|
EXHIBIT 10.1
------------
Execution Copy
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") made this 23rd day of
February,
2005 by and among Bangla Property Management, Inc., a Colorado
corporation
("Parent"), China Property Holding, Inc., a Colorado corporation
("Merger Sub"),
and Wollaston Industrial Limited, ("the Company") a British
Virgin Islands
("BVI") limited liability corporation.
R E C I T A L S:
A. The respective Boards of Directors of Parent and the Company
have
determined that an acquisition of the Company by Merger Sub and
then the merger
of Merger Sub with and into the Parent (the "Merger"), 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 Merger, pursuant to which shares of Common
Stock of the
Company ("Company Common Stock") issued and outstanding
immediately prior to the
Effective Time of the Merger (as defined in Section 1.03) will
be exchanged for
the right to receive Common Stock of Parent ("Parent Common
Stock") other than
Dissenting Shares (as defined in Section 2.01(d)).
B. Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in
connection with the
Merger and also to prescribe various conditions to the
Merger.
C. For federal income tax purposes, the parties intend that the
Merger
shall qualify as a reorganization under the provisions of
Section 368 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 MERGER
1.01 The Merger. Upon the terms and subject to the conditions
set forth in this
---------------
Agreement, and in accordance with the Colorado Corporations Code
(the "Colorado
Statutes"), Merger Sub shall acquire the Company and then shall
be merged with
and into the Parent at the Effective Time of the Merger. The
Company will become
a wholly owned subsidiary of the Parent. The Parent shall at all
times maintain
no less than 90 per cent of the equity of the Merger Sub.
1.02 Closing. Unless this Agreement shall have been terminated
and the
-------------
transactions herein contemplated shall have been abandoned
pursuant to Section
1
<PAGE>
7.01 and subject to the satisfaction or waiver of the conditions
set forth in
Article VI, the closing of the Merger (the "Closing") will take
place at 10:00
a.m. on the business day after satisfaction of the conditions
set forth in
Article VI (or as soon as practicable thereafter following
satisfaction or
waiver of the conditions set forth in Article VI) (the "Closing
Date"), at the
offices of Baker & McKenzie in New York., unless another
date, time or place is
agreed to in writing by the parties hereto.
1.03 Effective Time of Merger. As soon as practicable following
the satisfaction
-----------------------------
or waiver of the conditions set forth in Article VI, the parties
shall file
articles of merger (the "Articles of Merger") executed in
accordance with the
relevant provisions of the Colorado Statutes and shall make all
other filings or
recordings required under Colorado Statutes. The Merger shall
become effective
at such time as the Articles of Merger are duly filed with the
Secretary of
State of Colorado or at such other time as is permissible in
accordance with
Colorado Statutes and as Parent and the Company shall agree
should be specified
in the Articles of Merger (the time the Merger becomes effective
being the
"Effective Time of the Merger"). Parent shall use reasonable
efforts to have the
Closing Date and the Effective Time of the Merger to be the same
day.
1.04 Effects of the Merger. The Merger shall have the effects
set forth in the
---------------------------
applicable provisions of the Colorado Statutes.
1.05 Articles of Incorporation; Bylaws; Purposes.
------------------------------------------------
(a) The Certificate of Incorporation of the Parent in effect
immediately
prior to the Effective Time of the Merger shall be the
Certificate of
Incorporation of the Parent until thereafter changed or amended
as provided
therein or by applicable law.
(b) The Bylaws of the Parent in effect at the Effective Time of
the Merger
shall be the Bylaws of the Parent until thereafter changed or
amended as
provided therein or by applicable law.
(c) The purposes of the Parent and the total number of its
authorized
capital stock shall be as set forth in the Certificate of
Incorporation of the
Parent in effect immediately prior to the Effective Time of the
Merger until
such time as such purposes and such number may be amended as
provided in the
Certificate of Incorporation of the Parent and by applicable
law.
1.06 Directors. The directors of the Company at the Effective
Time of the Merger
--------------
shall be the directors of the Parent within twenty days after
the Merger or
within the required timeframe of the 14F filing ("Transition
Period"), and its
subsidiary, until the earlier of their resignation or removal or
until their
respective successors are duly elected and qualified, as the
case may be. The
current sole director of the Parent ("Parent Director") shall
remain as a
director for the sole purpose of transition during the
Transition Period and
shall not take any action other than the ordinary maintenance
and the election
of the new directors designated by the Company. The Parent
Director shall resign
after the election of all the new directors designated by the
Company. The
Parent and the Company shall hold the Parent Director harmless
and indemnify the
Parent Director against any and all claims, losses and damages
arising from the
execution of the limited function during the Transition Period.
At the Effective
Time of the Merger, Jiahui (as defined herein) shall appoint the
other directors
of the Parent.
2
<PAGE>
1.07 Officers. The officers designated by the Company at the
Effective Time of
-------------
the Merger shall be the officers of the Parent and its
subsidiary, until the
earlier of their resignation or removal or until their
respective successors are
duly elected and qualified, as the case may be.
ARTICLE II:
-----------
EFFECT OF THE MERGER
ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.01 Effect on Capital Stock. As of the Effective Time of the
Merger, by virtue
----------------------------
of the Merger and without any action on the part of the holders
of shares of
Company Common Stock or any shares of capital stock of Merger
Sub:
(a) Company-Owned Common Stock of Merger Sub. All the Company's
shares
issued and outstanding prior to the Merger ("Company Common
Stock") shall be
converted into 100 shares of common stock of the Merger Sub
prior to the Merger.
Each share of common stock of Merger Sub issued and outstanding
immediately
prior to the Effective Time of the Merger owned by the Company
shall be
converted into 226,750 shares of Common Stock of the Parent and
shall be the
issued and outstanding capital stock of the Parent. In the
aggregate, the
Company-owned common stock of the Merger Sub shall be converted
into 22,675,000
shares of the Parent.
(b) Cancellation of Parent-Owned Merger Sub Common Stock. The
Parent shall
own 900 shares of commons tock of the Merger Sub prior to the
Merger. Each share
of Common Stock of the Merger Sub that is owned by the Parent
shall
automatically be cancelled and retired and shall cease to exist,
and no Parent
Common Stock or other consideration shall be delivered or
deliverable in
exchange therefor.
(c) Issuance and Transfer of Parent Common Stock. The 22,675,000
Parent
Shares to be issued by the Parent to the Company's shareholders
pursuant to this
Agreement constituting approximately seventy-five point fifty
eight per cent
(75.58%) of the total outstanding shares of the common stock of
the Parent shall
be delivered by the Parent to Baker & Mackenzie LLP (the
"Exchange Agent") and
shall be known as the "Merger Consideration."
(d) Dissenting Shares. Notwithstanding anything in this
Agreement to the
contrary, shares of Company Common Stock issued and outstanding
immediately
prior to the Effective Time of the Merger held by a holder (if
any) who has the
right to demand payment for and an appraisal of such shares as
provided under
BVI law, if applicable, ("Dissenting Shares") shall not be
converted into a
right to receive Merger Consideration unless such holder fails
to perfect or
otherwise loses such holder's right to such payment or
appraisal, if any. If,
after the Effective Time of the Merger, such holder fails to
perfect or loses
any such right to appraisal, each such share of such holder
shall be treated as
a share that had been converted as of the Effective Time of the
Merger into the
right to receive Merger Consideration in accordance with this
Section 2.01. The
Company shall give prompt notice to Parent of any demands
received by the
Company for appraisal of shares of Company Common Stock, and
Parent shall have
the right to participate in all negotiations and proceedings
with respect to
3
<PAGE>
such demands. The Company shall not, except with the prior
written consent of
Parent, make any payment with respect to, or settle or offer to
settle, any such
demands.
2.02 Stock Warrants. At the Effective Time of the Merger, there
will be no
--------------------
outstanding warrants to purchase Parent Common Stock.
2.03 Exchange of Certificates.
-----------------------------
(a) Exchange of Certificates. As soon as reasonably practicable
as of or
after the Effective Time of the Merger, Parent shall issue the
Merger
Consideration.
(b) Settlement Date. The settlement date as set forth herein
shall be such
date which is six months from the Effective Time of the Merger
and the date of
the resolution of any Contests further to Section 8.03
herein.
(c) Exchange Procedures. At the Effective Time of the Merger,
each holder
of an outstanding certificate or certificates which prior
thereto represented
shares of Company Common Stock shall, upon surrender of such
certificate or
certificates and acceptance be entitled to a certificate or
certificates
representing the number of shares of Parent Common Stock into
which the
aggregate number of shares of Company Common Stock previously
represented by
such certificate or certificates surrendered shall have been
converted pursuant
to this Agreement. The Company shareholders shall accept such
certificates upon
compliance with such reasonable terms and conditions to effect
an orderly
exchange thereof in accordance with normal exchange practices.
All shares of
Company Common Stock shall be surrendered at the Effective Time
of the Merger.
After the Effective Time of the Merger, there shall be no
further transfer on
the records of the Company or its transfer agent of certificates
representing
shares of Company Common Stock. If any certificate for such
Parent Common Stock
is to be issued in a name other than that in which the
certificate for Company
Common Stock surrendered for exchange is registered, it shall be
a condition of
such exchange that the certificate so surrendered shall be
properly endorsed,
with signature guaranteed, or otherwise in proper form for
transfer and that the
person requesting such exchange shall pay to Parent or its
transfer agent any
transfer or other taxes or other costs required by reason of the
issuance of
certificates for such Parent Common Stock in a name other than
that of the
registered holder of the certificate surrendered, or establish
to the
satisfaction of Parent or its transfer agent that all taxes have
been paid.
(d) No Further Ownership Rights in Company Common Stock. All
shares of
Parent Common Stock issued upon the surrender for exchange of
certificates
representing shares of Company Common Stock in accordance with
the terms of this
Article II shall be deemed to have been issued (and paid) in
full satisfaction
of all rights pertaining to the shares of Company Common Stock
theretofore
represented by such certificates.
(e) No Liability. None of Parent, Merger Sub, or the Company
shall be
liable to any person in respect of any shares of Parent Common
Stock (or
dividends or distributions with respect thereto) delivered to a
public official
pursuant to any applicable abandoned property, escheat or
similar law. All
certificates representing shares of Company Common Stock shall
have been
surrendered at the Effective Time of the Merger.
4
<PAGE>
ARTICLE III:
------------
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company. Except as
set forth in the
---------------------------------------------------
Company Disclosure Schedule delivered by the Company to the
Parent at the time
of execution of this Agreement, the Company represents and
warrants to Parent
and Merger Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is
duly
organized, validly existing and in good standing under the laws
of the British
Virgin Islands and has the requisite corporate power and
authority to carry on
its business as now being conducted. The Company 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 the
Company.
(b) Subsidiaries. The Company owns 90.28% of its subsidiary,
Xi'an Jialing
Real Estate Co. Ltd. formed under the Company Law of the
People's Republic of
China ("Jiahui").
(c) Capital Structure. The authorized capital stock of the
Company consists
of 50,000 shares of Company Common Stock. There are 10,000
shares of Common
Stock outstanding. Except as set forth above, no shares of
capital stock or
other equity securities of the Company 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 on which shareholders of the Company may vote. The
Company
Disclosure Schedule sets forth the outstanding Capitalization of
the Company.
Except as set forth above, there are no outstanding securities,
options,
warrants, calls, rights, commitments, agreements, arrangements
or undertakings
of any kind to which the Company is a party or by which it is
bound obligating
the Company 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. Other than the Company Stock Options and Company
Warrants, 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 (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) Authority; Noncontravention. The Company has the requisite
corporate
and other power and authority to enter into this Agreement and
to consummate the
Merger. The execution and delivery of this Agreement by the
Company and the
consummation by the Company of the transactions contemplated
hereby have been
5
<PAGE>
duly authorized by all necessary corporate action on the part of
the Company.
This Agreement has been duly executed and delivered by the
Company and
constitutes a valid and binding obligation of the Company,
enforceable against
the Company in accordance with its terms. 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 loss of a material benefit under, or result in the creation
of any lien upon
any of the properties or assets of the Company under, (i) the
Articles of
Incorporation or Bylaws of the Company, (ii) any loan or credit
agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument,
permit,
concession, franchise or license applicable to the Company, 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
the Company, its
properties or assets. No consent, approval, order or
authorization of, or
registration, declaration or filing with, or notice to, any
federal, state or
local government or any court, administrative agency or
commission or other
governmental authority, agency, domestic or foreign (a
"Governmental Entity"),
is required by or with respect to the Company in connection with
the execution
and delivery of this Agreement by the Company or the
consummation by the Company
of the transactions contemplated hereby, except, with respect to
this Agreement,
for the filing of the Articles of Merger with the Secretary of
State of
Colorado.
(e) Absence of Certain Changes or Events. Since December 31,
2003, the
Company has conducted its business only in the ordinary course
consistent with
past practice, and there is not and has not been: (i) any
material adverse
change with respect to the Company; (ii) any 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 Company; (iii) any event which, if it had taken place
following the
execution of this Agreement, would not have been permitted by
Section 4.01
without prior consent of Parent; or (iv) any condition, event or
occurrence
which could reasonably be expected to prevent, hinder or
materially delay the
ability of the Company to consummate the transactions
contemplated by this
Agreement.
(f) Litigation; Labor Matters; Compliance with Laws.
(i) There is no suit, action or proceeding or investigation
pending
or, to the knowledge of the Company, threatened against or
affecting the Company
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 Company or prevent,
hinder or
materially delay the ability of the Company 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
Company having, or which, insofar as reasonably could be
foreseen by the
Company, in the future could have, any such effect.
6
<PAGE>
(ii) The Company 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 the Company.
(iii) The conduct of the business of the Company complies with
all
statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees or
arbitration awards applicable thereto.
(g) Benefit Plans. The Company is not a party to any collective
bargaining
agreement or any bonus, pension, profit sharing, deferred
compensation,
incentive compensation, stock ownership, stock purchase, phantom
stock,
retirement, vacation, severance, disability, death benefit,
hospitalization,
medical or other plan, arrangement or understanding (whether or
not legally
binding) under which the Company currently has an obligation to
provide benefits
to any current or former employee, officer or director of the
Company
(collectively, "Benefit Plans").
(h) Certain Employee Payments. The Company is not a party to any
employment
agreement which could result in the payment to any current,
former or future
director or employee of the Company 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.
(i) Tax Returns and Tax Payments. The Company has timely filed
all Tax
Returns required to be filed by it, has paid all Taxes shown
thereon to be due
and has provided adequate reserves in its financial statements
for any Taxes
that have not been paid, whether or not shown as being due on
any returns. No
material claim for unpaid Taxes has been made or become a lien
against the
property of the Company or is being asserted against the
Company, no audit of
any Tax Return of the Company 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 the Company and is currently in effect. 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.
(j) Environmental Matters. The Company is in compliance with all
applicable
Environmental Laws. "Environmental Laws" means all applicable
federal, state and
7
<PAGE>
local statutes, rules, regulations, ordinances, orders, decrees
and common law
relating in any manner to contamination, pollution or protection
of human health
or the environment, and similar state laws.
(k) Material Contract Defaults. The Company is not, or has not
received any
notice or has any knowledge that any other party is, in default
in any respect
under any 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 Material Contract
means any contract,
agreement or commitment that is effective as of the Closing Date
to which the
Company is a party (i) with expected receipts or expenditures in
excess of
$100,000, (ii) requiring the Company to indemnify any person,
(iii) granting
exclusive rights to any party, (iv) evidencing indebtedness for
borrowed or
loaned money in excess of $100,000 or more, including guarantees
of such
indebtedness, or (v) which, if breached by the Company 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 the Company 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.
(l) Properties. The Company has good, clear and marketable title
to all the
tangible properties and tangible assets reflected in the latest
balance sheet as
being owned by the Company or acquired after the date thereof
which are,
individually or in the aggregate, material to the Company'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.
(m) Trademarks and Related Contracts. To the knowledge of the
Company:
(i) As used in this Agreement, the term "Trademarks" means
trademarks,
service marks, trade names, Internet domain names, designs,
slogans, and general
intangibles of like nature; the term "Trade Secrets" means
technology; trade
secrets and other confidential information, know-how,
proprietary processes,
formulae, algorithms, models, and methodologies; the term
"Intellectual
Property" means patents, copyrights, Trademarks, applications
for any of the
foregoing, and Trade Secrets; the term "Company License
Agreements" means any
license agreements granting any right to use or practice any
rights under any
Intellectual Property (except for such agreements for
off-the-shelf products
that are generally available or less than $25,000), and any
written settlements
relating to any Intellectual Property, to which the Company is a
party or
otherwise bound; and the term "Software" means any and all
computer programs,
including any and all software implementations of algorithms,
models and
methodologies, whether in source code or object code.
(ii) To the knowledge of the Company, none of the Company's
Intellectual Property or Company License Agreements infringe
upon the rights of
any third party that may give rise to a cause of action or claim
against the
Company or its successors.
(n) Board Recommendation. The Board of Directors of the Company
has
unanimously determined that the terms of the Merger are fair to
and in the best
8
<PAGE>
interests of the shareholders of the Company and recommended
that the holders of
the shares of Company Common Stock approve the Merger.
(o) Required Company Vote. The affirmative vote of a majority of
the shares
of each of the Company Common Stock is the only vote of the
holders of any class
or series of the Company's securities necessary to approve the
Merger (the
"Company Shareholder Approval").
3.02 Representations and Warranties of Jiahui. Except as set
forth in the
--------------------------------------------------
Company Disclosure Schedule delivered by the Company to the
Parent at the time
of execution of this Agreement, the Company represents and
warrants to Parent
and Merger Sub as follows:
(a) Organization, Standing and Corporate Power. Jiahui is duly
organized,
validly existing and in good standing under the laws of the
People's Republic of
China and has the requisite corporate power and authority to
carry on its
business as now being conducted. Jiahui 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 (as defined in Section 9.02) with
respect to Jiahui.
(b) Subsidiaries. Jiahui has no subsidiaries. Jiahui is 90.28%
owned by the
Company and shall remain a majority owned subsidiary of the
Company.
(c) Capital Structure. Except as set forth in the financial
statements, no
shares of capital stock or other equity securities of Jiahui are
issued,
reserved for issuance or outstanding. All outstanding equity
ownership interest
in Jiahui 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 Jiahui having
the right to
vote (or convertible into, or exchangeable for, securities
having the right to
vote) on any matters on which shareholders of Jiahui may vote.
The Jiahui
Disclosure Schedule sets forth the outstanding Capitalization of
Jiahui. Except
as set forth above, there are no outstanding securities,
options, warrants,
calls, rights, commitments, agreements, arrangements or
undertakings of any kind
to which Jiahui is a party or by which it is bound obligating
Jiahui 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 Jiahui or
obligating
Jiahui 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 Jiahui to repurchase, redeem or otherwise acquire or make any
payment in
respect of any shares of capital stock of Jiahui. There are no
agreements or
arrangements pursuant to which Jiahui is or could be required to
register shares
of Company Common Stock or other securities under the Securities
Act of 1933, as
amended (the "Securities Act") or other agreements or
arrangements with or among
any security holders of Jiahui with respect to securities of
Jiahui.
(d) Authority; Noncontravention. Jiahui has the requisite
corporate and
other power and authority to enter into this Agreement and to
make the
9
<PAGE>
representations contained herein. This Agreement has been duly
executed and
delivered by Jiahui and constitutes a valid and binding
obligation of Jiahui,
enforceable against Jiahui in accordance with its terms. 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 loss of a material benefit under, or result in
the creation of
any lien upon any of the properties or assets of Jiahui under,
(i) the Articles
of Incorporation or Bylaws of Jiahui, (ii) any loan or credit
agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument,
permit,
concession, franchise or license applicable to Jiahui, 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 Jiahui, its
properties or
assets. No consent, approval, order or authorization of, or
registration,
declaration or filing with, or notice to, any federal, state or
local government
or any court, administrative agency or commission or other
governmental
authority, agency, domestic or foreign (a "Governmental
Entity"), is required by
or with respect to Jiahui in connection with the execution and
delivery of this
Agreement by Jiahui or the consummation by Jiahui of the
transactions
contemplated hereby, except, with respect to this Agreement, for
the filing of
the Articles of Merger with the Secretary of State of
Colorado.
(e) Absence of Certain Changes or Events. Since December 31,
2003, other
than the ownership interest transfer to the Company, Jiahui has
conducted its
business only in the ordinary course consistent with past
practice, and there is
not and has not been: (i) any material adverse change with
respect to Jiahui;
(ii) any 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 Jiahui; (iii) any event
which, if it had
taken place following the execution of this Agreement, would not
have been
permitted by Section 4.01 without prior consent of Parent; or
(iv) any
condition, event or occurrence which could reasonably be
expected to prevent,
hinder or materially delay the ability of Jiahui to consummate
the transactions
contemplated by this Agreement.
(f) Litigation; Labor Matters; Compliance with Laws.
(i) There is no suit, action or proceeding or investigation
pending
or, to the knowledge of Jiahui, threatened against or affecting
Jiahui 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 Jiahui or prevent, hinder or materially
delay the ability
of Jiahui 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 Jiahui having, or which,
insofar as reasonably
could be foreseen by Jiahui, in the future could have, any such
effect.
(ii) Jiahui 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
10
<PAGE>
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 Jiahui.
(iii) The conduct of the business of Jiahui complies with
all
statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees or
arbitration awards applicable thereto.
(g) Benefit Plans. Jiahui is not a party to any collective
bargaining
agreement or any bonus, pension, profit sharing, deferred
compensation,
incentive compensation, stock ownership, stock purchase, phantom
stock,
retirement, vacation, severance, disability, death benefit,
hospitalization,
medical or other plan, arrangement or understanding (whether or
not legally
binding) under which Jiahui currently has an obligation to
provide benefits to
any current or former employee, officer or director of Jiahui
(collectively,
"Benefit Plans").
(h) Certain Employee Payments. Jiahui is not a party to any
employment
agreement which could result in the payment to any current,
former or future
director or employee of Jiahui 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 transa
| 
