Attached files
Exhibit
2.1
SHARE
EXCHANGE AGREEMENT
by
and among
Mondo
Acquisition III, Inc.,
a
Delaware corporation
and
the
Shareholders of Mondo Acquisition III, Inc.,
and
Kobe
Sport (International) Company Limited,
a British
Virgin Islands corporation
and
the
Shareholders of
Kobe
Sport (International) Company Limited
and
Hong
Kong Nam Kwong Trading Company Limited
and
Hengfeng
Shoes & Garments CO., Ltd.
Dated as
of February 12, 2010
SHARE
EXCHANGE AGREEMENT
THIS
SHARE
EXCHANGE AGREEMENT (hereinafter referred to as this “Agreement”) is
entered into as of this 12th day
of February, 2010, by and between MONDO ACQUISITION III, INC., a Delaware
company (hereinafter referred to as “Mondo”), the
shareholders of Mondo (hereinafter referred to as the “Mondo Shareholder”),
KOBE SPORT (INTERNATIONAL) COMPANY LIMITED, a British Virgin Islands business
company (hereinafter referred to as “Kobe Sport”) and the
shareholders of Kobe Sport (the “Kobe Sport
Shareholders”), and with respect to Articles I, V, VI and VIII of this
Agreement, Hong Kong Nam Kwong Trading Company Limited (“Nam Kwong”), a Hong
Kong company, and Hengfeng Shoes & Garments Co., Ltd. (“Heng Feng Shoes”), a
company incorporated in the People’s Republic of China (“PRC”, together with
Nam Kwong and Kobe Sport these entities shall be hereinafter referred to as the
“Kobe Group” or
the “Kobe Group Companies”), upon the following premises:
Premises
WHEREAS, Mondo is a publicly
reporting Form 10 company incorporated under the laws of the State of Delaware
with no significant operations;
WHEREAS, Kobe Sport is a
private company incorporated under the laws of the British Virgin Islands. Kobe
Sport owns 100% of the issued and outstanding capital stock of Nam Kwong, a
wholly foreign owned enterprise incorporated under the laws of Hong
Kong. Nam Kwong owns 94% of Hengfeng Shoes, a PRC
company;
WHEREAS, Mondo
agrees to acquire up to 100% of the issued and outstanding shares of Kobe Sport
from the Kobe Sport Shareholders in exchange for the issuance of certain shares
of Mondo (the “Exchange”) and the
Kobe Sport Shareholders agree to exchange their shares of Kobe Sport on the
terms described herein. On the Closing Date, Kobe Sport will become a
wholly-owned subsidiary of Mondo;
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 here
from, and intending to be legally bound hereby, it is hereby agreed as
follows:
ARTICLE
I
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF KOBE GROUP
As an
inducement to, and to obtain the reliance of Mondo, except as set forth in the
Kobe Group Schedules (as hereinafter defined), each of the Kobe Group
companies hereby, jointly and
severally represents and warrants that all of the statements in the
following subsections of this Article I are true and complete as of the date
hereof, and will, except as contemplated by this Agreement, be true and complete
as of the Closing
Date (as defined below) as if first made on such
date:
Section
1.01 Incorporation.
Kobe
Sport is a company duly incorporated, validly existing, and in good standing
under the laws of the British Virgin Islands and has the corporate power and is
duly authorized under all applicable laws, regulations, ordinances, and orders
of public authorities to carry on its business in all material respects as it is
now being conducted. Included in the Kobe Group Schedules are
complete and correct copies of the memorandum of association and articles of
association of Kobe Sport as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of Kobe Sports’
memorandum of association or articles of association. Kobe Sport has
taken all actions required by law, its memorandum of association and articles of
association, or otherwise to authorize the execution and delivery of this
Agreement. Kobe Sport has full power, authority, and legal capacity
and has taken all action required by law, its memorandum of association and
articles of association, and otherwise to consummate the transactions herein
contemplated.
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Each
member of the Kobe Group is organized under the laws of the jurisdiction set
forth in Schedule
1.01 hereto, is duly formed or organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being or currently planned
by each member of the Kobe Group to be conducted. Each member of the
Kobe Group is in possession of all Approvals necessary to own, lease and operate
the properties it purports to own, operate or lease, to carry on its business as
it is now being conducted, to consummate the Transactions contemplated under
this Agreement. No member of the Kobe Group is in violation of any of
the provisions of their respective Charter Documents. The Corporate
Records of each member of the Kobe Group contain true, complete and accurate
records of meetings and consents in lieu of meetings of its board of directors
(and any committees thereof), similar governing bodies and holders of its
registered capital, since the time of their respective organization, and such
Corporate Records have been heretofore delivered to Mondo. The
ownership records of each Kobe Group member’s registered capital are true,
complete and accurate records of such ownership as of the date of such records
and contain all transfers of such registered capital since the time of their
respective organization, and such ownership records have been heretofore been
delivered to Mondo. No member of the Kobe Group is required to
qualify to do business as a foreign corporation in any other
jurisdiction.
Section
1.02 Authorized
Shares.
The
number of shares which Kobe Sport is authorized to issue consists of 50,000
shares of a single class, par value of $1.00 per share. There are 20
shares currently issued and outstanding as set forth on Schedule 1.02
hereto. The issued and outstanding shares are validly issued, fully
paid, and non-assessable and not issued in violation of the preemptive or other
rights of any person.
Section
1.03 Subsidiaries and Predecessor Corporations. Except as
set forth in the Kobe Group Schedule 1.03, Kobe
Sport does not have any subsidiaries, and does not own, beneficially or of
record, any shares of any other corporation. For each entity listed thereon,
Schedule
1.03 sets forth its
jurisdiction of organization and the percentage of the outstanding capital stock
or other equity interests of such entity that is held by the Kobe Group
Companies. Each entity listed on Schedule
1.03 is duly
organized and validly existing and, except as set
forth on Schedule
1.03, is in good standing
under the laws of the jurisdiction of its formation; has the requisite corporate
power and authority to own its properties and to carry on its business as now
being conducted; and, if applicable, is duly qualified as a foreign entity to do
business and, to the extent legally applicable, is in good standing in every
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a material
adverse effect. For purposes hereinafter, the term “Kobe Sport” also
includes those subsidiaries set forth on the Kobe Group Schedules.
Section
1.03(a) Authorization and Validity
of Agreements. The Kobe Group Companies have all corporate
power and authority to execute and deliver this Agreement, to perform their
obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement constitutes the valid and legally binding
obligation of the Kobe Group Companies and
is enforceable in accordance with its terms against each of
them. None of the Kobe Group Companies need give any notice to, make
any filings with, or obtain any authorization, consent or approval of any
government or governmental agency or other person in order for it to consummate
the transactions contemplated by this Agreement, other than filings that may be
required or permitted under BVI law, states securities laws, the Securities Act
and/or the Exchange Act resulting from the transfer and exchange of the Kobe
Group Shares. The execution and delivery of this Agreement by the Kobe Group
Companies, and the consummation by Kobe Group of the transactions contemplated
hereby, have been duly authorized by all necessary corporate actions of the Kobe
Group Companies, and no other corporate proceedings on the part of the Kobe
Group Companies are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.
Except as
set forth in the Kobe Group Schedule 1.03, Kobe
Sport does not have any subsidiaries, and does not own, beneficially or of
record, any shares of any other corporation. For purposes
hereinafter, the term “Kobe Sport” also includes those subsidiaries set forth on
the Kobe Group Schedules.
Section
1.04 Financial
Statements.
(a) Included
in the Kobe Sport Schedule 1.04 are (i)
the audited balance sheets of Kobe Sport as of December 31, 2008 and December
31, 2007 and the related audited statements of operations, stockholders’ equity
and cash flows for the fiscal years ended December 31, 2008 and December 31,
2007 together with the notes to such statements and the opinion of AGCA CPA Limited,
independent certified public accountants, and (ii) the unaudited financial
statements for the quarter ended September 30, 2009.
(b) All such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved. The
Kobe Sport balance sheets are true and accurate and present fairly as of their
respective dates the financial condition of Kobe Sport. As of the
date of such balance sheets, except as and to the extent reflected or reserved
against therein, Kobe Sport had no liabilities or obligations (absolute or
contingent) which should be reflected in the balance sheets 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 Kobe Sport, in accordance with generally accepted accounting
principles. The statements of operations, stockholders’ equity and cash flows
reflect fairly the information required to be set forth therein by generally
accepted accounting principles.
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(c) Kobe
Sport has duly and punctually paid all governmental fees and taxation which it
has become liable to pay and has duly allowed for all taxation reasonably
foreseeable and is under no liability to pay any penalty or interest in
connection with any claim for governmental fees or taxation and Kobe Sport has
made any and all proper declarations and returns for taxation purposes and all
information contained in such declarations and returns is true and complete and
full provision or reserves have been made in its financial statements for all
governmental fees and taxation.
(d) The books
and records, financial and otherwise, of Kobe Sport are in all material aspects
complete and correct and have been maintained in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved.
(e) All of
Kobe Sports’ assets are reflected on its financial statements, and, except as
set forth in the Kobe Sport Schedules or the financial statements of Kobe Sport
or the notes thereto, Kobe Sport has no material liabilities, direct or
indirect, matured or unmatured, contingent or otherwise.
Section
1.05 Information
The information
concerning Kobe Sport or the Kobe Group Companies set forth in this Agreement
and in the Kobe Sport 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. In
addition, Kobe Sport and the Kobe Group Companies have fully disclosed in
writing to Mondo (through this Agreement or the Kobe Sport Schedules) all
information relating to matters involving the Kobe Group Companies or their
assets or their present or past operations or activities which (i) indicated or
may indicate, in the aggregate, the existence of a greater than $100,000
liability , (ii) have led or may lead to a competitive disadvantage on the part
of the Kobe Group Companies or (iii) either alone or in aggregation with other
information covered by this Section, otherwise have led or may lead to a
material adverse effect on the Kobe Group Companies, their assets, or their
operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to, information
relating to governmental, employee, environmental, litigation and securities
matters and transactions with affiliates.
Section
1.06 Options or
Warrants
Except as
set forth in the Kobe Sport Schedule 1.06, there
are no existing options, warrants, calls, or commitments of any character
relating to the authorized and unissued stock of Kobe Sport.
Section
1.07 Absence of Certain Changes
or Events
Since
September 30, 2009:
(a) There has
not been any material adverse change in the business, operations, properties,
assets, or condition (financial or otherwise) of Kobe Sport;
(b) None of
the Kobe Group Companies have (i) amended its memorandum of association or
articles of association; (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 shares; (iii) made any material change in its method of management,
operation or accounting, (iv) entered into any other material transaction other
than sales in the ordinary course of its business; or (v) made any increase in
or adoption of 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;
and
(c) None of
the Kobe Group Companies have (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 as disclosed herein and except liabilities incurred in the
ordinary course of business; (iii) sold or transferred, or agreed to sell or
transfer, any of its assets, properties, or rights or canceled, or agreed to
cancel, any debts or claims; or (iv) 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) except in connection
with this Agreement.
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Section
1.08 Litigation and
Proceedings. Except as
disclosed on Schedule
1.08, there are no actions, suits, proceedings, or investigations pending
or, to the knowledge of the Kobe Group Companies have after reasonable
investigation, threatened by or against the Kobe Group Companies or affecting
the Kobe Group Companies or their 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. None of the Kobe Group Companies
has any knowledge of any material default on its part with respect to any
judgment, order, 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
1.09 Contracts.
(a) All
“material” contracts, agreements, franchises, license agreements, debt
instruments or other commitments to which any of the Kobe Group
Companies are a party or by which any of them or any of their assets, products,
technology, or properties are bound other than those incurred in the ordinary
course of business are set forth on the Kobe Sport Schedules. A
“material” contract, agreement, franchise, license agreement, debt instrument or
commitment is one which (i) will remain in effect for more than six (6) months
after the date of this Agreement or (ii) involves aggregate obligations of at
least one hundred thousand dollars ($100,000);
(b) All
contracts, agreements, franchises, license agreements, and other commitments to
which any of the Kobe Group Companies are a party or by which its
properties are bound and which are material to the operations of the Kobe Group
Companies taken as a whole are valid and enforceable by the Kobe Group Companies
in all respects, except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally; and
(c) Except as
included or described in the Kobe Sport Schedule 1.09 or
reflected in the most recent Kobe Sport balance sheet, the Kobe Group Companies
are not a party to any 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,
(iii) agreement, contract, or indenture relating to the borrowing of money, (iv)
guaranty of any obligation; (vi) collective bargaining agreement; or (vii)
agreement with any present or former officer or director of the Kobe Group
Companies.
Section
1.10 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, constitute
a default under, or terminate, accelerate or modify the terms of any indenture,
mortgage, deed of trust, or other material agreement, or instrument to which any
of the Kobe Group Companies is a party or to which any of its assets, properties
or operations are subject.
Section
1.11 Compliance With Laws and
Regulations To the best
of their knowledge, the Kobe Group Companies have 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 the Kobe Group Companies or except to the extent that noncompliance
would not result in the occurrence of any material liability for the Kobe Group
Companies. This compliance includes, but is not limited to, the
filing of all reports to date with federal and state securities
authorities.
Section
1.12 Approval of
Agreement The Board
of Directors of Kobe Sport has authorized the execution and delivery of this
Agreement by Kobe Sport and has approved this Agreement and the transactions
contemplated hereby, and will recommend to the Kobe Sport Shareholders that the
Exchange be accepted.
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Section
1.13 Kobe Sport
Schedules The Kobe Group Companies have delivered
to Mondo all of the schedules, required by this Article I which are collectively
referred to as the “Kobe Sport Schedules” and which consist of separate
schedules dated as of the date of execution of this Agreement, all certified by
the chief executive officer of Kobe Sport as complete, true, and correct as of
the date of this Agreement in all material respects.
The Kobe Group Companies shall cause the Kobe Sport
Schedules and the instruments and data delivered to Mondo hereunder to be
promptly updated after the date hereof up to and including the Closing
Date.
Section
1.14 Valid
Obligation This
Agreement and all agreements and other documents executed by the Kobe Group Companies in connection herewith
constitute the valid and binding obligation of the Kobe Group Companies, enforceable in
accordance with its or their terms, except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and subject to the qualification that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefore may be brought.
Section
1.15 Title to Assets; Liens,
Etc. Each of
the Kobe Group Companies has good and marketable
title to its assets, including the assets reflected in the most recent balance
sheet included in the Kobe Sports’ financial statements as set forth in Section 1.04, and in
each case subject to no mortgage, pledge, lien, lease, encumbrance or charge,
other than (a) those resulting from taxes which have not yet become delinquent;
(b) liens and encumbrances which do not materially detract from the value of the
assets subject thereto or materially impair the operations of Kobe Sport or any
subsidiary; (c) those that have otherwise arisen in the ordinary course of
business; and (d) those that would not reasonably be expected to have a material
adverse change in the business, operations, property, inventory, assets, or
condition of the Kobe Group Companies. Each
of the Kobe Group Companies is in compliance with all
material terms of each lease to which it is a party or is otherwise
bound.
Section
1.16 Intellectual
Property. Except as
set forth on Schedule 1.16, each of the Kobe Group Companies owns or possesses licenses
or rights to use all patents, patent applications, patent rights, inventions,
know-how, trade secrets, trademarks, trademark applications, service marks,
service names, trade names and copyrights that it believes are necessary to
enable it to conduct its business as now operated (the “Intellectual
Property”). Except as set forth on Schedule 1.16, there are no
material options, licenses or agreements relating to the Intellectual Property,
nor are the Kobe Group Companies bound by, or a party to,
any material options, licenses or agreements relating to the patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names or copyrights
of any other person or entity. Except as disclosed in the Memorandum,
there is no claim or action or proceeding pending or, to the the Kobe Group Companies’ knowledge, threatened,
that challenges the right of the
Kobe Group Companies with respect to any
Intellectual Property.
Section
1.17 Environmental
Laws. To the
best of the knowledge of the
Kobe Group Companies, the Kobe Group Companies (a) are in compliance with
any and all Environmental Laws (as hereinafter defined), (b) have received
all permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (c) are in compliance with
all terms and conditions of any such permit, license or approval where, in each
of the foregoing clauses (a), (b) and (c), the failure to so comply would
reasonably be expected to have, individually or in the aggregate, a material
adverse change in the business, operations, property, inventory, assets, or
condition of the Kobe Group Companies. The
term “Environmental
Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic
or hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
5
Section
1.18 PRC Laws and
Regulations. The Kobe Group Companies are in compliance with PRC
laws and regulations. All material consents, approvals, authorizations or
licenses requisite under PRC law for the due and proper establishment and
operation of Kobe Sport’s subsidiaries doing business in the PRC have been duly
obtained from the relevant PRC governmental authorities and are in full force
and effect.
Section
1.19 Sarbanes-Oxley; Disclosure
Controls. The Kobe Group Companies will be in compliance in all material
respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it after the Exchange. The Kobe Group Companies shall establish disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for Kobe
Sport and design such disclosure controls and procedures to ensure that material
information relating to the Kobe Group Companies is made known to the certifying
officers by others within those entities.
ARTICLE
II
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF MONDO
As an
inducement to, and to obtain the reliance of Kobe Sport and the Kobe Sport
Shareholders, except as set forth in the Mondo Schedules (as hereinafter
defined), Mondo represents and warrants, as of the date hereof and as of the
Closing Date, as follows:
Section
2.01 Organization
Mondo is
a corporation duly incorporated, validly existing, and in good standing under
the laws of the State of Delaware and has the corporate power and is duly
authorized under all applicable laws, regulations, ordinances, and orders of
public authorities to carry on its business in all material respects as it is
now being conducted. Included in the Mondo Schedules are complete and
correct copies of the certificate of incorporation (the “Articles”) as in
effect on the date hereof. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
violate any provision of Mondo’s certificate of incorporation or
Articles. Mondo has taken all action required by law, its certificate
of incorporation, its Articles, or otherwise to authorize the execution and
delivery of this Agreement, and Mondo has full power, authority, and legal right
and has taken all action required by law, its certificate of incorporation,
Articles, or otherwise to consummate the transactions herein
contemplated.
Section
2.02 Capitalization
(a) Mondo’s
authorized capitalization consists of (a) 40,000,000 shares of common stock, par
value $0.001, of which 1,000,000 shares are issued and outstanding, and (b)
10,000,000 shares of preferred shares, par value $0.001 per share, none of which
are issued and outstanding. All issued and outstanding shares are
legally issued, fully paid, and non-assessable and not issued in violation of
the preemptive or other rights of any person. As of the Closing Date, no shares
of Mondo’s common stock were reserved for issuance upon the exercise of
outstanding options to purchase common stock; (iv) no shares of common stock
were reserved for issuance upon the exercise of outstanding warrants to purchase
Mondos common stock; (v) no shares of preferred stock were reserved for issuance
to any party; and (vi) no shares of common stock were reserved for issuance upon
the conversion of Mondo preferred stock or any outstanding convertible notes,
debentures or securities. All outstanding shares of Mondo’s common
stock have been issued and granted in compliance with (i) all applicable
securities laws and (in all material respects) other applicable laws and
regulations, and (ii) all requirements set forth in any applicable
Contracts.
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(b) There
are no equity securities, partnership interests or similar ownership interests
of any class of any equity security of Mondo, or any securities exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except as contemplated by this Agreement or as set
forth in Schedule
2.02, there are no subscriptions, options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which Mondo is
a party or by which it is bound obligating Mondo to issue, deliver or sell, or
cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition of, any shares of
capital stock, partnership interests or similar ownership interests of Mondo or
obligating Mondo to grant, extend, accelerate the vesting of or enter into any
such subscription, option, warrant, equity security, call, right, commitment or
agreement. There is no plan or arrangement to issue shares of common
stock or preferred stock except as set forth in this Agreement.
Except as
contemplated by this Agreement and except as set forth in Schedule 2.02 hereto,
there are no registration rights, and there is no voting trust, proxy, rights
plan, anti-takeover plan or other agreement or understanding to which Mondo is a
party or by which it is bound with respect to any equity security of any class
of Mondo, and there are no agreements to which Mondo is a party, or which Mondo
has knowledge of, which conflict with this Agreement or the transactions
contemplated herein or otherwise prohibit the consummation of the transactions
contemplated hereunder.
Section
2.03 Subsidiaries and Predecessor
Corporations
Mondo
does not have any predecessor corporation(s), no subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation.
Section
2.04 Financial
Statements.
(a) All
financial statements as filed with the Securities and Exchange Commission have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The Mondo balance sheets
are true and accurate and present fairly as of their respective dates the
financial condition of Mondo. As of the date of such balance sheets,
except as and to the extent reflected or reserved against therein, Mondo had no
liabilities or obligations (absolute or contingent) which should be reflected in
the balance sheets 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 Mondo, in accordance with
generally accepted accounting principles. The statements of operations,
stockholders’ equity and cash flows reflect fairly the information required to
be set forth therein by generally accepted accounting principles;
(b) Mondo 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) Mondo
has
timely filed all state, federal or local income and/or franchise tax returns
required to be filed by it from inception to the date hereof, except for the
2008 federal and state tax returns. Each of such income tax returns
reflects the taxes due for the period covered thereby, except for amounts which,
in the aggregate, are immaterial;
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(d) The books
and records, financial and otherwise, of Mondo are in all material aspects
complete and correct and have been maintained in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved; and
(e) All of
Mondo’s assets are reflected on its financial statements, and, except as set
forth in the Mondo Schedules or the financial statements of Mondo or the notes
thereto, Mondo has no material liabilities, direct or indirect, matured or
unmatured, contingent or otherwise.
Section
2.05 Information
The
information concerning Mondo set forth in this Agreement and the Mondo Schedules
is complete and accurate in all material respects and does not contain any
untrue statements 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. In addition, Mondo has fully disclosed in
writing to Kobe Sport (through this Agreement or the Mondo Schedules) all
information relating to matters involving Mondo or its assets or its present or
past operations or activities which (i) indicated or may indicate, in the
aggregate, the existence of a greater than $1,000 liability , (ii) have led or
may lead to a competitive disadvantage on the part of Mondo or (iii) either
alone or in aggregation with other information covered by this Section,
otherwise have led or may lead to a material adverse effect on Mondo, its
assets, or its operations or activities as presently conducted or as
contemplated to be conducted after the Closing Date, including, but not limited
to, information relating to governmental, employee, environmental, litigation
and securities matters and transactions with affiliates.
Section
2.06 Options or
Warrants
Except as
disclosed on Schedule
2.06, there are no existing options, warrants, calls, or commitments of
any character relating to the authorized and unissued stock of
Mondo. Any such options or warrants listed on Schedule 2.06 shall be
cancelled, redeemed or retired on or prior to the Closing of this contemplated
Share Exchange.
Section
2.07 Absence of Certain Changes
or Events
Since the
date of the most recent Mondo balance sheet:
(a) there has
not been (i) any material adverse change in the business, operations,
properties, assets or condition of Mondo or (ii) any damage, destruction or loss
to Mondo (whether or not covered by insurance) materially and adversely
affecting the business, operations, properties, assets or condition of
Mondo;
(b) Mondo has
not (i) amended its certificate of incorporation or Articles except as required
by this Agreement; (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
outside of the ordinary course of business or material considering the business
of Mondo; (iv) made any material change in its method of management, operation,
or accounting; (v) entered into any transactions or agreements other than in the
ordinary course of business; (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 salaried employees whose monthly
compensation exceed $1,000; 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;
8
(c) Mondo has
not (i) granted or agreed to grant any options, warrants, or other rights for
its stock, 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 or agreed to
pay any material obligations or liabilities (absolute or contingent) other than
current liabilities reflected in or shown on the most recent Mondo balance sheet
and current liabilities incurred since that date in the ordinary course of
business and professional and other fees and expenses in connection with the
preparation of this Agreement and the consummation of the transaction
contemplated hereby; (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 $1,000), or canceled, or agreed to cancel, any debts or claims (except
debts or claims which in the aggregate are of a value less than $1,000); (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 Mondo; 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), except in
connection with this Agreement; and
(d) to its
knowledge, Mondo 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 Mondo.
Section
2.08 Litigation and
Proceedings
There are
no actions, suits, proceedings or investigations pending or, to the knowledge of
Mondo after reasonable investigation, threatened by or against Mondo or
affecting Mondo 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 except as disclosed in the Mondo Schedule
2.08. Mondo has no 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 any circumstance which after reasonable investigation would result in the
discovery of such default.
Section
2.09 Contracts.
(a) Mondo is
not a party to, and its assets, products, technology and properties are not
bound by, any contract, franchise, license agreement, agreement, debt instrument
or other commitments whether such agreement is in writing or oral;
(b) Mondo is
not a party to or bound by, and the properties of Mondo are not subject to any
contract, agreement, other commitment or instrument; any charter or other
corporate restriction; or any judgment, order, writ, injunction, decree, or
award; and
(c) Mondo is
not a party to any 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, (iii) agreement,
contract, or indenture relating to the borrowing of money, (iv) guaranty of any
obligation, (vi) collective bargaining agreement; or (vii) agreement with any
present or former officer or director of Mondo.
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, constitute a default under, or terminate, accelerate or modify the
terms of, any indenture, mortgage, deed of trust, or other material agreement or
instrument to which Mondo is a party or to which any of its assets, properties
or operations are subject.
9
Section
2.11 Compliance With Laws and
Regulations
To the
best of its knowledge, Mondo has complied with all applicable statutes and
regulations of any federal, state, or other applicable governmental entity or
agency thereof. This compliance includes, but is not limited to, the
filing of all reports to date with federal and state securities
authorities.
Section
2.12 Approval of
Agreement
The Board
of Directors of Mondo has authorized the execution and delivery of this
Agreement by Mondo and has approved this Agreement and the transactions
contemplated hereby.
Section
2.13 Material Transactions or
Affiliations
Except as
disclosed herein and in the Mondo Schedules, there exists no contract, agreement
or arrangement between Mondo 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 Mondo to own beneficially, 5% or more of the issued
and outstanding shares of Mondo and which is to be performed in whole or in part
after the date hereof or was entered into not more than three years prior to the
date hereof. Neither any officer, director, nor 5% Shareholders of
Mondo has, or has had since inception of Mondo, any known interest, direct or
indirect, in any such transaction with Mondo which was material to the business
of Mondo. Mondo has no commitment, whether written or oral, to lend
any funds to, borrow any money from, or enter into any other transaction with,
any such affiliated person.
Section
2.14 Mondo
Schedules
Mondo has
delivered to Kobe Sport the schedules required by this Article II, which are
collectively referred to as the “Mondo Schedules” and which consist of separate
schedules, which are dated the date of this Agreement, all certified by the
chief executive officer of Mondo to be complete, true, and accurate in all
material respects as of the date of this Agreement.
Mondo
shall cause the Mondo Schedules and the instruments and data delivered to Kobe
Sport hereunder to be promptly updated after the date hereof up to and including
the Closing Date.
10
Section
2.15 Bank Accounts; Power of
Attorney
Set forth
on Schedule
2.15 hereto, is a true and complete list of (a) all accounts with banks,
money market mutual funds or securities or other financial institutions
maintained by Mondo within the past twelve (12) months, the account numbers
thereof, and all persons authorized to sign or act on behalf of Mondo, (b) all
safe deposit boxes and other similar custodial arrangements maintained by Mondo
within the past twelve (12) months, (c) the check ledger for the last 12 months,
and (d) the names of all persons holding powers of attorney from Mondo or who
are otherwise authorized to act on behalf of Mondo with respect to any matter,
other than its officers and directors, and a summary of the terms of such powers
or authorizations.
Section
2.16 Valid
Obligation.
This
Agreement and all agreements and other documents executed by Mondo in connection
herewith constitute the valid and binding obligation of Mondo, enforceable in
accordance with its or their terms, except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and subject to the qualification that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefore may be brought.
Section
2.17 SEC
Filings
Financial
Statements.
(a) Mondo
is current in its filings with the SEC and has made available to Kobe Sport a
correct and complete copy, or there has been available on EDGAR, copies of each
report, registration statement and definitive proxy statement filed by Mondo
with the SEC for the 36 months prior to the date of this Agreement (the “Mondo SEC Reports”),
which, to Mondo’s knowledge, are all the forms, reports and documents filed by
(and required to be filed by) Mondo with the SEC for the 36 months prior to the
date of this Agreement. As of their respective dates, to Mondo’s knowledge, the
Mondo SEC Reports: (i) were prepared in accordance and complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such Mondo SEC Reports, and (ii) did not at the time they were filed (and if
amended or superseded by a filing prior to the date of this Agreement then on
the date of such filing and as so amended or superceded) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
11
(b) Each
set of financial statements (including, in each case, any related notes thereto)
contained in the Mondo SEC Reports comply as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with U.S. GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, do not contain footnotes as permitted by Form 10-Q
promulgated under the Exchange Act) and each fairly presents in all material
respects the financial position of Mondo at the respective dates thereof and the
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal
adjustments which were not or are not expected to have a material adverse effect
on Mondo taken as a whole.
Section
2.18 Exchange Act
Compliance.
Mondo is
in compliance with, and current in, all of the reporting, filing and other
requirements under the Exchange Act, the shares of common stock have been
registered under Section 12(g) of the Exchange Act, and Mondo is in compliance
with all of the requirements under, and imposed by, Section 12(g) of the
Exchange Act, except where a failure to so comply is not reasonably likely to
have a material adverse effect on Mondo.
Section
2.19 Title to
Property. Mondo does not own or lease any real property or
personal property. There are no options or other contracts under
which Mondo has a right or obligation to acquire or lease any interest in real
property or personal property.
Section
2.20 Intellectual
Property. Mondo does not own, license or otherwise have any
right, title or interest in any intellectual property.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF
THE
KOBE SPORT SHAREHOLDERS
The Kobe
Sport Shareholders hereby represent and warrant, severally and solely, to Mondo
as follows.
Section
3.01 Good
Title. Each of the Section
3.02 he Kobe
Sport Shareholders is the record and beneficial owner, and has good title to his
Kobe Sport Common Stock, with the right and authority to sell and deliver such
Kobe Sport Common Stock, free and clear of all
liens, claims, charges, encumbrances, pledges, mortgages, security interests,
options, rights to acquire, proxies, voting trusts or similar agreements,
restrictions on transfer or adverse claims of any nature
whatsoever. Upon delivery of any certificate or certificates duly
assigned, representing the same as herein contemplated and/or upon registering
of Mondo as the new owner of such Kobe Sport Common Stock in the share register
of Kobe Sport, Mondo will receive good title to such Kobe Sport Common Stock,
free and clear of all liens.
12
Section
3.02 Power and Authority.
Each of the Kobe Sport Shareholders has the legal power, capacity and authority
to execute and deliver this Agreement to consummate the transactions
contemplated by this Agreement, and to perform his obligations under this
Agreement. This Agreement constitutes a legal, valid and binding
obligation of the Kobe Sport Shareholders, enforceable against the Kobe Sport
Shareholders in accordance with the terms hereof.
Section
3.03 No
Conflicts. The execution and delivery of this Agreement by the
Kobe Sport Shareholders and the performance by the Kobe Sport Shareholders of
their obligations hereunder in accordance with the terms hereof: (a) will not
require the consent of any third party or governmental entity under any laws;
(b) will not violate any laws applicable to the Kobe Sport Shareholders and (c)
will not violate or breach any contractual obligation to which the Kobe Sport
Shareholders are a party.
Section
3.04 Finder’s
Fee. Each of the Kobe Sport Shareholders represents and
warrants that it has not created any obligation for any finder’s, investment
banker’s or broker’s fee in connection with the Exchange.
Section
3.05 Purchase Entirely for Own
Account. The Exchange Shares (as defined in Section 4.01 herein) proposed
to be acquired by each of the Kobe Sport Shareholders hereunder will be acquired
for investment for its own account, and not with a view to the resale or
distribution of any part thereof, and each of the Kobe Sport Shareholders has no
present intention of selling or otherwise distributing the Exchange Shares,
except in compliance with applicable securities laws.
Section
3.06 Acquisition of Exchange
Shares for Investment.
(a) Each Kobe
Sport Shareholder is acquiring the Exchange Shares for investment for Kobe Sport
Shareholder’s own account and not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and each Kobe Sport Shareholder
has no present intention of selling, granting any participation in, or otherwise
distributing the same. Each Kobe Sport Shareholder further represents
that he or she does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participation to such person or to
any third person, with respect to any of the Exchange Shares.
(b) Each Kobe
Sport Shareholder represents and warrants that he or she: (i) can bear the
economic risk of his respective investments, and (ii) possesses such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of the investment in Mondo and its
securities.
13
(c) Each Kobe
Sport Shareholder who is not a “U.S. Person” as defined in Rule 902(k) of
Regulation S of the Securities Act (“Regulation S”) (each
a “Non-U.S.
Shareholder”) understands that the Exchange Shares are not registered
under the Securities Act and that the issuance thereof to such Kobe Sport
Shareholder is intended to be exempt from registration under the Securities Act
pursuant to Regulation S. Each Non-U.S. Shareholder has no intention
of becoming a U.S. Person. At the time of the origination of contact
concerning this Agreement and the date of the execution and delivery of this
Agreement, each Non-U.S. Shareholder was outside of the United
States. Each certificate representing the Exchange Shares shall be
endorsed with the following legends, in addition to any other legend required to
be placed thereon by applicable federal or state securities laws:
“THE
SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED
IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”))
AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED
UNDER THE SECURITIES ACT.”
“TRANSFER
OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT
BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
(d) Each Kobe
Sport Shareholder who is a “U.S. Person” as defined in Rule 902(k) of Regulation
S (each a “U.S.
Shareholder”) understands that the Exchange Shares are not registered
under the Securities Act and that the issuance thereof to such Kobe Sport
Shareholder is intended to be exempt from registration under the Securities Act
pursuant to Regulation D promulgated thereunder (“Regulation
D”). Each U.S. Shareholder represents and warrants that he is
an “accredited investor” as such term is defined in Rule 501 of Regulation D or,
if not an accredited investor, that such Kobe Sport Shareholder otherwise meets
the suitability requirements of Regulation D and Section 4(2) of the Securities
Act (“Section
4(2)”). Each
U.S. Shareholder agrees to provide documentation to Mondo prior to Closing as
may be requested by Mondo to confirm compliance with Regulation D and/or Section
4(2), including, without limitation, a letter of investment intent or similar
representation letter and a completed investor questionnaire. Each certificate
representing the Exchange Shares issued to such Kobe Sport Shareholder shall be
endorsed with the following legends, in addition to any other legend required to
be placed thereon by applicable federal or state securities laws:
“THIS
SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR APPLICABLE STATE
SECURITIES OR “BLUE SKY” LAWS.”
“TRANSFER
OF THESE SECURITIES IS PROHIBITED UNLESS A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT WITH RESPECT TO SUCH SECURITY SHALL THEN BE IN EFFECT AND SUCH
TRANSFER HAS BEEN QUALIFIED UNDER ALL APPLICABLE STATE SECURITIES OR “BLUE SKY”
LAWS, OR AN EXEMPTION THEREFROM SHALL BE AVAILABLE UNDER THE ACT AND SUCH
LAWS.”
14
(e) Each Kobe
Sport Shareholder acknowledges that neither the SEC, nor the securities
regulatory body of any state or other jurisdiction, has received, considered or
passed upon the accuracy or adequacy of the information and representations made
in this Agreement.
(f) Each Kobe
Sport Shareholder acknowledges that he has carefully reviewed such information
as he has deemed necessary to evaluate an investment in Mondo and its
securities, and with respect to each U.S. Shareholder, that all information
required to be disclosed to such Kobe Sport Shareholder under Regulation D has
been furnished to such Kobe Sport Shareholder by Mondo. To the full
satisfaction of each Kobe Sport Shareholder, he has been furnished all materials
that he has requested relating to Mondo and the issuance of the Exchange Shares
hereunder, and each Kobe Sport Shareholder has been afforded the opportunity to
ask questions of Mondo’s representatives to obtain any information necessary to
verify the accuracy of any representations or information made or given to the
Kobe Sport Shareholders. Notwithstanding the foregoing, nothing
herein shall derogate from or otherwise modify the representations and
warranties of Mondo set forth in this Agreement, on which each of the Kobe Sport
Shareholders have relied in making an exchange of his shares Kobe Sport for the
Exchange Shares.
(g) Each Kobe
Sport Shareholder understands that the Exchange Shares may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Exchange Shares or any available exemption
from registration under the Securities Act, the Exchange Shares may have to be
held indefinitely. Each Kobe Sport Shareholder further acknowledges
that the Exchange Shares may not be sold pursuant to Rule 144 promulgated under
the Securities Act unless all of the conditions of Rule 144 are satisfied
(including, without limitation, Mondo’s compliance with the reporting
requirements under the Securities Exchange Act of 1934, as amended (“Exchange
Act”)).
(h) The
Kobe Sport Shareholder agrees that, notwithstanding anything contained herein to
the contrary, the warranties, representations, agreements and covenants of the
Kobe Sport Shareholder under this Section 3.06 shall survive the
Closing.
Section
3.9 Additional Legend;
Consent. Additionally, the Exchange Shares will bear any legend required
by the “blue sky” laws of any state to the extent such laws are applicable to
the securities represented by the certificate so legended. Each of the Kobe
Sport Shareholders consents to Mondo making a notation on its records or giving
instructions to any transfer agent of Exchange Shares in order to implement the
restrictions on transfer of the Exchange Shares.
15
ARTICLE
IV
PLAN
OF EXCHANGE
Section
4.01 The
Exchange.
On the
terms and subject to the conditions set forth in this Agreement, on the Closing
Date (as defined in Section 4.03), each of the Kobe Sport Shareholders who has
elected to accept the exchange offer described herein by executing this
Agreement, shall assign, transfer and deliver, free and clear of all liens,
pledges, encumbrances, charges, restrictions or known claims of any kind,
nature, or description, the number of shares of Kobe Sport set forth on the Kobe
Sport Schedules attached hereto, constituting all of the shares of Kobe Sport
held by such shareholder; the objective of such Exchange being the acquisition
by Mondo of not less than 100% of the issued and outstanding shares of Kobe
Sport. In exchange for the transfer of such securities by the Kobe
Sport Shareholders, Mondo shall issue to the Kobe Sport Shareholders, his
affiliates or assigns, a total of 9,000,000 shares pursuant to Table 1 attached
hereto, representing 90.00% of the total issued and outstanding shares of Mondo,
for all of the outstanding shares of Kobe Sport held by the Kobe Sport
Shareholders (the “Exchange Shares”). At
the Closing Date, each of the Kobe Sport Shareholders shall, on surrender of his
certificate or certificates representing his Kobe Sport shares to Mondo or its
registrar or transfer agent, be entitled to receive a certificate or
certificates evidencing his proportionate interest in the Exchange
Shares.
Upon
consummation of the transaction contemplated herein, all of the issued and
outstanding shares of Kobe Sport shall be held by Mondo. Upon
consummation of the transaction contemplated herein there shall be 10,000,000
shares of Mondo common stock issued and outstanding.
Section
4.02 Satisfaction of All
Outstanding Liabilities.
Prior to the Closing Date, Mondo
shall satisfy all outstanding liabilities.
Section
4.03 Closing
The
closing (the “Closing” or the
“Closing Date”)
of the transactions contemplated by this Agreement shall occur following the
payment of the outstanding liabilities of Mondo, which may be paid from the
proceeds at Closing, and upon the exchange of the shares of Mondo and Kobe Sport
as described in Section 4.01 herein. Such Closing shall take place at a mutually
agreeable time and place, and be conditioned upon all of the conditions of the
Offering being met.
16
Section
4.04 Closing
Events
At the
Closing, Mondo, Kobe Sport and the Kobe Sport Shareholders shall execute,
acknowledge, and deliver (or shall ensure 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 at or prior to the Closing, 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.
Section
4.05 Termination
This
Agreement may be terminated by the Board of Directors of Kobe Sport or Mondo
only in the event that Mondo or Kobe Sport do not meet the conditions precedent
set forth in Articles VI and VII. If this Agreement is terminated
pursuant to this section, this Agreement shall be of no further force or effect,
and no obligation, right or liability shall arise hereunder.
ARTICLE
V
SPECIAL
COVENANTS
Section
5.01 Access to Properties and
Records
Mondo
and Kobe Sport will each afford to the officers and authorized
representatives of the other full access to the properties, books and records of
Mondo or Kobe Sport , as the case may be, in order that each may have a 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 Mondo or Kobe Sport, as the case may be, as the other shall from
time to time reasonably request. Without limiting the foregoing, as
soon as practicable after the end of each fiscal quarter (and in any event
through the last fiscal quarter prior to the Closing Date), each party shall
provide the other with quarterly internally prepared and unaudited financial
statements.
Section
5.02 Delivery of Books and
Records
At the
Closing, Mondo shall deliver to Kobe Sport, the originals of the corporate
minute books, books of account, contracts, records, and all other books or
documents of Mondo which is now in the possession of Mondo or its
representatives.
Section
5.03 Third Party Consents and
Certificates
Mondo and
Kobe Sport agree to cooperate with each other in order to obtain any required
third party consents to this Agreement and the transactions herein
contemplated.
17
Section
5.04 Designation of Directors and
Officer.
Upon the
effectiveness of an information statement required by Rule 14f-1 promulgated
under the Exchange Act, Qionglin Lin, Mendoza Anding Lin and Aling Lin will take
positions as Directors of Mondo, and the existing officers and directors of
Mondo, Thomas Rose, Marc Ross and Darrin Ocasio, after the signing of this
Agreement, shall tender their resignations of their positions held with Mondo
effective ten (10) days after the mailing of the Schedule 14f-1. In
addition, upon the signing of this Agreement, Mondo shall immediately appoint
Qionglin Lin, Mendoza Anding Lin and Tommy Lo as the officers of
Mondo.
Section
5.05 Indemnification.
(a) Kobe
Sport hereby agrees to indemnify Mondo and each of the officers, agents and
directors of Mondo 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) (the “Loss”), to which it
or they may become subject arising out of or based on any inaccuracy appearing
in or misrepresentations made under Article I of 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 one year following the Closing, up to a maximum amount of
$25,000.
(b) The Kobe
Sport Shareholders agrees to indemnify Mondo and each of the officers, agents
and directors of Mondo as of the date of execution of this Agreement against any
Loss, to which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentations made under Article III of 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 one year following the Closing, up to a
maximum amount of $25,000.
(c) Notwithstanding
the limitation set forth in Section 8.11, from and after the Closing Date until
the expiration of the twelve-month anniversary of the Closing Date, the Mondo
Shareholder will indemnify and hold harmless Kobe Group, the Kobe Sport
Shareholders, and their respective officers, directors, agents, attorneys and
employees, and each person, if any, who controls or may “control” (within the
meaning of the Securities Act) any of the forgoing persons or entities
from and against any and all losses, costs, damages, liabilities and expenses
arising from claims, demands, actions, causes of action, including, without
limitation, legal fees, (collectively, “Damages”) arising out of any
(i) any breach of representation or warranty made by Mondo or the Mondo
Shareholder in this Agreement, and in any certificate delivered by Mondo or the
Mondo Shareholder pursuant to this Agreement, (ii) any breach by Mondo or the
Mondo Shareholder of any covenant, obligation or other agreement made by Mondo
or the Mondo Shareholder in this Agreement, and (iii) a third-party claim based
on any acts or omissions by Mondo or the Mondo Shareholder since inception
through and including the Closing Date, up to a maximum amount of
$25,000.
18
Section
5.06 The Acquisition of Common
Shares of
Mondo
Mondo and
Kobe Sport understand and agree that the consummation of this Agreement
including the issuance of the common shares of Mondo to the Kobe Sport
Shareholders in exchange for the Kobe Sport Shares as contemplated hereby
constitutes the offer and sale of securities under the Securities Act and
applicable state statutes. Mondo and Kobe Sport agree that such
transactions shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes, which
depend, among other items, on the circumstances under which such securities are
acquired.
(a) In
connection with the transaction contemplated by this Agreement, Mondo and Kobe
Sport shall each file, with the assistance of the other and their respective
legal counsel, such notices, applications, reports, or other instruments as may
be deemed by them to be necessary or appropriate in an effort to document
reliance on such exemptions, and the appropriate regulatory authority in the
states where the shareholders of Kobe Sport reside unless an exemption requiring
no filing is available in such jurisdictions, all to the extent and in the
manner as may be deemed by such parties to be appropriate.
(b) In order
to more fully document reliance on the exemptions as provided herein, Kobe
Sport, the Kobe Sport Shareholders, and Mondo shall execute and deliver to the
other, at or prior to the Closing, such further letters of representation,
acknowledgment, suitability, or the like as Kobe Sport or Mondo and their
respective counsel may reasonably request in connection with reliance on
exemptions from registration under such securities laws.
(c) The Kobe
Sport Shareholders acknowledges that the basis for relying on exemptions from
registration or qualifications are factual, depending on the conduct of the
various parties, and that no legal opinion or other assurance will be required
or given to the effect that the transactions contemplated hereby are in fact
exempt from registration or qualification.
Section
5.07 Payment
of Liabilities. Recognizing
the need to extinguish all existing liabilities of Mondo prior to the Exchange,
Kobe Sport has indicated it will not enter into this Agreement unless Mondo has
arranged for the payment and discharge of all of Mondo’s liabilities, including
all of Mondo’s accounts payable and any outstanding legal fees incurred prior to
the Closing Date. Accordingly, Mondo has agreed to arrange for the
payment and discharge of all such liabilities.
Section
5.08 Assistance with
Post-Closing SEC Reports and Inquiries. Upon the
reasonable request of Kobe Sport, after the Closing Date, the Mondo Shareholder
shall use its reasonable best efforts to provide such information available to
it, including information, filings, reports, financial statements or other
circumstances of Mondo occurring, reported or filed prior to the Closing, as may
be necessary or required by Mondo for the preparation of the reports that Mondo
is required to file after Closing with the SEC to remain in compliance and
current with its reporting requirements under the Exchange Act, or filings
required to address and resolve matters as may relate to the period prior to
Closing and any SEC comments relating thereto or any SEC inquiry
thereof.
Section
5.09 Filing of 2008 Federal and
State Tax Returns. Within a reasonable time, but in no event later than
ten (10) business days following the Closing hereof, Mondo shall cause to have
its tax returns for 2008 filed with the federal and/or state government, as
applicable, and deliver copies of such tax returns to Kobe Sport at the time of
filing.
19
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF MONDO
The
obligations of Mondo under this Agreement are subject to the satisfaction, at or
before the Closing Date, of the following conditions:
Section
6.01 Accuracy of Representations
and Performance of Covenants
The
representations and warranties made by Kobe Sport and Kobe Sport Shareholders 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
and as of the Closing Date (except for changes therein permitted by this
Agreement). Kobe Sport shall have performed or complied with all
covenants and conditions required by this Agreement to be performed or complied
with by Kobe Sport prior to or at the Closing. Mondo shall be
furnished with a certificate, signed by a duly authorized executive officer of
Kobe Sport and dated the Closing Date, to the foregoing effect.
Section
6.02 Officer’s
Certificate
Mondo
shall have been furnished with a certificate dated the Closing Date and signed
by a duly authorized officer of Kobe Sport to the effect that no litigation,
proceeding, investigation, or inquiry is pending, or to the best knowledge of
Kobe Sport 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 Kobe Sport Schedules, by or against Kobe Sport,
which might result in any material adverse change in any of the assets,
properties, business, or operations of Kobe Sport.
Section
6.03 Good
Standing
Within
fifteen (15) business days from the Closing Date, Mondo shall have received a
certificate of good standing from The Registrar of Corporate Affairs of the
British Virgin Islands, certifying that Kobe Sport is in good standing as a
company in the British Virgin Islands.
Section
6.04 Approval by Kobe Sport
Shareholders
The
Exchange shall have been approved by the holders of not less than fifty and one
tenths percent (50.01%) of the shares, including voting power, of Kobe Sport,
unless a lesser number is agreed to by Mondo.
Section
6.05 No Governmental
Prohibition
No order,
statute, rule, regulation, executive order, injunction, stay, decree, judgment
or restraining order shall have been enacted, entered, promulgated or enforced
by any court or governmental or regulatory authority or instrumentality which
prohibits the consummation of the transactions contemplated hereby.
20
Section
6.06 Consents
All
consents, approvals, waivers or amendments pursuant to all contracts, licenses,
permits, trademarks and other intangibles in connection with the transactions
contemplated herein, or for the continued operation of Kobe Sport after the
Closing Date on the basis as presently operated shall have been
obtained.
Section
6.07 Legal Opinion. Mondo
shall have been furnished with an opinion dated the Closing Date, from the legal
counsel of Kobe Sport, covering such matters as it relates to this Agreement and
other matters reasonably requested by Mondo.
Section
6.08 Other
Items.
(a) Mondo
shall have received a list containing the name, address, and number of shares
held by the Kobe Sport Shareholders as of the date of Closing, certified by an
executive officer of Kobe Sport as being true, complete and accurate;
and
(b) Mondo
shall have received such further opinions, documents, certificates or
instruments relating to the transactions contemplated hereby as Mondo may
reasonably request.
ARTICLE
VII
CONDITIONS
PRECEDENT TO OBLIGATIONS OF KOBE SPORT
AND
THE KOBE SPORT SHAREHOLDERS
The
obligations of Kobe Sport and the Kobe Sport Shareholders under this Agreement
are subject to the satisfaction, at or before the Closing Date, of the following
conditions:
Section
7.01 Accuracy of Representations
and Performance of Covenants
The
representations and warranties made by Mondo 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. Additionally, Mondo shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by Mondo.
Section
7.02 Closing
Certificate
Kobe
Sport shall have been furnished with certificates dated the Closing Date and
signed by duly authorized executive officers of Mondo, to the effect that no
litigation, proceeding, investigation or inquiry is pending, or to the best
knowledge of Mondo 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 Mondo Schedules, by or against Mondo, which
might result in any material adverse change in any of the assets, properties or
operations of Mondo.
21
Section
7.03 Officer’s
Certificate. Kobe Sport shall have been furnished with certificates dated
the Closing Date and signed by duly authorized executive officers of Mondo,
certifying that there are no existing liabilities as of the Closing Date and
that each representations and warranties of Mondo contained in this Agreement
(i) shall have been true and correct as of the date of this Agreement and (ii)
shall be true and correct on and as of the Closing Date with the same force and
effect as if made on and as of the Closing.
Section
7.04 Director’s
Certificate. Kobe Sport shall have been furnished with a
certificate dated the Closing Date and signed by a director of Mondo, certifying
to Kobe Sport and the Kobe Sport Shareholders the resolutions adopted by the
Board of Directors of Mondo approving, as applicable, the transactions
contemplated by this Agreement and the issuance of the common stock of Mondo,
certifying the certificates of incorporation and the current versions of its
Articles or other incorporation documents and certifying as to the signatures
and authority of persons signing this Agreement and related documents on its
behalf.
Section
7.05 Good Standing. Kobe
Sport shall have received a certificate of good standing from the State of
Delaware, dated as of a date within five (5) calendar days prior to the Closing
Date certifying that Mondo is in good standing in the State of Delaware.
Section
7.07 No Governmental
Prohibition
No order,
statute, rule, regulation, executive order, injunction, stay, decree, judgment
or restraining order shall have been enacted, entered, promulgated or enforced
by any court or governmental or regulatory authority or instrumentality which
prohibits the consummation of the transactions contemplated hereby.
Section
7.08 Consents
All
consents, approvals, waivers or amendments pursuant to all contracts, licenses,
permits, trademarks and other intangibles in connection with the transactions
contemplated herein, or for the continued operation of Mondo after the Closing
Date on the basis as presently operated shall have been obtained.
Section
7.9 Shareholder
Report. Kobe Sport shall receive a shareholder’s report
reflective of the Mondo Shareholder which does not exceed 1,000,000 shares
issued and outstanding as of the Closing Date.
Section
7.10 Other
Items
Kobe
Sport shall have received further opinions, documents, certificates, or
instruments relating to the transactions contemplated hereby as Kobe Sport may
reasonably request.
22
ARTICLE
VIII
MISCELLANEOUS
Section
8.01 Brokers
Mondo and
Kobe Sport agree that, except as set out on Schedule 7.01 attached hereto, there
were no finders or brokers involved in bringing the parties together or who were
instrumental in the negotiation, execution or consummation of this
Agreement. Mondo and Kobe Sport each agree to indemnify the other
against any claim by any third person other than those described above for any
commission, brokerage, or finder’s fee arising from 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
8.02 Governing
Law
This
Agreement shall be governed by, enforced, and construed under and in accordance
with the laws of the United States of America and, with respect to the matters
of state law, with the laws of the State of Delaware. Venue for all
matters shall be in New York, New York, without giving effect to principles of
conflicts of law thereunder. Each of the parties (a) irrevocably
consents and agrees that any legal or equitable action or proceedings arising
under or in connection with this Agreement shall be brought exclusively in the
federal courts of the United States. By execution and delivery of this
Agreement, each party hereto irrevocably submits to and accepts, with respect to
any such action or proceeding, generally and unconditionally, the jurisdiction
of the aforesaid court, and irrevocably waives any and all rights such party may
now or hereafter have to object to such jurisdiction.
23
Section
8.03 Notices
Any
notice or other communications required or permitted hereunder
shall be in writing and shall be sufficiently given if personally
delivered to it or sent by telecopy, overnight courier or registered mail or
certified mail, postage prepaid, addressed as follows:
|
|
If
to Kobe Sport, to:
|
Hengfeng
Shoes & Garments Co., Ltd.
|
|
|
Attn:
Anding Mendoza Lin, CEO
|
|
|
Yangdai
Village, Chendai County
|
|
|
Jinjiang
City, Fujian Province
|
|
|
Facsimile:
86 (151) 1249-4568
|
|
|
With
copies to (which copies shall not constitute
notice):
|
|
|
Anslow
& Jaclin, LLP
|
|
|
Attn:
Richard I. Anslow, Esq.
|
|
|
Eric
M. Stein, Esq.
|
|
|
195
Route 9 South, Suite 204
|
|
|
Manalapan,
New Jersey 07726
|
|
|
Facsimile:
(732) 577-1188
|
|
|
If
to Mondo, to:
|
Mondo
Acquisition III, Inc.
|
|
|
Attn:
Thomas Rosa
|
|
|
61
Broadway, 32nd
Floor
|
|
|
New
York, New York 10006
|
|
|
Facsimile:
(212) 930-9725
|
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 (i) upon receipt, if personally delivered, (ii) on the day
after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section
8.04 Attorney’s
Fees
In the
event that either party institutes any action or suit to enforce this Agreement
or to secure relief from any default hereunder or breach hereof, the prevailing
party shall be reimbursed by the losing party for all costs, including
reasonable attorney’s fees, incurred in connection therewith and in enforcing or
collecting any judgment rendered therein.
Section
8.05 Confidentiality
Each
party hereto agrees with the other that, unless and until the transactions
contemplated by this Agreement have been consummated, it and its 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 or information is published,
is a matter of public knowledge, or is required by law to be published; or (ii)
to the extent that such data or information must be used or disclosed in order
to consummate the transactions contemplated by this Agreement. In the
event of the termination of this Agreement, each party shall return to the other
party all documents and other materials obtained by it or on its behalf and
shall destroy all copies, digests, work papers, abstracts or other materials
relating thereto, and each party will continue to comply with the
confidentiality provisions set forth herein.
24
Section
8.06 Public Announcements and
Filings
Unless
required by applicable law or regulatory authority, none of the parties will
issue any report, statement or press release to the general public, to the
trade, to the general trade or trade press, or to any third party (other than
its advisors and representatives in connection with the transactions
contemplated hereby) or file any document, relating to this Agreement and the
transactions contemplated hereby, except as may be mutually agreed by the
parties. Copies of any such filings, public announcements or
disclosures, including any announcements or disclosures mandated by law or
regulatory authorities, shall be delivered to each party at least one (1)
business day prior to the release thereof.
Section
8.07 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
8.08 Third Party
Beneficiaries
This
contract is strictly between Mondo and Kobe Sport, and, except as specifically
provided, no director, officer, stockholder (other than the Kobe Sport
Shareholders), employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this
Agreement.
Section
8.09 Expenses
Subject
to Article VI and VII above, whether or not the Exchange is consummated, each of
Mondo and Kobe Sport will bear their own respective expenses, including legal,
accounting and professional fees, incurred in connection with the Exchange or
any of the other transactions contemplated hereby.
Section
8.10 Entire
Agreement
This
Agreement represents the entire agreement between the parties relating to the
subject matter thereof and supersedes all prior agreements, understandings and
negotiations, written or oral, with respect to such subject matter.
Section
8.11 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 a period of two years.
Section
8.12 Counterparts
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.
Section
8.13 Amendment or
Waiver
25
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 by 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 may be extended by a writing signed by the party or parties for
whose benefit the provision is intended.
Section
8.14 Best
Efforts
Subject
to the terms and conditions herein provided, each party shall use its best
efforts to perform or fulfill all conditions and obligations to be performed or
fulfilled by it under this Agreement so that the transactions contemplated
hereby shall be consummated as soon as practicable. Each party also
agrees that it shall use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
this Agreement and the transactions contemplated herein.
[Signature
Pages Follow]
[Signature
Page to Share Exchange Agreement]
26
IN WITNESS WHEREOF, the
corporate parties hereto have caused this Agreement to be executed by their
respective officers, hereunto duly authorized, as of the date first-above
written.
| MONDO ACQUISITION III, INC. | |||
|
|
By:
|
||
| Name: Thomas A. Rose | |||
| Title: President | |||
|
THE
SHAREHOLDER OF MONDO ACQUISTION I, INC.:
MONDO
MANAGEMENT CORP.
|
|||
|
|
By:
|
||
| Name: | |||
| Title: | |||
| KOBE SPORT (INTERNATIONAL) COMPANY, LTD. | |||
|
|
By:
|
||
| Name: Anding Mendoza Lin | |||
| Title: Chief Executive Officer | |||
| HONG KONG NAM KWONG TRADING COMPANY LTD. | |||
|
|
By:
|
||
| Name: | |||
| Title: Chief Executive Officer | |||
| HENGFENG SHOES & GARMENT CO., LTD. | |||
|
|
By:
|
||
| Name: | |||
| Title: | |||
27
Approved
and Accepted by the Kobe Sport Shareholders:
|
Name
|
Signature
|
|
|
Anding
Mendoza Lin
Name:
Title:
|
___________________________
|
|
|
Worldluck
Holdings Ltd.
Name:
Title:
|
___________________________
|
|
|
Zhang
Huide
Name:
Title:
|
___________________________
|
|
|
Xu
Wen Zhan
Name:
Title:
|
___________________________
|
|
28
Table 1:Exchange Shares to be
Issued
|
Name
|
Number of Shares
|
||
|
Anding
Mendoza Lin
|
6,300,000 | ||
|
Worldluck
Holdings Limited
|
1,800,000 | ||
|
Zhang
Huide
|
450,000 | ||
|
Xu
Wen Zhan
|
450,000 | ||
|
Total
|
9,000,000 | ||
29