AGREEMENT AND PLAN OF REORGANIZATION
by and between
RETAIL HIGHWAY.COM, INC.,
a Nevada corporation
and
DRAGON INTERNATIONAL GROUP CORP.,
a Florida corporation
effective as of August 19, 2004
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made and entered into this 19th day
of August 2004, by and between RETAIL HIGHWAY.COM, INC., a Nevada corporation
("Retail") with its principal place of business located at 225 Macpherson Ave.,
Unit B, Toronto, Ontario, Canada M4V 1A1 and DRAGON INTERNATIONAL GROUP CORP., a
Florida corporation ("Dragon"), with its principal place of business located at
9858 Glades Road, Suite 213, Boca Raton, FL 33434 ("Dragon").
Premises
WHEREAS, this Agreement provides for the merger of Dragon into Retail, and in
connection therewith, the conversion of the outstanding common stock of Dragon
into shares of common voting stock of Retail, all for the purpose of effecting a
tax-free reorganization pursuant to sections 354 and 368(a) of the Internal
Revenue Code of 1986, as amended; and
WHEREAS, the boards of directors and shareholders of Dragon and Retail have
determined, subject to the terms and conditions set forth in this Agreement,
that the merger contemplated hereby is desirable and in the best interests of
their respective corporations. This Agreement is being entered into for the
purpose of setting forth the terms and conditions of the proposed merger.
Agreement
NOW, THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
DRAGON
As an inducement to and to obtain the reliance of Retail, Dragon represents and
warrants as follows:
Section 1.1 Organization. Dragon is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Florida and has the corporate power and is duly authorized, qualified,
franchised and licensed under all applicable laws, regulations, ordinances and
orders of public authorities to own all of its properties and assets and to
carry on its business in all material respects as it is now being conducted,
including qualification to do business as a foreign corporation in the
jurisdiction in which the character and location of the assets owned by it or
the nature of the business transacted by it requires qualification. Included in
the Dragon Schedules (as hereinafter defined) are complete and correct copies of
the articles of incorporation, bylaws and amendments thereto of Dragon as in
effect on the date hereof. The execution and delivery of this Agreement does not
and the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not violate any provision of Dragon's
articles of incorporation or bylaws. Dragon has full power, authority and legal
right and has taken all action required by law, its articles of incorporation,
its bylaws or otherwise to authorize the execution and delivery of this
Agreement.
Section 1.2 Capitalization. Dragon's total authorized capital
consists of 200,000,000 Common Shares, par value $.001 per share. As of the date
of Closing, as defined hereinbelow, there will be 8,000,000 Common Shares issued
and outstanding. All issued and outstanding shares are legally issued, fully
paid and nonassessable and are not issued in violation of the preemptive or
other rights of any person. Dragon has no other securities, warrants or options
authorized or issued.
Section 1.3 Subsidiaries and Predecessor Corporations. Except as otherwise
set forth in the Dragon Schedules, Dragon does not have any subsidiaries and
does not own, beneficially or of record, any shares of any other corporation.
<page>
Section 1.4 Financial Statements. Included in the Dragon Schedules is an
unaudited balance sheet and income statement, dated as of June 30, 2004.
Relevant thereto:
(a) the Dragon balance sheets present fairly as of their date the
financial condition of Dragon. Dragon does not have, as of the date of
such balance sheets, except as noted and to the extent reflected or
reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in a balance sheet or the notes
thereto and all assets reflected therein are properly reported and
present fairly the value of the assets of Dragon, in accordance with
generally accepted accounting principles;
(b) Dragon has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable;
(c) Dragon has filed all state, federal and local income tax returns
required to be filed by it from inception to the date hereof, if any;
(d) The books and records, financial and others, of Dragon are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices; and
(e) except as and to the extent disclosed in the most recent Dragon
balance sheet and the Dragon Schedules, Dragon has no material
contingent liabilities, direct or indirect, matured or unmatured.
Section 1.5 Information. The information concerning Dragon
set forth in this Agreement and in the Dragon Schedules is complete and accurate
in all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading.
Section 1.6 Options and Warrants. There are no existing options,
warrants, calls or commitments of any character to which Dragon is a party and
by which it is bound.
Section 1.7 Absence of Certain Changes or Events. Except as set forth in
this Agreement, the Dragon Schedules, or as otherwise disclosed to Retail, since
June 30, 2004:
(a)there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of Dragon; or
(ii) any damage, destruction or loss to Dragon (whether or not covered
by insurance) materially and adversely affecting the business,
operations, properties, assets or condition of Dragon;
(b)Dragon has not: (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of Dragon; (iv) made any material change in
its method of management, operation or accounting; (v) entered into
any other material transaction; (vi) made any accrual or arrangement
for or payment of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer or
employee; (vii) increased the rate of compensation payable or to
become payable by it to any of its officers or directors or any of its
employees whose monthly compensation exceeds $5,000; or (viii) made
any increase in any profit sharing, bonus, deferred compensation,
insurance, pension, retirement or other employee benefit plan, payment
or arrangement made to, for, or with its officers, directors or
employees;
(c)Dragon has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed
to borrow any funds or incurred or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent Dragon balance
sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties or rights (except assets,
properties or rights not used or useful in its business which, in the
aggregate have a value of less than $10,000); (v) made or permitted
any amendment or termination of any contract, agreement or license to
which it is a party if such amendment or termination is material,
considering the business of Dragon; or (vi) issued, delivered or
agreed to issue or deliver any stock, bonds or other corporate
securities, including debentures (whether authorized and unissued or
held as treasury stock); and
(d)to the best knowledge of Dragon, it has not become subject to any
law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties,
assets or condition of Dragon.
<page>
Section 1.8 Title and Related Matters. Dragon has good and
marketable title to and is the sole and exclusive owner of all of its
properties, inventory, interests in properties and assets, real and personal
(collectively, the "Assets") which are reflected in the most recent Dragon
audited balance sheet and the Dragon Schedules or acquired after that date
(except properties, interests in properties and assets sold or otherwise
disposed of since such date in the ordinary course of business), free and clear
of all liens, pledges, charges or encumbrances except: (a) statutory liens or
claims not yet delinquent; (b) such imperfections of title and easements as do
not and will not, materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected thereby or otherwise
materially impair present business operations on such properties; and (c) as
described in the Dragon Schedules. Except as set forth in the Dragon Schedules,
Dragon owns free and clear of any liens, claims, encumbrances, royalty interests
or other restrictions or limitations of any nature whatsoever and all
procedures, techniques, marketing plans, business plans, methods of management
or other information utilized in connection with Dragon's business. Except as
set forth in the Dragon Schedules, no third party has any right to, and Dragon
has not received any notice of infringement of or conflict with asserted rights
of others with respect to any product, technology, data, trade secrets,
know-how, proprietary techniques, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse affect on the
business, operations, financial conditions or income of Dragon or any material
portion of its properties, assets or rights.
Section 1.9 Litigation and Proceedings. To the best of Dragon's
knowledge and belief, there are no actions, suits, proceedings or investigations
pending or threatened by or against Dragon or affecting Dragon or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign or before any arbitrator of any kind
that would have a material adverse affect on the business, operations, financial
condition or income of Dragon. Dragon does not have any knowledge of any default
on its part with respect to any judgment, order, writ, injunction, decree,
award, rule or regulation of any court, arbitrator or governmental agency or
instrumentality or of any circumstances which, after reasonable investigation,
would result in the discovery of such a default.
Section 1.10 Contracts.
(a)Except as included or described in the Dragon Schedules, there are
no material contracts, agreements, franchises, license agreements or
other commitments to which Dragon is a party or by which it or any of
its assets, products, technology or properties are bound;
(b)Except as included or described in the Dragon Schedules or
reflected in the most recent Dragon balance sheet, Dragon is not a
party to any oral or written: (i) contract for the employment of any
officer or employee which is not terminable on thirty (30) days or
less notice; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, agreement
or arrangement covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or indenture
relating to the borrowing of money; (iv) guaranty of any obligation,
other than one on which Dragon is a primary obligor, for collection
and other guaranties of obligations, which, in the aggregate do not
exceed more than one year or providing for payments in excess of
$10,000 in the aggregate; (v) consulting or other similar contracts
with an unexpired term of more than one year or providing for payments
in excess of $10,000 in the aggregate; (vi) collective bargaining
agreements; (vii) agreement with any present or former officer or
director of Dragon; or (viii) contract, agreement or other commitment
involving payments by it of more than $10,000 in the aggregate; and
(c)To Dragon's knowledge, all contracts, agreements, franchises,
license agreements and other commitments to which Dragon is a party or
by which its properties are bound and which are material to the
operations of Dragon taken as a whole, are valid and enforceable by
Dragon in all respects, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors generally.
Section 1.11 Material Contract Defaults. Except as set forth in the
Dragon Schedules, to the best of Dragon's knowledge and belief, Dragon is not in
default in any material respect under the terms of any outstanding contract,
agreement, lease or other commitment which is material to the business,
operations, properties, assets or condition of Dragon, and there is no event of
default in any material respect under any such contract, agreement, lease or
other commitment in respect of which Dragon has not taken adequate steps to
prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Dragon is a
party or to which any of its properties or operations are subject.
<page>
Section 1.13 Governmental Authorizations. To the best of Dragon's
knowledge, Dragon has all licenses, franchises, permits or other governmental
authorizations legally required to enable Dragon to conduct its business in all
material respects as conducted on the date hereof. Except for compliance with
federal and state securities and corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by Dragon of this Agreement and the consummation by
Dragon of the transactions contemplated hereby.
Section 1.14 Compliance With Laws and Regulations. To the best of
Dragon's knowledge, except as disclosed in the Dragon Schedules, Dragon has
complied with all applicable statutes and regulations of any federal, state or
other governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets or condition of Dragon or would not result in
Dragon's incurring any material liability.
Section 1.15 Insurance. All of the insurable properties of Dragon are
insured for Dragon's benefit in accordance with the insurance policies disclosed
in the Dragon Schedules under valid and enforceable policies issued by insurers
of recognized responsibility. Such policy or policies containing substantially
equivalent coverage will be outstanding and in full force at the Closing Date.
Section 1.16 Approval of Agreement. The board of directors of
Dragon has authorized the execution and delivery of this Agreement by Dragon,
has approved the transactions contemplated hereby and approved the submission of
this Agreement and the transactions contemplated hereby to the stockholders of
Dragon for their unanimous approval with the recommendation that the merger be
accepted.
Section 1.17 Material Transactions or Affiliations. Except as disclosed
herein and in the Dragon Schedules, there exists no material contract, agreement
or arrangement between Dragon and any predecessor and any person who was at the
time of such contract, agreement or arrangement an officer, director or person
owning of record, or known by Dragon to own beneficially, ten percent (10%) or
more of the issued and outstanding Dragon Common Shares and which is to be
performed in whole or in part after the date hereof. In all of such
transactions, the amount paid or received, whether in cash, in services or in
kind, has been during the full term thereof, and is required to be during the
unexpired portion of the term thereof, no less favorable to Dragon than terms
available from otherwise unrelated parties in arms length transactions. There
are no commitments by Dragon, whether written or oral, to lend any funds to,
borrow any money from or enter into any other material transactions with, any
such affiliated person.
Section 1.18 Labor Relations. Dragon has never had a work
stoppage resulting from labor problems. To the best knowledge of Dragon, no
union or other collective bargaining organization is organizing or attempting to
organize any employee of Dragon.
Section 1.19 Previous Sales of Securities. Since inception, Dragon
has sold Dragon Common Shares to investors in reliance upon applicable
exemptions from the registration requirements under the laws of the United
States, the state of Florida and such other states in the United States where
such sales have occurred. All such sales were made in accordance with the laws
of the United States and those states where such securities were sold.
<page>
Section 1.20 Dragon Schedules. Upon execution hereof, Dragon
will deliver to Retail the following schedules, which are collectively referred
to as the "Dragon Schedules" and which consist of separate schedules dated as of
the date of this Agreement and instruments and data as of such date, all
certified by the chief executive officer of Dragon as complete, true and correct
in all material respects:
(a)copies of the articles of incorporation, bylaws and all minutes of
shareholders' and directors' meetings of Dragon;
(b)the financial statements of Dragon referenced hereinabove in
Section 1.4;
(c)a list indicating the name and address of the stockholders of
Dragon, together with the number of shares owned by them;
(d)copies of all licenses, permits and other governmental
authorizations, requests or applications therefor, pursuant to which
Dragon carries on or proposes to carry on its business (except those
which in the aggregate, are immaterial to the present or proposed
business of Dragon);
(e)a list of every debt, mortgage, security interest, pledge, lien,
encumbrance or claim of any nature whatsoever in excess of $10,000 as
may affect Dragon, its properties or assets;
(f)a list of all executive employees of Dragon, including current
compensation, with notation as to job description and whether or not
such employee is subject to a written contract;
(g)a description of all real and personal property owned by Dragon,
together with a description of every mortgage, deed of trust, pledge,
lien, agreement, encumbrance, claim or equity interest of any nature
whatsoever in such real and personal property;
(h)copies of all material contracts, leases, agreements or other
instruments to which Dragon is a party or by which it or its
properties are bound;
(i)the name and location of each bank or other institution with which
Dragon has an account or safety deposit box and the names of all
persons authorized to draw thereon or having access thereto;
(j)a list of all patent applications, copyrights, trademarks, service
marks and trade names that are pertinent in any manner whatsoever to
the development, testing, registration, assembly, manufacture, use or
sale of any products or services used in the business of Dragon and in
which either Dragon or Dragon's stockholders has or previously had any
direct or indirect, equitable or legal right or interest;
(k)a copy of all material documentation relating to the sale of Dragon
Common Shares by Dragon to its present stockholders;
(l) a list of insurance policies referred to in Section 1.15;
(m)a description of any material adverse change in the business
operations, property, inventory, assets or condition of Dragon since
the most recent Dragon balance sheet required to be provided pursuant
to Section 1.7;
(n)any other information, together with any required copies of
documents required to be disclosed in the Dragon Schedules by Sections
1.1 through 1.19.
Dragon shall cause the Dragon Schedules and the instruments and data
delivered to Retail hereunder to be updated after the date hereof up
to and including the Closing Date, as hereinafter defined. ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF RETAIL
As an inducement to, and to obtain the reliance of Dragon, Retail represents and
warrants as follows:
Section 2.1 Organization. Retail is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has the
corporate power and is duly authorized, qualified, franchised and licensed under
all applicable laws, regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its business in all
material respects as it are now being conducted, including qualification to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the Retail Schedules (as hereinafter
defined) are complete and correct copies of the articles of incorporation, and
bylaws of Retail as in effect on the date hereof. The execution and delivery of
this Agreement does not and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not, violate any
provision of Retail's articles of incorporation or bylaws. Retail
has taken all action required by law, its articles of incorporation, its bylaws
or otherwise to authorize the execution and delivery of this Agreement. Retail
has full power, authority and legal right and has taken all action required by
law, its articles of incorporation, bylaws or otherwise to consummate the
transactions herein contemplate.
<page>
Section 2.2 Capitalization. The authorized capitalization of
Retail consists of 25,000,000 shares of Preferred Stock, par value $0.001 per
share, and 50,000,000 Common Shares, par value $.001 per share. As of the date
hereof there are 10,241,867 common shares of Retail issued and outstanding.
Simultaneous with the Closing Date, as defined hereinbelow, Retail shall
undertake a reverse stock split of the Retail Common Stock, whereby 1 share of
Common Stock shall be issued in exchange for every 8 shares of Common Stock
presently issued and outstanding, in order to establish the number of issued and
outstanding common shares to be 1,280,233, (the "Retail Common Shares") held by
the then existing securities holders of Retail. Except as previously disclosed
to Dragon and as indicated hereinbelow, as of the Closing Date, as defined
herein, there will be no more than 1,280,233 common shares issued and
outstanding. However, Dragon hereby acknowledges that there are three (3)
convertible promissory notes issued and outstanding, each such not convertible
into shares of Retail's common stock and reserved for issuance
All issued and outstanding Retail Common Shares have been legally issued, fully
paid and are nonassessable. There are no preferred shares issued or outstanding.
All issued and outstanding Retail Common Shares have been legally issued, fully
paid and are nonassessable.
Section 2.3 Subsidiaries. Retail has no subsidiary companies.
Section 2.4 Financial Statements.
(a)Included in the Retail Schedules are the audited financial
statements of Retail for the years ended June 30, 2003 and 2002 and
the unaudited financial statements of Retail for the nine month period
ended March 31, 2004 and the related statements of operations,
stockholders' equity and cash flows for the periods then ended, which
are included in the schedules identified in Section 2.18(c).
(b) All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved.The Retail balance sheets presents
fairly as of their respective dates the financial condition of Retail.
Retail did not have as of the date of any of such Retail balance
sheets, any liabilities or obligations (absolute or contingent) which
should be reflected in a balance sheet or the notes thereto prepared
in accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly the
value of the assets of Retail, in accordance with generally accepted
accounting principles. The statements of operations, stockholders'
equity and changes in financial position reflect fairly the
information required to be set forth therein by generally accepted
accounting principles.
(c) The books and records, financial and others, of Retail are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices.
(d) Retail has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties).
(e) As of the Closing Date, as defined herein the Retail balance sheet
and the notes thereto, shall reflect that Retail has: (i) no
receivables; (ii) no accounts payable; and (iii) no contingent
liabilities, direct or indirect, matured or unmatured.
Section 2.5 Information. The information concerning Retail
as set forth in this Agreement and in the Retail Schedules is complete and
accurate in all material respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made, not misleading.
Section 2.6 Absence of Certain Changes or Events. Except as described
herein or in the Retail Schedules, since March 31, 2004:
(a)Retail has not: (i) amended its articles of incorporation or
bylaws; (ii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of Retail; (iii)
made any material change in its method of management, operation or
accounting; or (iv) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee;
(b)Retail has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof, which option, warrant or
other right has not been cancelled as of the Closing Date; or (ii)
borrowed or agreed to borrow any funds or incurred or become subject
to, any material obligation or liability (absolute or contingent)
except liabilities incurred in the ordinary course of business; and
(c)to the best knowledge of Retail, it has not become subject to any
law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties,
assets or condition of Retail.
<page>
Section 2.7 Title and Related Matters. As of the Closing Date, Retail will own
no real, personal or intangible property.
Section 2.8 Litigation and Proceedings. There are no actions, suits
or proceedings pending or, to the best of Retail's knowledge and belief,
threatened by or against or affecting Retail, at law or in equity, before any
court or other governmental agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind that would have a material adverse effect on
the business, operations, financial condition, income or business prospects of
Retail. Retail does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or instrumentality.
Section 2.9 Contracts. On the Closing Date:
(a) Except for its agreements with its transfer agent, legal counsel
and accountants, there are no material contracts, agreements,
franchises, license agreements, or other commitments to which Retail
is a party or by which it or any of its properties are bound;
(b)Retail is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree or award which
materially and adversely affects, or in the future may (as far as
Retail can now foresee) materially and adversely affect, the business,
operations, properties, assets or conditions of Retail; and
(c)Retail is not a party to any material oral or written: (i) contract
for the employment of any officer or employee; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay, pension,
benefit or retirement plan, agreement or arrangement covered by Title
IV of the Employee Retirement Income Security Act, as amended; (iii)
agreement, contract or indenture relating to the borrowing of money;
(iv) guaranty of any obligation for the borrowing of money or
otherwise, except for those outstanding convertible promissory notes,
which notes shall be converted or released at or immediately following
the Closing herein. It is specifically acknowledged that, by
conversion of said notes, the total shares to be held by Dragon
following conversion, shall not fall below 65% of the Retail issued
and outstanding common stock; (v) consulting or other similar contract
with an unexpired term of more than one year or providing for payments
in excess of $10,000 in the aggregate; (vi) collective bargaining
agreement; (vii) agreement with any present or former officer or
director of Retail; or (viii) contract, agreement, or other commitment
involving payments by it of more than $10,000 in the aggregate.
Section 2.10 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Retail is a
party or to which any of its properties or operations are subject.
Section 2.11 Material Contract Defaults. To the best of Retail's
knowledge and belief, Retail is not in default in any material respect under the
terms of any outstanding contract, agreement, lease or other commitment which is
material to the business, operations, properties, assets or condition of Retail,
and there is no event of default in any material respect under any such
contract, agreement, lease or other commitment in respect of which Retail has
not taken adequate steps to prevent such a default from occurring.
Section 2.12 Governmental Authorizations. To the best of Retail's
knowledge, Retail has all licenses, franchises, permits and other governmental
authorizations that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by Retail of the transactions contemplated hereby.
Section 2.13 Compliance With Laws and Regulations. To the best of
Retail's knowledge and belief, Retail has complied with all applicable statutes
and regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
Retail or would not result in Retail's incurring any material liability.
Section 2.14 Insurance. Retail has no insurable properties and no
insurance policies will be in effect at the Closing Date, as hereinafter
defined.
Section 2.15 Approval of Agreement. The board of directors and
shareholders of Retail has authorized the execution and delivery of this
Agreement by Retail and have approved the transactions contemplated hereby.
<page>
Section 2.16 Material Transactions or Affiliations. As of the Closing
Date there will exist no material contract, agreement or arrangement between
Retail and any person who was at the time of such contract, agreement or
arrangement an officer, director or person owning of record, or known by Retail
to own beneficially, ten percent (10%) or more of the issued and outstanding
common stock of Retail and which is to be performed in whole or in part after
the date hereof. Retail has no commitment, whether written or oral, to lend any
funds to, borrow any money from or enter into any other material transactions
with, any such affiliated person.
Section 2.17 Labor Relations. Retail has never had a work
stoppage resulting from labor problems. Retail has no employees other than its
officers and directors.
Section 2.18. 34 Act Filings. As of the Closing Date, Retail shall be current
in, and in compliance with all requirements of, all filings required to be
tendered to the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended. Said filings contain all of the information
required pursuant to the Securities Exchange Act of 1934, as amended and, to the
best knowledge of Retail, do not fail to state any material facts which were
required to be so stated.
Section 2.19 Retail Schedules. Upon execution hereof, Retail
shall deliver to Dragon the following schedules, which are collectively referred
to as the "Retail Schedules" which are dated the date of this Agreement, all
certified by an officer of Retail to be complete, true and accurate:
(a)complete and correct copies of the articles of incorporation and
bylaws of Retail as in effect as of the date of this Agreement;
(b)copies of all financial statements of Retail identified in Section
2.4(a);
(c) the description of any material adverse change in the business,
operations, property, assets, or condition of Retail since December
31, 1998 required to be provided pursuant to Section 2.6; and
(d)any other information, together with any required copies of
documents, required to be disclosed in the Retail Schedules by
Sections 2.1 through 2.17.
Retail shall cause the Retail Schedules and the instruments to be
delivered to Dragon hereunder to be updated after the date hereof up
to and including the Closing Date.
ARTICLE III
MERGER
Section 3.1 Delivery of Dragon Securities. On the Closing Date, the
holders of the Dragon Common Shares shall deliver to Retail (i) certificates or
other documents evidencing all of the issued and outstanding Dragon Common
Shares, duly endorsed in blank or with executed stock power attached thereto in
transferrable form, and (ii) investment letters, the form of which is attached
hereto as Exhibit "A".
Section 3.2 Issuance of Retail Common Shares.
(a) In exchange for all of the Dragon Common Shares tendered pursuant
to Section 3.1, Retail shall issue an aggregate of 25,953,333
"restricted" Retail Common Shares, including (i) 22,750,000
"restricted" Retail Common Shares to the Dragon shareholders on a pro
rata basis, and (ii) 3,203,333 "restricted" Retail Common Shares to
those four entities designated by Dragon pursuant to contractual
obligations of Dragon, so that the Dragon shareholders and assigns
will own approximately 95% of the surviving company's issued and
outstanding common stock .
(b) No fractional Retail Common Shares shall be issued pursuant to
this Section 3.2. In lieu of such fractional shares, all shares to be
issued shall be rounded up or down to the nearest whole share. Section
3.3 Events Prior to Closing. Upon execution hereof or as soon
thereafter as practical, management of Retail and Dragon shall
execute, acknowledge and deliver (or shall cause to be executed,
acknowledged and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings or
other instruments required by this Agreement to be so delivered,
together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to
effectuate or evidence the transactions contemplated hereby, subject
only to the conditions to Closing referenced hereinbelow.
Section 3.4 Closing. The closing ("Closing" or the "Closing Date") of the
transaction contemplated by this Agreement shall be as of the date in which all
of the conditions included in Sections 3.1 and 3.2 hereinabove and those
additional conditions contained in Article V hereinbelow have been satisfied by
the respective party and all documentation referenced herein is delivered to the
respective party herein, unless a different date is mutually agreed to in
writing by the parties hereto.
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of directors of
either Retail or Dragon at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any court or
any governmental body which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement and
which, in the judgment of such board of directors, made in good
faith and based on the advice of its legal counsel, makes it
inadvisable to proceed with the merger contemplated by this
Agreement; or (ii) any of the transactions contemplated hereby
are disapproved by any regulatory authority whose approval is
required to consummate such transactions; or (iii) the conditions
described in Section 6.6 below have not been satisfied in full.
In the event of termination pursuant to this paragraph (a) of
this Section 3.5, no obligation, right, or liability shall arise
hereunder and each party shall bear all of the expenses incurred
by it in connection with the negotiation, drafting and execution
of this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Retail if
Dragon shall fail to comply in any material respect with any of
its covenants or agreements contained in this Agreement or if any
of the representations or warranties of Dragon contained herein
shall be inaccurate in any material respect, which noncompliance
or inaccuracy is not cured after 20 days' written notice thereof
is given to Dragon. If this Agreement is terminated pursuant to
this paragraph (b) of this Section 3.5, this Agreement shall be
of no further force or effect and no obligation, right or
liability shall arise hereunder.
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Dragon if
Retail shall fail to comply in any material respect with any of
its covenants or agreements contained in this Agreement or if any
of the representations or warranties of Retail contained herein
shall be inaccurate in any material respect, which noncompliance
or inaccuracy is not cured after 20 days written notice thereof
is given to Retail. If this Agreement is terminated pursuant to
this paragraph (c) of Section 3.5, this Agreement shall be of no
further force or effect and no obligation, right or liability
shall arise hereunder.
<page>
Section 3.6 Directors of Retail. Upon the Closing, the present
members of Retail's Board of Directors shall tender their resignations seriatim
so that the following persons are appointed directors of Retail in accordance
with procedures set forth in the Retail bylaws: David Wu (who shall be appointed
Chairman of the Board of Directors), Xuejun Chen and Xiali Gan. Each director
shall hold office until his successor shall have been duly elected and shall
have qualified or until his earlier death, resignation or removal.
Section 3.7 Officers of Retail. Upon the Closing, the present
officers of Retail shall tender their resignations and simultaneous therewith,
the following person shall be elected as officer of Retail in accordance with
procedures set forth in the Retail bylaws:
NAME OFFICE
David Wu Chief Executive Officer/President
Xuejun Chen Vice President
Xiali Gan Chief Financial Officer
Orson Zhang Secretary
Lei Li Vice President
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. Retail and Dragon will
each afford to the officers and authorized representatives of the other full
access to the properties, books and records of Retail and Dragon, as the case
may be, in order that each may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the other and each
will furnish the other with such additional financial and operating data and
other information as to the business and properties of Retail and Dragon, as the
case may be, as the other shall from time to time reasonably request.
Section 4.2 Availability of Rule 144. Each of the parties
acknowledge that the stock of Retail to be issued pursuant to this Agreement
will be "restricted securities," as that term is defined in Rule 144 promulgated
pursuant to the Securities Act. Retail is under no obligation to register such
shares under the Securities Act, or otherwise. Notwithstanding the foregoing,
however, following the Closing Date, Retail will use its best efforts to: (a)
make publicly available on a regular basis not less than semi-annually, business
and financial information regarding Retail so as to make available to the
shareholders of Retail the provisions of Rule 144 pursuant to subparagraph
(c)(2) thereof; and (b) within ten (10) days of any written request of any
stockholder of Retail, Retail will provide to such stockholder written
confirmation of compliance with such of the foregoing subparagraph as may then
be applicable. The stockholders of Retail holding restricted securities of
Retail as of the date of this Agreement and their respective heirs,
administrators, personal representatives, successors and assigns, are intended
third party beneficiaries of the provisions set forth herein. The covenants set
forth in this Section 4.2 shall survive the Closing and the consummation of the
transactions herein contemplated.
Section 4.3 Information for Retail Public Reports. Dragon will furnish
Retail with all information concerning Dragon and the Dragon Stockholders,
including all financial statements, required for inclusion in any registration
statement or public report intended to be filed by Retail pursuant to the
Securities Act, the Exchange Act, or any other applicable federal or state law.
Dragon covenants that all information so furnished for either such registration
statement or other public release by Retail, including the financial statements
described in Section 1.4, shall be true and correct in all material respects
without omission of any material fact required to make the information stated
therein not misleading.
Section 4.4 Special Covenants and Representations Regarding the Retail Common
Shares to be Issued in the Merger. The consummation of this Agreement, including
the issuance of the Retail Common Shares to the stockholders of Dragon as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act, and applicable state statutes. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, inter alia, upon the
circumstances under which the Dragon stockholders acquire such securities. In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, Dragon shall cause
to be delivered, and the Dragon stockholders shall deliver to Retail, the
investment letter referenced in Section 3.1.
Section 4.5 Third Party Consents. Retail and Dragon agree to
cooperate with each other in order to obtain any required third party consents
to this Agreement and the transactions herein contemplated.
<page>
Section 4.6 Actions Prior to Closing. From and after the date of
this Agreement until the Closing Date and except as set forth in the Retail or
Dragon Schedules or as permitted or contemplated by this Agreement, Retail and
Dragon will each use its best efforts to:
(i) carry on its business in substantially the same manner as it
has heretofore;
(ii) maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to
ordinary wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or
affecting its assets, properties and business;
(v) maintain and preserve its business organization intact, to
retain its key employees and to maintain its relationship with
its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state
laws and all rules, regulations and orders imposed by federal or
state governmental authorities.
From and after the date of this Agreement until the Closing Date,
neither Retail nor Dragon will, without the prior consent of the
other party:
(i) except as otherwise specifically set forth herein, make any
change in their respective certificates or articles of
incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding shares of
capital stock, except as may otherwise be required by law, or
effect any stock split or otherwise change its capitalization,
except as provided herein;
(iii) enter into or amend any employment, severance or similar
agreements or arrangements with any directors or officers;
(iv) grant, confer or award any options, warrants, conversion
rights or other rights not existing on the date hereof to acquire
any shares of its capital stock; or
(v) purchase or redeem any shares of its capital stock, except as
disclosed herein.
Section 4.7 Indemnification.
(a)Dragon hereby agrees to indemnify Retail and each of the
officers, agents and directors of Retail as of the date of
execution of this Agreement against any loss, liability, claim,
damage or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or
threatened or any claim whatsoever), to which it or they may
become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made in this Agreement. The
indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby
and termination of this Agreement for a period of 24 months.
(b) Retail and its officers and directors hereby agrees to
indemnify Dragon and each of the officers, agents, directors and
current shareholders of Dragon as of the Closing Date against any
loss, liability, claim, damage or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation,
commenced or threatened or any claim whatsoever), to which it or
they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made in this Agreement and
particularly the representation regarding no liabilities referred
to in Section 2.4(b). The indemnification provided for in this
Section shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this
Agreement for a period of 24 months.
<page>
Section 4.8 Undertakings of Dragon. Management of Dragon, who will assume the
management of Retail upon Closing, hereby undertakes to Retail and its
shareholders as follow:
(a) to exercise good faith in their efforts to file all reports
required to be filed by the surviving company herein with the
Securities and Exchange Commission or any other governmental
agency, in a timely manner, including but not limited to, its
audited financial statements within the time parameters
established by the rules and regulations of the US Securities and
Exchange Commission; and
(b) to exercise all due diligence in causing the surviving
company to list its common stock for trading on any national
stock exchange for which the surviving company may then qualify
for such listing. ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF RETAIL
The obligations of Retail under this Agreement are subject to the satisfaction,
at or before the Closing Date, of the following conditions:
Section 5.1 Accuracy of Representations. The representations and
warranties made by Dragon in this Agreement were true when made and shall be
true at the Closing Date with the same force and effect as if such
representations and warranties were made at the Closing Date (except for changes
therein permitted by this Agreement), and Dragon shall have performed or
complied with all covenants and conditions required by this Agreement to be
performed or complied with by Dragon prior to or at the Closing. Retail shall be
furnished with a certificate, signed by a duly authorized officer of Dragon and
dated the Closing Date, to the foregoing effect.
Section 5.2 Stockholder Approval. The stockholders of Dragon
shall have approved this Agreement and the transactions contemplated thereby in
accordance with the laws of the State of Florida.
Section 5.3 Officer's Certificate. Retail shall have been
furnished with a certificate dated the Closing Date and signed by a duly
authorized officer of Dragon to the effect that no litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of Dragon,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the Dragon Schedules, by or against Dragon which might
result in any material adverse change in any of the assets, properties, business
or operations of Dragon.
Section 5.4 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of Dragon.
Section 5.5 Other Items. Retail shall have received such
further documents, certificates or instruments relating to the transactions
contemplated hereby as Retail may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF DRAGON
The obligations of Dragon under this Agreement are subject to the satisfaction,
at or before the Closing Date (unless otherwise indicated herein), of the
following conditions:
Section 6.1 Accuracy of Representations. The representations and
warranties made by Retail in this Agreement were true when made and shall be
true as of the Closing Date (except for changes therein permitted by this
Agreement) with the same force and effect as if such representations and
warranties were made at and as of the Closing Date, and Retail shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed or complied with by Retail prior to or at the Closing.
Dragon shall have been furnished with a certificate, signed by a duly authorized
executive officer of Retail and dated the Closing Date, to the foregoing effect.
<page>
Section 6.2 Officer's Certificate. Dragon shall be furnished with
a certificate dated the Closing Date and signed by a duly authorized officer of
Retail to the effect that no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of Retail, threatened, which might result in
an action to enjoin or prevent the consummation of the transactions contemplated
by this Agreement or, to the extent not disclosed in the Retail Schedules, by or
against Retail which might result in any material adverse change in any of the
assets, properties, business or operations of Retail.
Section 6.3 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of Retail.
Section 6.4 Compliance with Reporting Requirements. As of the Closing Date,
Retail shall be current in, and in compliance with all requirements of, all
filings required to be tendered to the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended. Said filings
contain all of the information required pursuant to the Securities Exchange Act
of 1934, as amended and, to the best knowledge of Retail, do not fail to state
any material facts which were required to be so stated.
Section 6.5 Other Items. Dragon shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby as
Dragon may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Except as set forth in Schedule
7.1, each party hereto hereby represents and warrants that it is under no
obligation, express or implied, to pay certain finders in connection with the
bringing of the parties together in the negotiation, execution, or consummation
of this Agreement. The parties each agree to indemnify the other against any
claim by any third person not listed in Schedule 7.1 for any commission,
brokerage or finder's fee or other payment with respect to this Agreement or the
transactions contemplated hereby based on any alleged agreement or understanding
between the indemnifying party and such third person, whether express or implied
from the actions of the indemnifying party.
Section 7.2 Law; Forum and Jurisdiction. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Nevada, except as US
federal law may be applicable.
Section 7.3 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to Retail:
Mr. Michael Levine
225 Macpherson Ave.,
Unit B
Toronto, Ontario, Canada M4V 1A1
If to Dragon:
Mr. David Wu
DRAGON INTERNATIONAL GROUP CORP.
9858 Glades Road
Suite 213
Boca Raton, FL 33434
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party
institutes any action or suit to enforce this Agreement or to secure relief from
any default hereunder or breach hereof, the breaching party or parties shall
reimburse the non-breaching party or parties for all costs, including reasonable
attorneys' fees, incurred in connection therewith and in enforcing or collecting
any judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees with the
other parties that, unless and until the reorganization contemplated by this
Agreement has been consummated, they and their representatives will hold in
strict confidence all data and information obtained with respect to another
party or any subsidiary thereof from any representative, officer, director or
employee, or from any books or records or from personal inspection, of such
other party, and shall not use such data or information or disclose the same to
others, except: (i) to the extent such data is a matter of public knowledge or
is required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed to have
full knowledge of all information set forth in the other party's schedules
delivered pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is solely
among Retail and Dragon and, except as specifically provided, no director,
officer, stockholder, employee, agent, independent contractor or any other
person or entity shall be deemed to be a third party beneficiary of this
Agreement.
<page>
Section 7.8 Entire Agreement. This Agreement represents the
entire agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
Section 7.9 Survival; Termination. The representations,
warranties and covenants of the respective parties shall survive the Closing
Date and the consummation of the transactions herein contemplated for 18 months.
Section 7.10 Counterparts Facsimile Execution. For purposes of this Agreement, a
document (or signature page thereto) signed and transmitted by facsimile machine
or telecopier is to be treated as an original document. The signature of any
party thereon, for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document. At the request
of any party, a facsimile or telecopy document is to be re-executed in original
form by the parties who executed the facsimile or telecopy document. No party
may raise the use of a facsimile machine or telecopier machine as a defense to
the enforcement of the Agreement or any amendment or other document executed in
compliance with this Section.
Section 7.11 Amendment or Waiver. Every right and remedy
provided herein shall be cumulative with every other right and remedy, whether
conferred herein, at law, or in equity, and may be enforced concurrently
herewith, and no waiver by any party of the performance of any obligation by the
other shall be construed as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time prior to the
Closing Date, this Agreement may be amended by a writing signed by all parties
hereto, with respect to any of the terms contained herein, and any term or
condition of this Agreement may be waived or the time for performance hereof may
be extended by a writing signed by the party or parties for whose benefit the
provision is intended.
Section 7.12 Incorporation of Recitals. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
Section 7.13 Expenses. Each party herein shall bear all of their respective
costs and expenses incurred in connection with the negotiation of this Agreement
and in the consummation of the transactions provided for herein and the
preparation therefor.
Section 7.14 Headings; Context. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only and
do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
Section 7.15 Benefit. This Agreement shall be binding upon and shall
inure only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
Section 7.16 Public Announcements. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
Section 7.17 Severability. In the event that any particular provision
or provisions of this Agreement or the other agreements contained herein shall
for any reason hereafter be determined to be unenforceable, or in violation of
any law, governmental order or regulation, such unenforceability or violation
shall not affect the remaining provisions of such agreements, which shall
continue in full force and effect and be binding upon the respective parties
hereto.
Section 7.18 Failure of Conditions; Termination. In the event any of
the conditions specified in this Agreement shall not be fulfilled on or before
the Closing Date, either of the parties have the right either to proceed or,
upon prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other party. The election to proceed shall not affect
the right of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
Section 7.19 No Strict Construction. The language of this Agreement
shall be construed as a whole, according to its fair meaning and intendment, and
not strictly for or against either party hereto, regardless of who drafted or
was principally responsible for drafting the Agreement or terms or conditions
hereof.
Section 7.20 Execution Knowing and Voluntary. In executing this
Agreement, the parties severally acknowledge and represent that each: (a) has
fully and carefully read and considered this Agreement; (b) has been or has had
the opportunity to be fully apprised of its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (c) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
and entered into as of the date first above written.
RETAIL HIGHWAY.COM, INC.
By:/s/ Michael Levine
Michael Levine, President
DRAGON INTERNATIONAL GROUP CORP.
By:/s/ David Wu
David Wu, Chief Executive Officer
EXHIBIT "A"
FORM OF INVESTMENT LETTER
INVESTMENT LETTER
August __, 2004
RETAIL HIGHWAY.COM, INC.
225 Macpherson Ave.
Unit B
Toronto, Ontario, Canada M4V 1A1
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common stock of
DRAGON INTERNATIONAL GROUP CORP., a Florida corporation, ("Dragon"), as
described below (endorsed, or having executed stock powers attached) in
acceptance of and subject to the terms and conditions of that certain Agreement
and Plan of Reorganization (the "Agreement"), between RETAIL HIGHWAY.COM, INC.
(the "Company") and Dragon, dated August 19, 2004, receipt of which is hereby
acknowledged, in exchange for shares of Common Stock of Dragon (the "Exchange
Shares"). If any condition precedent to the Agreement is not satisfied within
the relevant time parameters established in the Agreement (or any extension
thereof), the certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees with you that,
in connection with the undersigned's acceptance of the Exchange Shares and as of
the date of this letter:
1. The undersigned is aware that his acceptance of the Exchange Shares is
irrevocable, absent an extension of the Expiration Date of any material change
to any of the terms and conditions of the Agreement.
2. The undersigned warrants full authority to deposit all shares referred to
above and the Company will acquire good and unencumbered title thereto.
3. The undersigned has full power and authority to enter into this Agreement and
that this Agreement constitutes a valid and legally binding obligation of the
undersigned.
4. By execution hereof, the undersigned hereby confirms that the Company's
common stock to be received in exchange for Dragon common stock (the
"Securities"), will be acquired for investment for the undersigned's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the undersigned has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By execution hereof, the undersigned further represents the
undersigned does not have any contract, undertaking, agreement or arrangement
with any third party, with respect to any of the Securities. 5. The undersigned
understands that the Securities are being issued pursuant to available exemption
thereto and have not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or under any state securities laws. I understand that
no registration statement has been filed with the United States Securities and
Exchange Commission nor with any other regulatory authority and that, as a
result, any benefit which might normally accrue to a holder such as me by an
impartial review of such a registration statement by the Securities and Exchange
Commission or other regulatory authority will not be forthcoming. I understand
that I cannot sell the Securities unless such sale is registered under the 1933
Act and applicable state securities laws or exemptions from such registration
become available. In this connection I understand that the Company has advised
the Transfer Agent for the Common Shares that the Securities are "restricted
securities" under the 1933 Act and that they may not be transferred by me to any
person without the prior consent of the Company, which consent of the Company
will require an opinion of my counsel to the effect that, in the event the
Securities are not registered under the 1933 Act, any transfer as may be
proposed by me must be entitled to an exemption from the registration provisions
of the 1933 Act. To this end, I acknowledge that a legend to the following
effect will be placed upon the certificate representing the Securities and that
the Transfer Agent has been advised of such facts:
<page>
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED PURSUANT TO THE
PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM REGISTRATION THEREUNDER IS
AVAILABLE, THE AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE SATISFACTION OF
THE COMPANY.
I understand that the foregoing legend on my certificate for the Common
Shares limits their value, including their value as collateral.
6. The undersigned represents that he is experienced in evaluation and
investing in securities of companies in the development stage and acknowledges
that it is able to fend for himself, can bear the economic risk of this
investment and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
in the Securities.
In Witness Whereof, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: August 19, 2004
Very truly yours,
- ----------------------------
(signature)
- ----------------------------
(print name in full)
- ----------------------------
(street address)
- ----------------------------
(city, state, zip)
- ----------------------------
(social security number or
employer identification no.)