EXHIBIT 10.1
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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:
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THE MERGER
1.01 The Merger. Upon the terms and subject to the
conditions set forth in this
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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
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transactions herein contemplated shall have been
abandoned pursuant to Section
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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
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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
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applicable provisions of the Colorado
Statutes.
1.05 Articles of Incorporation; Bylaws;
Purposes.
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(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
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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.
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1.07 Officers. The officers designated by the Company at the
Effective Time of
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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:
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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
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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
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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
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outstanding warrants to purchase Parent
Common Stock.
2.03 Exchange of Certificates.
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(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.
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ARTICLE III:
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REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of
the Company. Except as
set forth in the
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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
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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.
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(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
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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
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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
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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
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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 transactions
contemplated by this Agreement, whet
