of the most
recent financial statements included in the Pubco SEC Documents, Pubco has
conducted its business only in the ordinary course consistent with past practice
in light of its current business circumstances, and there is not and has not
been any:
(i) material adverse change with respect to Pubco;
(ii) event which, if it had taken place following the execution of this
Agreement, would not have been permitted by Section 3.01 without prior consent
of the Company;
(iii) condition, event or occurrence which could reasonably be expected to
prevent, hinder or materially delay the ability of Pubco to consummate the
transactions contemplated by this Agreement;
(iv) incurrence, assumption or guarantee by Pubco of any indebtedness for
borrowed money other than in the ordinary course and in amounts and on terms
consistent with past practices or as disclosed to the Company in writing;
(v) creation or other incurrence by Pubco of any lien on any asset other
than in the ordinary course consistent with past practices;
(vi) transaction or commitment made, or any contract or agreement entered
into, by Pubco relating to its assets or business (including the acquisition or
disposition of any assets) or any relinquishment by Pubco of any contract or
other right, in either case, material to Pubco, other than transactions and
commitments in the ordinary course consistent with past practices and those
contemplated by this Agreement;
(vii) labor dispute, other than routine, individual grievances, or, to the
knowledge of Pubco, any activity or proceeding by a labor union or
representative thereof to organize any employees of Pubco or any lockouts,
strikes, slowdowns, work stoppages or threats by or with respect to such
employees;
(viii) payment, prepayment or discharge of liability other than in the
ordinary course of business or any failure to pay any liability when due;
(ix) write-offs or write-downs of any assets of Pubco;
(x) creation, termination or amendment of, or waiver of any right under,
any material contract of Pubco;
(xi) damage, destruction or loss having, or reasonably expected to have, a
material adverse effect on Pubco;
(xii) other condition, event or occurrence which individually or in the
aggregate could reasonably be expected to have a material adverse effect or give
rise to a material adverse change with respect to Pubco; or
15
(xiii) agreement or commitment to do any of the foregoing.
(h) Certain Fees. No brokerage or finder's fees or commissions are or will
be payable by Pubco to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other person with respect to the
transactions contemplated by this Agreement.
(i) Litigation; Labor Matters; Compliance with Laws.
(i) There is no suit, action or proceeding or investigation pending or, to
the knowledge of Pubco, threatened against or affecting Pubco or any basis for
any such suit, action, proceeding or investigation that, individually or in the
aggregate, could reasonably be expected to have a material adverse effect with
respect to Pubco or prevent, hinder or materially delay the ability of Pubco to
consummate the transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Pubco having, or which, insofar as reasonably
could be foreseen by Pubco, in the future could have, any such effect.
(ii) Pubco is not a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is it the subject of any proceeding asserting that it
has committed an unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages or conditions of employment nor is there any
strike, work stoppage or other labor dispute involving it pending or, to its
knowledge, threatened, any of which could have a material adverse effect with
respect to Pubco.
(iii) The conduct of the business of Pubco complies with all statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees or arbitration
awards applicable thereto.
(j) Benefit Plans. Pubco is not a party to any Benefit Plan under which
Pubco currently has an obligation to provide benefits to any current or former
employee, officer or director of Pubco.
(k) Certain Employee Payments. Pubco is not a party to any employment
agreement which could result in the payment to any current, former or future
director or employee of Pubco of any money or other property or rights or
accelerate or provide any other rights or benefits to any such employee or
director as a result of the transactions contemplated by this Agreement, whether
or not (i) such payment, acceleration or provision would constitute a "parachute
payment" (within the meaning of Section 280G of the Code), or (ii) some other
subsequent action or event would be required to cause such payment, acceleration
or provision to be triggered.
(l) Tax Returns and Tax Payments.
(i) Pubco has timely filed with the appropriate taxing authorities all Tax
Returns required to be filed by it (taking into account all applicable
extensions). All such Tax Returns are true, correct and complete in all
respects. All Taxes due and owing by Pubco has been paid (whether or not shown
on any Tax Return and whether or not any Tax Return was required). Pubco is not
currently the beneficiary of any extension of time within which to file any Tax
Return or pay any Tax. No claim has ever been made in writing or otherwise
addressed to Pubco by a taxing authority in a jurisdiction where Pubco does not
file Tax Returns that it is or may be subject to taxation by that jurisdiction.
The unpaid Taxes of Pubco did not, as of the date of the most recent financial
statements included in the Pubco SEC Documents, exceed the reserve for Tax
liability (excluding any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
financial statements (rather than in any notes thereto). Since the date of the
16
most recent financial statements included in the Pubco SEC Documents, Pubco has
not incurred any liability for Taxes outside the ordinary course of business
consistent with past custom and practice. As of the Closing Date, the unpaid
Taxes of Pubco will not exceed the reserve for Tax liability (excluding any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the books and records of Pubco.
(ii) No material claim for unpaid Taxes has been made or become a lien
against the property of Pubco or is being asserted against Pubco, no audit of
any Tax Return of Pubco is being conducted by a tax authority, and no extension
of the statute of limitations on the assessment of any Taxes has been granted by
Pubco and is currently in effect. Pubco has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
(m) Environmental Matters. Pubco is in compliance with all Environmental
Laws in all material respects. Pubco holds all permits and authorizations
required under applicable Environmental Laws, unless the failure to hold such
permits and authorizations would not have a material adverse effect on Pubco,
and is compliance with all terms, conditions and provisions of all such permits
and authorizations in all material respects. No releases of Hazardous Materials
have occurred at, from, in, to, on or under any real property currently or
formerly owned, operated or leased by Pubco or any predecessor thereof and no
Hazardous Materials are present in, on, about or migrating to or from any such
property which could result in any liability to Pubco. Pubco has not transported
or arranged for the treatment, storage, handling, disposal, or transportation of
any Hazardous Material to any off-site location which could result in any
liability to Pubco. Pubco has no liability, absolute or contingent, under any
Environmental Law that if enforced or collected would have a material adverse
effect on Pubco. There are no past, pending or threatened claims under
Environmental Laws against Pubco and Pubco is not aware of any facts or
circumstances that could reasonably be expected to result in a liability or
claim against Pubco pursuant to Environmental Laws.
(n) Material Contract Defaults. Pubco is not, or has not, received any
notice or has any knowledge that any other party is, in default in any respect
under any Pubco Material Contract; and there has not occurred any event that
with the lapse of time or the giving of notice or both would constitute such a
material default. For purposes of this Agreement, a "PUBCO MATERIAL CONTRACT"
means any contract, agreement or commitment that is effective as of the Closing
Date to which Pubco is a party (i) with expected receipts or expenditures in
excess of $25,000, (ii) requiring Pubco to indemnify any person, (iii) granting
exclusive rights to any party, (iv) evidencing indebtedness for borrowed or
loaned money in excess of $25,000 or more, including guarantees of such
indebtedness, or (v) which, if breached by Pubco in such a manner would (A)
permit any other party to cancel or terminate the same (with or without notice
of passage of time) or (B) provide a basis for any other party to claim money
damages (either individually or in the aggregate with all other such claims
under that contract) from Pubco or (C) give rise to a right of acceleration of
any material obligation or loss of any material benefit under any such contract,
agreement or commitment.
(o) Accounts Receivable. All of the accounts receivable of Pubco that are
reflected in the Pubco SEC Documents or the accounting records of Pubco as of
the Closing Date (collectively, the "PUBCO ACCOUNTS Receivable") represent or
will represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business and are not subject to any
defenses, counterclaims, or rights of set off other than those arising in the
ordinary course of business and for which adequate reserves have been
established. The Pubco Accounts Receivable are fully collectible to the extent
not reserved for on the balance sheet on which they are shown.
17
(p) Properties. Pubco has valid land use rights for all real property that
is material to its business and good, clear and marketable title to all the
tangible properties and tangible assets reflected in the latest balance sheet as
being owned by Pubco or acquired after the date thereof which are, individually
or in the aggregate, material to Pubco's business (except properties sold or
otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all material liens, encumbrances, claims, security
interest, options and restrictions of any nature whatsoever. Any real property
and facilities held under lease by Pubco are held by them under valid,
subsisting and enforceable leases of which Pubco is in compliance, except as
could not, individually or in the aggregate, have or reasonably be expected to
result in a material adverse effect.
(q) Intellectual Property. Pubco owns or has valid rights to use the
Trademarks, trade names, domain names, copyrights, patents, logos, licenses and
computer software programs (including, without limitation, the source codes
thereto) that are necessary for the conduct of its business as now being
conducted. All of Pubco's licenses to use Software programs are current and have
been paid for the appropriate number of users. To the knowledge of Pubco, none
of Pubco's Intellectual Property or Pubco License Agreements infringe upon the
rights of any third party that may give rise to a cause of action or claim
against Pubco or its successors.
(r) Board Determination. The Board of Directors of Pubco has unanimously
determined that the terms of the Exchange are fair to and in the best interests
of Pubco and its shareholders.
(s) Compliance With Anti-Corruption Laws. Neither Pubco nor to the
knowledge of Pubco, any director, officer, agent, employee or other person
acting on behalf of Pubco has, in the course of its actions for, or on behalf
of, Pubco (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any applicable U.S. laws; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
(t) OFAC. Neither Pubco, nor to the knowledge of Pubco, any director,
officer, agent, employee, affiliate or person acting on behalf of Pubco, is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department.
(u) Undisclosed Liabilities. Pubco has no liabilities or obligations of any
nature (whether fixed or unfixed, secured or unsecured, known or unknown and
whether absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the financial statements included
in the Pubco SEC Documents incurred in the ordinary course of business.
(v) Money Laundering Laws. The operations of Pubco are and have been
conducted at all times in compliance with the Money Laundering Laws, and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving Pubco with respect to the Money
Laundering Laws is pending or, to the best knowledge of Pubco, threatened.
(w) Full Disclosure. All of the representations and warranties made by
Pubco in this Agreement, and all statements set forth in the certificates
delivered by Pubco at the Closing pursuant to this Agreement, are true, correct
and complete in all material respects and do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
such representations, warranties or statements, in light of the circumstances
under which they were made, misleading. The copies of all documents furnished by
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Pubco pursuant to the terms of this Agreement are complete and accurate copies
of the original documents. The schedules, certificates, and any and all other
statements and information, whether furnished in written or electronic form, to
the Company or its representatives by or on behalf of Pubco in connection with
the negotiation of this Agreement and the transactions contemplated hereby do
not contain any material misstatement of fact or omit to state a material fact
or any fact necessary to make the statements contained therein not misleading.
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO EXCHANGE
3.01 CONDUCT OF THE COMPANY AND PUBCO. From the date of this Agreement and
until the Effective Time, or until the prior termination of this Agreement, the
Existing Company Entities and Pubco shall not, unless mutually agreed to in
writing:
(a) engage in any transaction, except in the normal and ordinary course of
business, or create or suffer to exist any lien or other encumbrance upon any of
their respective assets or which will not be discharged in full prior to the
Effective Time;
(b) sell, assign or otherwise transfer any of their assets, or cancel or
compromise any debts or claims relating to their assets, other than for fair
value, in the ordinary course of business, and consistent with past practice;
(c) fail to use reasonable efforts to preserve intact their present
business organizations, keep available the services of their employees and
preserve its material relationships with customers, suppliers, licensors,
licensees, distributors and others, to the end that its good will and ongoing
business not be impaired prior to the Effective Time;
(d) except for matters related to complaints by former employees related to
wages, suffer or permit any material adverse change to occur with respect to the
Company and Pubco or their business or assets; or
(e) make any material change with respect to their business in accounting
or bookkeeping methods, principles or practices, except as required by GAAP.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.01 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) The Existing Company Entities shall, and shall cause its officers,
employees, counsel, financial advisors and other representatives to, afford to
Pubco and its representatives reasonable access during normal business hours
during the period prior to the Effective Time to its and to the Existing Company
Entities' properties, books, contracts, commitments, personnel and records and,
during such period, the Existing Company Entities shall, and shall cause its
respective officers, employees and representatives to, furnish promptly to Pubco
all information concerning its business, properties, financial condition,
operations and personnel as such other party may from time to time reasonably
request. For the purposes of determining the accuracy of the representations and
warranties of Pubco set forth herein and compliance by Pubco of its obligations
hereunder, during the period prior to the Effective Time, Pubco shall provide
the Existing Company Entities and their representatives with reasonable access
during normal business hours to its properties, books, contracts, commitments,
personnel and records as may be necessary to enable the Existing Company
Entities to confirm the accuracy of the representations and warranties of Pubco
set forth herein and compliance by Pubco of its obligations hereunder, and,
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during such period, Pubco shall, and shall cause its officers, employees and
representatives to, furnish promptly to the Existing Company Entities upon its
request (i) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws and (ii) all other information concerning its business,
properties, financial condition, operations and personnel as such other party
may from time to time reasonably request. Except as required by law, each of the
Existing Company Entities and Pubco will hold, and will cause its respective
directors, officers, employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic information in
confidence.
(b) No investigation pursuant to this Section 4.01 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
4.02 BEST EFFORTS. Upon the terms and subject to the conditions set forth
in this Agreement, each of the parties agrees to use its best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Exchange and the other transactions contemplated by this
Agreement. Pubco and the Company shall mutually cooperate in order to facilitate
the achievement of the benefits reasonably anticipated from the Exchange.
4.03 PUBLIC ANNOUNCEMENTS. Pubco, on the one hand, and the Company, on the
other hand, will consult with each other before issuing, and provide each other
the opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law or court
process. The parties agree that the initial press release or releases to be
issued with respect to the transactions contemplated by this Agreement shall be
mutually agreed upon prior to the issuance thereof.
4.04 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
4.05 DIRECTOR AND OFFICER APPOINTMENTS. As of the Effective Time, Pubco
shall have taken all action to cause the persons as set forth on Schedule 1.05
to be appointed Pubco's directors.
4.06 NO SOLICITATION. Except as previously agreed to in writing by the
other party, neither the Existing Company Entities nor Pubco shall authorize or
permit any of its officers, directors, agents, representatives, or advisors to
(a) solicit, initiate or encourage or take any action to facilitate the
submission of inquiries, proposals or offers from any person relating to any
matter concerning any exchange, merger, consolidation, business combination,
recapitalization or similar transaction involving the Existing Company Entities
or Pubco, respectively, other than the transaction contemplated by this
Agreement or any other transaction the consummation of which would or could
reasonably be expected to impede, interfere with, prevent or delay the Exchange
or which would or could be expected to dilute the benefits to either the
Existing Company Entities or Pubco of the transactions contemplated hereby. The
Existing Company Entities or Pubco will immediately cease and cause to be
terminated any existing activities, discussions and negotiations with any
parties conducted heretofore with respect to any of the foregoing.
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ARTICLE V
CONDITIONS PRECEDENT
5.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE EXCHANGE. The
obligation of each party to effect the Exchange and otherwise consummate the
transactions contemplated by this Agreement is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions:
(a) No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Exchange shall have
been issued by any court of competent jurisdiction or any other Governmental
Entity having jurisdiction and shall remain in effect, and there shall not be
any applicable legal requirement enacted, adopted or deemed applicable to the
Exchange that makes consummation of the Exchange illegal.
(b) Governmental Approvals. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any Governmental Entity having jurisdiction which
the failure to obtain, make or occur would have a material adverse effect on
Pubco or the Company shall have been obtained, made or occurred.
(c) Company Shareholder Approval. The Selling Shareholders shall have
adopted and approved this Agreement and the Exchange in accordance with
applicable law.
(d) No Litigation. There shall not be pending or threatened any suit,
action or proceeding before any court, Governmental Entity or authority (i)
pertaining to the transactions contemplated by this Agreement or (ii) seeking to
prohibit or limit the ownership or operation by the Company, Pubco or any of its
subsidiaries, or to dispose of or hold separate any material portion of the
business or assets of the Company or Pubco.
(e) Audited Financial Statements. The Existing Company Entities shall have
completed, and Pubco shall have received from the Company, audited Financial
Statements and proforma Financial Statements as required to be filed by Pubco
pursuant to the Exchange Act.
5.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF PUBCO. The obligation of Pubco
to effect the Exchange and otherwise consummate the transactions contemplated by
this Agreement are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of the Company, the Selling Shareholders and CC Power in this
Agreement shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality or material adverse effect, which representations and warranties
as so qualified shall be true and correct in all respects) both when made and on
and as of the Closing Date, and (ii) the Company, the Selling Shareholders and
CC Power shall each have performed and complied in all material respects with
all covenants, obligations and conditions of this Agreement required to be
performed and complied with by them prior to the Effective Time.
(b) Consents. Pubco shall have received evidence, in form and substance
reasonably satisfactory to it, that such licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and other
third parties as necessary in connection with the transactions contemplated
hereby have been obtained.
(c) Officer's Certificate of the Company and CC Power. Pubco shall have
received a certificate executed on behalf of each of the Company and CC Power by
an executive officer of the Company and CC Power, respectively, confirming that
the conditions set forth in Sections 5.02(a) and 5.02(d) have been satisfied.
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(d) Secretary's Certificate of the Company and CC Power. Pubco shall have
received a certificate, dated as of the Closing Date, from the secretary of the
Company and CC Power, respectively, certifying (i) as to the incumbency and
signatures of the officers of the Company and CC Power, respectively, who shall
execute this Agreement and documents at the Closing and (ii) that attached
thereto is a true and complete copy of (A) the articles or certificate of
incorporation of the Company and CC Power, respectively, and all amendments
thereto, (B) the bylaws of the Company and CC Power, respectively, and all
amendments thereto, and (C) resolutions of the board of directors of the Company
and CC Power, respectively, and their shareholders authorizing the execution,
delivery and performance of this Agreement by the Company and CC Power,
respectively.
(e) No Material Adverse Change. There shall not have occurred any change in
the business, condition (financial or otherwise), results of operations or
assets (including intangible assets) and properties of the Company or CC Power
that, individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company or CC Power.
(f) Selling Shareholder Representation Letter. Selling Shareholders shall
each have executed and delivered to Pubco a shareholder representation letter in
substantially the form attached hereto as Exhibit B, and Pubco shall be
reasonably satisfied that the issuance of Pubco Common Stock pursuant to the
Exchange is exempt from the registration requirements of the Securities Act.
(g) Due Diligence Investigation. Pubco shall be reasonably satisfied with
the results of its due diligence investigation of the Company and CC Power in
its sole and absolute discretion.
(h) Corporate Restructuring. At or prior to the Closing, CC Power shall
enter in variable interest entity control agreements with PRC Sub to permit PRC
Sub to effectively consolidate the financial statements of CC Power under the
Exchnage Act and in accordance with GAAP.
5.03 CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Exchange and otherwise consummate the transactions
contemplated by this Agreement is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of Pubco in this Agreement shall be true and correct in all material
respects (except for such representations and warranties that are qualified by
their terms by a reference to materiality or material adverse effect, which
representations and warranties as so qualified shall be true and correct in all
respects) both when made and on and as of the Closing Date, and (ii) Pubco shall
have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by it prior to the Effective Time.
(b) Consents. The Company shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties as necessary in connection with the transactions
contemplated hereby have been obtained.
(c) Officer's Certificate of Pubco. The Company shall have received a
certificate executed on behalf of Pubco by an executive officer of Pubco,
confirming that the conditions set forth in Sections 5.03(a) and 5.03(d) have
been satisfied.
(d) Secretary's Certificate of Pubco. The Company shall have received a
certificate, dated as of the Closing Date, from the secretary of Pubco,
certifying (i) as to the incumbency and signatures of the officers of Pubco who
shall execute this Agreement and documents at the Closing and (ii) that attached
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thereto is a true and complete copy of (A) the articles or certificate of
incorporation of Pubco and all amendments thereto, (B) the bylaws of Pubco and
all amendments thereto, and (C) resolutions of the board of directors of Pubco
authorizing the execution, delivery and performance of this Agreement by Pubco.
(e) No Material Adverse Change. There shall not have occurred any change in
the business, condition (financial or otherwise), results of operations or
assets (including intangible assets) and properties of Pubco that, individually
or in the aggregate, could reasonably be expected to have a material adverse
effect on Pubco.
(f) Good Standing Certificate. The Company shall have received a
certificate of good standing for Pubco from its jurisdiction of incorporation,
dated not earlier than three (3) calendar days prior to the Closing Date.
(g) Delivery of the Exchange Shares Certificates. The Selling Shareholders
shall have received the Exchange Shares Certificates on the Closing Date.
(h) New Directors and Officers. Pubco shall deliver to the Company evidence
of appointment of those new directors as further described in Section 1.05 and
Section 4.05, respectively. Pubco shall have delivered to each new director an
executed indemnification agreement in substantially the form attached hereto as
Exhibit C. Pubco shall also have delivered to the Company a letter of
resignation executed by the Pubco directors and officers set forth on Schedule
1.05 to be effective on or before the Closing Date.
(i) Current Report. Pubco shall file a Current Report on Form 8-K with the
SEC within four (4) business days of the Closing Date containing information
about the Exchange and pro forma financial statements of Pubco and the Company
and audited financial statements of the Company as required by Regulation S-K
under the Securities Act. Such Form 8-K shall be in form and substance
acceptable to the Company and its counsel prior to Closing.
(j) Due Diligence Investigation. The Company shall be reasonably satisfied
with the results of its due diligence investigation of Pubco in its sole and
absolute discretion.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.01 TERMINATION. This Agreement may be terminated and abandoned at any
time prior to the Effective Time of the Exchange:
(a) by mutual written consent of Pubco and the Company;
(b) by either Pubco or the Company if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Exchange and such order,
decree, ruling or other action shall have become final and nonappealable;
(c) by either Pubco or the Company if the Exchange shall not have been
consummated on or before September 30, 2011 (other than as a result of the
failure of the party seeking to terminate this Agreement to perform its
obligations under this Agreement required to be performed at or prior to the
Effective Time);
23
(d) by Pubco, if a material adverse change shall have occurred relative to
the Company (and not curable within thirty (30) days);
(e) by the Company if a material adverse change shall have occurred
relative to Pubco (and not curable within thirty (30) days);
(f) by Pubco, if the Company willfully fails to perform in any material
respect any of its material obligations under this Agreement; or
(g) by the Company, if Pubco willfully fails to perform in any material
respect any of its obligations under this Agreement.
6.02 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either the Company or Pubco as provided in Section 6.01, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Pubco or the Company, other than the provisions of the last sentence
of Section 4.01(a) and this Section 6.02. Nothing contained in this Section
shall relieve any party for any breach of the representations, warranties,
covenants or agreements set forth in this Agreement.
6.03 AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties upon approval by the party,
if such party is an individual, and upon approval of the Boards of Directors of
each of the parties that are corporate entities.
6.04 EXTENSION; WAIVER. Subject to Section 6.01(c), at any time prior to
the Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement, or (c) waive compliance
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
6.05 RETURN OF DOCUMENTS. In the event of termination of this Agreement for
any reason, Pubco and the Company will return to the other party all of the
other party's documents, work papers, and other materials (including copies)
relating to the transactions contemplated in this Agreement, whether obtained
before or after execution of this Agreement. Pubco and the Company will not use
any information so obtained from the other party for any purpose and will take
all reasonable steps to have such other party's information kept confidential.
ARTICLE VII
INDEMNIFICATION AND RELATED MATTERS
7.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive until twelve (12) months after the Effective Time
(except for with respect to Taxes which shall survive for the applicable statute
of limitations plus 90 days, and covenants that by their terms survive for a
longer period).
7.02 INDEMNIFICATION.
(a) Irrespective of any due diligence investigation conducted by the
Company with regard to the transactions contemplated hereby, Pubco shall
indemnify and hold the Selling Shareholders, the Existing Company Entities, and
24
the Existing Company Entities' officers and directors (the "COMPANY
REPRESENTATIVES") harmless from and against any and all liabilities,
obligations, damages, losses, deficiencies, costs, penalties, interest and
expenses (including, but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever) (collectively,
"LOSSES") to which Pubco, the Selling Shareholders, the Existing Company
Entities, or any of the Company Representatives may become subject resulting
from or arising out: (1) of any breach of a representation, warranty or covenant
made by Pubco as set forth herein; or (2) any and all liabilities arising out of
or in connection with: (A) any of the assets of Pubco prior to the Closing; or
(B) the operations of Pubco prior to the Closing.
(b) The Existing Company Entities shall jointly and severally indemnify and
hold Pubco harmless from and against any and all Losses to which Pubco may
become subject to resulting from or arising out of any breach of a
representation, warranty or covenant made by any of the Existing Company
Entities as set forth herein.
7.03 NOTICE OF INDEMNIFICATION. Promptly after the receipt by any
indemnified party (the "INDEMNITEE") of notice of the commencement of any action
or proceeding against such Indemnitee, such Indemnitee shall, if a claim with
respect thereto is or may be made against any indemnifying party (the
"INDEMNIFYING PARTY") pursuant to this Article VII, give such Indemnifying Party
written notice of the commencement of such action or proceeding and give such
Indemnifying Party a copy of such claim and/or process and all legal pleadings
in connection therewith. The failure to give such notice shall not relieve any
Indemnifying Party of any of its indemnification obligations contained in this
Article VII, except where, and solely to the extent that, such failure actually
and materially prejudices the rights of such Indemnifying Party. Such
Indemnifying Party shall have, upon request within thirty (30) days after
receipt of such notice, but not in any event after the settlement or compromise
of such claim, the right to defend, at its own expense and by its own counsel
reasonably acceptable to the Indemnitee, any such matter involving the asserted
liability of the Indemnitee; provided, however, that if the Indemnitee
determines that there is a reasonable probability that a claim may materially
and adversely affect it, other than solely as a result of money payments
required to be reimbursed in full by such Indemnifying Party under this Article
VII or if a conflict of interest exists between Indemnitee and the Indemnifying
Party, the Indemnitee shall have the right to defend, compromise or settle such
claim or suit; and, provided, further, that such settlement or compromise shall
not, unless consented to in writing by such Indemnifying Party, which shall not
be unreasonably withheld, be conclusive as to the liability of such Indemnifying
Party to the Indemnitee. In any event, the Indemnitee, such Indemnifying Party
and its counsel shall cooperate in the defense against, or compromise of, any
such asserted liability, and in cases where the Indemnifying Party shall have
assumed the defense, the Indemnitee shall have the right to participate in the
defense of such asserted liability at the Indemnitee's own expense. In the event
that such Indemnifying Party shall decline to participate in or assume the
defense of such action, prior to paying or settling any claim against which such
Indemnifying Party is, or may be, obligated under this Article VII to indemnify
an Indemnitee, the Indemnitee shall first supply such Indemnifying Party with a
copy of a final court judgment or decree holding the Indemnitee liable on such
claim or, failing such judgment or decree, the terms and conditions of the
settlement or compromise of such claim. An Indemnitee's failure to supply such
final court judgment or decree or the terms and conditions of a settlement or
compromise to such Indemnifying Party shall not relieve such Indemnifying Party
of any of its indemnification obligations contained in this Article VII, except
where, and solely to the extent that, such failure actually and materially
prejudices the rights of such Indemnifying Party. If the Indemnifying Party is
defending the claim as set forth above, the Indemnifying Party shall have the
right to settle the claim only with the consent of the Indemnitee.
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ARTICLE VIII
GENERAL PROVISIONS
8.01 NOTICES. Any and all notices and other communications hereunder shall
be in writing and shall be deemed duly given to the party to whom the same is so
delivered, sent or mailed at addresses and contact information set forth below
(or at such other address for a party as shall be specified by like notice.) Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be deemed given and effective on the earliest of:
(a) on the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached
hereto prior to 5:30 p.m. (Pacific Standard Time) on a business day, (b) on the
next business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto on a day that is not a business day or later
than 5:30 p.m. (Pacific Standard Time) on any business day, (c) on the second
business day following the date of mailing, if sent by a nationally recognized
overnight courier service, or (d) if by personal delivery, upon actual receipt
by the party to whom such notice is required to be given.
If to Pubco:
XcelMobility, Inc.
0000 Xxxx Xxxxxx Xxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Telephone No.: (000) 000-0000
with a copy to (which copy shall not constitute notice):
Xxxx X. Xxx, Esq.
Xxxxxxxxx Traurig, LLP
0000 X Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Email: xxxxx@xxxxx.xxx
If to the Company, CC Power and the Selling Shareholders:
Shenzhen CC Power Corporation
Room 705, Cyber Times Tower B
Tairan Road, Futian District
Shenzhen, China 518040
Telephone No.: 00-000-00000000
Facsimile No.: 00-000-00000000
Attention: President
8.02 DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "material adverse change" or "material adverse effect" means, when used
in connection with the Company or Pubco, any change or effect that either
individually or in the aggregate with all other such changes or effects is
materially adverse to the business, assets, properties, condition (financial or
26
otherwise) or results of operations of such party and its subsidiaries taken as
a whole (after giving effect in the case of Pubco to the consummation of the
Exchange);
(c) "ordinary course of business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency);
(d) "person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity;
(e) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of Directors or
other governing body (or, if there are no such voting interests, fifty percent
(50%) or more of the equity interests of which) is owned directly or indirectly
by such first person.
(f) "security interest" means any mortgage, pledge, lien, encumbrance, deed
of trust, lease, charge, right of first refusal, easement, servitude, proxy,
voting trust or agreement, transfer restriction under any shareholder or similar
agreement or any other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) statutory liens for taxes not yet due and
payable, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, (d) pledges or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance or
other similar social security legislation; and (e) encumbrances, security
deposits or reserves required by law or by any Governmental Entity.
8.03 INTERPRETATION. When a reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
8.04 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement and the
other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This Agreement
is not intended to confer upon any person other than the parties any rights or
remedies.
8.05 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
8.06 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
8.07 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
27
located in the State of Nevada, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (a) agrees that it will not attempt to deny or defeat such personal
jurisdiction or venue by motion or other request for leave from any such court,
and (b) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any state court other
than such court.
8.08 SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
8.09 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and the
same Agreement. This Agreement, to the extent delivered by means of a facsimile
machine or electronic mail (any such delivery, an "ELECTRONIC DELIVERY"), shall
be treated in all manner and respects as an original agreement or instrument and
shall be considered to have the same binding legal effect as if it were the
original signed version thereof delivered in person. At the request of any party
hereto, each other party hereto shall re-execute original forms hereof and
deliver them in person to all other parties. No party hereto shall raise the use
of Electronic Delivery to deliver a signature or the fact that any signature or
agreement or instrument was transmitted or communicated through the use of
Electronic Delivery as a defense to the formation of a contract, and each such
party forever waives any such defense, except to the extent such defense related
to lack of authenticity.
8.10 ATTORNEYS FEES. In the event any suit or other legal proceeding is
brought for the enforcement of any of the provisions of this Agreement, the
parties hereto agree that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final judgment on the merits
reasonable attorneys' fees, including attorneys' fees for any appeal, and costs
incurred in bringing such suit or proceeding.
8.11 CURRENCY. All references to currency in this Agreement shall refer to
the lawful currency of the United States of America.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have caused their duly authorized
officers to execute this Agreement as of the date first above written.
XCELMOBILITY, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
CC MOBILITY LIMITED
By: /s/ Ge Renyan
-------------------------------------------
Name: Ge Renyan
Title: Director
SHENZHEN CC POWER CORPORATION
By: /s/ Wang Xili
-------------------------------------------
Name: Wang Xili
Title: Executive Director
SELLING SHAREHOLDERS:
CC WIRELESS LIMITED
By: /s/ Ge Renyan
-------------------------------------------
Name: Ge Renyan
Title: Director
SHEEN VENTURES LIMITED
By: /s/ Xxxxxx Xxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxx Xxxxxxx
Title: Director
[SIGNATURE PAGE TO SHARE EXCHANGE AGREEMENT]
29
