EXHIBIT 2.1
STOCK EXCHANGE AGREEMENT
BETWEEN AND AMONG
MIGRATION DEVELOPMENTS LIMITED,
COL CHINA ONLINE INTERNATIONAL INC.
AND
THE SHAREHOLDERS OF MIGRATION DEVELOPMENTS LIMITED
June 8, 2000
STOCK EXCHANGE AGREEMENT
TABLE OF CONTENTS
1. DEFINITIONS............................................................1
1.1. "BVI Act".........................................................1
1.2. "Closing".........................................................1
1.3. "Code"............................................................1
1.4. "COL China Online"................................................2
1.5. "COL China Online Business".......................................2
1.6. "COL China Online Common Stock"...................................2
1.7. "Constituent Corporations"........................................2
1.8. "Delaware Law"....................................................2
1.9. "Exchange"........................................................2
1.10. "Execution Date"..................................................2
1.11. "Material Adverse Change" or "Material Adverse Effect"............2
1.12. "Migration".......................................................2
1.13. "Migration Common Stock"..........................................2
1.14. "Migration's Business"............................................2
1.15. "Migration Shareholders"..........................................2
1.16. "1933 Act"........................................................2
1.17. "1934 Act"........................................................2
1.18. "SEC".............................................................2
1.19. "Subsidiary"......................................................3
1.20. "Transfer Agent"..................................................3
2. THE EXCHANGE; ADDITIONAL AGREEMENTS....................................3
2.1. Exchange..........................................................3
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2.2. Effective Date....................................................3
2.3. Expenses; Liability...............................................3
2.4. Covenant Not To Compete...........................................3
3. DIRECTORS..............................................................4
4. EXCHANGE OF SHARES.....................................................4
4.1. Exchange Of Shares................................................4
4.2. Mechanics Of Exchange.............................................5
5. REPRESENTATIONS AND WARRANTIES OF COL CHINA ONLINE.....................5
5.1. Organization And Standing.........................................5
5.2. No Subsidiaries...................................................5
5.3. Capitalization....................................................5
5.4. Authority; Non-Contravention......................................5
5.5. Governmental Consents.............................................6
5.6. Disclosure........................................................6
6. REPRESENTATIONS AND WARRANTIES OF MIGRATION............................6
6.1. Organization And Standing.........................................7
6.2. Subsidiaries......................................................7
6.3. Capitalization....................................................7
6.4. Authority; Non-Contravention......................................7
6.5. Contracts And Commitments.........................................8
6.6. Compliance With Other Instruments.................................8
6.7. Litigation And Claims.............................................8
6.8. Insurance.........................................................8
6.9. Governmental Consents.............................................9
6.10. Disclosure........................................................9
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6.11. Actions...........................................................9
6.12. Taxes.............................................................9
6.13. Employees; No Retirement Obligations.............................10
6.14. Books And Records................................................10
6.15. Copies Of Documents..............................................10
6.16. Employees, Officers, Directors, And Consultants..................10
6.17. Documents Delivered..............................................10
6.18. No Material Changes..............................................10
6.19. Assets; Undisclosed Liabilities..................................12
6.20. No Encumbrances..................................................12
6.21. No Encumbrances On Migration Common Stock........................12
6.22. Real Estate......................................................12
6.23. Restricted Stock.................................................12
7. CERTAIN AGREEMENTS....................................................12
7.1. Access And Information...........................................12
7.2. Shareholders Authorization.......................................13
7.3. Operation Of Business............................................13
7.4. Preservation Of Business.........................................13
7.5. Tax Cooperation..................................................13
7.6. Interim Operations...............................................14
7.7. Accuracy Of Representations......................................15
7.8. Consents, Waivers And Approvals..................................15
7.9. Notice Of Breach Of Warranty.....................................16
7.10. Additional Documents; Further Assurances.........................16
7.11. Notice Of Inaccurate Information.................................16
7.12. Publicity........................................................16
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8. CONDITIONS TO PERFORMANCE BY ALL PARTIES..............................16
9. CONDITIONS PRECEDENT TO PERFORMANCE BY MIGRATION......................16
10. CONDITIONS PRECEDENT TO PERFORMANCE BY COL CHINA ONLINE...............17
11. INDEMNIFICATION BY COL CHINA ONLINE...................................19
12. INDEMNIFICATION BY MIGRATION AND THE MIGRATION SHAREHOLDERS...........19
13. NOTICE OF CLAIM.......................................................20
14. CLOSING...............................................................21
15. TERMINATION AND ABANDONMENT OF THE EXCHANGE...........................22
15.1. Termination......................................................22
15.2. Effect Of Termination............................................22
16. AMENDMENT OR WAIVER...................................................22
17. ENTIRE AGREEMENT......................................................22
18. NOTICE................................................................22
19. SEVERABILITY..........................................................23
20. HEADINGS..............................................................23
21. COUNTERPARTS..........................................................23
22. EXPENSES..............................................................23
23. NATURE AND SURVIVAL OF REPRESENTATIONS................................23
24. BENEFITS AND ASSIGNMENT...............................................23
25. SPECIFIC PERFORMANCE..................................................23
26. BROKERS...............................................................24
27. COSTS.................................................................24
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28. TERMINATION ON DEFAULT................................................24
29. CHOICE OF LAW.........................................................24
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STOCK EXCHANGE AGREEMENT
BETWEEN AND AMONG
MIGRATION DEVELOPMENTS LIMITED,
COL CHINA ONLINE INTERNATIONAL INC.
AND
THE SHAREHOLDERS OF MIGRATION DEVELOPMENTS LIMITED
THIS STOCK EXCHANGE AGREEMENT (the "Agreement") is made and entered into to
be effective as of June 8, 2000 (the "Effective Date"), between and among
Migration Developments Limited, a British Virgin Islands corporation
("Migration"), COL China Online International Inc., a Delaware corporation ("COL
China Online"), and First Strike Securities Limited, a British Virgin Islands
corporation, and Honview International Limited, a Hong Kong corporation
(together, the "Migration Shareholders"). Each of Migration, COL China Online
and the Migration Shareholders may be referred to individually as a "Party", and
all of Migration , COL China Online and the Migration Shareholders may be
referred to collectively as the "Parties".
RECITALS
A. The Parties to this Agreement desire to effect an exchange (the
"Exchange") pursuant to which COL China Online will deliver to the Migration
Shareholders 40,200,000 shares of restricted common stock of COL China Online in
exchange for all the issued and outstanding shares of common stock of Migration.
As a result of the Exchange, COL China Online will own all the issued and
outstanding securities of Migration, and Migration will become a wholly owned
subsidiary of COL China Online. Migration has no outstanding securities except
for the shares of its common stock to be delivered to COL China Online pursuant
to the terms of this Agreement.
B. The Board Of Directors of COL China Online and the Migration
Shareholders have reviewed and approved this Agreement and have determined that
the Exchange should be consummated pursuant to the terms and conditions
hereinafter set forth in this Agreement.
C. The Parties desire to effectuate the Exchange as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
In consideration of the premises and the mutual representations,
warranties, covenants and agreements herein contained, the Parties agree as
follows:
1. Definitions. As used in this Agreement the following terms have the
meanings indicated:
1.1. "BVI Act" refers to The International Business Companies Act of
the Territory of the British Virgin Islands.
1.2. "Closing" refers to the consummation of the transactions
contemplated by this Agreement, as specified in Section 1.4 hereof.
1.3. "Code" refers to the Internal Revenue Code of 1986, as amended.
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1.4. "COL China Online" refers to COL China Online International,
Inc., a Delaware corporation.
1.5. "COL China Online Business" refers to the consulting services to
ISPs, e-commerce business, and physical network engineering and related software
development carried on throughout China by COL China Online prior to the Closing
and any other business in which COL China Online is engaged or in which COL
China Online plans to engage following the Closing.
1.6. "COL China Online Common Stock" refers to the $.001 par value
common stock of COL China Online.
1.7. "Constituent Corporations" refers to COL China Online and
Migration, collectively.
1.8. "Delaware Law" refers to the Delaware General Corporation Law.
1.9. "Exchange" refers to the exchange of 40,200,000 shares of COL
China Online Common Stock for all the issued and outstanding Migration Common
Stock pursuant to the terms and conditions of this Agreement.
1.10. "Execution Date" refers to the date on which this Agreement is
signed by the last to sign of all the signatories to this Agreement.
1.11. "Material Adverse Change" or "Material Adverse Effect" means,
when used with respect to COL China Online or Migration, as the case may be, any
change or effect that is or, so far as can reasonably be determined, is likely
to be materially adverse to the assets, properties, condition (financial or
otherwise), business or results of operations of COL China Online or Migration,
as the case may be.
1.12. "Migration" refers to Migration Developments Limited , a British
Virgin Islands limited corporation.
1.13. "Migration Common Stock" refers to the $1.00 par value common
stock of Migration.
1.14. "Migration's Business" refers to the consulting services to
ISPs, e-commerce business, and physical network engineering and related software
development carried on throughout China by Migration prior to the Closing and
any other business in which Migration is engaged or in which Migration plans to
engage following the Closing.
1.15. "Migration Shareholders" means First Strike Securities Limited
and Honview International Limited, who at the Effective Date and the Closing
will own all the outstanding Migration Common Stock.
1.16. "1933 Act" refers to the Securities Act of 1933, as amended.
1.17. "1934 Act" refers to the Securities Exchange Act of 1934, as
amended.
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1.18. "SEC" refers to the United States Securities And Exchange
Commission.
1.19. "Subsidiary" means any corporation, partnership, joint venture
or other legal entity of which COL China Online or Migration, as the case may be
(either alone or through or together with any other Subsidiary), owns, directly
or indirectly, 50 percent or more of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
1.20. "Transfer Agent" refers to American Securities Transfer and
Trust, Inc., located at 12039 West Alameda Parkway, Suite Z-2, Lakewood,
Colorado 80228.
2. The Exchange; Additional Agreements.
------------------------------------
2.1. Exchange.. Subject to the terms and conditions hereof, at the
Closing, COL China Online shall deliver to the Migration Shareholders 40,200,000
shares of COL China Online Common Stock in exchange for all the issued and
outstanding shares of Migration Common Stock, constituting all the outstanding
securities of Migration, with COL China Online then being the sole shareholders
of Migration.
2.2. Effective Date. Subject to compliance by the Parties with the
covenants and agreements of, and satisfaction of the conditions contained in,
this Agreement, the Parties shall take all actions as are required by law to
make the Exchange effective. Upon the Closing of this Agreement, the Exchange
shall become effective as of the Effective Date.
2.3. Expenses; Liability. The Migration Shareholders shall be
responsible for all liabilities incurred in connection with its business prior
to the Effective Date.
2.4. Covenant Not To Compete.
------------------------
2.4.1. At the Closing, COL China Online shall cause Power to
enter into an agreement (the "Noncompetition Agreement") providing for the
restrictions imposed on pursuant to this Section 2.4. Until the later to occur
of two (2) years after the Effective Date and one (1) year following the
termination of Power's employment with COL China Online, without the prior
written consent of COL China Online, Power will not directly or indirectly
engage in (whether as a principal, consultant, proprietor, sales representative,
shareholder, partner, director or otherwise), or have any ownership interest in,
or participate in the financing, operation, management or control of, any
person, firm, corporation or business that engages in a "Restricted Business" in
a "Restricted Territory" (as defined below). It is agreed that ownership of no
more than one percent (1%) of the outstanding voting stock of a publicly traded
corporation shall not constitute a violation of this provision.
2.4.2. As used herein, the terms:
2.4.2.1. "Restricted Business" shall mean any business
selling any products or services in competition with the business of COL China
Online or Migration or with the COL China Online Business or the Migration
Business or with the business of any entity controlled by or under common
control with COL China Online or Migration, as of the Effective Date and/or as
of any date during the period set forth in Section 2.4.1.
2.4.2.2. "Restricted Territory" shall mean the United
States, China or anywhere in the world outside the United States and China where
COL China Online or Migration or any entity controlled by or under common
control with COL China Online or Migration conducts business.
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2.4.3. If any restriction set forth in this Section 2.4 is found
by any court of competent jurisdiction to be unenforceable because it extends
for too long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable.
3. Directors. At the Effective Date, the officers and directors of
Migration shall resign and COL China Online, as the then-owner of all the
outstanding Migration Common Stock, shall cause the following to be elected as
the directors of Migration beginning as of the Effective Date: Brian Power, K.C.
Chan, Paul Wong and Zhang Qi Yu (the "New Board"). The New Board shall elect the
following to serve in the offices indicated beginning as of the Effective Date:
Brian Power - Chief Executive Officer and Secretary.
4. Exchange Of Shares.
-------------------
4.1. Exchange Of Shares. At the Closing the following shall occur:
------------------
4.1.1. COL China Online shall deliver to the Migration
Shareholders 40,200,000 shares of restricted COL China Online Common Stock in
exchange for all outstanding shares of Migration Common Stock owned by the
Migration Shareholders, and the Migration Shareholders shall deliver to COL
China Online a Migration stock certificate representing all shares of Migration
Common Stock owned by the Migration Shareholders together with a duly executed
stock power and assignment transferring those shares to COL China Online.
4.1.2. No fractional shares of COL China Online Common Stock will
be issued. The Migration Shareholders shall receive the number of shares of COL
China Online Common Stock set forth below:
- --------------------------------------------------------------------------------
Shares of Shares of COL
Migration Common China Online Commom
Migration Shareholders Stock Held Stock to be Issued
---------------------- ----------------- ---------------------
- --------------------------------------------------------------------------------
First Strike Securities Limited 21,580 17,350,320
- --------------------------------------------------------------------------------
Honview International Limited 28,420 22,849,680
- --------------------------------------------------------------------------------
Totals 50,000 40,200,000
- --------------------------------------------------------------------------------
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4.2. Mechanics Of Exchange. At the Closing, the Migration Shareholders
shall surrender any and all certificates representing all the outstanding
securities of Migration, together with any other reasonably required documents,
to COL China Online, and the Migration Shareholders shall be entitled, upon
surrender, to receive in exchange therefor certificates representing shares of
COL China Online Common Stock in accordance with the terms of this Agreement. If
any certificate for COL China Online Common Stock is to be issued in a name
other than that in which the certificate for shares of Migration Common Stock
surrendered in exchange therefor is registered, it shall be a condition of that
exchange that the person requesting the exchange shall pay any transfer or other
taxes or fees required by reason of the issuance of certificates for COL China
Online Common Stock in a name other than that of the registered holder of the
Migration certificate surrendered. If any Migration certificates representing
shares of Migration Common Stock shall have been lost or destroyed, the
Migration Shareholders who are the registered owners of those shares may obtain
the certificate representing the COL China Online Common Stock to which the
Migration Shareholders are entitled by reason of the consummation of the
Exchange, provided that the Migration Shareholders deliver to COL China Online
and the Transfer Agent a statement certifying to the loss or destruction and
providing for indemnity or in certain cases a bond satisfactory to COL China
Online and the Transfer Agent indemnifying COL China Online and the Transfer
Agent against any loss or expense either of them may incur if the lost or
destroyed certificates are thereafter presented to COL China Online or the
Transfer Agent for exchange.
5. Representations And Warranties Of COL China Online. COL China Online
represents and warrants to Migration and theMigration Shareholders as follows:
5.1. Organization And Standing. COL China Online is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. COL China Online has the requisite corporate power to own and operate
its properties and assets, and to carry on its business as currently conducted
and as proposed to be conducted. COL China Online is licensed or qualified as a
foreign corporation and is in good standing in every state, or other
jurisdiction, wherein the character of its property or the nature of its
activities makes such licensing or qualification necessary and wherein the
failure to be so licensed or qualified would have a Material Adverse Effect on
the business and operations of COL China Online taken as a whole. COL China
Online has furnished Migration or Migration's counsel with copies of its
Certificate Of Incorporation, as amended, and Bylaws. These copies are true,
correct and complete in the form in which they now exist and contain all
amendments through the date of this Agreement.
5.2. No Subsidiaries. COL China Online has no partially or wholly
owned, direct or indirect, Subsidiaries.
5.3. Capitalization. COL China Online's entire authorized capital
stock consists of 100,000,000 shares of COL China Online Common Stock, par value
$.001 per share and 5,000,000 shares of COL China Online preferred stock, par
value $.001 per share. At June 7, 2000 there were 8,300,000 shares of COL China
Online Common Stock issued and outstanding. There are no shares of COL China
Online's preferred stock outstanding.
5.4. Authority; Non-Contravention. COL China Online has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by COL China Online of its obligations hereunder, and the
consummation of the transactions contemplated hereby have been duly authorized
by its Board Of Directors, and, except for the corporate filings required by
state law, no other corporate proceedings on the part of COL China Online are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by COL China
Online and (assuming the due authorization, execution and delivery hereof by
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Migration) constitutes a valid and binding obligation of COL China Online
enforceable against COL China Online in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the effect
of general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law). The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not, conflict with, or
result in any 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 any obligation or to the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of COL China Online under any provision of
(i) the Certificate Of Incorporation, as amended, or Bylaws (true and complete
copies of which as of the date hereof have been delivered to Migration) of COL
China Online, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, other agreement, instrument, permit, concession, franchise or
license applicable to COL China Online, or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to COL China Online or to
any of its properties or assets, other than, in the case of clauses (ii) or
(iii), any such conflicts, violations, defaults, right, liens, security
interests, charges or encumbrances that, individually or in the aggregate, would
not have a Material Adverse Effect on COL China Online, materially impair the
ability of COL China Online to perform its obligations hereunder, or prevent the
consummation of any of the transactions contemplated hereby.
5.5. Governmental Consents. Except for actions that have been or will
be taken prior to the Closing, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
governmental or regulatory authority on the part of COL China Online is required
in connection with the consummation of the transactions contemplated by this
Agreement. As of the Closing, there will be no consent of any third party that
has not been obtained and that is required in order to consummate the
transactions being consummated at the Closing.
5.6. Disclosure. Neither this Agreement nor any Schedule, Exhibit or
certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of COL China
Online, or by any of the directors or officers of COL China Online, in
connection with the transactions contemplated hereby, contains any untrue
statement (attributable to COL China Online) of a material fact. There is no
fact known to COL China Online which would cause a Material Adverse Effect on
the business, prospects or financial condition of COL China Online or any of COL
China Online's properties or assets taken as a whole, which has not been set
forth in this Agreement or in the Schedules or Exhibits or certificates, SEC
filings by COL China Online, if any, or statements in writing furnished in
connection with the transactions contemplated by this Agreement. COL China
Online has fully provided Migration with all the written information that
Migration has requested for the purpose of deciding whether to consummate the
Exchange. COL China Online agrees that, during the period between execution of
this Agreement and the date of the Closing, COL China Online will provide all
additional information that Migration reasonably requests.
6. Representations And Warranties Of Migration. Migration agrees,
represents and warrants to COL China Online as follows:
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6.1. Organization And Standing. Migration is a corporation duly
organized, validly existing and in good standing under the laws of the Territory
of the British Virgin Islands. Migration has the requisite corporate power to
own and operate its properties and assets, and to carry on its business as
currently conducted and as proposed to be conducted. Migration is licensed or
qualified as a foreign corporation and is in good standing in every state, or
other jurisdiction, wherein the character of its property or the nature of its
activities makes such licensing or qualification necessary and wherein the
failure to be so licensed or qualified would have a Material Adverse Effect on
the business and operations of Migration taken as a whole.
6.2. Subsidiaries. Migration has no partially or wholly owned, direct
or indirect, Subsidiaries, except for Shenzhen Rayes Electronic Network System
Co., Ltd., a Sino Foreign Joint Venture registered in China, and Shanghai Tongji
Construction Materials Technology Sales Service Co., Ltd., a privately-owned
limited liability company incorporated in China.
6.3. Capitalization. Migration's entire authorized capital stock
consists of 50,000 shares of Migration Common Stock. As of the date of this
Agreement and the date of Closing, there are and will be 50,000 shares of
Migration Common Stock issued and outstanding, all of which are and will be held
by the Migration Shareholders in the amounts set forth in Section 4.1.2 of this
Agreement. There are no shareholders of Migration or owners of any equity
interests in Migration other than the Migration Shareholders.
Migration has granted no warrant, call, option, convertible
security or other agreement or right (contingent or otherwise) to purchase or
acquire any Migration Common Stock or any other capital stock of Migration, and
Migration has no other commitments to issue such warrant, call, option,
convertible security or other right. Migration has no obligation, contingent or
otherwise, to purchase, redeem, or otherwise acquire any shares of Migration's
capital stock or any interest therein or to pay any dividend or to make any
other distribution in respect thereof, except as permitted by this Agreement.
6.4. Authority; Non-Contravention. Migration has the requisite power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
performance by Migration of its obligations hereunder and the consummation of
the transactions contemplated hereby have been duly authorized by its Board Of
Directors and by the Migration Shareholders, and except for the corporate
filings required by state law, no other corporate proceedings on the part of
Migration are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Migration and (assuming the due authorization, execution and
delivery hereof by COL China Online) constitutes a valid and binding obligation
of Migration enforceable against Migration in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of general
applicability relating to or affecting the enforcement of creditors' rights and
by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, or result in any 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 any obligation or to the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Migration under, any provision of (i)
the Memorandum and Articles Of Association (true and complete copies of which as
of the date hereof have been delivered to COL China Online) of Migration, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
Migration, or (iii) any judgment, order, decree, statute, law, ordinance, rule
7
or regulation applicable to Migration or any of its properties or assets, other
than, in the case of clauses (ii) or (iii), any such conflicts, violations,
defaults, right, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
Migration, materially impair the ability of Migration to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
6.5. Contracts And Commitments. Other than this Agreement and the
agreements and documents contemplated herein, all agreements, contracts,
indebtedness, liabilities and other obligations known to Migration to which
Migration is a party or by which Migration is bound or subject, which are
material to the conduct and operations of its business, have been made available
for inspection by COL China Online at the offices of Migration. All of these
contracts and other agreements are valid and binding upon Migration in
accordance with their terms, and neither Migration nor, to the knowledge of
Migration, any other party is in default, nor has Migration received or sent
notice of default or of any unresolved claim, under any such contracts or other
agreements. No approval or consent of any person is needed in order that these
contracts and other agreements continue in full force and effect following the
consummation of the transactions contemplated by this Agreement.
6.6. Compliance With Other Instruments. Migration is not in violation
of any term of its Memorandum and Articles of Association, or in any respect
material to the business and operations of Migration taken as a whole of any
contract, agreement, instrument, judgment, decree, or order. To the best of
Migration's knowledge Migration is not in violation of any material federal,
state, or local law, ordinance, statute, rule or regulation or any other
material requirement of any governmental or regulatory body, court or arbitrator
applicable to the business of that entity. Migration holds, or believes that in
the ordinary course of business it will be able to obtain, all licenses,
permits, orders and approvals of any foreign, federal, state or local
governmental or regulatory bodies that are material to or necessary for the
conduct of the business of Migration (collectively, "Permits"). All Permits are
in full force and effect; and no proceeding is pending or, to the knowledge of
Migration, threatened to revoke or limit any Permit.
6.7. Litigation And Claims. There is no action, suit, claim or legal,
administrative or arbitral proceeding or investigation (whether or not the
defense thereof or liabilities in respect thereof are covered by insurance)
pending and known to Migration or known and currently threatened against
Migration or any properties or assets of any of them, nor to the knowledge of
Migration is there a basis therefor which questions the validity of this
Agreement or the right of Migration to enter into it, or to consummate the
transactions contemplated hereby, or which might result, either individually or
in the aggregate, in any Material Adverse Change in the assets, condition,
affairs or prospects of Migration, financially or otherwise, nor does Migration
know of any meritorious basis for the foregoing. Neither Migration nor any
properties or assets of Migration is a party or subject to the provisions of any
order, writ, injunction, judgment, award or decree of any court or government or
regulatory agency or instrumentality or arbitration tribunal of a material
nature. All notices required to have been given to any insurance company listed
as insuring against any action, suit or claim have been timely and duly given
and no insurance company has asserted, orally or in writing, that such claim is
not covered by the applicable policy relating to such claim.
6.8. Insurance. Migration maintains insurance coverage that it
believes is adequate and is consistent with industry standards.
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6.9. Governmental Consents. Except for actions that have been or will
be taken prior to the Closing, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
governmental or regulatory authority on the part of Migration is required in
connection with the consummation of the transactions contemplated by this
Agreement. As of the Closing, there will be no consent of any third party that
has not been obtained and that is required in order to consummate the
transactions being consummated at the Closing.
6.10. Disclosure. Neither this Agreement nor any Schedule, Exhibit or
certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of Migration, or by
any of the directors or officers of Migration in connection with the
transactions contemplated hereby, contains any untrue statement (attributable to
Migration) of a material fact. There is no fact known to Migration which would
cause a Material Adverse Effect on the business, prospects or financial
condition of Migration or any of its respective properties or assets taken as a
whole, which has not been set forth in this Agreement or in the Schedules or
Exhibits or certificates or statements in writing furnished in connection with
the transactions contemplated by this Agreement. Migration has fully provided
COL China Online with all the written information that COL China Online has
requested for the purpose of deciding whether to consummate the Exchange.
Migration agrees that, during the period between execution of this Agreement and
the date of the Closing, Migration will provide all additional information that
COL China Online reasonably requests.
6.11. Actions. Except as otherwise set forth in this Agreement or the
Schedules hereto, during the period from the Execution Date to and including the
date of Closing, Migration will not have (a) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock or redeemed, purchased or otherwise acquired any shares of
its capital stock or any option, warrant or other right to purchase or acquire
any such shares, (b) made any loans or advances to any officer, director or
shareholder, (c) sold, transferred, exchanged or otherwise disposed of any of
its assets or rights, (d) permitted any of its assets to be subjected to any
mortgage, pledge, lien, security interest, encumbrance, restriction or charge of
any kind, (e) made any capital expenditure or commitment therefor, (f) made any
bonus or profit sharing distribution or payment of any kind, (g) written-off as
uncollectable any notes or accounts receivable, (h) granted any increase in the
rate of wages, salaries, bonuses or other remuneration of any officer, director,
employee or consultant, (i) cancelled or waived any claims or rights, (j) made
any change in any method of accounting or auditing practice, (k) otherwise
conducted its business or entered into any transaction, other than in the usual
and ordinary manner and in the ordinary course of its business, or (l) agreed,
whether or not in writing, to do any of the foregoing. Migration will cause all
outstanding bank debt to be paid in full prior to the Effective Time.
6.12. Taxes. All income, excise, occupation, franchise, and other
taxes, duties or charges levied, assessed or imposed upon Migration by the
United States or by any government, state, municipality or governmental
subdivision have been duly paid or adequately provided for or are being timely
and properly contested, and all income, excise, franchise and other tax reports
or other reports required by law or regulation have been duly filed or
extensions have been duly obtained. All federal, state or other tax returns of
Migration have been filed by Migration as required with the appropriate
governmental agency and all assessments with respect to such periods have been
paid or adequately provided for or are being timely and properly contested.
Since its inception on May 18, 1998, (a) no audit of any federal, state, local
or other tax returns of Migration has been conducted, is in progress or, to
Migration's knowledge, has been threatened, (b) Migration has not waived any
statute of limitations with respect to any of its tax liabilities, including,
without limitation, liability for federal income or any other taxes for any
period prior to the date hereof, and (c) no consents have been filed pursuant to
Section 341(f) of the Code by Migration or any transferor corporation to
Migration.
9
6.13. Employees; No Retirement Obligations. Migration has no
obligation to any employee under any pension, retirement or similar plan or
obligation, whether of a legally binding nature or in the nature of informal
understandings. Migration has no employment contracts, collective bargaining
agreements, health, medical, long-term disability, dental, overriding royalty
plans, or pension, bonus, profit-sharing, stock option, or 401(k) plans, or
other agreements providing for employee remuneration or benefits, or any
consulting, commission or fee agreements with independent contractors, except
for relationships with accounting and law firms that may be terminated by
Migration at any time without payment of any penalty or other amounts other than
fees and expenses previously incurred.
6.14. Books And Records. With respect to matters occurring since the
inception of Migration, the minute books of Migration contain complete and
accurate records of all meetings and other corporate actions of Migration's
shareholders, Board Of Directors and all committees, if any, appointed by the
Board Of Directors.
6.15. Copies Of Documents. Migration has caused to be made available,
to the extent reasonably requested by COL China Online, for inspection and
copying by COL China Online and its advisors, true, complete and correct copies
of all documents referred to in any Schedule furnished by Migration to COL China
Online.
6.16. Employees, Officers, Directors, And Consultants. Migration has
no commitment or agreement to continue to employ or retain, or to compensate in
any manner, any employee, agent, consultant, officer, director or other
representative of Migration after the Effective Date and, as of the Effective
Date, Migration is not indebted to any such person and, also as of the Effective
Date, Migration has no other liability to any such person. None of such persons
has made a written threat to Migration or to any of Migration's officers or
directors concerning such person's relationship with Migration.
6.17. Documents Delivered. Migration has furnished to COL China Online
for its examination true and complete copies of the following: (a) the
Memorandum and Articles Of Association of Migration; (b) the minute book of
Migration, containing all records required to be set forth concerning all
proceedings, consents, actions and meetings of the shareholders and the Board Of
Directors of Migration; and (c) all material permits, orders, and consents
(issued by a governmental or quasi-governmental authority) received by
Migration, or with respect to any security of Migration, and all applications
for such permits, orders and consents, except for permits, orders and consents,
or applications therefor, issued to or received by Migration in the ordinary
course of Migration's business. No amendments will be made to the Memorandum or
Articles Of Association of Migration prior to the Closing without COL China
Online's consent.
6.18. No Material Changes. From the Execution Date through the date of
the Closing, none of the following has occurred without the written consent of
COL China Online:
6.18.1. Any material transaction by Migration;
6.18.2. Any capital expenditure in excess of US $10,000 by
Migration;
6.18.3. Any changes in the condition (financial or otherwise),
liabilities, assets, or business of Migration that, when considered individually
or in the aggregate, have a Material Adverse Effect except for general
political, economic or industry changes that Migration reasonably believes COL
China Online already has knowledge of from sources other than Migration;
6.18.4. The destruction of, damage to, or loss of any asset of
Migration (regardless of whether covered by insurance) as a direct or indirect
result of the action or inaction of Migration that, when considered individually
10
or in the aggregate, has a Material Adverse Effect upon the condition (financial
or otherwise) or business of Migration;
6.18.5. Any labor matters or other events or conditions of any
character that, when considered individually or in the aggregate, have a
Material Adverse Effect upon the condition (financial or otherwise) of Migration
except for general political, economic or industry changes that Migration
reasonably believes COL China Online already has knowledge of from sources other
than Migration;
6.18.6. Any change in accounting methods or practices
(including, without limitation, any change in depreciation
or amortization policies or rates) by Migration;
6.18.7. Any issuance or sale or authorization for issuance or
sale of additional shares of any class of capital stock, or subscriptions,
options (including employee stock options), warrants, rights or convertible
securities or other agreements obligating Migration to issue shares of its
capital stock;
6.18.8. The declaration, setting aside, or payment of a dividend
or other distribution with respect to the capital stock of Migration, or any
direct or indirect redemption, purchase or other acquisition by Migration of any
of its shares of capital stock, except as otherwise permitted in this Agreement;
6.18.9. Any increase in the salary or other compensation payable
or to become payable by Migration to any of its officers or directors, or the
declaration, payment, or commitment or obligation of any kind for the payment by
Migration of a bonus or other additional salary or compensation to any such
person;
6.18.10. The amendment or termination of any contract,
agreement, or license to which Migration is directly a party, except for
amendment or termination of customer contracts in the ordinary course of
Migration's business.
6.18.11. Any loan by Migration to any person or entity, or the
guaranteeing by Migration of any loan;
6.18.12. Any mortgage, pledge or other encumbrance of any asset
of Migration by Migration or as a direct or indirect result of the action or
inaction of Migration;
6.18.13. The waiver or release of any right or claim of
Migration by Migration;
6.18.14. Any other events or conditions of any character within
the knowledge of Migration that, when considered individually or in the
aggregate, have or might reasonably be expected to have a Material Adverse
Effect on the condition (financial or otherwise), business or assets of
Migration except for general political, economic or industry events or
conditions that Migration reasonably believes COL China Online already has
knowledge of from sources other than Migration;
6.18.15. The issuance or sale by Migration of any shares of its
capital stock of any class, or of any other of its securities;
6.18.16. The granting, by Migration, exercise or expiration of
options or other rights to purchase securities of Migration; or
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6.18.17. Any agreement by Migration to do any of the things
described in this Section 6.18.
6.19. Assets; Undisclosed Liabilities. Notwithstanding any other
provision of this Agreement, at the Effective Date, Migration does not have any
debt, liability or obligation of any nature, whether accrued, absolute,
contingent, or otherwise, and whether due or to become due, including any debt,
liability or obligation relating to or arising out of any act, transaction,
circumstance or state of facts that occurred or existed on or before the
Execution Date or the date of Closing.
6.20. No Encumbrances. All of Migration's interests in tangible and
intangible property are free and clear of restrictions on or conditions to
transfer or assignment, and free and clear of liens, pledges, charges,
encumbrances, equities, claims, conditions, or restrictions, except for (a) the
lien of current taxes not yet due and payable; and (b) matters that, in the
aggregate, are not substantial and do not materially detract from or interfere
with the present or intended use of these assets, or do not materially impair
the business operations of Migration.
6.21. No Encumbrances On Migration Common Stock. The Migration Common
Stock being exchanged by the Migration Shareholders is owned by the Migration
Shareholders free and clear of any liens, claims, encumbrances or restrictions
of any kind, and none of those shares is subject to options, rights, warrants,
or other agreements or commitments by which the Migration Shareholders are or
may become obligated to transfer those shares of Migration Common Stock other
than pursuant to this Agreement.
6.22. Real Estate. Migration owns no real estate property and has no
obligation to pay any real estate tax to the appropriate governmental agencies.
Migration does not occupy any real property in violation of any law, regulation
or decree.
6.23. Restricted Stock. The Migration Shareholders understand and
agree that the issuance of the shares of COL China Online Common Stock has not
been registered under federal or state securities laws and the shares of COL
China Online Common Stock are "restricted" securities as defined in Rule 144
under the 1933 Act. The Migration Shareholders understand and agree that no
holder of Migration Common Stock may sell, offer for sale, transfer, pledge or
hypothecate the shares of COL China Online Common Stock received pursuant to
this Agreement in the absence of an effective registration statement covering
that transaction, under all applicable federal and state securities laws, unless
that transaction is exempt from registration under all applicable federal and
state securities laws, including an exemption under Rule 144 promulgated under
the 1933 Act.
7. Certain Agreements.
7.1. Access And Information. Migration shall give to COL China Online
and its representatives, and COL China Online shall give to Migration and its
representatives, during normal business hours from the Execution Date until the
Effective Date, full access to all properties, books, contracts and records
(including tax returns and insurance policies) of or relating to Migration or
COL China Online, respectively, with all information reasonably requested by the
other Party. Except as agreed to by Migration and COL China Online, all
information obtained hereunder which is not otherwise public shall be held
confidential and, in the event of termination of this Agreement, all documents
(including copies thereof) obtained hereunder containing such information shall
be destroyed or returned to the Party from which they were obtained. At the
Closing, Migration shall deliver to COL China Online all books, contracts, and
records (including tax returns and insurance policies) of or relating to
Migration.
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7.2. Shareholders Authorization. Migration shall provide COL China
Online with evidence of the approval of this Agreement and the transactions
contemplated by this Agreement by the Migration Shareholders in accordance with
all applicable laws and the governing documents of Migration.
7.3. Operation Of Business. Each of Migration and COL China Online
agrees with the other that from the Execution Date to the Effective Date, except
as otherwise consented to or approved by the other in writing, each will operate
its business as presently operated in the ordinary course, and, consistent with
those operations, each of Migration and COL China Online will substantially
comply with all applicable legal and contractual obligations, except where
noncompliance will not cause a Material Adverse Effect on their respective
operations, and will use its best efforts consistent with past practices to
preserve the goodwill of its suppliers, customers and others with whom it has
business relationships; and neither Migration nor COL China Online, without the
written consent of the other Party, (a) shall institute nor use any methods of
purchase, sale, lease, management, accounting or operation that are inconsistent
with practices normally followed or that vary substantially from those methods
used by that Party as of the date of this Agreement, (b) will take any action
(or omit to take any action) which action or omission would cause any
representation to be untrue at any time prior to the Effective Date as if that
representation or warranty were made at and as of the Effective Date, or make
any change in any method of reporting income or expenses for federal income tax
purposes.
7.4. Preservation Of Business. Unless it has the written consent of
the other Party to this Agreement, Migration and COL China Online will each use
its best efforts to preserve its business organization intact and to preserve
its present relationships with suppliers, customers and others having business
relationships with it.
7.5. Tax Cooperation.
7.5.1. After the Effective Date, each of COL China Online,
Migration and the Migration Shareholders shall cooperate, and cause their
respective directors, employees, officers and representatives to cooperate, with
each other and with each other's respective agents, including accounting firms
and legal counsel, in connection with the preparation or audit of any tax return
or report, amended return or report, claim for refund in any tax claim or
litigation in respect of COL China Online or Migration, or Migration's or COL
China Online's activities, which cooperation shall include, but not be limited
to, making available to the other all information, records, and documents in
their possession relating to the liabilities for taxes associated with COL China
Online or Migration, except as may be limited by this Agreement. COL China
Online and Migration also shall make available to the other, as reasonably
requested and available, the personnel responsible for preparing, maintaining
and interpreting information, records and documents in connection with taxes as
well as related litigation. Any information provided or obtained pursuant to
this Section 7.5.1 shall be kept confidential, except as may be otherwise
necessary in connection with the filing of returns or reports, refund claims,
audits, tax claims and litigation. The Migration Shareholders, with the
assistance of Migration and COL China Online as requested and furnished pursuant
to this Section 7.5.1, shall prepare and file a federal and state tax return on
behalf of Migration for the year ended December 31, 1999, which tax return shall
be filed by the applicable due date including applicable extensions. Copies of
the tax return filed pursuant to this Section 7.5.1 shall be promptly provided
to each Party. The Migration Shareholders shall cause the tax return to be
prepared in sufficient detail to determine the tax basis of the investments as
of the Effective Date.
7.5.2. Migration and COL China Online shall provide written
notice to the other on or before 15 days after learning of any pending or
threatened tax audit, tax assessment or tax proceeding related to Migration or
COL China Online for whole or partial periods for which a claim for payment or
reimbursement may be made by the Migration Shareholders or COL China Online
13
against the other. The notice required by the previous sentence shall contain
factual information (to the extent known) describing the asserted tax liability
in reasonable detail and shall include copies of any notice or other document
received from any tax authority in respect of any such matters. If a Party (the
"Claiming Party") has knowledge of an asserted tax liability with respect to a
matter for which that Claiming Party may make a claim against the other Party
(the "Defending Party") and the Claiming Party fails to give the Defending Party
prompt notice of that asserted tax liability as required by this Section 7.5.2
and (i) if the Defending Party is precluded by the failure to receive prompt
notice from contesting the asserted tax liability in both the administrative and
judicial forums, then the Defending Party shall have no responsibility for any
taxes or penalties arising out of that asserted tax liability, and (ii) if the
Defending Party is not so precluded from contesting, but such failure to receive
prompt notice results in a detriment to the Defending Party, then any amount
that the Defending Party is otherwise required to pay to the Claiming Party
pursuant to this Agreement shall be reduced by the amount of such detriment,
provided that the Claiming Party shall nevertheless be entitled to full payment
as provided pursuant to this Agreement to the extent, and only to the extent,
that the Claiming Party can establish that the Defending Party was not
prejudiced by such failure.
7.5.3. In the event of an audit or dispute with a taxing
authority over taxes for which a Party is primarily liable pursuant to this
Agreement, that Party will be entitled to control the proceedings related to
those taxes (including action taken to pay, compromise, or settle those taxes),
provided that COL China Online, Migration and the Migration Shareholders shall
jointly control, in good faith with each other, any proceeding related to a
taxable period that begins before and ends after the Effective Date and which
COL China Online, Migration, and/or the Migration Shareholders have liability
for pursuant to this Agreement, provided further, however, that COL China Online
will in any event be entitled to solely control any proceeding that relates to
or impacts a consolidated, combined or unitary return filed in any jurisdiction
by Migration and COL China Online. Reasonable out-of-pocket expenses with
respect to such contest shall be borne by the Parties in proportion to their
responsibility for those taxes as set forth in this Agreement. The Party that is
not entitled to control any such proceedings shall be afforded a reasonable
opportunity to participate in such proceedings at its own expense.
7.5.4. COL China Online, Migration and the Migration Shareholders
shall have possession of their own and their subsidiaries', if applicable, tax
records after the Closing. COL China Online, Migration and the Migration
Shareholders shall make available to each other for inspection and copying
during normal business hours, in connection with the preparation of tax returns,
audits and litigation, all tax records in their possession relating to COL China
Online, Migration or the Migration Shareholders or their respective activities
for a period prior to the Effective Date, taxable periods for which COL China
Online, Migration and the Migration Shareholders may share tax liabilities, and
tax records that are relevant to periods following the Effective Date. COL China
Online, Migration and the Migration Shareholders shall preserve and keep all
such tax records in their possession until the expiration of any applicable
statutes of limitation or extensions thereof and as otherwise required by law,
but in any event for a period not less than seven years after the Tax Closing
Date. Notwithstanding the foregoing, any of the Parties may dispose of those
records provided 90 days advance written notice of the intent to dispose is
given to other Party. Such notice shall be delivered in accordance with the
provisions of Section 18 of this Agreement and shall include a list of the
records to be disposed of which shall describe in reasonable detail each file,
book or other record accumulation to be disposed. The notified Party shall have
the opportunity, at its cost and expense, to copy or remove, within that 90 day
period, all or any part of those tax records. For purposes of this Section 7.5.4
tax records include, without limitation, journal vouchers, cash vouchers,
general ledgers, material contracts, and other related records.
7.6. Interim Operations. From the Execution Date to the Effective
Date, Migration will not, unless COL China Online gives its prior written
approval: (a) amend or otherwise change its Memorandum or Articles of
Association; (b) issue or sell or authorize for issuance or sale additional
14
shares of any class of capital stock, or subscriptions, options (including
employee stock options), warrants, rights or convertible securities or other
agreements obligating Migration to issue shares of its capital stock; (c)
declare, set aside, make or pay any dividend or other distribution with respect
to its capital stock; (d) redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (e) issue any instrument that permits
participation in the revenues or profits of Migration; (f) incur any
indebtedness except for accounts payable in the ordinary course of its business;
(g) permit the sale or encumbrance of any of the assets of Migration; (h) enter
into any employment or severance agreements or similar agreements with any
person; or (i) agree to, make, engage in or allow to occur or continue any of
the following:
7.6.1. Any material transaction;
7.6.2. Any capital expenditure in excess of US$10,000;
7.6.3. Any changes in its condition (financial or otherwise),
liabilities, assets, or business that, when considered individually or in the
aggregate, have a Material Adverse Effect;
7.6.4. The destruction of, damage to, or loss of any asset of
Migration (regardless of whether covered by insurance) as a direct or indirect
result of the action or inaction of Migration, that, when considered
individually or in the aggregate, has a Material Adverse Effect upon the
condition (financial or otherwise) or business of Migration;
7.6.5. Any labor troubles or other events or conditions of any
character that, when considered individually or in the aggregate, have a
Material Adverse Effect upon the condition (financial or otherwise) or business
of Migration;
7.6.6. Any change in accounting methods or practices (including,
without limitation, any change in depreciation
or amortization policies or rates);
7.6.7. Any increase in the salary or other compensation payable
or to become payable to any of its officers or directors, or the declaration,
payment, or commitment or obligation of any kind for the payment of a bonus or
other additional salary or compensation to any such person;
7.6.8. The material amendment or termination of any material
contract, agreement, or license to which it is a party;
7.6.9. Any loan to any person or entity, or the guaranteeing of
any loan;
7.6.10. Any mortgage, pledge or other encumbrance of any asset of
Migration by Migration or as a direct or indirect result of the action or
inaction of Migration; or
7.6.11. The waiver or release of any right or claim of Migration
by Migration.
7.7. Accuracy Of Representations. Each Party will take all reasonable
action necessary to render accurate, as of the Closing, its representations and
warranties contained in this Agreement, and it will refrain from taking any
action that would render any such representation or warranty inaccurate as of
that time. Each Party will use its best efforts to perform or cause to be
satisfied each covenant or condition to be performed or satisfied by it pursuant
to the terms of this Agreement.
7.8. Consents, Waivers And Approvals. Each of Migration and COL China
Online hereby undertakes to use its best efforts to obtain in writing, as soon
as practicable after the Execution Date, all such consents, waivers, approval
15
and authorizations required prior to the consummation of the Exchange.
7.9. Notice Of Breach Of Warranty. Migration will immediately give
notice to COL China Online of the occurrence of any event or the failure of any
event to occur that has resulted in a breach of Migration's representations or
warranties or a failure by Migration to comply with any covenant, condition or
agreement contained in this Agreement. COL China Online will immediately give
notice to Migration of the occurrence of any event or the failure of any event
to occur that has resulted in a breach of COL China Online's representations or
warranties or a failure by COL China Online to comply with any covenant,
condition or agreement contained in this Agreement.
7.10. Additional Documents; Further Assurances. In addition to the
schedules and other items specifically required to be furnished hereunder,
Migration and COL China Online hereby agree that each will promptly furnish to
the other such further schedules, certificates and other instruments and take
such other action as may reasonably be requested in order to effectuate the
purposes of this Agreement.
7.11. Notice Of Inaccurate Information. Migration and COL China Online
each will notify the other in writing as soon as possible of any events or
occurrences that have happened or that may happen and that have caused or that
may cause any of the information contained in this Agreement or in the Schedules
to this Agreement to become inaccurate or incomplete.
7.12. Publicity. All notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be directed by
COL China Online. Notwithstanding anything to the contrary in this Section, any
Party to this Agreement shall be permitted unilaterally to make such notices and
to engage in such publicity as it reasonably deems necessary to comply with
applicable laws and regulations, including their respective reporting
obligations, if any, under the 1934 Act. The provisions of this Section 7.13
shall remain in effect only until the earlier to occur of the Closing or the
termination of this Agreement.
8. Conditions To Performance By All Parties. The obligations of all
Parties to effect the Exchange shall be subject to the fulfillment at or prior
to the Effective Date of the following conditions:
8.1. The Exchange shall have been approved by the Board Of Directors
and the Migration Shareholders in accordance with the BVI Act and any other laws
applicable to this transaction and Agreement to which Migration is subject.
8.2. The Exchange shall have been approved by the board of directors
of COL China Online in accordance with Delaware Law.
8.3. At the Effective Date, there shall not be in effect any court
order restraining or prohibiting consummation of the Exchange, or any pending
proceeding brought by, or before, any governmental commission, board, agency,
court or body with a view to seeking, or in which it is sought, to restrain or
prohibit consummation of the Exchange or in which it is sought to obtain
divestiture of a material amount of assets of either Migration, and its
Subsidiaries taken as a whole, or COL China Online.
9. Conditions Precedent To Performance By Migration. The obligations of
Migration to effect the Exchange shall be, at Migration's option, subject to the
fulfillment at or prior to the Effective Date of the following conditions
(unless any or all of them is waived by Migration):
16
9.1. The representations and warranties of COL China Online set forth
in this Agreement, including the attached Schedules, shall be true and correct
in all material respects at and as of the Execution Date and shall be true and
correct in all material respects at and as of the Effective Date as though made
at and as of the Effective Date, except for changes which do not have a Material
Adverse Effect on COL China Online and except to the extent such representations
and warranties are not true and correct by reason of actions permitted or
authorized by this Agreement or consented to in writing by Migration. Migration
shall have received a certificate of COL China Online, dated the Effective Date
and duly executed by its President and Secretary, as to the accuracy of their
respective representations and warranties as of the Effective Date.
9.2. Migration shall have received an opinion of counsel from legal
counsel to COL China Online, dated the Effective Date, substantially to the
effect that:
9.2.1. The incorporation, existence, good standing and
capitalization of COL China Online are as stated in this Agreement and the
shares of COL China Online Common Stock to be issued to and received by the
Migration Shareholders pursuant to this Agreement will be duly and validly
authorized and issued, fully paid and non-assessable.
9.2.2. COL China Online has full corporate power and authority to
execute, deliver and perform this Agreement and this Agreement has been duly
authorized, executed and delivered by COL China Online, and (assuming the due
and valid authorization, execution and delivery by Migration) constitutes the
legal, valid and binding agreement of COL China Online.
9.2.3. To the knowledge of such counsel, there are no actions,
suits or proceedings, pending or threatened against COL China Online by any
Governmental Entity which seek to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.
9.2.4. The execution and performance by COL China Online of this
Agreement will not violate the Certificate Of Incorporation, as amended, or
Bylaws of COL China Online.
9.2.5. To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental agency or body which has not
been obtained is required on behalf of COL China Online for consummation of the
transactions contemplated by this Agreement.
In rendering its opinion, counsel may rely as to factual matters
on certificates of public officials and officers or employees of COL China
Online, provided that copies of such opinions and certificates shall be
delivered with such opinion, and provided further that in the case of any such
reliance, counsel shall state that it believes that it is justified in relying
on such opinions and certificates for such matters.
9.3. COL China Online shall have completed a public offering of at
least 1,000,000 shares of common stock.
9.4. COL China Online shall have performed all obligations required to
be performed by them and shall have furnished all documents, schedules and
instruments required to be furnished by them under this Agreement at or prior to
the Effective Date. Migration shall have received a certificate of COL China
Online, dated the Effective Date and duly executed by its President to this
effect.
10. Conditions Precedent To Performance By COL China Online. The
obligations of COL China Online to effect the Exchange shall be, at COL China
Online's option, subject to the fulfillment at or prior to the Effective Date of
the following conditions:
17
10.1. The representations and warranties of Migration set forth in
this Agreement, including the attached Schedules, shall be true and correct in
all material respects at and as of the date hereof and shall be true and correct
in all material respects at and as of the Effective Date as though made at and
as of the Effective Date, except to the extent such representations and
warranties are not true and correct by reason of actions permitted or authorized
by this Agreement or consented to in writing by COL China Online. COL China
Online shall have received a certificate of Migration, dated the Effective Date
and duly executed by its President and Secretary, as to the accuracy of its
representations and warranties.
10.2. COL China Online shall have received an opinion of counsel from
legal counsel to Migration, dated the Effective Date, substantially to the
effect that:
10.2.1. The incorporation, existence, good standing and
capitalization of Migration are as stated in this Agreement; all outstanding
shares of Migration Common Stock are duly and validly authorized and issued,
fully paid and non-assessable and have not been issued in violation of any
preemptive right of shareholders; and, to the knowledge of such counsel, there
is no existing option, warrant, right, call, subscription or other agreement or
commitment obligating Migration to issue or sell, or to purchase or redeem any
shares of its capital stock other than as stated in this Agreement.
10.2.2. Migration has full corporate power and authority to
execute, deliver and perform this Agreement and this Agreement has been duly
authorized, executed and delivered by Migration, and (assuming the due and valid
authorization, execution and delivery by COL China Online) constitutes the
legal, valid and binding agreement of Migration.
10.2.3. To the knowledge of such counsel, there are no actions,
suits or proceedings, pending or threatened against Migration or its
Subsidiaries by any Governmental Entity which seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement.
10.2.4. The execution and performance by Migration of this
Agreement will not violate the Memorandum and Articles of Association of
Migration.
10.2.5. To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental agency or body which has not
been obtained is required on behalf of Migration or any of its Subsidiaries for
consummation of the transactions contemplated by this Agreement.
In rendering its opinion, counsel may rely as to factual matters
on certificates of public officials and officers or employees of Migration,
provided that copies of such opinions and certificates shall be delivered with
such opinion, and provided further that in the case of any such reliance,
counsel shall state that it believes that it is justified in relying on such
opinions and certificates for such matters.
10.3. Migration shall have performed all obligations required to be
performed by it and shall have furnished all documents, schedules and
instruments required to be furnished by it under this Agreement at or prior to
the Effective Date. COL China Online shall have received a certificate of
Migration, dated the Effective Date and duly executed by its President to this
effect.
10.4. On or before the date of Closing, all necessary approvals and
consents of any Parties as set forth in Schedule 6.5 shall have been obtained by
Migration and delivered to COL China Online.
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10.5. At or before the Closing, COL China Online shall have been
furnished with all documents that they reasonably may require for the purpose of
enabling them to pass upon the valid exchange of the COL China Online Common
Stock for Migration Common Stock and in order to evidence the accuracy of any of
the representations or warranties and the fulfillment of any of the conditions
contained in this Agreement. All proceedings taken by Migration in connection
with the consummation of transactions contemplated by this Agreement shall be
satisfactory in form and substance to COL China Online.
11. Indemnification By COL China Online. COL China Online hereby agrees to
indemnify and hold harmless Migration, Migration's officers, directors,
shareholders, employees and agents against any and all losses, claims, damages,
liabilities, costs and expenses (including but not limited to attorneys' fees
and other expenses of investigation and defense of any claims or actions) to
which they or any of them may become subject due to, or which results from, any
of the following:
11.1. Any breach of COL China Online's covenants, agreements,
warranties or representations contained in this Agreement.
11.2. Any misstatement of a material fact contained in this Agreement
or in any of the documents executed in connection with transactions contemplated
by this Agreement, but only if the misstatement relates to information
concerning COL China Online or its operations.
11.3. The omission to state any fact necessary to make the statements
contained in this Agreement or in any of the documents executed in connection
with the transactions contemplated by this Agreement not misleading, but only if
the omission relates to information concerning COL China Online or their
operations.
11.4. The operations of COL China Online, or the acts of their
employees, acting in their capacities as such, prior to the Closing, except that
COL China Online shall not indemnify Migration or its officers, directors,
employees and agents for liabilities incurred by Migration in the ordinary
course of business prior to the Closing.
11.5. Actions or inactions of COL China Online, or the agents of COL
China Online acting in their capacity as agents, prior to the Closing, except
any such costs or losses incurred through reasonable and good faith acts in the
ordinary course of the business of COL China Online.
12. Indemnification By Migration And The Migration Shareholders.
12.1. Migration and the Migration Shareholders hereby agree to jointly
and severally indemnify and hold harmless COL China Online and COL China
Online's officers, directors, employees and agents against any and all losses,
damages, liabilities, costs and expenses (including but not limited to
attorneys' fees and other expenses of investigation and defense of any claims or
actions) to which they or any of them may become subject due to, or which result
from, any of the following:
12.1.1. Any breach of Migration's covenants, agreements,
warranties or representations contained in this Agreement.
12.1.2. Any misstatement of a material fact contained in this
Agreement or in any of the documents executed in connection with transactions
contemplated by this Agreement, but only if the misstatement related to
information concerning Migration and its operations.
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12.1.3. The omission to state any fact necessary to make the
statements contained in this Agreement or in any of the documents executed in
connection with the transactions contemplated by this Agreement not misleading,
including Migration's representations contained in Section 6.19 regarding
undisclosed liabilities, but only if the omission relates to information
concerning Migration and its operations.
12.1.4. The operations of Migration or the acts of their
employees, acting in their capacities as such, prior to the Closing, except that
the Migration Shareholders shall not indemnify COL China Online or COL China
Online's officers, directors, employees and agents for liabilities incurred by
COL China Online through reasonable and good faith acts in the ordinary course
of business of Migration prior to the Closing.
12.1.5. Actions or inactions of Migration, or the agents of
Migration (excluding sales agents) acting in their capacity as agents, prior to
the Closing, except any such costs or losses incurred through reasonable and
good faith acts in the ordinary course of the business of Migration.
12.2. The Migration Shareholders represent and warrant to COL China
Online as follows:
12.2.1. Benefits Of Agreement. All the outstanding capital stock
of Migration is owned by the Migration Shareholders in the amounts described in
Section 4.1.2. The Migration Shareholders acknowledge and agree that the
Migration Shareholders will be receiving benefit from the transactions entered
into pursuant to this Agreement and other transactions entered into between and
among the Migration Shareholders, Migration and/or COL China Online in
connection with the transactions contemplated by this Agreement.
12.2.2. Reliance On Representations And Warranties. The
Migration Shareholders understand that COL China Online, in entering into this
Agreement, is relying upon the agreements, representations, and warranties made
by Migration and upon the agreement of the Migration Shareholders herein made in
this Section 12.
13. Notice Of Claim. Should any Party (the "Indemnified Party") suffer any
loss, damage or expense for which the other Party (the "Indemnifying Party") is
obligated to indemnify and hold such Indemnified Party harmless pursuant to
Section 11 or 12 of this Agreement, the following shall apply: Promptly upon
receipt by the Indemnified Party of notice of any demand, assertion, claim,
action or proceeding, judicial or otherwise, with respect to any matter as to
which the Indemnifying Party is obligated to indemnify the Indemnified Party
under the provisions of this Agreement, the Indemnified Party shall give prompt
notice thereof to the Indemnifying Party, together with a statement of such
information respecting such matter as the Indemnified Party shall then have and
a statement advising that the Indemnifying Party must notify it within 10 days
whether the Indemnifying Party will undertake the defense of such matter. The
Indemnifying Party shall not be obligated to indemnify the Indemnified Party
with respect to any matter hereunder if the Indemnified Party has failed to use
its best efforts to notify the Indemnifying Party thereof in accordance with the
provisions of the Agreement in sufficient time to permit the Indemnifying Party
and its counsel to defend against such matter and to make a timely response
thereto, including without limitation, the preparation and assertion of an
answer or other responsive motion to a complaint, petition, notice or other
legal, equitable or administrative process relating to any such claim. Notice of
the intention of the Indemnifying Party to contest any such claim, and the
identity of counsel that the Indemnifying Party intends to employ to contest any
such claim, shall be given by the Indemnifying Party to the Indemnified Party
within 10 days from the date of receipt by the Indemnifying Party of notice by
the Indemnified Party of the assertion of any such claim. The Indemnified Party
shall have the right to approve the counsel named in the Notice provided
20
pursuant to the preceding sentence, provided that such approval shall not be
unreasonably withheld. The Indemnified Party shall have the right to participate
in such proceedings and to be represented by attorneys of its own choosing;
however, such representation shall be at the Indemnified Party's own expense if
the Indemnifying Party selects different counsel of its own choosing. If the
Indemnifying Party does not elect to contest any such claim, the Indemnifying
Party shall be bound by the results obtained with respect thereto by the
Indemnified Party, including any settlement of such claim. If the Indemnifying
Party elects to contest any claim, the Indemnified Party shall be bound by the
results obtained with respect thereto by the Indemnifying Party, including any
settlement of such claim.
14. Closing. Subject to the terms and conditions contained in this
Agreement, the Closing shall take place within seven business days after
completion of the public offering described in Section 9.3, or on such other
date or at such other time as shall be agreed to by the Parties, by exchange of
documents by overnight courier or facsimile. At the Closing, the following shall
occur:
14.1. Migration shall deliver to COL China Online (a) a certificate
executed by the President and Secretary of Migration dated as of the Closing
certifying that the representations and warranties of Migration in this
Agreement are true and correct in all material respects at and as of the
Effective Date as though each representation and warranty had been made on that
date; (b) the stock book, stock ledger, minute book and corporate seal of
Migration, and (c) such other documents as are required to be delivered to COL
China Online under the terms of this Agreement, including the opinion of counsel
described in Section 10.2.
14.2. The Migration Shareholders shall deliver to COL China Online
stock certificates representing the shares of Migration Common Stock that are
being exchanged for COL China Online Common Stock pursuant to Section 4 of this
Agreement together with duly executed stock powers and assignments transferring
those shares to COL China Online.
14.3. COL China Online shall deliver to each of the Migration
Shareholders, upon receipt from the Migration Shareholders by COL China Online
of the stock certificates described in Section 14.2, stock certificates
representing the shares of COL China Online Common Stock to be issued pursuant
to this Agreement in exchange for Migration Common Stock and the opinion of
counsel described in Section 9.2.
14.4. COL China Online shall deliver to Migration (a) a certificate
executed by the President of COL China Online dated as of the Closing,
certifying that the representations and warranties of COL China Online in this
Agreement are true and correct in all material respects at and as of the
Effective Date, as though each representation and warranty had been made on that
date; and (b) such other documents are required to be delivered to Migration
under the terms of this Agreement.
14.5. Power shall execute and deliver to COL China Online the
Noncompetition Agreement pursuant to Section 2.4 of this Agreement.
14.6. Each of Parties agrees that it will at any time and from time to
time after the Closing, upon the request of any other Party, perform, execute,
acknowledge and deliver all such further acts, deeds, assignments, transfers,
powers of attorney and assurances as may be required for the purpose of
effectuating the consummation of the transactions contemplated by this
Agreement.
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15. Termination And Abandonment Of The Exchange.
15.1. Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and abandoned at any time
before the consummation of the Exchange by the mutual consent of the Boards Of
Directors of COL China Online and Migration.
15.2. Effect Of Termination. In the event of termination and
abandonment under Section15.1, this Agreement shall forthwith become void and
there shall be no liability on the part of any Party or their respective
officers and directors, except that the provisions of the second sentence of
Section 7.1 hereof and the provisions of Section 22 hereof shall continue in
effect.
16. Amendment Or Waiver. This Agreement may be amended, modified or
superseded, and any of the terms, covenants, representations, warranties or
condition hereof may be waived, but only by a written instrument executed by
Migration and COL China Online; provided, however, the terms of the Exchange
concerning the ratio of the conversion of shares of Migration Common Stock may
be amended, modified or superseded only with the approval of COL China Online
and Migration and the Migration Shareholders. Except as expressly otherwise
required by the previous sentence or applicable law, no shareholders approval
shall be required for any amendment, modification or waiver. No waiver of any
nature, in any one or more instances, shall be deemed to be or construed as a
further or continued waiver of any condition or any breach of any other term,
representation or warranty in this Agreement.
17. Entire Agreement. This Agreement, together with the Schedules hereto,
and the documents referred to herein, constitutes the entire agreement among the
Parties with respect to the Exchange, and supersedes all prior arrangements or
understandings with respect thereto.
18. Notice. All notices, requests, demands, directions and other
communications ("Notices") provided for in this Agreement shall be in writing
and shall be mailed or delivered personally or sent by telecopier or facsimile
to the applicable Party at the address of such Party set forth below in this
Section 18. When mailed, each such Notice shall be sent by first class,
certified mail, return receipt requested, enclosed in a postage prepaid wrapper,
and shall be effective on the third business day after it has been deposited in
the mail. When delivered personally, each such Notice shall be effective when
delivered to the address for the respective Party set forth in this Section 18.
When sent by telecopier or facsimile, each such Notice shall be effective on the
first business day on which or after which it is sent. Each such Notice shall be
addressed to the Party to be notified as shown below:
MIGRATION:
Migration Developments Limited
ATTN: K.C. Chan
Suite 1408 Lippo Sun Plaza
28 Canton Road
Kowloon, Hong Kong
Facsimile: 852-2730-4291
COL CHINA ONLINE:
COL China Online International Inc.
ATTN: Mark K. Shaner
3177 South Parker Road
Aurora, Colorado 80014
Facsimile: (303) 695-1047
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MIGRATION SHAREHOLDERS:
K.C. Chan
Zhang Qi Yu
c/o Migration Developments Limited
Suite 1408 Lippo Sun Plaza
28 Canton Road
Kowloon, Hong Kong
Facsimile: 852-2730-4291
Any Party may change his or its respective address for purposes of this
Section 18 by giving the other Party Notice of the new address in the manner set
forth above.
19. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, and if any provision of this Agreement shall be or become
prohibited or invalid in whole or in part for any reason whatsoever, that
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remaining portion of that provision or the
remaining provisions of this Agreement.
20. Headings. The headings to this Agreement are for convenience only;
they form no part of this Agreement and shall not affect its interpretation.
21. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
22. Expenses. Regardless of whether the transactions provided for herein
are consummated, each Party to this Agreement will pay its respective costs and
expenses.
23. Nature And Survival Of Representations. All statements contained in
this Agreement and in the Schedules to this Agreement shall be deemed
representations and warranties by the applicable Party under this Agreement. All
representations and warranties made by the Parties in this Agreement or pursuant
to this Agreement shall be true and accurate as of the Closing in all material
respects. The obligation that the representations and warranties be accurate as
of the Closing in all material respects shall survive the Closing and continue
in full force and effect. In addition, all obligations relating to
indemnification under this Agreement shall survive the Closing and continue in
full force and effect.
24. Benefits And Assignment. The provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the Parties
hereto and their respective successors and assigns. The Parties agree that this
Agreement is made solely for the benefit of the Parties and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The terms "successor" or the term
"successors and assigns" as used in this Agreement shall not include any holders
of the Migration Common Stock, or recipients of the COL China Online Common
Stock pursuant to this Agreement.
25. Specific Performance. Each Party's obligation under this Agreement is
unique. If any Party should default in its obligations under this Agreement, the
Parties each acknowledge that it would be extremely impracticable to measure the
resulting damages; accordingly, the nondefaulting Party, in addition to any
other available rights or remedies, may sue in equity for specific performance,
23
and the Parties each expressly waive the defense that a remedy in damages will
be adequate. Notwithstanding any breach or default by any of the Parties of any
of their respective representations, warranties, covenants or agreements under
this Agreement, if Closing occurs as contemplated, each of the Parties waives
any rights that it or they may have to rescind this Agreement or the
transactions consummated pursuant to it; provided, however, this wavier shall
not affect any other rights or remedies available to the Parties under this
Agreement or under the law.
26. Brokers. Each of COL China Online and Migration represents and
warrants to the other that all of its negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on directly, without
the intervention of any other person, so as not to give rise to any valid claim
against any Party hereto for a finder's fee, brokerage commission or other like
payment.
27. Costs. If any legal action or other proceeding is brought by one of
the Parties to this Agreement against another Party to this Agreement for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing Party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it or they may be entitled.
28. Termination On Default. If COL China Online or Migration materially
defaults in the due and timely performance of any of its or their warranties,
covenants or agreements under this Agreement, then the nondefaulting Party may
at the time set for the Closing give notice of termination of this Agreement, in
the manner provided in Section 18. A notice shall specify with particularity the
default or defaults on which the notice is based. The defaulting Party, however,
shall have the right to cure such default or defaults within 30 days after the
date set for Closing. The termination shall be effective 30 days after the date
set for Closing, unless the specific default or defaults have been cured on or
before this effective date for termination.
29. Choice Of Law. This Agreement shall be governed by, construed,
interpreted and the rights of the Parties determined in accordance with the laws
of the State of Delaware without regard to principles of conflicts of laws.
[This page is left intentionally blank.]
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IN WITNESS WHEREOF, the Parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives on the date
first above written.
MIGRATION:
MIGRATION DEVELOPMENTS LIMITED
Date: June 8, 2000 By: /s/ K.C. Chan
------------------------- -----------------------------
K.C. Chan, Director
ATTEST:
/s/ [SIGNATURE SYMBOL]
- ---------------------------------
COL CHINA ONLINE:
COL CHINA ONLINE INTERNATIONAL INC.
Date: June 8, 2000 By: /s/ Mark K. Shaner
------------------------- -----------------------------
Mark K. Shaner, President
ATTEST:
/s/ Gloria Michel
- ---------------------------------
Gloria Michel
MIGRATION SHAREHOLDERS:
FIRST STRIKE SECURITIES LIMITED
Date: June 8, 2000 By: /s/ Zhang Qi Yu
------------------------- -----------------------------
Zhang Qi Yu, Director
HONVIEW INTERNATIONAL LIMITED
Date: June 8, 2000 By: /s/ K.C. Chan
------------------------- -----------------------------
K.C. Chan, Director
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