Share Exchange Agreement 2
Share Exchange Agreement 2
Share Exchange Agreement 2
RECITALS
WHEREAS, Hotgate Technology (M) Sdn Bhd owns 30% of PT Hotgate Technology
Indonesia, an Indonesian company (“PT Hotgate Technology) and 40% of Hotgate
Technology Brunei Sdn Bhd, a Brunei registered company (“Hotgate Technology Brunei”);
and
1.1 The Exchange. At the Closing (as hereinafter defined), RNS shall acquire 100%
ownership of HOTGATE. Consideration to be paid by RNS shall be a total of 121,108,929
shares (post 1:2.5 forward split) of its common stock (the “Exchange Shares”) in exchange
for 100% ownership of HOTGATE (such share exchange shall be referred to herein as the
“Exchange”). The specific allocation of the Exchange Shares shall be set forth on Exhibit A
attached hereto. The Exchange shall take place upon the terms and conditions provided for in
this Agreement and in accordance with applicable law. Immediately following completion of
the share exchange transaction through issuance of the Exchange Shares, RNS shall have a
total of approximately 186,321,429 shares of its common stock issued and outstanding. For
Federal income tax purposes, it is intended that the Exchange shall constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended (the “Code”).
1.2 Closing and Effective Time. Subject to the provisions of this Agreement, the parties
shall hold a closing (the "Closing") on (i) the first business day on which the last of the
conditions set forth in Article V to be fulfilled prior to the Closing is fulfilled or waived or
(ii) at such time and place as the parties hereto may agree. Such date shall be the date of
Exchange (the "Effective Time"), but in no event shall the Closing occur later than June 2,
2008 unless both parties agree, in writing, to extend the Closing beyond that date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of RNS. RNS represents and warrants to HOTGATE
as follows:
(c) Certificate of Incorporation, Bylaws, and Minute Books. The copies of the
Articles of Incorporation and of the Bylaws of RNS which have been delivered to
HOTGATE are true, correct and complete copies thereof. The minute book of RNS, which
has been made available for inspection, contains accurate minutes of all meetings and
accurate consents in lieu of meetings of the Board of Directors (and any committee thereof)
and of the Shareholders of RNS since the date of incorporation and accurately reflects all
transactions referred to in such minutes and consents in lieu of meetings.
(d) Authority. RNS has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of RNS. No other corporate or
shareholder proceedings on the part of RNS are necessary to authorize the Exchange, or the
other transactions contemplated hereby.
(e) Conflict with Other Agreements; Approvals. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated hereby will
not result in any violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien, pledge, security interest or other
encumbrance on assets (any such conflict, violation, default, right of termination, cancellation
or acceleration, loss or creation, a "violation") pursuant to any provision of the Articles of
Incorporation or Bylaws or any organizational document of RNS or, result in any violation of
any loan or credit agreement, note, mortgage, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to RNS which violation would
have a material adverse effect on RNS taken as a whole. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity") is required by or with respect to RNS in connection with the
execution and delivery of this Agreement by RNS or the consummation by RNS of the
transactions contemplated hereby.
(f) Books and Records. RNS has made and will make available for inspection by
HOTGATE upon reasonable request all the books of RNS relating to the business of RNS.
Such books of RNS have been maintained in the ordinary course of business. All documents
furnished or caused to be furnished to HOTGATE by RNS are true and correct copies, and
there are no amendments or modifications thereto except as set forth in such documents.
(g) Compliance with Laws. RNS is and has been in compliance in all material
respects with all laws, regulations, rules, orders, judgments, decrees and other requirements
and policies imposed by any Governmental Entity applicable to it, its properties or the
operation of its businesses.
(h) Dilutive Securities. RNS has no dilutive securities of any kind, including but
not limited to warrants, options or employee stock options outstanding.
(i) Litigation. There is no suit, action or proceeding pending, or, to the knowledge
of RNS, threatened against or affecting RNS which is reasonably likely to have a material
adverse effect on RNS, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against RNS having, or which, insofar as
reasonably can be foreseen, in the future could have, any such effect.
(j) Tax Returns. RNS has duly filed or will file prior to Closing any tax reports and
returns required to be filed by it and has fully paid all taxes and other charges claimed to be
due from it by any federal, state or local taxing authorities. There are not now any pending
questions relating to or claims asserted for, taxes or assessments asserted upon RNS.
(b) Capital Structure. There are no options, warrants, calls, agreements or other
rights to purchase or otherwise acquire from HOTGATE at any time, or upon the happening
of any stated event, any share of the capital stock of HOTGATE.
(d) Authority. HOTGATE has all requisite power to enter into this Agreement and,
subject to approval of the proposed transaction by its shareholders, has the requisite power
and authority to consummate the transactions contemplated hereby. Except as specified
herein, no other corporate or shareholder proceedings on the part of HOTGATE are necessary
to authorize the Exchange and the other transactions contemplated hereby.
(e) Conflict with Agreements; Approvals. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of any provision of the Certificate of Incorporation or
Bylaws of HOTGATE or of any loan or credit agreement, note, mortgage, indenture, lease,
benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable to HOTGATE
or its properties or assets except for any such conflict or violation, which when taken together
with all other conflict or violation, is not likely to have a material adverse effect on the
business of the relevant Acquirer taken as a whole. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to HOTGATE in connection with the execution and delivery of
this Agreement by HOTGATE, or the consummation by HOTGATE of the transactions
contemplated hereby.
(f) Books and Records. HOTGATE has made and will make available for
inspection by RNS upon reasonable request all the books of account, relating to the business
of HOTGATE. Such books of account have been maintained in the ordinary course of
business. All documents furnished or caused to be furnished to RNS by HOTGATE are true
and correct copies, and there are no amendments or modifications thereto except as set forth
in such documents.
(g) Compliance with Laws. HOTGATE is and has been in compliance in all
material respects with all laws, regulations, rules, orders, judgments, decrees and other
requirements and policies imposed by any Governmental Entity applicable to it, its properties
or the operation of its businesses.
(i) Litigation. There is no suit, action or proceeding pending, or, to the knowledge
of HOTGATE threatened against or affecting HOTGATE, which is reasonably likely to have
a material adverse effect on HOTGATE, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against HOTGATE having, or
which, insofar as reasonably can be foreseen, in the future could have, any such effect.
(j) Taxes. HOTGATE has filed or will file within the time prescribed by law
(including extension of time approved by the appropriate taxing authority) all tax returns and
reports required to be filed with all other jurisdictions where such filing is required by law;
and HOTGATE has paid, or made adequate provision for the payment of all taxes, interest,
penalties, assessments or deficiencies due and payable on, and with respect to such periods.
HOTGATE knows of (i) no other tax returns or reports which are required to be filed which
have not been so filed and (ii) no unpaid assessment for additional taxes for any fiscal period
or any basis therefore.
(b) Unqualified Right to Transfer Shares. Each Shareholder has the unqualified
right to sell, assign, and deliver the shares of HOTGATE and, upon consummation of the
transactions contemplated by this Agreement, RNS will acquire good and valid title to such
shares, free and clear of all liens, claims, options, charges, and encumbrances of whatsoever
nature.
(d) Share Ownership. The Shareholders are presently the only shareholders of
HOTGATE, and collectively own 100% of the equity ownership of HOTGATE. Redtone
Telecommunications Sdn Bhd owns 30% of HOTGATE, Pang Wee Tak owns 29.7% of
HOTGATE, Alvin James owns 0.3% of HOTGATE, and Michael Yang owns 40% of
HOTGATE.
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS
RESERVED
ARTICLE IV
ADDITIONAL AGREEMENTS AND RELATED TRANSACTIONS
4.1 Restricted RNS Shares. The Exchange Shares will not be registered under the
Securities Act, but will be issued pursuant to applicable exemptions from such registration
requirements for transactions not involving a public offering and/or for transactions which
constitute “offshore transactions” as defined in Regulation S under the Securities Act of
1933. Accordingly, the Exchange Shares will constitute "restricted securities" for purposes of
the Securities Act and the holders of Exchange Shares will not be able to transfer such shares
except upon compliance with the registration requirements of the Securities Act or in reliance
upon an available exemption therefrom. The certificates evidencing the Exchange Shares
shall contain a legend to the foregoing effect and the holders of such shares shall deliver at
Closing an Investment Letter acknowledging the fact that the Exchange Shares are restricted
securities and agreeing to the foregoing transfer restrictions.
4.2 Access to Information. Upon reasonable notice, RNS and HOTGATE shall each afford
to the officers, employees, accountants, counsel and other representatives of the other
company, and with respect to HOTGATE, the Acquired Entities, access to all their respective
properties, books, contracts, commitments and records and, during such period, each of RNS
and HOTGATE shall furnish promptly to the other (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such period pursuant
to the requirements of Federal or state securities laws and (b) all other information
concerning its business, properties and personnel as such other party may reasonably request.
Unless otherwise required by law, the parties will hold any such information which is
nonpublic in confidence until such time as such information otherwise becomes publicly
available through no wrongful act of either party, and in the event of termination of this
Agreement for any reason each party shall promptly return all nonpublic documents obtained
from any other party, and any copies made of such documents, to such other party.
4.3 Legal Conditions to Exchange. Each of RNS and HOTGATE shall take all reasonable
actions necessary to comply promptly with all legal requirements which may be imposed on
itself with respect to the Exchange and will promptly cooperate with and furnish information
to each other in connection with any such requirements imposed upon any of them or upon
any of their related entities or subsidiaries in connection with the Exchange. Each party shall
take all reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required to be obtained or made by
RNS or HOTGATE or any of their related entities or subsidiaries in connection with the
Exchange or the taking of any action contemplated thereby or by this Agreement.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligation to Effect the Exchange. The respective
obligations of each party to effect the Exchange shall be conditional upon the filing,
occurring or obtainment of all authorizations, consents, orders or approvals of, or declarations
or filings with, or expirations of waiting periods imposed by any governmental entity or by
any applicable law, rule, or regulation governing the transactions contemplated hereby.
HOTGATE represents and warrants that it has obtained the appropriate required consents of
the PRC government, if any.
5.2 Conditions to Obligations of RNS. The obligation of RNS to effect the Exchange is
subject to the satisfaction of the following conditions on or before the Closing Date unless
waived by RNS:
(b) Tradability. The Common Stock of RNS shall remain listed for trading on the
OTC Bulletin Board and RNS shall not have received any notice that its Common Stock is
subject to being delisted therefrom.
(e) Consents. HOTGATE shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of RNS, individually or in the aggregate, have
a material adverse effect on HOTGATE and of its subsidiaries and related entities taken as a
whole upon the consummation of the transactions contemplated hereby. HOTGATE shall
also have received the approval of its shareholders in accordance with applicable law.
(f) Due Diligence Review. RNS shall have completed to its reasonable satisfaction
a review of the business, operations, finances, assets and liabilities of HOTGATE and shall
not have determined that any of the representations or warranties of HOTGATE or its
shareholders contained herein are, as of the date hereof or the Closing, inaccurate in any
material respect or that HOTGATE or its shareholders is otherwise in violation of any of the
provisions of this Agreement.
(g) Pending Litigation. There shall not be any litigation or other proceeding
pending or threatened to restrain or invalidate the transactions contemplated by this
Agreement, which, in the sole reasonable judgment of RNS, made in good faith, would make
the consummation of the Exchange imprudent. In addition, there shall not be any other
litigation or other proceeding pending or threatened against HOTGATE, the consequences of
which, in the judgment of RNS, could be materially adverse to HOTGATE.
(h) Corporate Structure. HOTGATE shall have properly completed its corporate
structure as stated in this Agreement
(b) Performance of Obligations of RNS. RNS shall have performed in all material
respects all obligations required to be performed by it under this Agreement at or prior to the
Closing Date, and RNS shall have received a certificate signed on behalf of RNS by the
President to such effect.
(c) Closing Documents. HOTGATE shall have received (i) an original copy of the
resolution from RNS’s current directors appointing designees of the Shareholders to RNS’s
Board of Directors; (ii) letters of resignation from RNS’s current officers and directors to be
effective upon Closing and after the appointments described in clause (i); and (iii) all other
closing documents as counsel for HOTGATE shall reasonably request.
(d) Consents. RNS shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the transactions contemplated
hereby.
(e) Due Diligence Review. HOTGATE shall have completed to its reasonable
satisfaction a review of the business, operations, finances, assets and liabilities of RNS and
shall not have determined that any of the representations or warranties of RNS contained
herein are, as of the date hereof or the Closing Date, inaccurate in any material respect or that
RNS is otherwise in violation of any of the provisions of this Agreement.
(f) Pending Litigation. There shall not be any litigation or other proceeding
pending or threatened to restrain or invalidate the transactions contemplated by this
Agreement, which, in the sole reasonable judgment of HOTGATE, made in good faith,
would make the consummation of the Exchange imprudent. In addition, there shall not be any
other litigation or other proceeding pending or threatened against RNS the consequences of
which, in the judgment of HOTGATE, could be materially adverse to RNS.
(g) Capital Structure. RNS shall have increased its authorized capital stock to
300,000,000 shares of Common Stock with par value $0.0001. RNS shall also cause a 1:2.5
forward split (the “Forward Split”) of its Common Stock and obtain all necessary consents
and approvals to effect the Forward Split.
(h) Name Change. RNS shall change its name to Hotgate Technology Inc.
ARTICLE VI
TERMINATION AND AMENDMENT
6.1 Termination. This Agreement may be terminated at any time prior to the Effective
Time:
(b) by either RNS or HOTGATE if there has been a material breach of any
representation, warranty, covenant or agreement on the part of RNS or HOTGATE, as the
case may be set forth in this Agreement which breach has not been cured within five (5)
business days following receipt by the breaching party of notice of such breach, or if any
permanent injunction or other order of a court or other competent authority preventing the
consummation of the Exchange shall have become final and non-appealable.
6.2 Effect of Termination. In the event of termination of this Agreement by either RNS or
HOTGATE as provided in Section 6.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of any party hereto. In such event, all costs and
expenses incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
6.3 Amendment. This Agreement may be amended by mutual agreement of RNS and
HOTGATE. Any such amendment must be by an instrument in writing signed on behalf of
each of the parties hereto.
6.4 Extension; Waiver. At any time prior to the Effective Time, the parties hereto, by
action taken or authorized by their respective Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VII
GENERAL PROVISIONS
7.2 Notices. All notices and other communications hereunder shall be in writing and shall
be deemed given if delivered personally, telecopied (which is confirmed) or mailed by
registered or certified mail (return receipt requested) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) If to RNS:
(b) If to HOTGATE:
7.6 Governing Law. This Agreement shall be governed and construed in accordance with
the laws of the State of Nevada without regard to principles of conflicts of law. Each party
hereby irrevocably submits to the jurisdiction of any Nevada state court or any federal court
in the State of Nevada in respect of any suit, action or proceeding arising out of or relating to
this Agreement, and irrevocably accept for themselves and in respect of their property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
7.7 No Remedy in Certain Circumstances. Each party agrees that, should any court or
other competent authority hold any provision of this Agreement or part hereof or thereof to
be null, void or unenforceable, or order any party to take any action inconsistent herewith or
not to take any action required herein, the other party shall not be entitled to specific
performance of such provision or part hereof or thereof or to any other remedy, including but
not limited to money damages, for breach hereof or thereof or of any other provision of this
Agreement or part hereof or thereof as a result of such holding or order.
7.8 Publicity. Except as otherwise required by law or the rules of the SEC, so long as this
Agreement is in effect, no party shall issue or cause the publication of any press release or
other public announcement with respect to the transactions contemplated by this Agreement
without the written consent of the other party, which consent shall not be unreasonably
withheld.
7.9 Assignment. Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
IN WITNESS WHEROF, this Agreement has been signed by the parties set forth below as of
the date set forth above.
RNS HOLDINGS CORPORATION, a Nevada
corporation
/s/ Alex Koo
Alex Koo, President and Director
/s/
/s/
EXHIBIT A