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Exhibit 10.1
SECURITIES EXCHANGE AGREEMENT
dated effective as of March 31, 2005
by and among
UNIVERSAL FLIRTS CORP,
UNITED FIRST INTERNATIONAL LIMITED,
and
THE SHAREHOLDERS OF UNITED FIRST INTERNATIONAL LIMITED
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TABLE OF CONTENTS
ARTICL I ISSUANCE AND EXCHANGE OF SHARES.......................................1
1.1 Issuance and Exchange.........................................1
1.2 Exchange Ratio................................................2
ARTICLE II CLOSING......................................................2
2.1 Closing ....................................................2
2.2 Deliveries by Public Company..................................2
ARTICLE III Representations and warranties...............................3
3.1 Representation and Warranties of Shareholders.................3
A. Ownership of Stock..................................3
B. Authority to Execute and Perform Agreement..........3
C. No Breach...........................................3
D. Securities Matters..................................4
3.2 Representations and Warranties of Holding Co.................4
A. Organization, Standing and Corporate Power..........4
B. Authority; Noncontravention.........................4
C. Financial Statements................................5
D. Capital Structure...................................5
3.3 Representations and Warranties of Public Company..............5
A. Organization, Standing and Power....................6
B. Capital Structure...................................6
C. Authority: Noncontravention.........................6
D. Subsidiaries........................................7
F. Absence of Certain Changes or Events;
No Undisclosed Material Liabilities.................7
G. Books and Records...................................8
H. Employees...........................................8
I. Employee Benefit Plans..............................8
J. Compliance with Applicable Laws.....................8
K. Insurance...........................................9
L. Litigation, etc.....................................9
M. Contracts...........................................9
N. Real Property.......................................9
O. Quotation...........................................9
P. Filings.............................................9
Q. Environmental Matters...............................9
R. Anti-takeover Plan: State Takeover Statutes........10
S. Solicitation.......................................10
T. Disclosure.........................................10
ARTICLE IV Indemnification.............................................10
4.1 Indemnification of Holding Co and Shareholders...............10
4.2 Indemnification of Public Company............................11
ARTICLE V CONDITIONS PRECEDENT........................................11
5.1 Conditions to Each Party's Obligation to Effect the Exchange.11
A. No Injunctions or Restraints.......................11
B. Governmental and Regulatory Consents...............12
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5.2 Conditions to Obligations of Holding Co and the
Shareholders.................................................12
A. Representations and Warranties.....................12
B. Performance of Obligations of Public Company.......12
C. Board Representation...............................12
D. Opinion of Counsel.................................12
5.3 Conditions to Obligations of Public Company..................12
A. Representations and Warranties.....................12
B. Performance of Obligations of Holding Co
and the Shareholders...............................13
C. Opinion of Counsel.................................13
5.4 Frustration of Closing Conditions............................13
ARTICLE VI GENERAL PROVISIONS.........................................13
6.1 Survival of Representations and Warranties...................13
6.2 Fees and Expenses............................................13
6.3 Definitions..................................................13
6.4 Usage ...................................................14
6.5 Notices ...................................................15
6.4 Counterparts.................................................15
6.7 Entire Agreement; Third-Party Beneficiaries..................15
6.8 Governing Law................................................15
6.9 Assignment...................................................15
6.10 Enforcement..................................................16
6.11 Severability.................................................16
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SECURITIES EXCHANGE AGREEMENT
THIS SECURITIES EXCHANGE AGREEMENT (this "Agreement"), dated effective
as of March 31, 2005 (the "Effective Date"), is entered into by and among United
First International Limited, a Hong Kong corporation ("Holding Co"), Universal
Flirts Corp, a Delaware corporation (the "Public Company"), and the individuals
whose names appear on the signature page hereof, each being a shareholder of
Holding Co (the "Shareholders"). Unless the context otherwise requires,
capitalized terms in this Agreement that are not defined in connection with
their first use shall have the meaning ascribed to them in Section 6.3 of this
Agreement.
Background
A. As of the Effective Date, there are 20,000,000 outstanding shares of
the common stock, par value HK$1.00, of Holding Co (the "Holding Co Stock"), of
which all of the shares of Holding Co Stock are beneficially owned or controlled
by the Shareholders.
B. Public Company proposes to acquire all of the outstanding shares of
Holding Co in exchange for a cash payment of US $50,000 from Holding Co. and the
issuance of an aggregate of 15,000,000 shares of common stock, $.001 par value,
of Public Company (the "Exchange"), so that immediately following the Closing
(as defined in Section 2.1 below) the Shareholders will own 50.41% of the issued
and outstanding shares of Public Company, so that that immediately following the
Closing Wang Xin will own 3,000,000 shares (10.09% of the total outstanding
shares), Liu Yu will own 6,000,000 shares (20.16% of the total outstanding
shares) and Wang Zhibin will own 6,000,000 shares (20.16% of the total
outstanding shares) of Public Company; and
C. The Boards of Directors of Public Company and Holding Co have
determined that it is desirable to affect a plan of reorganization.
Terms and Conditions
In consideration of the mutual benefits to be derived from the
covenants and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
ISSUANCE AND EXCHANGE OF SHARES
1.1 Issuance and Exchange. At the Closing (as defined in Section 2.1
below), to be held in accordance with the provisions of Article II below and
subject to the terms and agreements set forth herein, Public Company shall cause
its transfer agent to issue to the Shareholders the number of duly authorized
and newly issued shares of common stock, $.001 par value, of Public Company (the
"Public Company Stock") set forth in Section 1.2 below in exchange for a cash
payment of US $50,000 from Holding Co (the full amount of which has heretofore
been delivered to counsel for Public Company to hold in escrow pending the
Closing) and all of the outstanding shares of Holding Co Stock. The shares of
Public Company to be received by the Shareholder in connection with the
transaction described herein shall be delivered to the Shareholders at the
Closing. In consideration for the shares of Public Company Stock to be
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exchanged, the Shareholders shall deliver to counsel for Public Company, at the
Closing, certificates evidencing their shares of Holding Co, together with duly
executed stock powers to effectuate the transfer. Counsel for Public Company
shall release the Holding Co shares, over which he has custody, to Public
Company at the Closing, assuming satisfaction by the Shareholders and Holding Co
of all applicable conditions set forth in this Agreement.
1.2 Exchange Ratio.
A. At the Closing, Public Company shall exchange an aggregate
of 15,000,000 shares of Public Company Stock for all issued and
outstanding shares of Holding Co Stock as full consideration for the
Holding Co Stock. A chart setting forth the capitalization of Public
Company immediately prior to and immediately following the Closing (as
defined in Section 2.1) is set forth on Exhibit 1.2 attached hereto and
incorporated herein by reference for all purposes.
B. No fractional shares of Public Company Stock will be issued
to any Shareholder entitled to receive said shares. Accordingly,
Shareholders who would otherwise be entitled to receive fractional
shares of Public Company Stock will, upon surrender of their
certificate representing the fractional shares of Holding Co Stock,
receive a full share if the fractional share exceeds fifty percent
(50%) and if the fractional share is less than fifty percent (50%) the
fractional share shall be cancelled.
ARTICLE II
CLOSING
2.1 Closing. The consummation of the Exchange by Public Company,
Holding Co and the Shareholders (the "Closing") shall occur on the Effective
Date at the offices of counsel for Holding Co, subject to the satisfaction or
waiver of all of the conditions to Closing, or at such other place as the
parties may agree upon.
2.2 Deliveries by Public Company. Public Company shall deliver, or
cause to be delivered, to the Shareholders:
A. At the Closing, certificates for the shares of Public
Company Stock being exchanged for their respective accounts, in form
and substance reasonably satisfactory to the Shareholders and their
counsel, it being understood that the certificates will be prepared by
Public Company's transfer agent and delivered to Snell Wylie & Tibbals
for the benefit of the Shareholders;
B. At the Closing, the items specified in Article V below; and
C. At the Closing, all of the books and records of Public
Company.
2.3 Deliveries by Shareholders and Holding Co. At the Closing, the
Shareholders and Holding Co, as applicable, shall deliver to Public Company the
items specified in Article V below.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representation and Warranties of Shareholders. Each Shareholder
hereby represents and warrants to Public Company as follows (it being
acknowledged that Public Company is entering into this Agreement in material
reliance upon each of the following representations and warranties, and that the
truth and accuracy of each, as evidenced by their signature set forth on the
signature page, constitutes a condition precedent to the obligations of Public
Company hereunder):
A. Ownership of Stock. Each Shareholder is the lawful owner of
his Holding Co Stock that is to be transferred to Public Company free
and clear of all preemptive or similar rights, Liens, and the delivery
to Public Company of the Holding Co Stock, pursuant to the provisions
of this Agreement, will transfer to Public Company valid title thereto,
free and clear of all Liens. To the Knowledge of each Shareholder, the
Holding Co Stock to be exchanged herein has been duly authorized and
validly issued and is fully paid and nonassessable.
B. Authority to Execute and Perform Agreement. Each
Shareholder has the full legal right and power and all authority and
approval required to enter into, execute and deliver this Agreement,
and to sell, assign, transfer and convey the Holding Co Stock and to
perform fully his respective obligations hereunder. This Agreement has
been duly executed and delivered by each Shareholder and, assuming due
execution and delivery by, and enforceability against, Public Company,
constitutes the valid and binding obligation of each Shareholder
enforceable in accordance with its terms, subject to the qualifications
that enforcement of the rights and remedies created hereby is subject
to (a) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors, and (b) general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law). No approval or consent
of any Governmental Entity, and no approval or consent of, or filing,
with any other Person is required to be obtained by the Shareholders or
in connection with the execution and delivery by the Shareholders of
this Agreement and consummation and performance by them of the
transactions contemplated hereby.
C. No Breach. The execution, delivery and performance of this
Agreement by each Shareholder and the consummation of the transactions
contemplated hereby in accordance with the terms and conditions hereof
by each Shareholder will not:
(i) violate, conflict with or result in the breach of
any of the terms of, or constitute (or with notice or lapse of
time or both would constitute) a default under, any contract,
lease, agreement or other instrument or obligation to which a
Shareholder is a party or by or to which any of the properties
and assets of any of the Shareholders may be bound or subject;
(ii) violate any order, judgment, injunction, award
or decree of any court, arbitrator, governmental or regulatory
body, by which a Shareholder or the securities, assets,
properties or business of any of them is bound; or
(iii) violate any statute, law or regulation to which
any Shareholder is subject.
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D. Securities Matters. The Shareholders hereby represent,
warrant and covenant to the Public Company as follows:
(i) The Shareholders have been advised that the
Public Company Stock they will be receiving has not been
registered under the Securities Act, or any state securities
act in reliance on exemptions therefrom.
(ii) The Public Company Stock is being acquired
solely for each Shareholder's own account, for investment and
are not being acquired with a view to or for the resale,
distribution, subdivision or fractionalization thereof. The
Shareholders have no present plans to enter into any such
contract, undertaking, agreement or arrangement and the
Shareholders further understand that the Public Company Stock
may only be resold pursuant to a registration statement under
the Securities Act, or pursuant to some other available
exemption.
(iii) The Shareholders agree that the certificate or
certificates representing the Public Company Stock will be
inscribed with substantially the following legend:
"The securities represented by this certificate have
not been registered under the Securities Act of 1933.
The securities have been acquired for investment and
may not be sold, transferred or assigned in the
absence of an effective registration statement for
these securities under the Securities Act of 1933 or
an opinion of counsel acceptable to the issuer of the
securities represented by this certificate that
registration is not required under said Act."
E. Limited Market. The Shareholders acknowledge that an
investment in Public Company is subject to a high degree of risk and
that, even though Public Company's common stock is quoted on the OTCBB,
there exists only a very limited trading market for the Public Company
Stock.
3.2 Representations and Warranties of Holding Co. Holding Co hereby
represents and warrants to Public Company as follows (it being acknowledged that
Public Company is entering into this Agreement in material reliance upon each of
the following representations and warranties, and that the truth and accuracy of
each, as evidenced by the execution of this Agreement by a duly authorized
officer of Holding Co, constitutes a condition precedent to the obligations of
the Public Company hereunder):
A. Organization, Standing and Corporate Power. Holding Co is
duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation, and has all requisite corporate
power and authority to own, lease and operate its properties and to
carry on its business substantially as now conducted, except where the
failure to do so would not have, individually or in the aggregate, a
Holding Co Material Adverse Effect. For purposes of this Agreement, the
term "Holding Co Material Adverse Effect" means any Material Adverse
Effect with respect to Holding Co, taken as a whole, or any change of
effect that adversely, or is reasonably expected to adversely, affect
the ability of Holding Co to consummate the transactions contemplated
by this Agreement in any material respect or materially impair or delay
Holding Co's ability to perform its obligations hereunder.
B. Authority; Noncontravention. Holding Co has the requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The
execution, delivery and performance by Holding Co of this Agreement and
the consummation of the transactions contemplated hereby by Holding Co
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have been duly authorized by all necessary corporate action on the part
of Holding Co. This Agreement has been duly executed and delivered by
Holding Co and, assuming this Agreement constitutes the valid and
binding agreement of Public Company, constitutes a valid and binding
obligation of Holding Co, enforceable against Holding Co in accordance
with its terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors, and
(ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law). The
execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated by this Agreement and compliance with
the provisions of this Agreement, will not (x) conflict with any
provisions of the charter or other organizational or governing
documents of Holding Co, (y) be subject to the governmental filings and
other matters referred to in the following sentence, conflict with,
result in a breach of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of first refusal,
termination, cancellation or acceleration of any obligation (including
to pay any sum of money) or loss of a material benefit under, or
require the consent of any Person under, any indenture, or other
material agreement, Permit, concession, ground lease or similar
instrument or undertaking to which Holding Co is a party or by which
Holding Co or any of its assets are bound or affected, result in the
creation or imposition of a Lien against any material asset of Holding
Co, which singly or in the aggregate would have a Holding Co Material
Adverse Effect, or (z) subject to the governmental filings and other
matters referred to in the following sentence, contravene any law, rule
or regulation, or any order, writ, judgment, injunction, decree,
determination or award binding on or applicable to Holding Co and
currently in effect, which, in the case of clauses (y) and (z) above,
singly or in the aggregate, would have a Holding Co Material Adverse
Effect. No consent, approval or authorization of, or declaration or
filing with, or notice to, any Governmental Entity or any third party
which has not been received or made is required by or with respect to
Holding Co in connection with the execution and delivery of this
Agreement by Holding Co or the consummation by Holding Co of the
transactions contemplated hereby, except for consents, approvals,
authorizations, declarations, filings and notices that, if not obtained
or made, will not, individually or in the aggregate, result in a
Holding Co Material Adverse Effect.
C. Financial Statements. The financial statements of Holding
Co have been audited for the periods indicated in conformity with U.S.
Generally Accepted Accounting Principles ("GAAP").
D. Capital Structure. As of the Effective Date, 20,000,000
shares of Holding Co Stock were issued and outstanding and no shares of
Holding Co Stock were held by Holding Co in its treasury. All
outstanding shares of capital stock of Holding Co will have been duly
authorized and validly issued, and will be fully paid and nonassessable
and not subject to preemptive or similar rights. No bonds, debentures,
notes or other indebtedness of Holding Co having the right to vote (or
convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the Shareholders may vote are issued or
outstanding. Except for this Agreement, Holding Co does not have and,
at or after Closing will not have, any outstanding option, warrant,
call, subscription or other right, agreement or commitment which either
(a) obligates Holding Co to issue, sell or transfer, repurchase, redeem
or otherwise acquire or vote any shares of the capital stock of Holding
Co, or (b) restricts the voting, disposition or transfer of shares of
capital stock of Holding Co. There are no outstanding stock
appreciation rights or similar derivative securities or rights of
Holding Co.
3.3 Representations and Warranties of Public Company. Public Company
hereby represents and warrants to Holding Co and the Shareholders as follows (it
being acknowledged that Holding Co and the Shareholders are entering into this
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Agreement in material reliance upon each of the following representations and
warranties, and that the truth and accuracy of each, as evidenced by the
execution of this Agreement by a duly authorized officer of Public Company,
constitutes a condition precedent to the obligations of Holding Co and the
Shareholders hereunder):
A. Organization, Standing and Power. Public Company is duly
organized, validly existing and in good standing under the laws of
Delaware and has the requisite corporate power and authority to carry
on its business as now being conducted. Public 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 Public Company Material Adverse Effect. For purposes of this
Agreement, the term "Public Company Material Adverse Effect" means any
Material Adverse Effect with respect to Public Company, taken as a
whole, or any change or effect that adversely, or is reasonably
expected to adversely, affect the ability of Public Company to
consummate the transactions contemplated by this Agreement in any
material respect or materially impairs or delays Public Company's
ability to perform its obligations hereunder. Public Company has made
available to Holding Co complete and correct copies of its charter
documents and bylaws.
B. Capital Structure. As of the Effective Date, the authorized
capital stock of Public Company consists of 100,000,000 shares of
Public Company Stock and 10,000,000 shares of preferred stock.
Immediately prior to the Closing, there will be 14,756,000 shares of
common stock of Public Company issued and outstanding, and no shares of
preferred stock issued and outstanding. No shares of common stock of
Public Company will be held by Public Company in its treasury. All
outstanding shares of capital stock of Public Company will have been
duly authorized and validly issued, and will be fully paid and
nonassessable and not subject to preemptive or similar rights. No
bonds, debentures, notes or other indebtedness of Public Company having
the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the stockholders of
Public Company may vote are issued or outstanding. Public Company does
not have, and at or after Closing will not have, any outstanding
option, warrant, call, subscription or other right, agreement or
commitment which either (i) obligates Public Company to issue, sell or
transfer, repurchase, redeem or otherwise acquire or vote any shares of
the capital stock of Public Company, or (ii) restricts the voting,
disposition or transfer of shares of capital stock of Public Company.
There are no outstanding stock appreciation rights or similar
derivative securities or rights of Public Company.
C. Authority: Noncontravention. Public Company has the
requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement by Public Company
and the consummation by Public Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on
the part of Public Company. This Agreement has been duly executed and
delivered by Public Company and, assuming this Agreement constitutes
the valid and binding agreement of Holding Co and the Shareholders,
constitutes a valid and binding obligation of Public Company,
enforceable against Public Company in accordance with its terms,
subject to (i) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors, and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity). The execution and
delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and compliance with the
provisions hereof, will not, (x) conflict with any of the provisions of
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the charter documents or bylaws of Public Company, (y) be subject to
the governmental filings and other matters referred to in the following
sentence, conflict with, result in a breach of or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of first refusal, termination, cancellation or acceleration of
any obligation (including to pay any sum of money) or loss of a benefit
under, or require the consent of any Person under, any indenture or
other agreement, Permit, concession, ground lease or similar instrument
or undertaking to which Public Company is a party or by which Public
Company or any of its assets are bound or affected, result in the
creation or imposition of a Lien against any material asset of Public
Company, which, singly or in the aggregate, would have a Public Company
Material Adverse Effect, or (z) subject to the governmental filings and
other matters referred to in the following sentence, contravene any
law, rule or regulation, or any order, writ, judgment, injunction,
decree, determination or award binding on Public Company currently in
effect, which in the case of clauses (y) and (z) above, singly or in
the aggregate, would have a Public Company Material Adverse Effect. No
consent, approval or authorization of, or declaration or filing with,
or notice to, any Governmental Entity or any third party which has not
been received or made is required by or with respect to Public Company
in connection with the execution and delivery of this Agreement by
Public Company or the consummation by Public Company of the
transactions contemplated hereby, except for consents, approvals,
authorizations, declarations, filings and notices that, if not obtained
or made, will not, individually or in the aggregate, result in a Public
Company Material Adverse Effect.
D. Subsidiaries. Public Company does not own, directly or
indirectly, any of the capital stock of any other corporation or any
equity, profit sharing, participation or other interest in any
corporation, partnership, joint venture or other entity.
E. Intellectual Property. Public Company does not own or use
any trademarks, trade names, service marks, patents, copyrights or any
applications with respect thereto. Public Company has no Knowledge of
any claim that, or inquiry as to whether, any product, activity or
operation of Public Company infringes upon or involves, or has resulted
in the infringement of, any trademarks, trade names, service marks,
patents, copyrights or other proprietary rights of any other Person,
corporation or other entity; and no proceedings have been instituted,
are pending or are threatened with respect thereto.
F. Absence of Certain Changes or Events; No Undisclosed
Material Liabilities.
(i) Audited financial statements of Public Company as
of December 31, 2004 (the "Financial Statements") have been
prepared. Except as otherwise disclosed in its filings or
public records with the Securities and Exchange Commission,
Public Company has conducted its business only in the ordinary
course, and there has not been (a) any change, destruction,
damage, loss or event which has had or could reasonably be
expected to have, individually or in the aggregate a Public
Company Material Adverse Effect; (b) any declaration, setting
aside or payment of any dividend or other distribution in
respect of shares of Public Company's capital stock, or any
repurchase, redemption or other acquisition by Public Company
of any shares of their respective capital stock or equity
interests, as applicable; (c) any increase in the rate or
terms of compensation payable or to become payable by Public
Company to its directors, officers or key employees; (d) any
entry into, or increase in the rate or terms of, any bonus,
insurance, severance, pension or other employee or retiree
benefit plan, payment or arrangement made to, for or with any
such directors, officers or employees; (e) any entry into any
agreement, commitment or transaction by Public Company, or
waiver, termination, amendment or modification to any
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agreement, commitment or transaction, which is material to
Public Company taken as a whole; (f) any material labor
dispute involving the employees of Public Company; (g) any
change by Public Company in accounting methods, principles or
practices except as required or permitted by GAAP; (h) any
write-off or write-down of, or any determination to write-off
or write-down, any asset of Public Company or any portion
thereof; (i) any split, combination or reclassification of any
of Public Company's capital stock or issuance or authorization
relating to the issuance of any other securities in respect
of, in lieu of or in substitution for shares of Public
Company's capital stock; (j) any amendment of any material
term of any outstanding security of Public Company; (k) any
loans, advances or capital contributions to or investments in,
any other Person in existence on the Effective Date made by
Public Company; (l) any sale or transfer by Public Company of
any of the assets of Public Company, cancellation of any
material debts or claims or waiver of any material rights by
Public Company; or (m) any agreements by Public Company to (i)
do any of the things described in the preceding clauses (a)
through (l) other than as expressly contemplated or provided
for herein or (ii) take, whether in writing or otherwise, any
action which, if taken prior to the Effective Date, would have
made any representation or warranty of Public Company in this
Agreement untrue or incorrect in any material respect.
(ii) Public Company has no Liabilities, except as set
forth in the Financial Statements or otherwise incurred in the
ordinary course of business.
G. Books and Records. The books of account and other financial
Records of Public Company, all of which have been made available to
Holding Co, are complete and correct and represent actual, bona fide
transactions and have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Securities
Exchange Act. and in accordance with U.S. generally accepted accounting
principals.
H. Employees. Except with regard to Darrell Lerner, Public
Company's sole officer and director, Public Company (i) has no
employees, (ii) does not owe any compensation of any kind, deferred or
otherwise, to any current or previous employees, (iii) has no written
or oral employment agreements with any officer or director of Public
Company or (iv) is not a party to or bound by any collective bargaining
agreement. There are no loans or other obligations payable or owing by
Public Company to any stockholder, officer, director or employee of
Public Company, nor are there any loans or debts payable or owing by
any of such persons to Public Company or any guarantees by Public
Company of any loan or obligation of any nature to which any such
Person is a party.
I. Employee Benefit Plans. Public Company has no (i)
non-qualified deferred or incentive compensation or retirement plans or
arrangements, (ii) qualified retirement plans or arrangements, (iii)
other employee compensation, severance or termination pay or welfare
benefit plans, programs or arrangements or (iv) any related trusts,
insurance contracts or other funding arrangements maintained,
established or contributed to by Public Company.
J. Compliance with Applicable Laws. Public Company has and
after giving effect to the transactions contemplated hereby will have
in effect all Permits necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted,
and to the Knowledge of Public Company there has occurred no default
under any such Permit, except for the lack of Permits and for defaults
under Permits which individually or in the aggregate would not have a
Public Company Material Adverse Effect. To Public Company's Knowledge,
Public Company is in compliance with, and has no liability or
obligation under, any applicable statute, law, ordinance, rule, order
8
or regulation of any Governmental Entity, including any liability or
obligation to undertake any remedial action under Hazardous Substances
Laws (as hereinafter defined), except for instances of non-compliance,
liabilities or obligations, which individually or in the aggregate
would not have a Public Company Material Adverse Effect.
K. Insurance. Public Company has no insurance policies in
effect.
L. Litigation, etc. As of the Effective Date, (i) there is no
suit, claim, action or proceeding (at law or in equity) pending or, to
the Knowledge of Public Company, threatened against Public Company
(including, without limitation, any product liability claims) before
any court or governmental or regulatory authority or body, and (ii)
Public Company is not subject to any outstanding order, writ, judgment,
injunction, order, decree or arbitration order that, in any such case
described in clauses (i) and (iii), (a) could reasonably be expected to
have, individually or in the aggregate, a Public Company Material
Adverse Effect or (b) involves an allegation of criminal misconduct or
a violation of the Racketeer and Influenced Corrupt Practices Act. As
of the Closing, there are no suits, actions, claims or proceedings
pending or, to Public Company's Knowledge, threatened, seeking to
prevent, hinder, modify or challenge the transactions contemplated by
this Agreement.
M. Contracts. Except for its contract with Corporate Stock
Transfer ("Transfer Agent"), pursuant to which Transfer Agent acts as
the Public Company's stock transfer agent, Public Company has no
material contracts, leases, arrangements or commitments (whether oral
or written) and is not a party to or bound by or affected by any
contract, lease, arrangement or commitment (whether oral or written)
relating to (i) the employment of any Person; (ii) collective
bargaining with, or any representation of any employees by, any labor
union or association; (iii) the acquisition of services, supplies,
equipment or other personal property; (iv) the purchase or sale of real
property; (v) distribution, agency or construction; (vi) lease of real
or personal property as lessor or lessee or sublessor or sublessee;
(vii) lending or advancing of funds; (viii) borrowing of funds or
receipt of credit; (ix) incurring any obligation or liability; or (x)
the sale of personal property.
N. Real Property. Public Company does not own or lease any
real property.
O. Quotation. As of the Effective Date, the Public Company
Stock is and shall remain eligible for quotation on the OTCBB following
the Closing.
P. Filings. Public Company has filed all reports required to
be filed by it under the Securities Exchange Act.
Q. Environmental Matters. Public Company has not received any
written notice from any Governmental Entity that there exists any
violation of any Hazardous Substances Law (as hereinafter defined).
Public Company has no Knowledge (i) of any Hazardous Substances (as
hereinafter defined) present on, under or about any Public Company
asset, and to Public Company's Knowledge no discharge, spillage,
uncontrolled loss, seepage or filtration of Hazardous Substances has
occurred on, under or about any Public Company asset, (ii) that any
Public Company assets violates, or has at any time violated, any
Hazardous Substance Laws, and (iii) that there is a condition on any
asset for which Public Company has an obligation to undertake any
remedial action pursuant to Hazardous Substance Laws. For purposes
hereof, "Hazardous Substances" means, without limitation (a) those
substances included within definitions of any one or more of the terms
"Hazardous Substance," and "Hazardous Waste," "Toxic Substance" and
9
"Hazardous Material" in the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss. 90,601, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq.,
the Toxic Substances Control Act, 15 U.S.C. ss. 2601, et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the
Occupational Safety and Health Act, 29 U.S.C. ss. 651, et seq.,
(insofar as it relates to employee health and safety in relation to
exposure to Hazardous Substances) and any other local, state, federal
or foreign laws or regulations related to the protection of public
health or the environment (collectively, "Hazardous Substances Laws");
(b) such other substances, materials or wastes as are or become
regulated under, or as are classified as hazardous or toxic under
Hazardous Substance Laws; and (c) any materials, wastes or substances
that can be defined as petroleum products or wastes, asbestos,
polychlorinated biphenyl, flammable or explosive, or radioactive.
R. Anti-takeover Plan: State Takeover Statutes. Public Company
does not have in effect any plan, scheme, device or arrangement,
commonly or colloquially known as a "poison pill" or "anti-takeover"
plan or any similar plan, scheme, device or arrangement. The Board of
Directors of Public Company has approved this Agreement. No other state
takeover statute or similar statute or regulation applies or purports
to apply to the Exchange, this Agreement or any of the transactions
contemplated by this Agreement.
S. Solicitation. None of Public Company, its officers,
directors, Affiliates or agents, or any other Person acting on its
behalf has solicited, directly or indirectly, any Person to enter into
a merger or similar business combination transaction with Public
Company by any form of general solicitation, including, without
limitation, any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising.
T. Disclosure. The representations and warranties and
statements of fact made by Public Company in this Agreement are, as
applicable, accurate, correct and complete and do not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained
herein not false or misleading.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnification of Holding Co and Shareholders.
A. Indemnification Obligation. Public Company shall, from and
after the Closing, indemnify, defend and hold harmless the
Shareholders, Holding Co, and Holding Co's officers, directors,
Affiliates or agents, and any other Person acting on its behalf (the
"Holding Co Indemnified Parties") against all losses, claims, damages,
costs, expenses (including reasonable attorneys' fees and expenses),
liabilities or judgments or amounts that are paid in settlement with
the approval of the indemnifying party (the "Holding Co Indemnified
Liabilities") based on, or arising out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case, to the
fullest extent permitted under the laws of the State of Delaware.
B. Defense and Survival. The Holding Co Indemnified Parties
shall have the right to conduct the defense of any action giving rise
to a claim for indemnity under this Agreement with counsel of their own
choosing. Holding Co, the Shareholders and Public Company agree that
all rights to indemnification, including provisions relating to
advances of expenses incurred in defense of any action or suit,
existing in favor of the Holding Co Indemnified Parties with respect to
matters occurring through the Closing, shall survive the Exchange and
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shall continue in full force and effect for a period of not less than
one year from the Closing; provided, however, that all rights to
indemnification in respect of any Holding Co Indemnified Liabilities
asserted or made within such period shall continue until the
disposition of such Holding Co Indemnified Liabilities.
C. Beneficiaries. The provisions of this Section 4.1 are
intended to be for the benefit of, and shall be enforceable by, each
Holding Co Indemnified Party, his or her heirs and his or her personal
representatives and shall be binding upon all successors and assigns of
Public Company and Holding Co.
4.2 Indemnification of Public Company.
A. Indemnification Obligation. Holding Co shall, from and
after the Closing, indemnify, defend and hold harmless Public Company
and Public Company's officers, directors, Affiliates or agents, and any
other Person acting on its behalf (the "Public Company Indemnified
Parties") against all losses, claims, damages, costs, expenses
(including reasonable attorneys' fees and expenses), liabilities or
judgments or amounts that are paid in settlement with the approval of
the indemnifying party (the "Public Company Indemnified Liabilities")
based on, or arising out of, or pertaining to this Agreement or the
transactions contemplated hereby, in each case, to the fullest extent
permitted under the laws of the State of Delaware.
B. Defense and Survival. The Public Company Indemnified
Parties shall have the right to conduct the defense of any action
giving rise to a claim for indemnity under this Agreement with counsel
of their own choosing. Holding Co, the Shareholders and Public Company
agree that all rights to indemnification, including provisions relating
to advances of expenses incurred in defense of any action or suit,
existing in favor of the Public Company Indemnified Parties with
respect to matters occurring through the Closing, shall survive the
Exchange and shall continue in full force and effect for a period of
not less than one year from the Closing; provided, however, that all
rights to indemnification in respect of any Public Company Indemnified
Liabilities asserted or made within such period shall continue until
the disposition of such Public Company Indemnified Liabilities.
C. Beneficiaries. The provisions of this Section 4.2 are
intended to be for the benefit of, and shall be enforceable by, each
Public Company Indemnified Party, his or her heirs and his or her
personal representatives and shall be binding upon all successors and
assigns of Public Company and Holding Co.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligation to Effect the Exchange. The
respective obligation of each party to effect the Exchange is subject to the
satisfaction or written waiver of the following conditions:
A. No Injunctions or Restraints. No statute, rule, regulation,
temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
Exchange shall be in effect; provided, however, that the party invoking
this condition shall use its best efforts to have any such temporary
restraining order, injunction, order, restraint or prohibition vacated.
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B. Governmental and Regulatory Consents. All material filings
required to be made prior to the Closing with, and all material
consents, approvals, permits and authorizations required to be obtained
prior to the Closing from, Governmental Entities, in connection with
the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby by Holding Co and Public Company
will have been made or obtained (as the case may be).
5.2 Conditions to Obligations of Holding Co and the Shareholders. The
obligations of Holding Co and the Shareholders to effect the Exchange are
further subject to the satisfaction or written waiver on or prior to the Closing
of the following conditions:
A. Representations and Warranties. The representations and
warranties of Public Company set forth in Section 3.3 that are
qualified as to materiality or Material Adverse Effect shall be true
and correct and the representations and warranties of Public Company
set forth in Section 3.3 that are not so qualified shall be true and
correct in all material respects, in each case as of the Closing,
except to the extent such representations and warranties speak as of an
earlier date. In addition, all such representations and warranties
shall be true and correct as of the Closing, except to the extent such
representation or warranty speaks of an earlier date (without regard to
any qualifications for materiality or Material Adverse Effect) except
to the extent that any such failure to be true and correct (other than
any such failure the effect of which is immaterial) individually and in
the aggregate with all such other failures would not have a Material
Adverse Effect, and Holding Co and the Shareholders shall have received
a certificate signed on behalf of Public Company by the chief executive
officer of Public Company to the effect set forth in this paragraph.
B. Performance of Obligations of Public Company. Public
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing.
C. Board Representation. At the Closing and pursuant to a
written consent to action of the Board of Directors of Public Company,
the Board of Directors (a) shall appoint Wang Xin, Liu Yu and Wang
Zhibin as members of the Board of Directors, and (b) all existing
officers and directors shall resign as officers of Public Company.
D. Opinion of Counsel. Holding Co shall have received an
opinion dated as of the Closing from Public Company's counsel to
Holding Co in form, content and scope satisfactory to Holding Co and
its counsel with respect to (i) the incorporation and existence of
Public Company, (ii) the authorized and issued capital of Public
Company, (iii) the due authorization, execution and delivery by Public
Company of this Agreement, (iv) the validity of the issuance of the
Public Company Stock, (v) and such other matters as counsel to Holding
Co may reasonably request.
5.3 Conditions to Obligations of Public Company. The obligation of
Public Company to effect the Exchange is further subject to the satisfaction or
written waiver on or prior to Closing of the following conditions:
A. Representations and Warranties. The representations and
warranties of the Shareholders and Holding Co set forth in Section 3.1
and 3.2, respectively, that are qualified as to materiality or Material
Adverse Effect shall be true and correct and the representations and
warranties of the Shareholders and Holding Co and the Shareholders set
forth in Section 3.1 and 3.2 respectively, that are not so qualified
shall be true and correct in all material respects, in each case as of
the Closing. In addition, all such representations and warranties shall
12
be true and correct as of the Closing, except to the extent such
representation or warranty speaks of an earlier date (without regard to
any qualifications for materiality or Material Adverse Effect) except
to the extent that any such failure to be true and correct (other than
any such failure the effect of which is immaterial) individually and in
the aggregate with all such other failures would not have a Material
Adverse Effect, and Public Company shall have received a certificate
signed on behalf of Holding Co by the president of Holding Co to the
effect set forth in this paragraph.
B. Performance of Obligations of Holding Co and the
Shareholders. Holding Co and the Shareholders shall have performed in
all material respects all obligations required to be performed by them
under this Agreement at or prior to the Closing.
C. Opinion of Counsel. Public Company shall have received an
opinion of Holding Co's counsel that is satisfactory to Public Company
in both form and content.
5.4 Frustration of Closing Conditions. None of Public Company, the
Shareholders or Holding Co may rely on the failure of any condition set forth in
Sections 5.1, 5.2 and 5.3, as the case may be, to be satisfied if such failure
was caused by such party's failure to use reasonable efforts to commence or
complete the Exchange and the other transactions contemplated by this Agreement.
ARTICLE VI
GENERAL PROVISIONS
6.1 Survival of Representations and Warranties. Except as otherwise
contemplated herein, the representations and warranties in this Agreement and in
any instrument delivered pursuant to this Agreement shall survive the Closing
for a period of one year.
6.2 Fees and Expenses. Each party hereto shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
6.3 Definitions. For purposes of this Agreement, and except as
otherwise defined in this Agreement:
A. "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. "Governmental Entity" means any domestic or foreign
governmental agency or regulatory authority;
C. "Knowledge" means actual knowledge. In order for an
individual to have Knowledge of a fact or matter, the individual must
be actually aware of that fact or matter. A Person who is not an
individual will be deemed to have Knowledge of a particular fact or
matter if any individual who is serving, or who has at any time served,
as a director, officer, partner, executor or trustee of that Person (or
in any similar capacity) has, or at any time had, Knowledge of that
fact or matter.
D. "Liens" means, collectively, all material pledges, claims,
liens, charges, mortgages, conditional sale or title retention
agreements, hypothecations, collateral assignments, security interests,
easements and other encumbrances of any kind or nature whatsoever;
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E. "Material Adverse Effect" with respect to any Person means
an event that has had or would reasonably be expected to have a
material adverse effect on the business, financial condition or results
of operations of such Person and its subsidiaries taken as a whole;
F. "Permit" means federal, state, local and foreign
governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits an rights; and
G. "Person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity.
H. "Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
I. "Securities Act" means the Securities Act of 1933, as
amended.
J. "Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
6.4 Usage. In this Agreement, unless a clear contrary intention
appears:
A. the singular number includes the plural number and vice
versa;
B. reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
not prohibited by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;
C. reference to any gender includes each other gender or, in
the case of an entity, the neuter;
D. reference to any agreement, document or instrument means
such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof, and
shall be deemed to refer as well to all addenda, exhibits and
schedules;
E. reference to a Section or Schedule, such reference shall be
to a Section of, or a Schedule to, this Agreement unless otherwise
indicated
F. reference to any law means such law as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated
thereunder and reference to any section or other provision of any law
means that provision of such law from time to time in effect and
constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision;
G. the table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
H. "hereunder", "hereof", "hereto" and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular Article, Section or other provision thereof;
14
I. "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
J. "or" is used in the inclusive sense of "and/or;" and
K. with respect to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding."
6.5 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
A. if to Public Company prior to the Closing to:
Darrell Lerner
142 Mineola Avenue, Suite 2-D
Roslyn Height, New York 11577
Tel: (516) 359-5619
Fax: ____________________
B. if to Holding Co and to Public Company after the Closing to
Wang Xin
Suite 503, 5F, St. George's Building
2 IceHouse Street
Central, Hong Kong
Tel: (86-10) 85613362
Fax: (86-10) 85625665
6.6 Counterparts. This Agreement may be executed in two or more
counterparts.
6.7 Entire Agreement; Third-Party Beneficiaries. This Agreement
constitutes the entire agreement, and supersedes 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 hereto and the third party beneficiaries
referred to in the following sentence, any rights or remedies. The parties
hereto expressly intend the provisions of Sections 4.1 and 4.2 to confer a
benefit upon and be enforceable by, as third party beneficiaries of this
Agreement, the third Persons referred to in, or intended to be benefited by,
such provisions.
6.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE REGARDLESS OF THE LAWS
THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
6.9 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, and any such assignment that is not consented to
shall be null and void. 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.
15
6.10 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
located in the State of Delaware, this being in addition to any other remedy to
which they are entitled at law or in equity.
6.11 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, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party, 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.
Signatures
To evidence the binding effect of the foregoing terms and conditions,
Public Company, Holding Co and the Shareholders have executed this Agreement to
be effective as of the Effective Date.
UNITED FIRST INTERNATIONAL LIMITED
By: /s/ Wang Xin
-------------------------------
Wang Xin,
Executive Director and CEO
UNIVERSAL FLIRTS CORP
By: /s/ Darrell Lerner
-------------------------------
Darrell Lerner,
President
SHAREHOLDERS
By: /s/ Wang Xin
-------------------------------
Wang Xin
By: /s/ Liu Yu
-------------------------------
Liu Yu
By: /s/ Zhibin
-------------------------------
Wang Zhibin
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EXHIBIT 1.2
CAPITALIZATION OF UNIVERSAL FLIRTS CORP
- ----------------------------------------------- ---------------------------------------------------
Pre-Exchange Post-Exchange
Number of Shares of Common Number of Shares of Common
Capital Stock Issued and Capital Stock Issued and
Outstanding Outstanding
- ----------------------------------------------- ---------------------------------------------------
Number of % Ownership Number of % Ownership
Name Shares Name Shares
Public Stockholders 14,756,000 100 Public Stockholders 14,756,000 49.59
==========
Wang Xin 3,000,000 10.09
Liu Yu 6,000,000 20.16
Wang Zhibin 6,000,000 20.16
Total: 14,756,000 100 Total: 29,756,000 100
- ----------------------------------------------- ---------------------------------------------------
17