UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):    January 18, 2016

 

VITAXEL GROUP LIMITED

(Exact name of registrant as specified in its charter)

 

Nevada 333-201365 30-0803939
(State or other jurisdiction of
incorporation)
(Commission File Number) (IRS Employer Identification No.)

 

Wisma Ho Wah Genting, No. 35

Jalan Maharajalela, 50150

Kuala Lumpur, Malaysia

N/A
(Address of principal executive offices) (Zip Code)

 

603.2143.2889

(Registrant’s telephone number, including area code)

 

22 Mount Davys Road, Cullybacky, Ballymena

Co. Antrim, Northern Ireland BT421JH

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

TABLE OF CONTENTS

 

  Page
   
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 1
   
EXPLANATORY NOTE 3
   
ITEM 1.01  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT 4
   
ITEM 2.01  COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS 4
   
THE SHARE EXCHANGE AND RELATED TRANSACTIONS 4
   
DESCRIPTION OF BUSINESS 6
   
RISK FACTORS 18
   
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28
   
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 34
   
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 36
   
EXECUTIVE COMPENSATION 39
   
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 41
   
MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 41
   
DESCRIPTION OF SECURITIES 43
   
LEGAL PROCEEDINGS 44
   
INDEMNIFICATION OF DIRECTORS AND OFFICERS 44
   
ITEM 3.02  UNREGISTERED SALES OF EQUITY SECURITIES 44
   
ITEM 5.01  CHANGES IN CONTROL OF REGISTRANT 45
   
ITEM 5.02  DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS 45
   
ITEM 5.03  AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR 45
   
ITEM 8.01  OTHER EVENTS 46
   
ITEM 9.01  FINANCIAL STATEMENTS AND EXHIBITS 46

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Current Report contains forward-looking statements, including, without limitation, in the sections captioned “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Plan of Operations,” and elsewhere. Any and all statements contained in this Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the SEC, and (iv) the assumptions underlying or relating to any statement described in points (i), (ii), or (iii) above.

 

Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We disclaim any obligation to update the forward-looking statements contained in this Report to reflect any new information or future events or circumstances or otherwise.

 

Readers should read this Report in conjunction with the discussion under the caption “Risk Factors,” our financial statements and the related notes thereto in this Report, and other documents which we may file from time to time with the Securities and Exchange Commission (the “SEC”).

 

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, our inability to obtain adequate financing, the significant length of time and resources associated with the development of our products and services and related insufficient cash flows and resulting illiquidity, our inability to expand our business, significant government regulation of our industry, existing or increased competition, results of arbitration and litigation, stock volatility and illiquidity, and our failure to implement our business plans or strategies. A description of some of the risks and uncertainties that could cause our actual results to differ materially from those described by the forward-looking statements in this Report appears in the section captioned “Risk Factors” and elsewhere in this Report and include the following:

 

our relationship with, and our ability to influence the actions of, our members;

 

improper action by our employees or members in violation of applicable law;

 

adverse publicity associated with our products, services or network marketing organization, including our ability to comfort the marketplace and regulators regarding our compliance with applicable laws;

 

changing consumer preferences and demands;

 

our reliance upon, or the loss or departure of any member of, our senior management team which could negatively impact our member relations and operating results;

 

the competitive nature of our business;

 

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regulatory matters governing our products and services, including potential governmental or regulatory actions concerning our products and services and network marketing program, including the direct selling market in which we operate;

 

legal challenges to our network marketing program;

 

risks associated with operating internationally and the effect of economic factors, including foreign exchange, inflation, disruptions or conflicts with our third party importers, pricing and currency devaluation risks;

 

uncertainties relating to the application of transfer pricing, duties, value added taxes, and other tax regulations, and changes thereto;

 

uncertainties relating to interpretation and enforcement of legislation governing direct selling in certain jurisdictions;

 

our inability to obtain the necessary licenses to expand our direct selling business in certain jurisdictions;

 

adverse changes in the Malaysian economy;

 

our dependence on increased penetration of existing markets;

 

contractual limitations on our ability to expand our business;

 

our reliance on our information technology infrastructure and outside service providers and manufacturers;

 

the sufficiency of trademarks and other intellectual property rights;

 

changes in tax laws, treaties or regulations, or their interpretation;

 

taxation relating to our members; and

 

share price volatility related to, among other things, speculative trading and certain traders shorting our common shares.

 

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EXPLANATORY NOTE

 

We were incorporated as Albero, Corp. in Nevada on November 19, 2013. Prior to the Share Exchange and Split-Off (each as defined below), we were engaged in the horse breading business.

 

As previously reported, on January 8, 2016, (i) we changed our name to Vitaxel Group Limited, and (ii) we increased our authorized capital stock from 75,000,000 shares of common stock, par value $0.001, to 7,000,000,000 shares of common stock, par value $0.000001 (the “Common Stock”), and 100,000,000 shares of “blank check” preferred stock, par value $0.000001.

 

On January 18, 2016, we completed and closed a share exchange (the “Share Exchange”) under a Share Exchange Agreement (the “Share Exchange Agreement”) of the same date among us, Vitaxel SDN BHD, a Malaysian corporation (“Vitaxel”), the shareholders of Vitaxel, Vitaxel Online Mall SBN BHD, a Malaysian corporation (“Vionmall”) and the shareholders of Vionmall pursuant to which Vitaxel and Vionmall each became wholly owned subsidiaries of ours. In the Share Exchange, all of the outstanding shares of Vitaxel and Vionmall were converted into shares of our Common Stock, as described in more detail below.

 

In connection with the Share Exchange and pursuant to the Split-Off Agreement (defined below), we transferred our pre-Share Exchange assets and liabilities to our pre-Share Exchange majority stockholder, in exchange for the surrender by him and cancellation of 3,000,000 shares of our Common Stock. See Item 2.01, “Split-Off” below.

 

As a result of the Share Exchange and Split-Off, we discontinued our pre-Share Exchange business and acquired the businesses of Vitaxel and Vionmall, and will continue the existing business operations of Vitaxel and Vionmall as a publicly-traded company under the name Vitaxel Group Limited.

 

In accordance with “reverse acquisition” accounting treatment, our historical financial statements as of period ends, and for periods ended, prior to the acquisition will be replaced with the historical financial statements of Vitaxel and Vionmall prior to the Share Exchange in all future filings with the SEC.

 

As used in this Current Report henceforward, unless otherwise stated or the context clearly indicates otherwise, the terms the “Company,” the “Registrant,” “we,” “us,” and “our” refer to Vitaxel Group Limited, incorporated in Nevada, after giving effect to the Share Exchange and the Split-Off.

 

This Current Report contains summaries of the material terms of various agreements executed in connection with the transactions described herein. Such agreements are filed as exhibits hereto and incorporated herein by reference.

 

This Current Report is being filed in connection with a series of transactions consummated by the Company and certain related events and actions taken by the Company.

 

This Current Report responds to the following Items in Form 8-K:

 

Item 1.01   Entry into a Material Definitive Agreement

 

Item 2.01   Completion of Acquisition or Disposition of Assets

 

Item 3.02   Unregistered Sales of Equity Securities

 

Item 4.01   Changes in Registrant’s Certifying Accountant

 

Item 5.01   Changes in Control of Registrant

 

Item 5.02   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

Item 5.03   Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

 

Item 8.01   Other Events

 

Item 9.01   Financial Statements and Exhibits

 

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ITEM 1.01  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

 

The information contained in Item 2.01 below relating to the various agreements described therein is incorporated herein by reference.

 

ITEM 2.01  COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

 

THE SHARE EXCHANGE AND RELATED TRANSACTIONS

 

Share Exchange Agreement

 

On January 18, 2016 (the “Closing Date”), the Company, Vitaxel, the shareholders of Vitaxel, Vionmall and the shareholders of Vionmall entered into a Share Exchange Agreement (the “Share Exchange Agreement”), which closed on the same date. Pursuant to the terms of the Share Exchange Agreement, we exchanged 2,625,000 shares of our Common Stock for all of the outstanding capital stock of Vitaxel and exchanged 375,000 shares of our Common Stock for all of the outstanding capital stock of Vionmall with the result that both Vitaxel and Vionmall became wholly owned subsidiaries of ours.

 

Pursuant to the Share Exchange, we acquired the business of Vitaxel to engage in the direct selling of products and services utilizing a multi-level marketing model with an emphasis on travel, entertainment and lifestyle products and services and the business of Vionmall to develop online shopping platforms geared to Vitaxel and its members and the third party suppliers of products and services.

 

At the closing of the Share Exchange:

 

each of the 1,500,000 shares of Vitaxel’s capital stock issued and outstanding immediately prior to the closing of the Share Exchange was exchanged for 1.75 shares of our Common Stock;

 

each of the 100,000 shares of Vionmall’s capital stock issued and outstanding immediately prior to the closing of the Share Exchange was exchanged for 3.75 shares of our Common Stock.

 

As a result, an aggregate of 2,625,000 shares of our Common Stock were issued to the holders of Vitaxel’s stock and an aggregate of 375,000 shares of our Common Stock were issued to the holders of Vionmall’s stock.

 

The Share Exchange Agreement contained customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions.

 

The Share Exchange will be treated as a recapitalization of the Company for financial accounting purposes. Vitaxel and Vionmall will be considered the acquirer for accounting purposes, and our historical financial statements before the Share Exchange will be replaced with the consolidated historical financial statements of Vitaxel and Vionmall before the Share Exchange in all future filings with the SEC.

 

The Share Exchange is intended to be treated as a tax-free reorganization under the Internal Revenue Code of 1986, as amended.

 

The issuance of shares of our Common Stock to holders of Vitaxel’s and Vionmall’s capital stock in connection with the Share Exchange was not registered under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering, Regulation D promulgated by the SEC under that section and/or Regulation S promulgated by the SEC. These securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement, and some of these securities are subject to further contractual restrictions on transfer as described below.

 

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The form of the Share Exchange Agreement is filed as an exhibit to this Report.

 

Split-Off

 

Upon the closing of the Share Exchange, under the terms of a split-off agreement and a general release agreement, the Company transferred all of its pre-Share Exchange operating assets and liabilities to its wholly-owned special-purpose subsidiary, Albero Enterprise Corp, a Nevada corporation (“Split-Off Subsidiary”), formed on January 14, 2016. Thereafter, pursuant to the split-off agreement, the Company transferred all of the outstanding shares of capital stock of Split-Off Subsidiary to Andriy Berezhnyy, the pre-Share Exchange majority stockholder of the Company, and the former sole officer and director of the Company (the “Split-Off”), in consideration of and in exchange for (i) the surrender and cancellation of an aggregate of 3,000,000 shares of our Common Stock held by Mr. Berezhnyy (which were cancelled and will resume the status of authorized but unissued shares of our Common Stock) and (ii) certain representations, covenants and indemnities.

 

2016 Equity Incentive Plan

 

Before the Share Exchange, our Board of Directors adopted, and our stockholders approved, our 2016 Equity Incentive Plan (the “2016 Plan”), which provides for the issuance of incentive awards of up to 1,000,000,000 shares of our Common Stock to officers, key employees, consultants and directors. See “Market Price of and Dividends on Common Equity and Related Stockholder Matters - Securities Authorized for Issuance under Equity Compensation Plans” below for more information about the 2016 Plan.

 

Departure and Appointment of Directors and Officers

 

Our Board of Directors currently consists of two members. On the Closing Date, Andriy Berezhnyy, our sole director before the Share Exchange, resigned his position as a director, and Lim Wee Kiat (Chairman) and Leong Yee Ming were appointed to the Board of Directors.

 

Also on the Closing Date, Mr. Berezhnyy, our Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer before the Share Exchange, resigned from these positions, and Lim Wee Kiat was appointed as our President and Secretary, Leong Yee Ming was appointed as our Chief Executive Officer, Lee Wei Boon was appointed as our Chief Financial Officer and Treasurer, Lim Boon Seng was appointed as our Chief Operating Officer and Yee Hing Yip was appointed as our Vice President of Marketing.

 

See “Management – Directors and Executive Officers” below for information about our new directors and executive officers.

 

Pro Forma Ownership

 

Immediately after giving effect to (i) the Share Exchange and (ii) the cancellation of 3,000,000 shares in the Split-Off, there were 3,825,000 issued and outstanding shares of our Common Stock, as follows:

 

the stockholders of Vitaxel prior to the Share Exchange hold 2,625,000 shares of our Common Stock;

 

the stockholders of Vionmall prior to the Share Exchange hold 375,000 shares of our Common Stock; and

 

the stockholders of the Company prior to the Share Exchange hold 825,000 shares of our Common Stock.

 

In addition, the 2016 Plan authorizes issuance of up to 1,000,000,000 shares of our Common Stock as incentive awards to executive officers, key employees, consultants, advisors and directors.

 

No other securities convertible into or exercisable or exchangeable for our Common Stock are outstanding.

 

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Our Common Stock is quoted on the OTC Markets (OTCQB) under the symbol “VXEL.”

 

Accounting Treatment; Change of Control

 

The Share Exchange is being accounted for as a “reverse acquisition,” and Vitaxel and Vionmall are deemed to be the acquirers in the reverse acquisition. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Share Exchange will be those of Vitaxel and Vionmall and will be recorded at the historical cost basis of Vitaxel and Vionmall, and the consolidated financial statements after completion of the Share Exchange will include the assets and liabilities of Vitaxel and Vionmall, historical operations of Vitaxel and Vionmall and operations of the Company and its subsidiaries from the closing date of the Share Exchange. As a result of the issuance of the shares of our Common Stock pursuant to the Share Exchange, a change in control of the Company occurred as of the date of consummation of the Share Exchange. Except as described in this Current Report, no arrangements or understandings exist among present or former controlling stockholders with respect to the election of members of our Board of Directors and, to our knowledge, no other arrangements exist that might result in a change of control of the Company.

 

We continue to be a “smaller reporting company,” as defined under the Exchange Act, following the Share Exchange.

 

DESCRIPTION OF BUSINESS

 

Immediately following the Share Exchange, the businesses of Vitaxel and Vionmall became our businesses. Vitaxel is engaged in the direct selling industry utilizing a multi-level marketing model with an emphasis on travel, entertainment and lifestyle products and services. Vionmall is engaged in the development of online shopping platforms geared to Vitaxel and its members and third party providers of products and services.

 

The Multi-Level Marketing Direct Selling Industry

 

Direct selling is a rapidly expanding channel of distribution for the marketing and sale of products and services. Direct selling generally refers to the sale of products and services to consumers away from a fixed retail outlet, generally at their home or workplace. Direct sales generally depend on the explanation and demonstration made by an independent direct salesperson to the consumer. Being a specialized channel of distribution, it covers both business-to-business and business-to-consumer aspects. Direct selling represents a successful industry operating in more than 100 countries with an estimated market size as of December 31, 2014 of more than US$182 billion. According to the World Federation of Direct Selling Associations, as of December 31, 2014, Asia and the neighboring Pacific area represented the largest direct selling market with an estimated 45% market share followed by North and South America (37%) and Europe (17%). Malaysia had an estimated 3% market share with 2014 direct selling retail sales of approximately US$5.3 billion.

 

The industry started with sales of products like cosmetics and household appliances through the direct selling channel, but after 1970 many direct selling companies diversified their product portfolios to a larger number of products such as household goods, food and wellness products. The period also witnessed improvement in technology. Many new marketing techniques and strategies were developed and new distribution and retail channels emerged. As a result, direct selling companies modified strategies to benefit from those technological advancements.

 

One such marketing strategy is multi-level marketing (“MLM”), a strategy in which the sales force is compensated not only for sales which they generate directly but also for the sales of other people that they recruit. MLM marked a major shift in the direct selling industry since the plan for the first time enabled the consumers to benefit from the success of the product by providing them the option to become a direct selling partner of the business. MLM plans became widely accepted and a large number of companies adopted them. The 1990s saw a growth in the global direct selling market with MLM direct sellers expanding globally and entering emerging markets like Brazil, China and India.

 

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One negative aspect of the popularity of MLM programs was the proliferation of pyramid schemes which has been a cause of concern for the direct selling industry globally. Several governments around the world have been taking enforcement actions and creating laws to address alleged pyramid schemes, including schemes disguised as MLM programs. These laws and enforcement actions draw clear distinctions between legitimate direct selling businesses, where participants earn income based on the sale of products to end user consumers, and illegal pyramid schemes, where compensation is based on recruiting others into the scheme.

 

Our Business

 

We are a global direct selling, multi-level marketing company offering travel, entertainment, lifestyle and other products and services principally through electronic commerce commonly referred to as e-commerce. Through Vionmall, which went live in January 2016 for Vitaxel members, we employ online shopping web sites for retail sales direct to consumers. We expect Vionmall to go live for the general public in April 2016. We do not develop or manufacture the products and services which we offer. At December 31, 2015, all of our operations, including sales transactions, were based and completed in Malaysia although we had members in 12 other Asian countries. More than half of our members reside in Malaysia and approximately 30% of our members reside in Singapore. We provide our members with training which includes prospecting and closing skills, plan orientation, back-office training, network management, personal and leadership development and team-building activities.

 

Unlike the traditional MLM business model where most of the business model concentrates on particular products and/or services, our business model allows our members to own a sub-domain through Vionmall where they can promote their own products and services (separate from our products and services). We believe that this model is the first of its kind in Asia.

 

We strive to differentiate ourselves through innovation in both our product and service offerings and our sales channels. Consumers can purchase our products and services either directly from our members or directly from our online platform. Our products and services are listed on our website and customers can easily purchase them online. Our members need not carry our products physically to their customers, they only need to promote our products through word of mouth or show prospective customers our list of products online through computers or smart-phones. During the year ended December 31, 2015, all of our revenues were attributable to the sale of Vitaxel product packages.

 

Our Vitaxel packages include product points (which are exchangeable for tour and travel products or travel kits). Since we are relatively new to the market, our initial strategy has been to promote our brand awareness by encouraging more people to become members. In furtherance thereof, to date all membership fees have been waived. Persons that purchase our product packages will automatically become members.

 

In furtherance of our membership benefits program, on November 1, 2015 Vitaxel entered into a Travel Agency Services Contract (the “Contract”) with Ho Wah Genting Holiday SDN BHD (“HWGH”), a travel agency specializing in providing tour packages, hotel bookings, arranging transportation and event ticket services. Pursuant thereto, HWGH provides services to Vitaxel’s members. The Contract has a term of 2 years and continues automatically for additional one year periods. After the first year, either party may terminate the Contract by providing the other party with 2 months’ advance notice of termination. Lim Chun Hoo, a director of HWGH is the brother of Lim Wee Kiat, our Chairman, President and Secretary. Lim Wee Kiat is also an executive director of Ho Wah Genting Berhad, a shareholder of HWGH.

 

Our initial Vitaxel products have not generated material demand. This has resulted in marginal purchases of our existing Vitaxel products. However, following our research and surveys conducted on the preferences of our members, we have re-packaged and expanded our product packages and the method of selling these products to our members and our customers. This strategy lead to the formation of Vionmall.

 

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With the introduction of Vionmall, our revenue component will be divided into three categories:

 

a. Vitaxel Product packages
b. Membership fees
c. Sales from our online Vionmall products

 

We believe that the Malaysian and other Asian direct selling markets hold significant potential. Our results, as reported in US dollars will be impacted by foreign currency fluctuations as well as global economic, political, demographic and business trends and conditions.

 

To create brand awareness and to keep our members fully informed as to our products and services, and policies and procedures, we designate certain members to be team leaders. Team leaders promote our membership requirements and products and services through word of mouth, home parties, private previews and training. As of December 31, 2015 we had approximately 229 team leaders, approximately 138 of which were located in Malaysia. We expect to engage at least 10-20 team leaders in each country in which we offer and sell our products and services. Our team leaders are independent contractors and do not receive salaries. They work on a commission basis tied to the revenue generated from product sales. The team leaders promote our products via the methods referenced above. Apart from this, they are required to assist our management to conduct surveys and research on our prospective customers and members needs and behaviors. To do this, the team leaders have meetings and discussions among themselves from time to time. Our obligation to the team leaders is to provide support, inform and advise as to the availability of new products, make payment (commission) on time and ensure that the team leaders understand our objective and mission so that they provide the correct message to our members and customers.

 

To become a team leader, persons must be well versed with our MLM business strategy and possess good sales skills. In most countries where MLM business have existed for years, the MLM members have their own community. Due to this, locating prospective team leaders is not difficult and they can be easily engaged through word of mouth. Currently, all of our team leaders are also Global Directors (this is one of our requirements for being a team leader, he/she must first show that he/she is able to commit to our business model before taking the role of a team leader).

 

Our future sales will depend on the team leaders to promote our products within and outside Malaysia with our continuous support. All of our products are available online. Team leaders and members can show our online catalog to their customers without the hassle of carrying too many physical catalogs. Moving forward, we intend to enhance our information technology support, promotion (events, charity, sponsorship and etc), conduct more research on customers needs and behavior, and training (which is essential for the team leaders). Team leaders will be our front line in promoting our products and services and generating revenues. With the introduction of Vionmall, members can promote their own products and services and for those that do not own personal products, they can promote our products. This gives a sense of business ownership to our members.

 

Our business is subject to various laws and regulations globally, particularly with respect to our direct selling business models and our product and service categories. See “Risk Factors” for a more detailed description of the risks associated within our business.

 

We acquire the products and services which we offer and sell from third parties. Although, we initially intend to primarily offer and sell products related to travel, entertainment and lifestyle, we are not limited to those areas and may sell unrelated products and services as long as these products and services will benefit our members and customers in a manner consistent with our objectives and mission.

 

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Intellectual Property

 

We have applied for registration for our major trademark, Live Better, in Malaysia (5 applications), Singapore, Brunei, Indonesia, The Philippines, Thailand, Myanmar, Vietnam, China, Hong Kong, Macau, Cambodia, Laos and Taiwan. To date, 4 of the applications have been approved and 14 are pending. We consider trademark protection to be important to our business.

 

Vitaxel Member Base

 

As of December 31, 2015, Vitaxel had approximately 4,000 members, with approximately 2,400 members in Malaysia and approximately 1,250 members in Singapore. Vitaxel’s members include approximately 1,900 Supervisors, 1,700 Senior Directors, 12 Managers, 111 Directors, and 246 Global Directors.

 

People become members for a number of reasons. Some join simply to receive a wholesale price on products and services that they and their families can enjoy. Some join to earn part-time money, wanting to give direct sales a try, whereas others are drawn to us because they can be their own boss and can earn rewards on their own skills and hard work. In addition to discounted prices, members can earn income from several sources. Members may earn income by selling our products and services and their own products and services. The allocation of proceeds from the sales of members’ products and services is similar to the allocation process for independent suppliers of products and services. Suppliers determine the minimum amount they wish to receive, the retail price to consumers is then negotiated between us and the supplier and we retain the difference as profit. Also, members who sponsor other members may earn commissions and bonuses based upon their sponsored members’ performance.

 

Vitaxel is party to an agreement with our members that prohibits us from selling our products exclusive of those offered through Vionmall, through any distribution channel other than our network of independent members, unless otherwise required by law. This is because Vionmall is an e-commerce business and not a MLM business. This allows Vionmall to sell its products on any distribution channel as long as it is compliant with applicable laws. Vitaxel’s products that are available on Vionmall, however, are restricted to MLM members only. Non-members who want to purchase these products need to buy from MLM members.

 

Geographic Diversification

 

As of December 31, 2015, we have expanded our network member base into approximately 12 Asian countries. While sales within our local markets may fluctuate due to economic, market and regulatory conditions, competitive pressures, political and social instability or for Company-specific reasons, we believe that our geographic diversity and intended further geographic diversity mitigates and will continue to mitigate our exposure to any one particular market.

 

We intend to continue to engage team leaders within each country in Asia in which we offer and sell our products to lead and promote our products. Since we have already established our name in certain of the Asian counties, we will continue to expand in those countries by providing more benefits to the team leaders, more attractive products through our Vionmall portal, further training and motivation talks, better information technology structure and enhance support systems.

 

We have set-up a short term, mid-term and long term plans as follows:

 

Short term plans

 

With the Vitaxel product packages and Vionmall portal, our expansion plan will be conducted simultaneously throughout the countries that we have already established our name. Team leaders and members will be informed and training will be provided for the new packages. The team leaders will be encouraged to hold events on a regular basis throughout their own regions and to provide feedback for any improvement.

 

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To ensure that our benefits packages and Vionmall business structure become known throughout Asia, we will release and promote information through word of mouth, promotion and training. The existing team leaders will then pass the message to their own community in their territories, as mentioned above.

 

Mid-term plans

 

For countries in which we have yet to establish name recognition or have been slow in generating revenue, we will continue to seek within our members’ network to expand the list of potential team leaders in those countries.

 

Unlike other business models, our MLM business model allows our members to generate income when they have downlines. This encourages our members to recruit more members. In our business model, downlines allow our existing members to generate points and additional bonus points, which are essential for their travel, entertainment and other product purchases, and cash rebates. These points are also used to determine if they are eligible for promotion. For further information, please refer to the “Structure” section below.

 

Long term plans

 

Our long term plan is to expand our MLM business and e-commerce business worldwide. To achieve this, we will continue to make improvements on our system and receive feedback from team leaders. Our plan is to expand into areas such as Europe, Australia, New Zealand and the United States. However, we will need to conduct research and studies and better understand the MLM business in those areas before doing so.

 

Our Products and Services

 

We are committed to providing our members with high-quality products and services to help them increase consumption and the retailing of our products and services. We believe this can be best accomplished in stages by introducing new products and services and by upgrading, reformulating and repackaging existing product lines. As of December 31, 2015 the Vionmall online platform was in the final stage of construction. It became operational as to Vitaxel members in January 2016. The initial products and services being offered through Vionmall principally involve travel, tourism and lifestyle. Our senior management is responsible for the review and evaluation of new product and service ideas.

 

Structure

 

To become a member, a person must purchase a member package. Member packages include products and points that carry a value that approximates the package price. The packages do not come with a membership fees because membership fees are exempted for the first year (that is when members purchase the package, membership fees are waived for the first 12 months). We only collect the membership fees from the second year onwards. Each member package is available in English and Chinese and typically includes booklets describing us, our compensation plan and rules of member conduct, various training and promotional materials, member applications and a product and services catalog. The price of a member package varies by package type and provides a low cost entry for incoming members. Since January 2016, we have four categories of member packages as follows:

 

Preferred Member
Action Member
Business Member
Career Member

 

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The Preferred Member package is our entry based package and is designed for members that wish to try or test our products and services. It requires an annual fee of US$15 and provides each Preferred Member with 100 Mall Points. Mall Points can be used for the purchase of products and services through Vionmall.

 

The Action Member package is our mid-level entry package and is designed for members that wish to earn extra benefits than those available under our Preferred Member package. It requires a one-time up-front payment of US$130 and an annual fee of US$15 payable commencing year two of membership and each year of membership thereafter. It provides members with 300 Mall Points, 75 Bonus Value Points (“BVP”) and 130 Redemption Points (“RP”). BVPs can be converted into cash or exchanged for gifts and may be utilized by a member during all times he or she remains a member. RPs can be exchanged for Vitaxel house products.

 

The Business Member package is our advance entry-level package and is designed for members that wish to become our business partners. This package allows members to earn extra income by promoting our products and services online. It requires a one-time up-front payment of US$800 and an annual fee of US$15 payable commencing year two of membership and each year of membership thereafter. It provides members with 1,800 MPs, 480 BVPs and 800 RPs. Business Members also become Vionmall agents which gives them the right to sell Vionmall’s products and services online.

 

The Career Member package is our professional entry-level package and is designed for members seeking a long-term business relationship with us. It requires a one-time up-front payment of US$2,000 and an annual fee of US$15 payable commencing year two of membership and each year of membership thereafter. It provides members with 4,500 MPS, 1,200 BVPs and 2,000 RPs. Career Members become Vionmall merchants which allows them to sell Vionmall’s products online and also place their own products for sale on Vionmall’s website.

 

Business Members and Career Members are eligible for promotions based upon achievements of certain milestones. There are five promotional categories as follows:

 

Supervisor
Manager
Director
Senior Director
Global Director

 

To achieve the Supervisor level, a member must have one Director Sponsor and achieve minimum accumulated Group Sales (the total product sales generated by all of the member’s sponsor tree) of 1,000 BVPs. Supervisor members receive 2 Consumption Bonus Level Entitlements. The Consumption Bonus is a 30% bonus based on repeat sales generated by members under their sponsor tree.

 

To achieve the Manager level, a member must have two Director Sponsors and achieve minimum accumulated Group Sales of 5,000 BVPs. They must also achieve a line qualification consisting of a minimum of two direct or indirect lines of a Supervisor rank. Manager Members receive four Consumption Bonus Level Entitlements and a one-night stay for one at a local 5 star hotel.

 

To achieve the Director level, a member must have three Director Sponsors and achieve minimum accumulated Group Sales of 30,000 BVPs. They must also achieve a line qualification of a minimum of two direct or indirect lines of a Manager rank, two of which lines must have minimum accumulated sales of 10,000 BVPs. Director Members receive six Consumption Bonus Level Entitlements and a local 3 day 2 night tour package.

 

To achieve the Senior Director level, a member must have four Director Sponsors and achieve minimum accumulated Group Sales of 100,000 BVPs. They must also achieve a line qualification consisting of a minimum of three direct or indirect lines of a Director rank, each of which lines must have minimum accumulated sales of 30,000 BVPs. Senior Director Members receive eight Consumption Bonus Level Entitlements and an international 3 day, 2 night tour package.

 

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To achieve the Global Director level, a member must have five Director Sponsors and achieve minimum accumulated Group Sales of 400,000 BVPs. They must also achieve a minimum of four direct lines of a Senior Director rank, each of which lines must have minimum accumulated Group Sales of 100,000 BVPs. Global Director Members receive 10 Consumption Bonus Level Entitlements and an international 3 day, 2 nights tour package for two.

 

Business Members and Career Members achieving Global Director status, are eligible for the following advanced categories of Global Director:

 

Sapphire
Ruby
Emerald
Diamond
Black Diamond

 

To achieve the Sapphire Global Director level, a member must achieve a line qualification consisting of a minimum of one direct or indirect line of a Global Director rank with minimum total group sales of 20,000 BVPs and a minimum of weaker leg Group Sales of 8,000 BVPs.

 

To achieve the Ruby Global Director level, a member must achieve a line qualification consisting of a minimum of two direct or indirect lines of a Global Director rank with minimum total group sales of 40,000 BVPs and a minimum of weaker leg sales of 16,000 BVPs.

 

To achieve the Emerald Global Director level, a member must achieve a line qualification consisting of a minimum of three direct or indirect lines of a Global Director rank with minimum total group sales of 60,000 BVPs and a minimum of weaker leg sales of 24,000 BVPs.

 

To achieve the Diamond Global Director level, a member must achieve a line qualification consisting of a minimum of four direct or indirect lines of a Global Director rank with minimum total group sales of 80,000 BVPs and a minimum of weaker leg sales of 32,000 BVPs.

 

To achieve the Black Diamond Global Director level, a member must achieve a line qualification consisting of a minimum of five direct or indirect lines of a Global Director rank with minimum total group sales of 100,000 BVPs and a minimum of weaker leg sales of 40,000 BVPs.

 

Global Directors are eligible for quarterly profit sharing based upon the number of BVPs achieved and will be eligible to receive stock options and similar awards under our 2016 Equity Incentive Plan if they reach certain defined milestones.

 

Our 2015 membership business model was based on the following:

 

Supervisor level – purchase a US$130 product package and receive the following Vita Points (VP – points that are used to exchange for travel package):

 

Own Vita Point (OVP – points that a member receive when he/she become a member) 22 points;

 

Sponsor Vita Point (SVP – points that a member receive when he/she has a first generation line) 18 points;

 

Bonus Vita (BV – additional points receive) 50 points

 

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Manager level – purchase a US$500 product package and receive the following:

 

OVP 60 points;

SVP 50 points;

BV250 points

 

Director level – purchase a US$1,000 product package and receive the following:

 

OVP 120 points;

SVP 100 points;

BV500 points

 

Senior Director level – purchase a US$1,500 product package and receive the following:

 

OVP 180 points;

SVP 150 points;

BV750 points

 

Global Director level – direct sponsor 4 Senior Directors.

 

The above statuses are eligible for the following advanced categories (any member from Supervisor rank to Global Director rank is able to achieve these advanced categories):

 

1—Star, qualification for achievement is to achieve US$1,000 sales each month 3 months consecutively. Rewards include 30 VP.

 

2—Star, qualification for achievement is to achieve US$2,000 sales each month 3 months consecutively. Rewards include 60 VP.

 

3—Star, qualification for achievement is to achieve US$3,000 sales each month 3 months consecutively. Rewards include 90 VP.

 

Ruby, qualification for achievement is to achieve US$4,000 sales each month 3 months consecutively. Rewards include 450 VP.

 

Emerald, qualification for achievement is to achieve US$10,000 sales each month 3 months consecutively. Rewards include 1,200 VP.

 

Diamond, qualification for achievement is to achieve US$16,000 sales each month 3 months consecutively. Rewards include 1,800 VP.

 

1 Diamond Ambassador, qualification for achievement is to achieve US$25,000 sales each month for 3 months consecutively. Rewards include 6 days Australia trip for 2 and cash rewards of US$3,000.

 

2 Diamond Ambassador, qualification for achievement is to achieve US$45,000 sales each month for 3 months consecutively. Rewards include 10 days Hawaii trip for 2 and cash rewards of US$5,000.

 

3 Diamond Ambassador, qualification for achievement is to achieve US$65,000 sales each month for 3 months consecutively. Rewards include 14 days Europe trip for 2 and cash rewards of US$7,000.

 

Transition from 2015 to 2016

 

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For the transition from the 2015 business model to 2016 business model, all ranks that have been achieved by the existing members remain as is, however, the existing members will have to follow the 2016 business model in order to achieve the advanced categories. This includes all rewards and bonuses which will be based on the 2016 business model.

 

Any unused Vital points as at December 2015 have been exchanges for Mall points on a 1:1 basis.

 

Distribution Channels

 

We will operate in the direct selling channel, primarily utilizing e-commerce and person-to-person marketing to promote and sell our products and services. These marketing efforts will be supported by various mediums, including the Internet, word of mouth and promotional events. We believe our distribution channel will be an effective vehicle to distribute our products and services because:

 

our sales force can educate consumers about our products and services face-to-face, which we believe is more effective for differentiating our products and services than using traditional mass-media advertising;

 

our distribution channel provides a sense of ownership to our members which motivates them to promote our products and services more effectively;

 

our distribution channel allows our sales force to provide personal testimonials of product and service offerings; and

 

as compared to other distribution methods, our sales force has the opportunity to provide consumers higher levels of service and encourage repeat purchases.

 

The manner in which we operate our distribution channel can vary from market to market based on regulatory and socio-economic conditions. While our person-to-person marketing philosophy remains consistent globally, various aspects of our business may differ from market-to-market, including product mix and pricing, compensation structure, access to distribution outlets or product stores, the manner of getting products to consumers, product claims, branding and product formulations.

 

Given that members of our sales force are primarily independent contractors, we do not control or direct their promotional efforts. We do, however, require that our sales force abide by policies and procedures that require them to act in an ethical and consumer-protective manner and in compliance with applicable laws and regulations.

 

Our distribution channel is composed of two primary groups: our consumer group—individuals who buy our products primarily for personal or family consumption; and our sales network—individuals who personally buy, use and resell products, and who also find new consumers, and recruit, train and develop new team leaders. We strive to develop both our consumer group and our sales network. Our strategy for growing our consumer group is to offer high-quality, innovative products and services that provide demonstrable benefits. Our strategy for growing our sales network is to provide a meaningful business opportunity for those persons who demonstrate the ability to develop both a consumer group and a team of sales leaders.

 

History

 

As described above, we were incorporated in Nevada as Albero, Corp. on November 19, 2013. Our original business was to engage in horse breeding. In connection with the Share Exchange, our Board determined to discontinue operations in this area and to seek the new business opportunity prescribed by the acquisitions of Vitaxel and Vionmall. As a result of the Share Exchange, we have acquired the businesses of Vitaxel and Vionmall.

 

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Our authorized capital stock currently consists of 7,000,000,000 shares of Common Stock, par value $0.000001, and 100,000,000 shares of “blank check” preferred stock, par value $0.000001. Our Common Stock is quoted on the OTC Markets (OTCQB) under the symbol “VXEL.”

 

Our principal executive offices are located at Wisma Ho Wah Genting, No. 35, Jalan Maharajalela, 50150, Kuala Lumpur, Malaysia. Our telephone number is 603.2143.2889. Our website address is www.vitaxel.com .

 

Governmental Regulation

 

Many countries have either implemented new laws or made revisions to existing laws on direct selling in the last decade. Both developed and developing economies have realized the potential of the direct selling industry in light of the positive socio-economic impact of this sector – both directly and indirectly.

 

Along with the primary objective of regulating various fraudulent schemes, these countries have also enacted specific legislations largely self-monitored by local associations. Globally, these regulations relating to direct selling industry vary from country to country. Certain countries, including Malaysia, have enacted specific anti-pyramid laws to deal with frauds and abusive schemes, however, through specific regulations, they distinguish permissible MLM operations by direct selling companies. On the other hand, some countries primarily focus on consumer protection and strive to identify fraudulent schemes.

 

The substantive provisions governing direct selling businesses in various countries are founded on similar principles such as drafting a precise definition of direct selling business, pre-licensing of direct selling company, registration of direct sellers, stipulations governing activities and rewards/bonuses received by direct sellers, bans on entry fees, extensive buy-back policies and related matters.

 

The global level, direct selling industry self –regulates itself to maintain high levels of probity, integrity, corporate governance and consumer protection standards. Multiple direct selling companies from across the world have also joined forces to form direct selling associations which promote ethical business practices and prescribe a detailed code of ethics for the members, its sales representatives and customers. The code of conduct is a self –regulatory standard which regulates the varying interactions across the spectrum of direct sales that often exceeds local legal requirements.

 

The World Federation of Direct Selling Associations (“WFDSA”) is a non-governmental, voluntary organization globally representing the direct selling industry as a Federation of 60 national Direct Selling Associations (“DSA’s”) and one regional DSA – Federation of European DSA (Seldia). The “World Selling Code of Conduct” (‘the Code’) was published by the WFDSA for National DSA members. This Code establishes a standard framework for interaction between direct selling member companies, their direct sellers and consumers. The Code is a constantly evolving cornerstone of the direct selling industry’s commitment to ethical business practices and customer service. It is a mechanism that helps ensure that independent salespeople and customers are treated fairly and respectfully.

 

In order for a DSA to become a member of WFDSA, it must adopt the minimum standards set forth by the Code to the extent the requirements are consistent with the law in each particular country. Every DSA member company pledges to abide by the Code’s standards and procedures as a condition of admission and continued membership in a DSA. These Code of Ethics are enforced by an independent code administrator who is not connected with any member company. The code administrator will do everything possible to ensure Code compliance and where complaints exist, has the power to decide on remedies. All member companies agree to honor the administrator’s decisions. Broadly, the Code seeks to capture various aspects of a direct selling business which need to be regulated including use of misleading testimonials, misrepresentation of actual or potential earning claims or use of any exploitative and deceptive recruitment practices.

 

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The entire Code has been classified into three sections containing regulations in respect of:

 

Conduct for the Protection of Consumers

 

Conduct Between Companies and Direct Sellers

 

Conduct Between Companies.

 

Further, to help ensure legal compliance, the Code provides that new memberships should not be subject to significant monetary commitment either by way of entrance fees, training fees, purchases of sales kits or inventory loading. The companies take responsibility for consumer protection through provision of accurate information, product warranty and buyback offers. It ensures that member companies implement adequate mechanisms to address customer complaints with respect to their products and/or its sales representatives.

 

The Code is a self-regulation and not a law, therefore, does not restate all legal obligations. Compliance with local laws pertaining to direct selling by National DSA’s is a condition of acceptance by or continuance of membership in DSA. The Code also has a provision for an extra-territorial effect wherein every national DSA pledges that it will require each member to comply with the WFDSA World Codes of Conduct for Direct Selling with regard to direct selling activities outside of its home country, unless those activities are under the jurisdiction of Codes of Conduct of another country’s DSA to which the member also belongs.

 

Malaysia is a member of the WFDSA and has drafted a standard code of ethics for companies engaged in direct selling activities.

 

Regulations in Malaysia

 

In 1978, the Direct Selling Association of Malaysia was founded to promote the direct selling industry on a national and international level, as well as act as the de facto voice of the industry. Malaysia’s strong belief in business without borders and that direct selling is a source of empowerment of people across the globe, led to the enactment of an extensive legal regime governing business activities of direct selling companies in the form of the Direct Sales Act, 1993.

 

Over the years, the success of direct selling companies in Malaysia was accompanied by the rise of fraudulent activities such as pyramid and Ponzi schemes. In 2011, Malaysia amended the existing statute to rename it as the ‘Direct Sales and Anti-Pyramid Scheme Act (the “DSAPSA”). The key objectives of amending the existing law were to incorporate specific provisions governing sales achieved through electronic medium and regulations on legitimate multilevel marketing.

 

The DSAPSA provides for:

 

Licensing of direct sales activities for the protection of the consumer’s rights and interest;

 

Promotion and regulation of the growth and development of ethical direct sales activities; and

 

Prohibition of all activities involving pyramid schemes, chain distribution schemes or other similar schemes.

 

All door-to door sales and mail order selling (including selling by telephone) in Malaysia are subject to the DSAPSA which sets forth the conditions under which business may be conducted, defines requirements of direct sales contracts, identifies conditions under which licenses may not be granted or revoked and the punishment for fraud. The DSAPSA also provides for a cooling-off period of 10 days after the date of making a direct sales contract. The regulating authority is the ministry of Domestic Trade and Consumers Affairs.

 

The DSAPSA also stipulates that any person negotiating a door-to door sale will have to produce an identification card and authority card. This protects consumers from fraudulent schemes. In Malaysia, direct sellers are treated as independent contractors. The following types of marketing plans are presently covered under the provisions of the DSAPSA:

 

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Door-to-door sales (Multilevel marketing plan/ Single marketing plan)

 

Mail Order sales

 

Sales through electronic transactions.

 

There is no prohibition on the sales of specific products. However, direct selling companies wanting to introduce new products must seek prior approval from the relevant authority before distributing the products. Also, all health products must be registered with the Drug Control Authority, Ministry of Health, before they can be sold through this mode.

 

The Direct Selling Association of Malaysia (“DSAM”)

 

The DSAM functions at the societal level to create and maintain an environment that is conductive to the growth and stability of the direct selling industry in Malaysia. Established in 1978 as a national trade association, it is led by a President and Vice-President and 7 committee members, all of whom are elected by member companies. In addition to the cooperation extended by member companies, the DSAM works closely with the Ministry of Domestic Trade, Co-operatives & Consumerism, Ministry of Finance, Ministry of Health, other government bodies and trade associations to achieve common goals. The DSAM Code of Conduct is an example of self-regulation. It is a strict and effective code of conduct implemented worldwide, and endorsed by the Ministry of Domestic Trade, Cooperatives & Consumerism.

 

Competition and Competitive Strengths

 

The categories of travel, entertainment and lifestyle products and services are very competitive and are available through many channels including those of direct selling and the Internet. We try to differentiate ourselves from our competitors through our member focus on the consultative and educational nature of the sales process and the contact that our members have with their customers.

 

We are subject to competition for the recruitment of members from other network marketing organizations, including those that market similar products and services as well as other types of products and services. Our ability to remain competitive depends on having relevant products that meet consumer needs, a rewarding compensation plan, and a financially viable company.

 

As a company, we believe that the direct selling channel is an effective way to sell our products and services. We believe that the direct-selling channel is ideally suited to marketing our products and services because demand for travel, entertainment and lifestyle products and services is strengthened by ongoing personal contact and education between members and their customers. In addition, our members consume our products and services themselves, and therefore can provide first-hand testimonials about our products and services, which can serve as a powerful sales tool.

 

Our business model enables us to grow our business with moderate investment in our infrastructure and fixed costs. We incur no direct incremental cost to add a new member in our existing markets or add additional products and services to our product and service mix, and our member compensation varies directly with sales. Furthermore, we can readily increase production and distribution of our products and services as a result of having access to numerous third party relationships.

 

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Employees

 

As of January 1, 2016, we had approximately 28 employees, all of which were located in Malaysia. These numbers do not include our members, who are independent contractors. None of our employees are members of any labor union, and we have never experienced any business interruption as a result of any labor disputes.

 

Description of Properties

 

Our principal executive offices are currently located at Wisma Ho Wah Genting, No. 35, Jalan Maharajalela, 50150, Kuala Lumpur, Malaysia, where the Company leases approximately 8,420 square feet at a monthly rental of RM7,000 (approximately US$1,597). We have other office leases as follows:

 

Property address   Square feet   Monthly Rent
         
Unit No 108, Bangunan Cheong Wing Chan, No 41-51, Jalan Maharajalela, Kuala Lumpure, Malaysia   780   RM1,560 (approximately US$356)
         
No 16B, Jalan Yeop Abdul Rani, 30300 Ipoh, Perak, Malaysia   3,150   RM1,400 (approximately US$319)
         
No 34-A, Jalan Gaya 25, Taman, Gaya, 81800 Ulu Tiram, Johor, Malaysia   1,200   RM1,200 (approximately US$274)
         
No 31 & 33, Ground & Mezzanine Floor, Wisma Malaysia-Beijing, Jalan Maharajalela, 50150 Kuala Lumpur, Malaysia   9,170   RM14,000 (approximately US$3,194)

 

We believe our facilities are adequate for our current needs.

 

We do not own any real property.

 

RISK FACTORS

 

AN INVESTMENT IN OUR SECURITIES IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. WE FACE A VARIETY OF RISKS THAT MAY AFFECT OUR OPERATIONS OR FINANCIAL RESULTS AND MANY OF THOSE RISKS ARE DRIVEN BY FACTORS THAT WE CANNOT CONTROL OR PREDICT. BEFORE INVESTING IN THE SECURITIES YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS, TOGETHER WITH THE FINANCIAL AND OTHER INFORMATION CONTAINED IN THIS REPORT. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, OUR BUSINESS, PROSPECTS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED. IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK WOULD LIKELY DECLINE AND YOU MAY LOSE ALL OR A PART OF YOUR INVESTMENT. ONLY THOSE INVESTORS WHO CAN BEAR THE RISK OF LOSS OF THEIR ENTIRE INVESTMENT SHOULD CONSIDER AN INVESTMENT IN OUR SECURITIES.

 

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THIS REPORT CONTAINS CERTAIN STATEMENTS RELATING TO FUTURE EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF OUR COMPANY. PROSPECTIVE INVESTORS ARE CAUTIONED THAT SUCH STATEMENTS ARE ONLY PREDICTIONS AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. IN EVALUATING SUCH STATEMENTS, PROSPECTIVE INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS IDENTIFIED IN THIS REPORT, INCLUDING THE MATTERS SET FORTH BELOW, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

 

If any of the following or other risks materialize, the Company’s business, financial condition, and results of operations could be materially adversely affected which, in turn, could adversely impact the value of our Common Stock. In such a case, investors in our Common Stock could lose all or part of their investment.

 

Prospective investors should consider carefully whether an investment in the Company is suitable for them in light of the information contained in this Report and the financial resources available to them. The risks described below do not purport to be all the risks to which the Company or the Company could be exposed. This section is a summary of certain risks and is not set out in any particular order of priority. They are the risks that we presently believe are material to the operations of the Company. Additional risks of which we are not presently aware or which we presently deem immaterial may also impair the Company’s business, financial condition or results of operations.

 

Risks Related to our Business and the Industry in Which We Operate

 

We have a limited operating history upon which investors can evaluate our future prospects.

 

Vitaxel was formed in August 2012 and did not conduct any material operations until February 2015. Vionmall was formed in September 2015 and its initial online shopping platform first became operational in January 2016. As an early stage company, it is difficult for our management and our investors to accurately forecast and evaluate our future prospects and our financial results. Our operations are therefore subject to all of the risks inherent in light of the expenses, difficulties, complications and delays frequently encountered in connection with the formation of any new business, as well as those risks that are specific to our business in particular. An investment in an early stage company such as ours involves a degree of risk, including the possibility that entire investment may be lost. The risks include, but are not limited to, the possibility that we will not be able to develop expected marketing and distribution channels, attract sufficient numbers of team leaders and members, or products and/or services which will be accepted in the market. To successfully introduce and market our products and services, we must establish brand name recognition and competitive advantages for our products and services. There are no assurances that we can successfully address these challenges. If we are unsuccessful, we and our business, financial condition and operating results will be materially and adversely affected.

 

We will rely on third parties to develop the products and services which we offer and sell.

 

We will not manufacture or develop the products and services which we offer and sell. Therefore, our success will substantially depend upon our ability to develop, maintain and expand our strategic relationships with manufacturers and service suppliers. Any impairment in our relationship with these manufacturers and suppliers could have a material adverse effect on our business, results of operations, cash flow and financial condition. There can be no assurance that we will be able to retain these relationships on commercially reasonable terms, if at all.

 

We will need to protect our trademark rights to prevent competitors taking advantage of our goodwill.

 

We believe that the protection of our trademark rights is an important factor in product recognition, protecting our brand, maintaining goodwill, and maintaining or increasing market share. We currently have trademarks that we have filed to register the Live Better mark and may expend substantial cost and effort in an attempt to register new trademarks and maintain and enforce our trademark rights. See “Business – Intellectual Property.” If we do not adequately protect our rights in our trademarks from infringement, any goodwill that we have developed in those trademarks could be lost or impaired.

 

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Third parties may claim that the sale or promotion of our products, when and if we have any, may infringe on the trademark rights of others. If we become involved in any dispute regarding our trademark rights, regardless of whether we prevail, we could be required to engage in costly, distracting and time-consuming litigation that could harm our business. If the trademarks we use are found to infringe upon the trademark of another company, we could be liable for damages and be forced to stop using those trademarks, and as result, we could lose all the goodwill that has been developed in those trademarks.

 

Our products and services may not be accepted in the market.

 

We cannot be certain that the products and services which we may determine to market and sell will achieve or maintain market acceptance. Market acceptance of our products and services depends on many factors, including our ability to convince our distributors and customers that our products and services are an attractive alternative to competing products and services, supply and service sufficient quantities of products directly or through marketing alliances, and price products and services competitively.

 

If we are unable to retain our existing members and recruit additional members, our revenue will not increase and may even decline.

 

Our products and services will be primarily marketed by our members and we will depend on them to generate a significant portion of our revenues. Our members may terminate their services at any time, and, like most direct selling companies, we will experience relatively high turnover among our members from year to year. People who join us to purchase our products for personal consumption or for short-term income goals frequently will only stay with us for a short time. Team leaders who have committed time and effort to build a sales organization will generally stay for longer periods. Our members have and will have highly variable levels of training, skills and capabilities. To increase our revenue, we must increase the number of and/or the productivity of our members.

 

If our initiatives do not drive growth in the number of our members our operating results could be harmed. While we take and will continue to take many steps to help train, motivate and retain our members, we cannot accurately predict how the number and productivity of our members may fluctuate because we rely primarily upon our team leaders and other members to find new consumers, and to find, train and develop new sales leaders and other members. Our operating results could be harmed if we, and our team leaders, do not generate sufficient interest in our business and or products and services to retain and motivate our existing members and attract new members to join our us.

 

The number and productivity of our members could be harmed by several additional factors, including:

 

any adverse publicity regarding us, our products and services, our distribution channels, or our competitors;

 

lack of interest in, dissatisfaction with, or the technical failure of, existing or new products and services;

 

lack of compelling products or services or income opportunities that generate interest;

 

any negative public perception of our products and services;

 

any negative public perception of our members and the direct selling industry in general;

 

our actions to enforce our policies and procedures;

 

any regulatory actions or charges against us or others in our industry;

 

general economic and business conditions; and

 

potential saturation or maturity levels in a given country or market which could negatively impact our ability to attract and retain members in such market.

 

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Laws and regulations may prohibit or severely restrict direct selling and cause our revenue and profitability to decline, and regulators could adopt new regulations that harm our business.

 

Various government agencies throughout the world regulate direct sales practices. Laws and regulations in certain of the jurisdictions in which we operate and expect to operate are particularly stringent and subject to broad discretion in enforcement by regulators. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, often referred to as “pyramid” schemes, that compensate participants primarily for recruiting additional participants without significant emphasis on product sales of products and services to consumers. The laws and regulations in our current markets often:

 

impose order cancellations, product returns, inventory buy-backs and cooling-off rights for our members and consumers;

 

require us, or our members, to register with government agencies;

 

impose limits on the amount of sales compensation we can pay;

 

impose reporting requirements; and

 

require that we ensure, among other things, that our sales force maintain levels of product and service sales to qualify to receive commissions and that our members are compensated for selling products and not for recruiting others.

 

Complying with these widely varying and sometimes inconsistent rules and regulations can be difficult, time-consuming and expensive, and may require significant resources. The laws and regulations governing direct selling are modified from time to time, and, like other direct selling companies, we will be subject from time to time to government investigations in our various markets related to our direct selling activities. This can require us to make changes to our business model and aspects of our sales compensation plan in the markets impacted by such changes and investigations. In addition, countries where we currently do business or expect to do business could change their laws or regulations to prohibit direct selling. If we are unable to continue business in existing markets or commence operations in new markets because of these laws, our revenue and profitability may decline.

 

Challenges to the form of our network marketing system could harm our business.

 

We may be subject to challenges by government regulators regarding the form of our network marketing system. Legal and regulatory requirements concerning the direct-selling industry generally do not include “bright line” rules and are inherently fact-based and subject to interpretation. As a result, regulators and courts have discretion in their application of these laws and regulations, and the enforcement or interpretation of these laws and regulations by government agencies or courts can change. We are aware of ongoing investigations against other companies in the direct selling industry. An adverse ruling in these investigations could impact our business if direct selling laws or anti-pyramid laws are interpreted more narrowly or in a manner that results in additional burdens or restrictions on direct selling companies. We could also be subject to challenges by private parties in civil actions. We are aware of recent civil actions against some of our competitors, which have and may in the future result in significant settlements. Allegations directed at our competitors regarding the legality of multi-level marketing in various markets have also created intense public scrutiny of our industry. Our business is subject to formal and informal inquiries from various government regulatory authorities regarding our business and our compliance with local laws and regulations. All of these actions and any future government scrutiny of us or our industry could generate negative publicity or further regulatory actions that could result in fines, restrict our ability to conduct our business in our various markets, enter into new markets, motivate our sales force and attract consumers.

 

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Changes to our sales compensation plans could be viewed negatively by some of our members, could fail to achieve desired long-term results and have a negative impact on revenue.

 

We expect to modify components of our sales compensation plans from time to time to keep our sales compensation plans competitive and attractive to our existing members and people interested in joining us as members, to address changing market dynamics, to provide incentives to our sales force that we believe will help grow our business, to conform to local regulations and to address other business needs. Because of the size of our member base and the complexity of our sales compensation plans, it is difficult to predict how such changes will be viewed by our members and whether such changes will achieve their desired results.

 

Adverse publicity concerning our business, marketing plan, products and services or people could harm our business and reputation.

 

Expected growth in our member base and consumers and our results of operations can be particularly impacted by adverse publicity regarding us, the nature of our direct selling business model, our products and services or the actions of our members and employees. Given the nature of our operations and our continuous need to recruit and retain consumers and members, we are particularly vulnerable to adverse publicity. Specifically, we are susceptible to adverse publicity concerning:

 

suspicions about the legality and ethics of network marketing;

 

regulatory investigations of us, our competitors and our respective products and services;

 

the actions of our current or former members and employees; and

 

public perceptions of the direct selling industry or the travel, entertainment and lifestyle industry generally.

 

Critics of our industry and individuals who want to pursue an agenda may, in the future, utilize the Internet, the press and other means to publish criticisms of the industry, our company and our competitors, or make allegations regarding our business and operations, or the business and operations of our competitors. We or others in our industry may receive similar negative publicity or allegations in the future, and it may harm our business and reputation.

 

Our ability to conduct business in international markets may be affected by political, legal, tax and regulatory risks.

 

Our ability to capitalize on growth in international markets is exposed to risks associated with our international operations, including:

 

the possibility that a foreign government might ban or severely restrict our business method of direct selling, or that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market;

 

the lack of well-established or reliable legal systems in certain areas where we operate or expect to operate;

 

the presence of high inflation in the economies of international markets in which we operate or expect to operate;

 

the possibility that a government authority might impose legal, tax or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets;

 

the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and

 

the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash.

 

22

 

 

We depend on our key personnel, and the loss of the services provided by any of our executive officers or other key employees could harm our business and results of operations.

 

Our success depends to a significant degree upon the continued contributions of our senior management and other key employees, many of whom would be difficult to replace. Our senior management and key employees may voluntarily terminate their employment with us at any time. In addition, we need to continue to attract and develop qualified management personnel to sustain growth in our markets. If we are not able to successfully retain existing personnel and identify, hire and integrate new personnel, our business and growth prospects could be harmed.

 

The inability of our products and services and other initiatives to gain or maintain sales force and market acceptance could harm our business.

 

Our operating results could be adversely affected if our products and services, business opportunities, and other initiatives do not generate sufficient enthusiasm and economic benefit to retain our existing consumers and sales force or to attract new consumers and people interested in joining our sales force. Potential factors affecting the attractiveness of our products and services, business opportunities, and other initiatives include, among other items, perceived product and service quality, product and service exclusivity or effectiveness, economic success in our business opportunity, adverse media attention or regulatory restrictions on claims.

 

In addition, our ability to develop and introduce new products and services could be impacted by, among other items, government regulations, the inability to attract and retain qualified development staff, the termination of third-party collaborative arrangements, intellectual property of competitors that may limit our ability to offer innovative products and services or that challenge our own intellectual property, and difficulties in anticipating changes in consumer tastes and buying preferences.

 

One of the challenges we face is keeping our members motivated and actively engaged in business building activities and in developing new members. There can be no assurance that our initiatives will generate excitement among our sales force in the long-term or that planned initiatives will be successful in maintaining sales force activity and productivity or in motivating members to remain engaged in business building and developing new members. Some initiatives may have unanticipated negative impacts on our sales force, particularly changes to our sales compensation plans. The introduction of a new product, service or key initiative can also negatively impact other product or service lines to the extent our team leaders focus their efforts on the new product, service or initiative. In addition, if any of our products or services fails to gain acceptance, we could see an increase in returns.

 

Government authorities may question our tax or customs positions or change their laws in a manner that could increase our effective tax rate or otherwise harm our business.

 

As a U.S. company doing business globally, we are subject to all applicable tax and customs laws, including those relating to intercompany pricing regulations and transactions between our corporate entities in the jurisdictions in which we do business. We expect that periodically we will be audited by tax and customs authorities around the world. If authorities challenge our tax or customs positions, including those regarding transfer pricing and customs valuation and classification, we may be subject to penalties, interest and payment of back taxes or customs duties. Since tax rates vary from country to country, any tax assessments might also impact our ability to fully utilize foreign tax credits on our U.S. consolidated tax return. The tax and customs laws in each jurisdiction are continually changing and are further subject to interpretation by the local government agencies. Despite our best efforts to be aware of and comply with tax and customs laws, including changes to and interpretations thereof, there is a potential risk that the local authorities may argue that we are out of compliance. Such situations may require that we defend our positions and/or adjust our operating procedures in response to such changes. Any or all of these potential risks may increase our effective tax rate or otherwise harm our business.

 

23

 

 

Our markets are intensely competitive and market conditions and the strengths of competitors may harm our business.

 

The markets for our products and services are intensely competitive. Our results of operations may be harmed by market conditions and competition in the future. Many competitors have much greater name recognition and financial resources than we have, which may give them a competitive advantage.

 

We also compete with other direct selling companies to attract and retain our sales force and consumers. Some of these competitors have longer operating histories and greater visibility, name recognition and financial resources than we do. Some of our competitors may adopt some of our business strategies, including our global sales compensation plan. Consequently, to successfully compete in this industry, and attract and retain our sales force and consumers, we must ensure that our business opportunities and sales compensation plans are financially rewarding. We believe we have significant competitive advantages, but we cannot assure that we will be able to continue to successfully compete in this industry.

 

Any failure of our internal controls over financial reporting or our compliance efforts could harm our stock price and our financial and operating results or could result in fines or penalties.

 

We have implemented internal controls to help ensure the accuracy of our financial reporting and have implemented compliance policies and programs to help ensure that our employees and sales force comply with applicable laws and regulations. We regularly assess the effectiveness of our internal controls. There can be no assurance, however, that our internal or external assessments and audits will identify all significant or material weaknesses in our internal controls. Any failure to correct a weakness in internal controls could result in the disclosure of a material weakness. If a material weakness results in a material misstatement in our financial results, we may also have to restate our financial statements.

 

From time to time, we may initiate further investigations into our business operations based on the results of our internal and external audits or on complaints, questions or allegations made by employees or other parties regarding our business practices and operations. In addition, our business and operations may be investigated by applicable government authorities. In the event any of these investigations identify material violations of applicable laws by our employees or our sales force, we could be subject to adverse publicity, fines, penalties or loss of licenses or permits.

 

Cyber security risks and the failure to maintain the integrity of company, employee, sales force or guest data could expose us to data loss, litigation and liability, and our reputation could be significantly harmed.

 

We will collect and retain large volumes of company, employee, sales force and guest data, including credit card numbers and other personally identifiable information, for business purposes, including for transactional and promotional purposes, and our various information technology systems enter, process, summarize and report such data. The integrity and protection of this data is critical to our business. We are subject to significant security and privacy regulations, as well as requirements imposed by the credit card industry. Maintaining compliance with these evolving regulations and requirements could be difficult and may increase our expenses. In addition, a penetrated or compromised data system or the intentional, inadvertent or negligent release or disclosure of data could result in theft, loss or fraudulent or unlawful use of company, employee, sales force or guest data which could harm our reputation, disrupt our operations, or result in remedial and other costs, fines or lawsuits.

 

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Some of the markets in which we operate may become highly inflationary, which could negatively impact our financial position, results of operations or cash flows.

 

In some of our markets, we face risks associated with high levels of inflation. High levels of inflation and currency devaluations in any of our markets could negatively impact our balance sheet and results of operations.

 

Some of the markets in which we operate have currency controls in place, which may restrict our repatriation of cash.

 

If foreign governments restrict transfers of cash out of their country and control exchange rates, we may be limited as to the timing and amount of cash we can repatriate and may not be able to repatriate cash at beneficial exchange rates, which could have a material adverse effect on our financial position, results of operations or cash flows.

 

Risks Related to our Financial Condition

 

We have a history of losses and we may not achieve or sustain profitability in the future.

 

We have incurred losses since our inception. We anticipate that our operating expenses will increase in the foreseeable future as we continue to invest to grow our business, engage new members, and develop our e-commerce platform. These efforts may prove more expensive than we currently anticipate, and we may not succeed in generating sufficient revenues to offset these higher expenses. If we are unable to do so, the Company and its business, financial condition and operating results could be materially and adversely affected.

 

Our operating losses raise substantial doubt about our ability to continue as a going concern. If we do not continue as a going concern, investors could lose their entire investment.

 

Our historical operating losses and lack of revenues to support our cost structure raise substantial doubt about our ability to continue as a going concern. If we do not generate revenues, do not achieve profitability and do not have other sources of financing for our business, we may have to curtail or cease our development plans and operations, which could cause investors to lose the entire amount of their investment.

 

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

 

Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the Securities and Exchange Commission and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.

 

Investment Risks

 

You could lose all of your investment.

 

An investment in our securities is speculative and involves a high degree of risk. Potential investors should be aware that the value of an investment in the Company may go down as well as up. In addition, there can be no certainty that the market value of an investment in the Company will fully reflect its underlying value. You could lose your entire investment.

 

25

 

 

You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.

 

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders and the purchasers of our Units offered hereby. The Company will be authorized to issue an aggregate of 7,000,000,000 shares of Common Stock and 100,000,000 shares of “blank check” preferred stock. We may issue additional shares of our Common Stock or other securities that are convertible into or exercisable for our Common Stock in connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our Common Stock may create downward pressure on the trading price of the Common Stock. We will need to raise additional capital in the near future to meet our working capital needs, and there can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at a price (or exercise prices) below the price you paid for your stock.

 

The ability of our Board of Directors to issue additional stock may prevent or make more difficult certain transactions, including a sale or share exchange of the Company.

 

Our Board of Directors will be authorized to issue up to 100,000,000 shares of preferred stock with powers, rights and preferences designated by it. See “Preferred Stock” in the section of this Report titled “Description of Securities.” Shares of voting or convertible preferred stock could be issued, or rights to purchase such shares could be issued, to create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of the Company. The ability of the Board to issue such additional shares of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of the Company by tender offer or other means. Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price that such an attempt could cause. Moreover, the issuance of such additional shares of preferred stock to persons friendly to the Board of Directors could make it more difficult to remove incumbent managers and directors from office even if such change were to be favorable to stockholders generally.

 

There currently is no public market for our Common Stock and there can be no assurance that a public market will ever develop. Failure to develop or maintain a trading market could negatively affect the value of our Common Stock and make it difficult or impossible for you to sell your shares.

 

There is currently no public market for shares of our Common Stock and one may never develop. Our Common Stock is quoted on the OTC Markets. The OTC Markets is a thinly traded market and lacks the liquidity of certain other public markets with which some investors may have more experience. We may not ever be able to satisfy the listing requirements for our Common Stock to be listed on a national securities exchange, which is often a more widely-traded and liquid market. Some, but not all, of the factors which may delay or prevent the listing of our Common Stock on a more widely-traded and liquid market include the following: our stockholders’ equity may be insufficient; the market value of our outstanding securities may be too low; our net income from operations may be too low; our Common Stock may not be sufficiently widely held; we may not be able to secure market makers for our Common Stock; and we may fail to meet the rules and requirements mandated by the several exchanges and markets to have our Common Stock listed. Should we fail to satisfy the initial listing standards of the national exchanges, or our Common Stock is otherwise rejected for listing, and remains listed on the OTC Markets or is suspended from the OTC Markets, the trading price of our Common Stock could suffer and the trading market for our Common Stock may be less liquid and our Common Stock price may be subject to increased volatility.

 

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Our Common Stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.

 

Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our Common Stock.

 

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

Our stock may be traded infrequently and in low volumes, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell your shares.

 

Until our Common Stock is listed on a national securities exchange such as the New York Stock Exchange or the Nasdaq Stock Market, we expect our Common Stock to remain eligible for quotation on the OTC Markets, or on another over-the-counter quotation system, or in the “pink sheets.” In those venues, however, the shares of our Common Stock may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given time may be relatively small or non-existent. An investor may find it difficult to obtain accurate quotations as to the market value of our Common Stock or to sell his or her shares at or near bid prices or at all. In addition, if we fail to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling our Common Stock, which may further affect the liquidity of our Common Stock. This would also make it more difficult for us to raise capital.

 

We do not anticipate paying dividends on our Common Stock, and investors may lose the entire amount of their investment.

 

Cash dividends have never been declared or paid on our Common Stock, and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their shares of Common Stock. If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will only occur if our stock price appreciates. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment.

 

27

 

 

Being a public company is expensive and administratively burdensome.

 

As a public reporting company, we are subject to the information and reporting requirements of the Securities Act, the Exchange Act and other federal securities laws, rules and regulations related thereto, including compliance with the Sarbanes-Oxley Act. Complying with these laws and regulations requires the time and attention of our Board of Directors and management, and increases our expenses. Among other things, we are required to:

 

maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board;

 

maintain policies relating to disclosure controls and procedures;

 

prepare and distribute periodic reports in compliance with our obligations under federal securities laws;

 

institute a more comprehensive compliance function, including with respect to corporate governance; and

 

involve, to a greater degree, our outside legal counsel and accountants in the above activities.

 

The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders is expensive and much greater than that of a privately-held company, and compliance with these rules and regulations may require us to hire additional financial reporting, internal controls and other finance personnel, and will involve a material increase in regulatory, legal and accounting expenses and the attention of management. There can be no assurance that we will be able to comply with the applicable regulations in a timely manner, if at all. In addition, being a public company makes it more expensive for us to obtain director and officer liability insurance. In the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage. These factors could also make it more difficult for us to attract and retain qualified executives and members of our Board of Directors, particularly directors willing to serve on an audit committee which we expect to establish.

 

***

 

The risks above do not necessarily comprise all of those associated with an investment in the Company. This Report contains forward looking statements that involve unknown risks, uncertainties and other factors that may cause the actual results, financial condition, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors that might cause such a difference include, but are not limited to, those set out above.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following management’s discussion and analysis should be read in conjunction with the historical financial statements and the related notes thereto contained in this Report. The management’s discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in this Form 8-K,that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.

 

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As a result of the Share Exchange and the change in business and operations of the Company, from engaging in the business of horse breeding to the business of multi-level marketing and selling of travel, entertainment and lifestyle products and services, a discussion of the past financial results of Albero, Corp. is not pertinent, and under generally accepted accounting principles in the United States the historical financial results of Vitaxel and Vionmall, the accounting acquirers, prior to the Share Exchange are considered the historical financial results of the Company.

 

The following discussion highlights Vitaxel’s results of operations and the principal factors that have affected its financial condition as well as its liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the financial condition and results of operations presented herein. The following discussion and analysis is based on Vitaxel’s audited and unaudited financial statements contained in this Report, which have been prepared in accordance with generally accepted accounting principles in the United States. You should read the discussion and analysis together with such financial statements and the related notes thereto.

 

Basis of Presentation

 

The audited consolidated financial statements for the fiscal years ended December 31, 2014 and 2013, and the unaudited consolidated financial statements for the nine month periods ended September 30, 2015 and 2014, include a summary of our significant accounting policies and should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the consolidated results of operations for such periods have been included in these audited consolidated financial statements. All such adjustments are of a normal recurring nature.

 

Overview

 

Vitaxel

 

Results of Operations

 

The following discussion should be read in conjunction with the financial statements of Vitaxel for the three-month period and nine-month periods ended September 30, 2015 and 2014, the fiscal years ended December 31, 2014 and 2013 and the related notes thereto.

 

Three-month period ended September 30, 2015 compared to three-month period ended September 30, 2014

 

Revenue

 

We have recognized $897,995 and $4,100 revenue for the three months ended September 30, 2015 and 2014, with an increase of $893,895, or approximately 21,802%

 

The significant increase for the three months ended September 30, 2015 occurred because we started our large scale sales of products in November 2014. Hence, there was minimal sales made during the three months ended September 30, 2014.

 

Cost of Sales

 

Cost of sales for the three months ended September 30, 2015 was $755,399, compared to $2,680 for the three months ended September 30, 2014, an increase of $752,719, or 28,087%.

 

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Gross Profit

 

Gross profit was $142,596 for the three months ended September 30, 2015, compared to $1,420 for the three months ended September 30, 2014, an increase of $141,176, or 9,942%.

 

Operating Expenses

 

For the three months ended September 30, 2015, we incurred total operating expenses in the amount of $336,740, composed of selling expenses of $4,833 and general and administrative expenses totaling $331,907. For the three months ended September 30, 2014, we incurred total operating expenses in the amount of $108,882, which mainly comprised selling expenses of $1,481 and general and administrative expenses totaling $107,401. The total operating expenses increased by $227,858, or 209%.

 

Nine-month period ended September 30, 2015 compared to nine-month period ended September 30, 2014

 

Revenue

 

We have recognized revenue of $1,751,536 and $8,589 for the nine months ended September 30, 2015 and 2014, with an increase of $1,742,947, or approximately 20,293%.

 

The significant increase for the nine months ended September 30, 2015 occurred because we started our large scale sales of products in November 2014. Hence, there was minimal sales made during the three months ended September 30, 2014.

 

Cost of Sales

 

Cost of sales for the nine months ended September 30, 2015 was $1,678,124, compared to $5,304 for the nine months ended September 30, 2014, an increase of $1,672,820, or 31,539%.

 

Gross Profit

 

Gross profit was $73,412 for the nine months ended September 30, 2015, compared to $3,285 for the nine months ended September 30, 2014, an increase of $70,127, or 2,135%.

 

Operating Expenses

 

For the nine months ended September 30, 2015, we incurred total operating expenses in the amount of $732,230, composed of selling expenses of $6,739 and general and administrative expenses totaling $725,491. For the nine months ended September 30, 2014, we incurred total operating expenses in the amount of $242,094, which mainly comprised selling expenses of $2,039 and general and administrative expenses totaling $240,055. The total operating expenses increased by $490,136, or 202%.

 

For the year ended December 31, 2014 and the period from August 10, 2012 (inception) to December 31, 2013

 

Revenue

 

We recognized $55,561 and $0 revenue for the year ended December 31, 2014 and the period from August 10, 2012 (inception) to December 31, 2013.

 

We had no operations in 2013, and started our large scale sales of products in November 2014. Hence, there was minimal sales made during the year of 2014.

 

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Cost of Sales

 

Cost of sales for the year ended December 31, 2014 was $26,885, compared to $0 for the period from August 10, 2012 (inception) to December 31, 2013.

 

Gross Profit

 

Gross profit was $28,676 for the year ended December 31, 2014, compared to $0 for the period from August 10, 2012 (inception) to December 31, 2013.

 

Operating Expenses

 

For the year ended December 31, 2014, we incurred total operating expenses in the amount of $576,703, composed of selling expenses of $151,371 and general and administrative expenses totaling $425,332. For the period from August 10, 2012 (inception) to December 31, 2013, we have incurred total operating expenses in the amount of $506,224, which was composed of selling expenses of $406,814 and general and administrative expenses totaling $99,410. Despite the decrease of $255,443, or 63% for the selling expenses, the increase of $325,922, or 328%, caused total operating expenses to increase by $41,803, or 8%.

 

Liquidity and Capital Resources

 

As of September 30, 2015, we had a cash balance of $514,925. During the nine months ended September 30, 2015, net cash generated from operating activities totaled $516,644. Net cash used in investing activities totaled $19,626. Net cash repaid in financing activities during the period totaled $146,610. The resulting change in cash for the period was an increase of $485,701, which was primarily due to cash in from other payables. As of September 30, 2014, we had a cash balance of $7,674. During the nine months ended September 30, 2014, net cash used in operating activities totaled $263,016. Net cash used in investing activities totaled $26,040. Net cash provided by financing activities during the period totaled $295,581. The resulting change in cash for the period was an increase of $6,763, which was primarily due to cash in from shareholders.

 

As of December 31, 2014, we had a cash balance of $29,224. During the year ended December 31, 2014, net cash used in operating activities totaled $368,311. Net cash used in investing activities totaled $27,725. Net cash provided by financing activities during the period totaled $425,940. The resulting change in cash for the period was an increase of $28,313, which was primarily due to the cash in from shareholders. Compare to December 31, 2013, we had a cash balance of $911. During the period from August 10, 2012 (inception) to December 31, 2013, net cash used in operating activities totaled $672,141. Net cash used in investing activities totaled $770. Net cash provided by financing activities during the period totaled $673,867. The resulting change in cash for the period was an increase of $911, which was primarily due to the proceeds from shares issued since incorporation.

 

As of September 30, 2015, we had current liabilities of $1,491,986, which was composed of amounts due to shareholders of $406,113, deferred revenue of $143,306, and accrued liabilities of $942,567.

 

As of December 31, 2014, we had current liabilities of $588,349, which was composed of amounts due to shareholders of $567,640, amounts due to director of $11,131, and accrued liabilities of $9,578.

 

As of December 31, 2013, we had current liabilities of $189,427, which was composed of amounts due to director of $185,172, and accrued liabilities of $4,255.

 

31

 

 

We had net liabilities of $919,543, $493,479 and $10,017 as of September 30, 2015, December 31, 2014 and December 31, 2013, respectively.

 

The Company has incurred losses since its inception resulting in an accumulated deficit of $1,762,457 as of September 30, 2015 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. Our future financial results are also uncertain due to a number of factors, some of which are outside our control. These risk factors include, but are not limited to:

 

our ability to raise additional funding;
the results of our proposed operations.

 

Vionmall

 

Vionmall was incorporated on September 22, 2015. Vionmall had no activities during the period from September 22, 2015 (inception) to September 30, 2015.

 

Going Concern Consideration

 

Our operations and financial results are subject to numerous various risks and uncertainties that could adversely affect our business, financial condition and results of operations.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

 

Critical Accounting Policies and Estimates

 

Use of Estimates and Assumptions

 

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

 

Fair Value Measurements

 

The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

 

32

 

 

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

 

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of September 30, 2015, December 31, 2014 and December 31, 2013.

 

Revenue Recognition

 

Sales of power generation system in conjunction of system installation are recognized under accounting for construction-type contracts, using the completed contract method. Accordingly, revenue is recognized upon the completion of the construction, provided persuasive evidence of an arrangement exists, title and risk of loss has transferred, the fee is fixed and determinable, and collection is reasonably assured. We provide for any loss that we expect to incur on these contracts when that loss is probable.

 

Recent Accounting Pronouncements

 

In July 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which modifies existing requirements regarding measuring inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (NRV), and NRV less an approximately normal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impacts on the Company’s consolidated results of operations and financial condition.

 

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the consolidated financial statements.

 

33

 

 

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements— Going Concern (Subtopic 205-40). This standard is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments contained in this ASU apply to all companies and not-for-profit organizations. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle the ASU includes provisions within a five step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when (or as) an entity satisfies a performance obligation. The standard also specifies the accounting for some costs to obtain or fulfill a contract with a customer and requires expanded disclosures about revenue recognition. The standard provides for either full retrospective adoption or a modified retrospective adoption by which it is applied only to the most current period presented. This ASU is effective January 1, 2017. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

 

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

 

Off-Balance Sheet Arrangements

 

The Company did not engage in any “off-balance sheet arrangements” (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of December 31, 2015.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange Commission rules, shares of our Common Stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the applicable table below are deemed beneficially owned by the holders of such options and warrants and are deemed outstanding for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person. Subject to community property laws, where applicable, the persons or entities named in the tables below have sole voting and investment power with respect to all shares of our Common Stock indicated as beneficially owned by them.

 

Pre-Share Exchange

 

The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of January 18, 2016, prior to the Share Exchange, by (i) each stockholder known by us to be the beneficial owner of more than 5% of our Common Stock (our only classes of voting securities), (ii) each of our directors and executive officers, and (iii) all of our directors and executive officers as a group. Unless otherwise indicated, the persons named in the table below had sole voting and investment power with respect to the number of shares indicated as beneficially owned by them.

 

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Name and address
of beneficial owner
  Amount and
nature of
beneficial
ownership
    Percent of
class  (1)
 
Andriy Berezhnyy
22 Mount Davys Road, Cullybacky, Ballymena
Co. Antrim, Northern Ireland BT421JH
    3,000,000 shares (direct)       78.43 %
                 
All directors and executive officers as a group (1 person)     3,000,000       78.43 %

 

(1) Applicable percentage ownership is based on 3,825,000 shares of Common Stock outstanding as of January 18, 2016.

 

Post-Share Exchange

 

The following table sets forth information with respect to the beneficial ownership of our Common Stock as of January 18, 2016, after the Share Exchange, by (i) each stockholder known by us to be the beneficial owner of more than 5% of our Common Stock (our only class of voting securities), (ii) each of our directors and executive officers, and (iii) all of our directors and executive officers as a group. To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our Common Stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. Other than the Share Exchange, to our knowledge, there is no arrangement, including any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of the Company.

 

Unless otherwise indicated in the following table, the address for each person named in the table is c/o Vitaxel Group Limited, Wisma Ho Wah Genting, No. 35, Jalan Maharajalela, 50150, Kuala Lumpur, Malaysia.

 

Name and address of beneficial owner   Amount and
nature of
beneficial
ownership
  Percent 
of
class  (1)
 
           
Directors and Executive Officers            
Lim Wee Kiat   131,250 shares (direct)     3.43 %
Leong Yee Ming   525,000 shares (direct)     13.73 %
Yee Hing Yip   0 shares     N/A  
Lim Boon Seng   0 shares     N/A  
Lee Wei Boon   0 shares     N/A  
All directors and executive officers as a group (5 persons)   656,250 shares     17.16 %
             
5% Shareholders            
Lim Chun Yen   1,916,250 shares (direct)     50.1 %

 

 

* Less than 1%

 

(1) Applicable percentage ownership is based on 3,825,000 shares of Common Stock outstanding as of January 18, 2016.

 

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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

 

Directors and Executive Officers

 

Below are the names of and certain information regarding the Company’s current executive officers and directors who were appointed effective as of the closing of the Share Exchange:

 

Name   Age   Position  

Date Named to Board

of Directors/as

Executive Officer

Lim Wee Kiat   35   Chairman (Director), President and Secretary   January 18, 2016
Leong Yee Ming   47   Chief Executive Officer and Director   January 18, 2016
Lee Wei Boon   43   Chief Financial Officer and Treasurer   January 18, 2016
Lim Boon Seng   51   Chief Operating Officer   January 18, 2016
Yee Hing Yip   45   Vice President - Marketing   January 18, 2016

 

Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Directors are elected by a plurality of the votes cast at the annual meeting of stockholders and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified.

 

A majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all members of the Board of Directors individually or collectively consent in writing to the action.

 

Executive officers are appointed by the Board of Directors and serve at its pleasure.

 

The principal occupation and business experience during at least the past five years for our executive officers and directors is as follows:

 

Lim Wee Kiat – Chairman of the Board of Directors, Director, President and Secretary

Lim Wee Kiat has served as our Chairman, President, Secretary and as a Director since January 18, 2016. He has more than 10 years business experience with 5 years in the area of multi-level marketing and management. He has served as a Director and as President for Vitaxel since December 2013. From June 2010 to the present, he has served as Executive Director for Ho Wah Genting Berhad in Kuala Lumpur, Malaysia (“Ho Wah Genting”), a public Malaysian corporation where his responsibilities include implementation of strategies, policies and decisions. From December 2013 to the present he has served in Kuala Lumpur, Malaysia as Vitaxel’s Chief Executive Officer. From April 2008 until March 2014 he served in Kuala Lumpur, Malaysia as Executive Director for HWG Tin Mining SDN BHD, a subsidiary of Ho Wah Genting. From June 2011 until August 2013 he served in Kuala Lumpur, Malaysia as a Non-Executive Director for Connectcounty Holdings Berhad and from February 2014 until December 2014 as its Deputy Chief Executive Officer. He is a graduate of the University of Nottingham (United Kingdom) where he received a Bachelor of Science Degree in Computing and Information Systems in 2003.

 

Leong Yee Ming – Director and Chief Executive Officer

Leong Yee Ming has served as our Chief Executive Officer and as a Director since January 18, 2016. He has more than 28 years of business experience in the area of multi-level marketing which has included the founding of an international multi-level marking company, acting as an independent distributor and management level experience. From November 2015 through the present, he has also served as the Chief Executive Officer for Vitaxel. From December 2013 until May 2015 he served in Hong Kong as Chief Executive Officer for Grande Life, Inc. and Grand Legacy, Inc., corporations engaged in relationship marketing and lifestyle programs which he co-founded. From February 2011 until November 2013 he was a strategic consultant for MLM Co., in Asia and the United States. From April 2009 until January 2011 he was a Pioneer Leader/1 st Diamond Executive in Kuala Lumpur, Malaysia for Asia – Velocity International Inc. From May 2005 until January 2009 he was the Chief Operating Officer for Gano iTouchLife Worldwide Inc., a company which he co-founded in Singapore. From December 2002 until March 2005 he was a Pioneer Leader, International Systems Trainee and 8-Star Distributor for Tiens Health Development SDN BHD in Kuala Lumpur, Malaysia. From May 1997 until December 1999 he was the Group Retail Manager in Kuala Lumpur, Malaysia for Giraffe World (M) SDN BHD and from September 1987 until August 1989 was an Independent Distributor for Amway in Kuala Lumpur, Malaysia, on a part time basis.

 

36

 

 

Lee Wei Boon – Chief Financial Officer and Treasurer

Lee Wei Boon has served as our Chief Financial Officer and Treasurer since January 18, 2016. He has more than 17 years of experience in various finance, taxation, accounting and information systems capacities. From May 2015 until the present he has also served as Vitaxel’s Finance Manager and since January 1, 2016 has served as Vitaxel’s Chief Financial Officer. From October 2011 until April 2015 he served in Penang, and Selangor, Malaysia as the Assistant Vice President – Finance for Kensortium Logistik Berhad, a transportation/logistics company. From December 2005 until October 2011 he served in Penang, Malaysia as an accountant for WD Media (Malaysia) SDN. From October 2001 until December 2005 he served in Penang, Malaysia as a senior consultant for KarenSoft Solutions SDN BHD. From August 1998 until September 2001 he served in Penang, Malaysia, Singapore, and Kuala Lumpur, Malaysia in various accounting capacities for Select Metal Industries(M) SDN BHD, See Hup Seng Limited and L&R Trading and Transport SDN BHD. He received an Associate Diploma in Computing in 1995 from the University of Southern Queensland (Australia), a Bachelor of Commerce Degree in Accounting in 1999 from the University of Southern Queensland (Australia) and a Masters Degree in Business Administration in 2012 from the University Utara (Malaysia).

 

Lim Boon Seng – Chief Operating Officer

Lim Boon Seng has served as our Chief Operating Officer since January 18, 2016. He has more than 25 years of experience in operations and marketing capacities. His expertise includes the training of distributors and team leaders. He has served as Vitaxel’s Chief Marketing Officer since February 2015, as Vitaxel’s Chief Operating Officer since January 1, 2016 and as a Director for Vionmall since November 2015. From June 2013 until December 2014 he worked in Kuala Lumpur, Malaysia for Country Farm Organics as a shop owner. From February 2009 until December 2013 he worked in Kuala Lumpur, Malaysia for MegaPlus Marketing. From May 2002 until January 2009 he worked in Kuala Lumpur, Malaysia for Unicity Marketing SDN BHD as a sales and marketing director. From April 2000 until April 2002 he worked in Kuala Lumpur, Malaysia for Alona Marketing & Training as a general manager. From June 1997 until March 2000 he worked in Kuala Lumpur, Malaysia for NTI Networks SDN BDN, a company which he founded. He worked from March 1992 until June 1997 in Kuala Lumpur, Malaysia for Seiton(M) SDN BHD, a company which he founded. From February 1989 until March 1992 he also held positions at various times with Empire Products (M) SDN BHD, Elegant World (M) SDN BHD and Lady Jane School of Beauty.

 

Yee Hing Yip – Vice President – Marketing

Yee Hing Yip has served as our Vice President – Marketing since January 18, 2016. He has more than 25 years of experience in the multi-level marketing industry. He has served as Vitaxel’s Vice President - Marketing since December 2014. From April 2006 until February 2014 he worked for Herbalife Products Malaysia SDN BHD as a Global Expansion Team Member. From June 2004 until February 2006 he worked in Kuala Lumpur, Malaysia for BYG Berhad as a Marketing Director. From February 2003 until February 2004 he worked in Kuala Lumpur, Malaysia for Grous Angle SDN BHD as a Sales Director. From April 2001 until January 2003 he worked in Petaling Jaya, Malaysia for Unicity Malaysia SDN BHD as a Main Speaker. From June 2000 until February 2001 he worked in Kuala Lumpur, Malaysia for SunHoup(M) SDN BHD as a Marketing Manager. From August 1991 until April 2000 he worked in Kuala Lumpur, Malaysia for NTI Network SDN BHD as a Diamond Agency Manager. From February 1989 until June 1991 he worked in Batu Caves, Malaysia for SunSky SDN BHD as a Distributor.

 

37

 

 

Director Independence

 

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.” Neither of our two directors are independent directors under the applicable standards of the SEC and the Nasdaq stock market.

 

Family Relationships

 

There are no family relationships among our directors or executive officers.

 

Involvement in Certain Legal Proceedings

 

None of our directors or executive officers has been involved in any of the following events during the past ten years:

 

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

 

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; or

 

being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

Board Committees

 

The Company currently has not established any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, other than as described above, no security holders have made any such recommendations. The entire Board of Directors performs all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly.

 

Audit Committee Financial Expert

 

We have no separate audit committee at this time. The entire Board of Directors oversees our audits and auditing procedures. Neither of our directors is an “audit committee financial expert” within the meaning of Item 407(d)(5) of SEC regulation S-K.

 

Compensation Committee

 

We have no separate compensation committee at this time. The entire Board of Directors oversees the functions which would be performed by a compensation committee.

 

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EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table sets forth information concerning the total compensation paid or accrued by us and Vitaxel during the last two fiscal years indicated to (i) all individuals that served as our or Vitaxel’s principal executive officer or acted in a similar capacity for us or Vitaxel 1at any time during the most recent fiscal year indicated; (ii) the two most highly compensated executive officers who were serving as executive officers of us or Vitaxel at the end of the most recent fiscal year indicated that received annual compensation during such fiscal year in excess of $100,000; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to clause (ii) above but for the fact that the individual was not serving as an executive officer of us or Vitaxel at the end of the most recent fiscal year indicated. No executive officer of ours or Vitaxel has even received annual compensation in excess of $100,000.

 

Name &
Principal
Position
  Fiscal
Year
ended
October 31,
    Salary
($)
    Bonus
($)
    Stock
Awards($)
    Option
Awards($)
    Non-Equity
Incentive Plan
Compensation
($)
    Non-Qualified
Deferred
Compensation
Earnings ($)
    All Other
Compensation
($)
    Total ($)  
Andriy Berezhnyy, CEO (1)     2015       0       0       0       0       0       0       0       0  
      2014       0       0       0       0       0       0       0       0  

 

Name &
Principal
Position
  Fiscal
Year
ended
December 31,
    Salary
($)
    Bonus
($)
    Stock
Awards
($)
    Option
Awards($)(2)
    Non-Equity
Incentive Plan
Compensation
($)
    Non-Qualified
Deferred
Compensation
Earnings ($)
    All Other
Compensation
($)
    Total ($)  
Lim Wee Kiat,     2014       12,319       -0-       -0-       -0-       -0-       -0-       4,106       16,425  
CEO (2)     2013       -0-       -0-       -0-       -0-       -0-       -0-       -0-       -0-  

 

(1) On January 18, 2016, Mr. Berezhnyy resigned as our CEO and director.

(2) Reflects compensation received from Vitaxel.

 

We have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans, except that the Company maintains a 401(k) plan in which all eligible employees may participate by making elective deferral contributions to the plan. The Company does not make any matching contributions to the plan.

 

Except as indicated below, we have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers listed above.

 

Outstanding Equity Awards at Fiscal Year-End

 

We have one compensation plan approved by our stockholders, the 2016 Plan. As of the end of our last completed fiscal year, the plan had not yet been created or approved. Accordingly, we had no outstanding equity awards at October 31, 2015. See “Description of Securities—Options” below for more information.

 

Employment Agreements

 

On December 1, 2014 Vitaxel executed a Letter of Appointment with Yee Hing Yip pursuant to which Yee Hing Yip serves as Vitaxel’s Marketing Director at a salary of RM6,000 per month (approximately US$1,370 per month). Pursuant to the Letter of Appointment, Yee Hing Yip also receives a mobile phone allowance of RM150 per month, a parking allowance of RM150 per month and a mileage allowance. He is also eligible to receive performance based bonuses at the discretion of Vitaxel on December 31 of each year of employment. The Letter of Appointment may be terminated by either party upon one-months’ prior written notice or the payment of one-months’ salary in lieu of notice. During the term of his employment by Vitaxel, Yee Hing Yip may not engage in any employments which conflict with Vitaxel’s business or interests.

 

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On March 24, 2015 Vitaxel executed a Letter of Appointment with Lee Wei Boon pursuant to which Lee Wei Boon has served as Vitaxel’s Finance Manager since May 5, 2015 at a salary of RM8,000 per month (approximately US$1,827 per month). The Letter of Appointment may be terminated by either party upon three-months’ prior written notice or the payment of three-months’ salary in lieu of notice. During the term of his employment by Vitaxel, Lee Wei Boon may not engage in any employments which conflict with Vitaxel’s business or interests.

 

On November 1, 2015 Vitaxel entered into a Consulting Services Agreement (the “Consulting Agreement”) with Leong Yee Ming pursuant to which Leong Yee Ming provides management services. The Consulting Agreement expires July 31, 2016. Pursuant to the Consulting Agreement, Leong Yee Ming receives a monthly consulting fee of RM12,000 per month (approximately US$2,740 per month) and an expense allowance of RM2,000 per month. The Consulting Agreement may be terminated by either party by providing the other with written notice of termination not less than one month prior to the date of termination.

 

Effective February 5, 2015, Vitaxel executed a Letter of Appointment with Lim Boon Seng pursuant to which Lim Boon Seng serves as Vitaxel’s Global Business Development Manager at a monthly salary of RM5,000 (approximately US$1,142 per month). Mr. Lim Boon Seng is also eligible to receive performance based bonuses at the discretion of Vitaxel on December 31 of each year of employment. The Letter of Appointment may be terminated by either party upon one-months’ prior written notice or the payment of one-months’ salary in lieu of notice. During the term of his employment by Vitaxel, Lim Boon Seng may not engage in any employments which conflict with Vitaxel’s business or interests.

 

Since April 1, 2014, Lim Wee Kiat has served as a Director and Director of Operations for Vitaxel at a monthly salary of RM5,000 (approximately US$1,142 per month). Lim Wee Kiat also receives a monthly expense allowance of RM2,000 per month. He is eligible to receive performance based bonuses at the discretion of Vitaxel on December 31 of each year of employment. Either party may terminate the employment arrangement by providing the other with three- months’ advance written notice or the payment of three-months’ salary in lieu of notice. During the term of his employment by Vitaxel, Lim Wee Kiat may not engage in any employments which conflict with Vitaxel’s business or interests.

 

On October 28, 2015, Vionmall executed a Letter of Appointment with Wong Chien Nan pursuant to which Wong Chien Nan has been serving as Vionmall’s Chief Executive Officer since November 1, 2015 at a monthly salary of RM8,000 per month (approximately US$1,827 per month). Wong Chen Nan also receives gas, travel and communications allowances. The Letter of Appointment may be terminated by either party upon two months’ prior written notice or the payment of two months’ salary in lieu of notice. During the term of his employment by Vionmall, Wong Chien Nan may not engage in any employments which conflict with Vionmall’s business or interests.

 

None of the Company’s executive officers have employment agreements directly with the Company, although they may enter into such agreements in the future.

 

Director Compensation

 

Neither we, Vitaxel or Vionmall have compensated our directors, in their capacities as such, since our respective formations.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

SEC rules require us to disclose any transaction or currently proposed transaction in which the Company is a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000 or one percent (1%) of the average of the Company’s total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s Common Stock, or an immediate family member of any of those persons.

 

The descriptions set forth above under the captions “The Share Exchange and Related Transactions—Share Exchange Agreement,” “—Split-Off,” “—2016 Equity Incentive Plan,” and “Executive Compensation—Employment Agreements” and “—Director Compensation” and below under “Description of Securities—Options” are incorporated herein by reference.

 

MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

Our Common Stock has been quoted on OTC Markets (OTCQB) under the symbol “VXEL” since January 19, 2016. Prior to January 19, 2016 our Common Stock was quoted under the symbol “ALLR.” Our Common Stock has never traded and no assurance can be given that an active market will develop or if developed, that it will be maintained.

 

As of the date of this Report, we have 3,825,000 shares of Common Stock outstanding held by approximately 40 stockholders of record.

 

Dividend Policy

 

We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The Company had no equity compensation plans as of December 31, 2015.

 

On January 18, 2016, our Board of Directors adopted, and on the same date, our stockholders holding a majority of our outstanding shares of Common Stock approved, the 2016 Equity Incentive Plan, which reserves a total of 1,000,000,000 shares of our Common Stock for issuance under the 2016 Plan. As described below, incentive awards authorized under the 2014 Plan include, but are not limited to, incentive stock options within the meaning of Section 422 of the internal Revenue Code of 1986, as amended (the “Code”). If an incentive award granted under the 2016 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2016 Plan.

 

The number of shares of our Common Stock subject to the 2016 Plan, any number of shares subject to any numerical limit in the 2016 Plan, to the terms of any incentive award or to any combination of the foregoing, is expected to be adjusted in the event of any change in our outstanding our Common Stock by reason of any stock dividend, spin-off, split-up, stock split, reverse stock split, recapitalization, reclassification, Share Exchange, consolidation, liquidation, business combination or exchange of shares or similar transaction.

 

41

 

 

Administration

 

The compensation committee of the Board, or the Board in the absence of such a committee, will administer the 2016 Plan. Subject to the terms of the 2016 Plan, the compensation committee or the Board has complete authority and discretion to determine the terms upon which awards may be granted under the 2016 Plan.

 

Grants

 

The 2016 Plan authorizes the grant to participants of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Code and stock appreciation rights, as described below:

 

Options granted under the 2016 Plan entitle the grantee, upon exercise, to purchase up to a specified number of shares from us at a specified exercise price per share. The exercise price for shares of our Common Stock covered by an option generally cannot be less than the fair market value of our Common Stock on the date of grant unless agreed to otherwise at the time of the grant. In addition, in the case of an incentive stock option granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary, the per share exercise price will be no less than 110% of the fair market value of our Common Stock on the date of grant.

 

Restricted stock awards and restricted stock units may be awarded on terms and conditions established by the compensation committee, which may include performance conditions for restricted stock awards and the lapse of restrictions on the achievement of one or more performance goals for restricted stock units.

 

The compensation committee may make performance grants, each of which will contain performance goals for the award, including the performance criteria, the target and maximum amounts payable, and other terms and conditions.

 

The 2016 Plan authorizes the granting of stock awards. The compensation committee will establish the number of shares of our Common Stock to be awarded (subject to the aggregate limit established under the 2016 Plan upon the number of shares of our Common Stock that may be awarded or sold under the 2016 Plan) and the terms applicable to each award, including performance restrictions.

 

Stock appreciation rights (“SARs”) entitle the participant to receive a distribution in an amount not to exceed the number of shares of our Common Stock subject to the portion of the SAR exercised multiplied by the difference between the market price of a share of our Common Stock on the date of exercise of the SAR and the market price of a share of our Common Stock on the date of grant of the SAR.

 

Duration, Amendment, and Termination

 

The Board has the power to amend, suspend or terminate the 2016 Plan without stockholder approval or ratification at any time or from time to time. No change may be made that increases the total number of shares of our Common Stock reserved for issuance pursuant to incentive awards or reduces the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our stockholders within one year of such change. Unless sooner terminated, the 2016 Plan would terminate ten years after it is adopted.

 

As of the date hereof, no options or other securities have been issued under the 2016 Plan. See “Description of Securities—Options” below for more information.

 

42

 

 

DESCRIPTION OF SECURITIES

 

We have authorized capital stock consisting of 7,000,000,000 shares of Common Stock and 100,000,000 shares of preferred stock. As of the date of this Report, we had 3,825,000 shares of Common Stock issued and outstanding, and no shares of preferred stock issued and outstanding.

 

Common Stock

 

The holders of outstanding shares of Common Stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends of such times and in such amounts as the board from time to time may determine. Holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. There is no cumulative voting of the election of directors then standing for election. The Common Stock is not entitled to pre-emptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding up of our company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the Common Stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors. Each outstanding share of Common Stock is duly and validly issued, fully paid and non-assessable.

 

Preferred Stock

 

We may issue shares of preferred stock from time to time in one or more series, each of which will have such distinctive designation or title as shall be determined by our Board of Directors and will have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Board of Directors.

 

While we do not currently have any plans for the issuance of additional preferred stock, the issuance of such preferred stock could adversely affect the rights of the holders of Common Stock and, therefore, reduce the value of the Common Stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the Common Stock until the Board of Directors determines the specific rights of the holders of the preferred stock; however, these effects may include:

 

Restricting dividends on the Common Stock;

 

Diluting the voting power of the Common Stock;

 

Impairing the liquidation rights of the Common Stock; or

 

Delaying or preventing a change in control of the Company without further action by the stockholders.

 

Other than in connection with shares of preferred stock (as explained above), which preferred stock is not currently designated nor contemplated by us, we do not believe that any provision of our charter or By-Laws would delay, defer or prevent a change in control.

 

Options

 

We do not presently have any issued and outstanding stock options.

 

Warrants

 

We do not presently have any issued and outstanding stock warrants.

 

43

 

 

Other Convertible Securities

 

As of the date hereof, the Company does not have any outstanding convertible securities.

 

Transfer Agent

 

The transfer agent for our Common Stock is Globex Transfer, LLC. The transfer agent’s address is 780 Deltona Blvd, Suite 202, Deltona, FL 32725, and its telephone number is 813.344.4490.

 

LEGAL PROCEEDINGS

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

We are currently not aware of any pending legal proceedings to which we are a party or of which any of our property is the subject, nor are we aware of any such proceedings that are contemplated by any governmental authority.

 

INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

The Nevada Private Corporation Law and our Articles of Incorporation allow us to indemnify our officers and directors from certain liabilities and our By-Laws state that we shall indemnify every present or former director or officer of ours or one of our subsidiaries (each an “Indemnitee”).

 

Our By-Laws provide that we shall indemnify an Indemnitee against all costs, charges and expenses, including amounts paid to settle an action or satisfy a judgment, actually and reasonably incurred by such Indemnitee.

 

Other than discussed above, none of our By-Laws, or Articles of Incorporation includes any specific indemnification provisions for our officers or directors against liability under the Securities Act. Additionally, insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

ITEM 3.02  UNREGISTERED SALES OF EQUITY SECURITIES

 

Shares Issued in Connection with the Share Exchange

 

On January 18, 2016, pursuant to the terms of the Share Exchange, all of the shares of Vitaxel and Vionmall were exchanged for 2,625,000 restricted shares and 375,000 restricted shares, respectively, of our Common Stock. This transaction was exempt from registration pursuant to Section 4(a)(2) of the Securities Act as not involving any public offering and/or Regulation S under the Securities Act. None of the shares were sold through an underwriter and accordingly, there were no discounts or commissions involved.

 

Sales of Unregistered Securities of Vitaxel

 

Set forth below is information regarding shares of common stock granted by Vitaxel within the past three years that were not registered under the Securities Act of 1933, as amended (the “Securities Act”). Also included is information relating to the section of the Securities Act, or rule of the Securities and Exchange Commission, under which exemption from registration was claimed. Share and per share stock numbers below in this Item do not give effect to the Share Exchange on January 18, 2016, in which each share of Vitaxel stock outstanding at the time of the Share Exchange was automatically converted into shares of our Common Stock at the applicable conversion ration described elsewhere herein.

 

44

 

 

On August 10, 2012, Vitaxel issued one ordinary share to each of two persons.

 

On December 20, 2012, Vitaxel issued 1,499,998 ordinary shares to one person.

 

These shares were issued in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act for transactions by an issuer not involving a public offering.

 

Sales of Unregistered Securities of Vionmall

 

Set forth below is information regarding shares of common stock granted Vionmall since its inception that were not registered under the Securities Act of 1933, as amended (the “Securities Act”). Also included is information relating to the section of the Securities Act, or rule of the Securities and Exchange Commission, under which exemption from registration was claimed. Share and per share stock numbers below in this Item do not give effect to the Share Exchange on January 18, 2016, in which each share of Vionmall stock outstanding at the time of the Share Exchange was automatically converted into shares of our Common Stock at the applicable conversion ration described elsewhere herein.

 

On September 22, 2015, Vionmall issued one ordinary share to each of two persons.

 

On October 6, 2015, Vionmall issued 69 ordinary shares to one person and 29 ordinary shares to another person.

 

In November 2015, Vionmall issued 29,970 ordinary shares to one person, 29,930 ordinary shares to one person, 20,000 ordinary shares to one person and 20,000 ordinary shares to one person.

 

These shares were issued in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act for transactions by an issuer not involving a public offering.

 

ITEM 5.01  CHANGES IN CONTROL OF REGISTRANT

 

The information regarding change of control of the Company in connection with the Share Exchange set forth in Item 2.01, “Completion of Acquisition or Disposition of Assets—The Share Exchange and Related Transactions” is incorporated herein by reference.

 

ITEM 5.02  DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

 

The information regarding departure and election of directors and departure and appointment of principal officers of the Company in connection with the Share Exchange set forth in Item 2.01, “Completion of Acquisition or Disposition of Assets—The Share Exchange and Related Transactions” is incorporated herein by reference.

 

ITEM 5.03  AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR

 

On January 8, 2016, prior to the Share Exchange, our Board of Directors amended and restated our Articles of Incorporation. Our Amended and Restated Articles of Incorporation are filed as an exhibit to this Report.

 

45

 

 

ITEM 8.01  OTHER EVENTS

 

We previously reported in a Current Report on Form 8-K filed with the SEC on January 11, 2016 that on January 8, 2016, we filed Amended and Restated Articles to our Articles of Incorporation with the Nevada Secretary of State pursuant to which, among other things, we changed our name to “Vitaxel Group Limited” (the “Name Change”). In connection with the Name Change, we submitted to the Financial Industry Regulatory Authority, Inc. (“FINRA”) a voluntary request for the change of our trading symbol. On January 15, 2016, FINRA notified us that the Name Change would take effect on the over-the-counter market at the start of business on January 19, 2016 (the “Effective Date”). At the open of trading on the Effective Date, our trading symbol changed from “ALLR” to “VXEL.”

 

ITEM 9.01  FINANCIAL STATEMENTS AND EXHIBITS

 

(a) Financial statements of businesses acquired.

 

In accordance with Item 9.01(a), Vitaxel’s audited financial statements as of, and for the years ended December 31, 2014 and 2013, Vitaxel’s unaudited financial statements as of, and for the nine months ended, September 30, 2015 and September 30, 2014, and Vionmall’s unaudited financial statements as of and for the period from September 22, 2015 (inception) through September 30, 2015 and the accompanying notes, are included in this Report beginning on Page F-1.

 

(b) Pro forma financial information.

 

In accordance with Item 9.01(c), the following unaudited pro forma financial information with respect to the Share Exchange with Vitaxel and Vionmall reported in Item 2.01 of this Current Report on Form 8-K are included in this Report beginning on page F-30.

 

Unaudited Pro Forma Consolidated Balance Sheet as of October 31, 2015
Unaudited Pro Forma Consolidated Statement of Operations for the year ended October 31, 2015
Notes to the Unaudited Pro Forma Consolidated Financial Statements.

 

(c) Exhibits

 

In reviewing the agreements included or incorporated by reference as exhibits to this Current Report on Form 8-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

 

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

 

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

 

may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

 

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

 

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Current Report on Form 8-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

 

46

 

 

Exhibit
Number
  Description
     
2.1*   Share Exchange Agreement, dated as of January 18, 2016, by and among the Registrant, Vitaxel SDN BHD (“Vitaxel”), the Shareholders of Vitaxel, Vitaxel Online Mall SDN BHD (“Vionmall”) and the Shareholders of Vionmall
     
3.1   Articles of Incorporation of the Registrant (incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on January 5, 2015)
     
3.2   Amended and Restated Articles of Incorporation of the Registrant as filed with the Nevada Secretary of State on January 8, 2016 (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on January 11, 2016)
     
3.4   By-Laws of the Registrant (incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on January 5, 2015)
     
10.1 *   Split-Off Agreement, dated as of January 18, 2016, by and among the Registrant, Albero Enterprise Corp, and Andriy Berezhnyy
     
10.2*   General Release Agreement, dated as of January 18, 2016, by and among the Registrant, Albero Enterprise Corp, and Andriy Berezhnyy
     
10.3*†   Registrant’s 2016 Equity Incentive Plan
     
10.4*†   Letter of Transfer, dated April 1, 2014 and Employment Agreement, dated April 1, 2014 between Vitaxel and Lim Wee Kiat
     
10.5*†   Consulting Agreement, dated November 1, 2015, between Vitaxel and Leong Yee Ming
     
10.6*†   Letter of Appointment, dated March 24, 2015, between Vitaxel and Lee Wei Boon
     
10.7*†   Letter of Appointment, dated December 1, 2014, between Vitaxel and Yee Hing Yip
     
10.8*†   Letter of Appointment, dated February 6, 2015, between Vitaxel and Lim Boon Seng
     
10.9*†   Letter of Appointment, dated October 28, 2015, between Vionmall and Wong Chien Nan
     
10.10*   Travel Agency Services Contract dated November 1, 2015 between Vitaxel SDN BHD and Ho Wah Genting Holiday SDN BHD
     
16.1   Letter from Li and Company PC dated November 23, 2015 to the Securities and Exchange Commission (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on November 23, 2015)

 

* Filed herewith

† Management contract or compensatory plan or arrangement

 

47

 

 

VITAXEL GROUP LIMITED

 

FINANCIAL STATEMENTS

 

Table of Contents

 

  Page Number
Report of Independent Registered Public Accounting Firm F-2
   
Audited Financial Statements of Vitaxel SDN BHD for the period from May 12, 2014 (inception) through March 31, 2015  
   
Balance Sheets as of December 31, 2014 and December 31, 2013 F-3
   
Statements of Operations and Comprehensive Loss for the year ended December 31, 2014 and the period from August 10, 2012 (inception) to December 31, 2013 F-4
   
Statements of Changes in Stockholders’ Equity F-5
   
Statements of Cash Flows for the year ended December 31, 2014 and the period from August 10, 2012 (inception) to December 31, 2013 F-6
   
Notes to Financial Statements F-7 – F-12
   
Unaudited Financial Statements of Vitaxel SDN BHD for the period from January 1, 2015 through September 30, 2015  
   
Balance Sheets as of September 30, 2015 and December 31, 2014 F-13
   
Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2015 and September 30, 2014 F-14
   
Statements of Cash Flows for the nine months ended September 30, 2015 and September 30, 2014 F-15
   
Notes to Financial Statements F-16 – F-22
   
Unaudited Financial Statements of Vitaxel Online Mall SBN BHD for the period from September 22, 2015 (inception) through September 30, 2015  
   
Balance Sheet as of September 30, 2015 F-23
   
Statements of Operations and Comprehensive Loss for the period from September 22, 2015 (inception) through September 30, 2015 F-24
   
Statements of Cash Flows for the period from September 22, 2015 (inception) through September 30, 2015 F-25
   
Notes to Financial Statements F-26 – F-27
   
Unaudited Pro Forma Financial Statements F-28
   
Pro Forma Condensed Balance Sheet as of October 31, 2015 F-29
   
Pro Forma Condensed Statements of Operations for the year ended October 31, 2015 F-30
   
Notes to Pro Forma Financial Statements F-31

 

F- 1

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To: The Board of Directors and Stockholders of

Vitaxel SDN BHD (“the Company”)

 

We have audited the accompanying balance sheets of Vitaxel SDN BHD as of December 31, 2014 and December 31, 2013 and the related statements of operations and comprehensive loss, stockholders' equity and cash flows for the year ended December 31, 2014 and the period from August 10, 2012 (inception) to December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

We were not engaged to examine management’s assertion about the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014 and December 31, 2013 and, accordingly, we do not express an opinion thereon.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vitaxel SDN BHD as of December 31, 2014 and December 31, 2013 and the results of its operations and its cash flows for the year ended December 31, 2014 and the period from August 10, 2012 (inception) to December 31, 2013in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered losses from operations and has a capital deficiency that may raise doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ AWC (CPA) Limited

Certified Public Accountants

Hong Kong, China

 

January 22, 2016

 

F- 2

 

 

Vitaxel SDN BHD

BALANCE SHEETS

(Stated in US Dollars)

 

    As of December 31,     As of December 31,  
    2014     2013  
             
CURRENT ASSETS                
Cash and cash equivalents   $ 29,224     $ 911  
Inventories     11,046       -  
Other receivables, net     29,376       176,534  
Total Current Assets     69,646       177,445  
                 
NON-CURRENT ASSETS                
Property, plant and equipment, net     25,224       1,965  
Total Non-Current Assets     25,224       1,965  
                 
TOTAL ASSETS   $ 94,870     $ 179,410  
                 
CURRENT LIABILITIES                
Amounts due to a shareholder   $ 567,640     $ 185,172  
Amounts due to a director     11,131       -  
Accruals and other payables     9,578       4,255  
Total Current Liabilities     588,349       189,427  
                 
TOTAL LIABILITIES     588,349       189,427  
                 
Commitments and Contingencies     -       -  
                 
STOCKHOLDERS' EQUITY                
Paid-in capital     491,159       491,159  
Accumulated deficit     (1,007,721 )     (490,278 )
Accumulated other comprehensive income (loss)     23,083       (10,898 )
Total Stockholders' Equity     (493,479 )     (10,017 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 94,870     $ 179,410  

 

The accompanying notes are an integral part of these financial statements.

 

F- 3

 

 

Vitaxel SDN BHD

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Stated in US Dollars)

 

    Year
ended
December
31, 2014
    From
August 10,
2012
(inception)
to
December
31, 2013
 
             
REVENUE   $ 55,561     $ -  
                 
COST OF REVENUE     26,885       -  
                 
GROSS LOSS     28,676       -  
                 
OPERATING EXPENSES                
Selling expenses     151,371       406,814  
General and administrative expenses     425,332       99,410  
Total operating expenses, net     576,703       506,224  
                 
NET LOSS FROM OPERATIONS     (548,027 )     (506,224 )
                 
OTHER INCOME (EXPENSES)                
Other income     30,584       15,946  
Total other income (expenses), net     30,584       15,946  
                 
NET LOSS BEFORE TAXES     (517,443 )     (490,278 )
                 
Income tax expense     -       -  
                 
NET LOSS     (517,443 )     (490,278 )
                 
OTHER COMPREHENSIVE GAIN (LOSS)                
Foreign currency translation gain (loss)     33,981       (10,898 )
                 
COMPREHENSIVE LOSS   $ (483,462 )   $ (501,176 )

 

The accompanying notes are an integral part of these financial statements.

 

F- 4

 

 

Vitaxel SDN BHD

STATEMENTS OF STOCKHOLDERS’ EQUITY

(Stated in US Dollars)

 

                Accumulated        
                other     Total  
          Accumulated     comprehensive     Stockholders’  
    Paid-in capital     Deficit     income (loss)     Equity  
                         
Balance, August 10, 2012 (inception)   $ 491,159     $ -     $ -     $ 491,159  
Net loss             (490,278 )     -       (490,278 )
Foreign currency translation adjustment     -       -       (10,898 )     (10,898 )
Balance, December 31, 2013   $ 491,159     $ (490,278 )   $ (10,898 )   $ (10,017 )
Net loss             (517,443 )     -       (517,443 )
Foreign currency translation adjustment     -       -       33,981       33,981  
Balance, December 31, 2014   $ 491,159     $ (1,007,721 )   $ 23,083     $ (493,479 )

 

The accompanying notes are an integral part of these financial statements.

 

F- 5

 

 

Vitaxel SDN BHD

STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

 

    Year ended
December 31,
2014
    From August 
10, 2012
(inception) to
December 31,
2013
 
             
CASH FLOWS FROM OPERATING ACTIVITIES                
Net loss   $ (517,443 )   $ (490,278 )
Adjustments to reconcile net loss to cash used in operating activities:                
Depreciation – property, plant and equipment     2,808       10,019  
Bad debt allowance – Other receivable     -       407,359  
Inventory loss                
Gain on disposal of equipment             (11,308 )
(Increase) decrease in:                
Accounts receivable                
Other receivables     152,322       (592,393 )
Inventories     (11,807 )        
Deferred tax asset     -          
Increase (decrease) in:                
Other payables and accrued expenses     5,809       4,460  
Net cash generated from (used in) operating activities     (368,311 )     (672,141 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchase of property, plant and equipment     (27,725 )     (74,336 )
Proceeds from disposal of equipment     -       73,566  
Net cash used in investing activities     (27,725 )     (770 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Proceeds from/(Repayments to) stockholders     425,940          
Advances from holding company     -       194,089  
Proceeds from shares issued     -       479,778  
Net cash (used in) provided by financing activities     425,940       673,867  
                 
EFFECT OF EXCHANGE RATES ON CASH     (1,591 )     (45 )
                 
NET (DECREASE) INCREASE  IN CASH AND CASH EQUIVALENTS     28,313       911  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR     911       -  
                 
CASH AND CASH EQUIVALENTS AT END OF YEAR   $ 29,224     $ 911  
                 
SUPPLEMENTAL OF CASH FLOW INFORMATION                
                 
Cash paid for interest expenses   $ -       $    
Cash paid for income tax   $ -       $    

 

The accompanying notes are an integral part of these financial statements.

 

F- 6

 

 

Vitaxel SDN BHD

NOTES TO FINANCIAL STATEMENTS

(In U.S. dollars)

 

1. ORGANIZATION AND BUSINESS

 

Vitaxel SDN BHD ("Vitaxel"), was incorporated in Malaysia on August 10, 2012. The Company is primarily engaged in the direct selling industry utilizing a multi-level marketing model with an emphasis on travel, entertainment and lifestyle products and services.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information article 10 of Regulation S-X.

 

This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s financial statements are expressed in U.S. dollars.

 

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Foreign currency translation and transactions

The functional currency of the Company is the Malaysian Ringgit (“MYR”) and reporting currency of the Company is United States Dollar “USD”). The financial statements of the Company are translated into USD using the exchange rate as of the balance sheet date for assets and liabilities and average exchange rate for the year for income and expense items. Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders' equity.

 

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments, which are unrestricted from withdrawal or use, and which have original maturities of three months or less when purchased.

 

Accounts receivable

Accounts receivable are recognized and carried at original invoiced amount less an allowance for any potential uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. The Company generally does not require collateral from its customers. For the year ended December 31, 2014 and 2013, the Company did not write off any accounts receivable as bad debts.

 

Fair value of financial instruments

FASB ASC 820, “Fair Value Measurement,” specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). In accordance with ASC 820, the following summarizes the fair value hierarchy:

 

F- 7

 

  

Level 1 Inputs – Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

 

Level 2 Inputs – Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

 

Level 3 Inputs – Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurements.

 

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurements. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. As of December31, 2014 and 2013, none of the Company’s assets and liabilities were required to be reported at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash, accounts receivables, payables and accrued liabilities, approximate their fair values due to the short term nature of these financial instruments. There were no changes in methods or assumptions during the periods presented.

 

Inventories

Inventories are stated at lower of cost or market, with cost determined on a weighted-average method, and not to exceed net realizable value. The Company writes down its inventory balances for obsolete amounts estimated on an individual basis for the finished goods and the raw material items with large amounts, and by a category basis for low value raw material items.

 

No charges for write-downs in inventories recognized during the year ended December 31, 2014 and the period from August 10, 2012 (inception) to December 31, 2013.

 

Property, plant and equipment, net

Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation are calculated on a straight-line basis over the following estimated useful lives:

 

Office equipment 10 years
Furniture and fixtures 10 years
Leasehold improvement 10 years

 

Revenue recognition

Product sales The Company generally recognizes revenue upon delivery and when both the title and risk and rewards pass to the independent members or purchasers of the products. Product sales are recognized net of product returns, discounts and taxes. A reserve for product returns is accrued based on historical experience. No accrual was recorded for the year ended December 31, 2014 and 2013.

 

Membership fee The Company recognizes the membership fee revenue over the term of the membership, which is 12 months. The revenue will not be recognized until the 10 days cooling-off period is expired. For the years ended December 31, 2014 and 2013, all membership fee was waived by the Company for promotion purpose.

 

Loyalty program

The Company operates loyalty program which allows customer to accumulate redemption points when they purchase products from the Company. The redemption points can be used to purchase a selection of products at discounted price or redeem products.

 

F- 8

 

 

The Company allocates consideration received from the sale of goods to the goods sold and the redemption points issued that are expected to be redeemed.

 

The consideration allocated to the redemptions points issued is measured at fair value of the redemption points. It is recognized as a liability (deferred revenue) in the statement of financial position and recognized as revenue when the points are redeemed, have expired or are no longer expected to be redeemed. The amount of revenue recognized is based on the number of points that have been redeemed, relative to the number expected to redeem.

 

As of December 31, 2014 and 2013, there was no such deferred revenue recorded.

 

Income taxes

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the combined financial statements.Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics.

 

The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes are classified as a component of the provisions for income taxes. The Company did not recognize any income tax due to uncertain tax positions or incur any interest and penalties related to potential underpaid income tax expense as of December 31, 2014, and 2013.

 

Comprehensive loss

Comprehensive loss includes net loss and cumulative foreign currency translation adjustments and is reported in the Combined Statement of Comprehensive Loss.

 

Loss per share

The loss per share is computed using the weighted average number of shares outstanding during the fiscal years. For the years ended December 31, 2014 and 2013, there is no dilutive effect due to net loss for the periods.

 

Recently issued accounting pronouncements

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU No. 2014-09: Revenue from Contracts with Customers (Topic 606). The ASU establishes a principles-based approach for accounting for revenue arising from contracts with customers and supersedes existing revenue recognition guidance. The ASU provides that an entity should apply a five-step approach for recognizing revenue, including:

 

(i) identify the contract with a customer;
(ii) identify the performance obligations in the contract;
(iii) determine the transaction price;
(iv) allocate the transaction price to the performance obligations in the contract; and
(v) recognize revenue when, or as, the entity satisfies a performance obligation.

 

F- 9

 

 

Also, the entity must provide various disclosures concerning the nature, amount and timing of revenue and cash flows arising from contracts with customers. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and early application is not permitted. The Company is currently analyzing the impact of this accounting guidance.

 

Disclose going-concern uncertainties

 

In August 2014, the FASB issued a new pronouncement which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements. Further, an entity must provide certain disclosure if there is "substantial doubt about the entity's ability to continue as a going concern." The new standard is effective for fiscal years ending after December 15, 2016. The Company does not expect the adoption of this guidance to have a significant effect on its combined financial statements.

 

Amendments to the Consolidation Analysis

 

In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the combined financial statements.

 

3. GOING CONCERN

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since its inception resulting in an accumulated deficit of $1,007,721 as of December 31, 2014. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These combined financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company expects to finance operations primarily through cash flow from revenue and capital contributions from principal shareholders. In the event that we require additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, our principal shareholders have indicated the intent and ability to provide additional equity financing.

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on our ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. The financial statements do not include any adjustments that might result from the outcome of this- uncertainty.

 

F- 10

 

 

4. OTHER RECEIVABLES, NET

 

Other receivables consist of the following:

 

         

As of

December
31, 2014

   

As of

December
31, 2013

 
                   
Deposits     (1 )   $ 28,232     $ 16,326  
Others     (2 )     1,144       160,208  
            $ 29,376     $ 176,534  

 

(1) Deposits represented payments for rental and construction funds to government department.
(2) Others mainly consists other miscellaneous payments.

 

5. PROPERTY, PLANT AND EQUIPMENT, NET

 

Property, plant and equipment, net consist of the following:

   

As of

December
31, 2014

   

As of

December
31, 2013

 
             
Office equipment   $ 6,061     $ 1,965  
Computer equipment     3,458       -  
Furniture and fittings     2,120       -  
Renovations     16,212       -  
      27,851       1,965  
                 
Less: Accumulated depreciation     (2,627 )     -  
                 
 Balance at end of year   $ 25,224     $ 1,965  

 

Depreciation expenses charged to the statements of operations for the year ended December 31, 2014 and the period from August 10, 2012 (inception) to December 31, 2013 were $2,808 and $9,948, respectively.

 

6. AMOUNT DUE TO A SHAREHOLDER AND A DIRECOR

 

   

As of

December
31, 2014

   

As of

December
31, 2013

 
Amounts due to a shareholder                
Ho WahGentingBerhad   $ 567,640     $ 185,172  
Amounts due to a director                
Lim Wee Kiat   $ 11,131     $ -  

 

The amounts due to a shareholder and a director represent borrowings from ultimate holding company and a director.

 

F- 11

 

 

7. RELATED PARTIES TRANSCTION

 

The Company entered into a distributorship agreement with ConnectcountyHoldings Berhad (“Connectcounty”) on 24th December 2013.Anovation agreement was made on 10th January 2014 to transfer all rights and obligations from Connectcounty to Borderless Fame Sdn. Bhd..

 

The Company received $30,584 distributor fee income from Borderless Fame Sdn. Bhd., a wholly owned subsidiary of Connectcounty during the year ended 31 December 2014. The distributorship agreement was terminated on 13th November 2014.

 

The Company recognized an expense of $2,294 pertaining to a forfeited deposit for a group air ticket during the year ended 31 December 2014, which was paid to its fellow subsidiary, Ho Wah Genting Holiday Sdn. Bhd..

 

8. INCOME TAXES

 

The Company is subject to income taxes in Malaysia. As of December 31, 2014, the Company had $1,007,721 in net operating loss carry forwards available to offset future taxable income. The deferred tax assets as at December 31, 2014 consist mainly of net operating loss carry forwards. Due to the uncertainty of the realization of the related deferred tax assets of $251,061, a reserve equal to the amount of deferred income taxes has been established at September 30, 2013. The Company has provided 100% valuation allowance to the deferred tax assets as of December 31, 2014 of $251,061.

 

9. COMMITMENTS AND CONTINGENCIES

 

Capital Commitments

The Company engaged a third party to develop an operation software with the total contract amount of $48,069. As of December 31, 2014 and 2013 the Company has capital commitments of $15,153 and $25,023, respectively.

 

Operation Commitments

The total future minimum lease payments under the non-cancellable operating lease with respect to the office and the dormitory, as well as hardware trading platform as of September 30, 2015 are payable as follows:

 

Year ending December 31, 2015     5,356  
         
Year ending December 31, 2016     893  
Total   $ 6,249  

 

Rental expense of the Company was $4,771 and $24,835for the year ended December 31, 2014 and the period from August 10, 2012 (inception) to December 31, 2013 respectively.

 

F- 12

 

 

Vitaxel SDN BHD

BALANCE SHEETS

As of September 31, 2015 and December 31, 2014

(In U.S. dollars)

 

    As of September 30,     As of December 31,  
    2015     2014  
    (Unaudited)        
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents   $ 514,925     $ 29,224  
Inventories     -       11,046  
Other receivables, net     20,047       29,376  
Total Current Assets     534,972       69,646  
                 
NON-CURRENT ASSETS                
Property, plant and equipment, net     37,471       25,224  
Total Non-Current Assets     37,471       25,224  
                 
TOTAL ASSETS   $ 572,443     $ 94,870  
                 
CURRENT LIABILITIES                
Amounts due to a shareholder   $ 406,113     $ 567,640  
Amounts due to a director     -       11,131  
Defer revenue     143,306          
Accruals and other payables     942,567       9,578  
Total Current Liabilities     1,491,986       588,349  
                 
TOTAL LIABILITIES     1,491,986       588,349  
                 
Commitments and Contingencies     -       -  
                 
STOCKHOLDERS' EQUITY                
Paid-in capital     491,159       491,159  
Accumulated deficit     (1,762,457 )     (1,007,721 )
Accumulated other comprehensive income     351,755       23,083  
Total Stockholders' Equity     (919,543 )     (493,479 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 572,443     $ 94,870  

 

The accompanying notes are an integral part of these financial statements.

 

F- 13

 

 

Vitaxel SDN BHD

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In U.S. dollars)

(UNAUDITED)

 

   

Three months ended

September 30,

   

Nine months ended

September 30,

 
    2015     2014     2015     2014  
                         
REVENUE   $ 897,995     $ 4,100     $ 1,751,536     $ 8,589  
                                 
COST OF REVENUE     755,399       2,680       1,678,124       5,304  
                                 
GROSS LOSS     142,596       1,420       73,412       3,285  
                                 
OPERATING EXPENSES                                
Selling expenses     4,833       1,481       6,739       2,039  
General and administrative expenses     331,907       107,401       725,491       240,055  
Total Operating Expenses     336,740       108,882       732,230       242,094  
                                 
LOSS FROM OPERATIONS     (194,144 )     (107,462 )     (658,818 )     (238,809 )
                                 
OTHER (EXPENSES) INCOME, NET                                
Exchange (loss) gain     (94,624 )     7,817       (99,395 )     23,150  
Total Other (Expenses) Income, net     (94,624 )     7,817       (99,395 )     23,150  
                                 
NET LOSS BEFORE TAXES     (288,768 )     (99,645 )     (758,213 )     (215,659 )
                                 
Income tax expense     -       -       -       -  
                                 
NET LOSS     (288,768 )     (99,645 )     (758,213 )     (215,659 )
                                 
OTHER COMPREHENSIVE (LOSS) INCOME                                
Foreign currency translation (loss) gain     141,946       4,790       332,149       2,591  
                                 
TOTAL COMPREHENSIVE LOSS   $ (146,822 )   $ (94,855 )   $ (462,064 )   $ (213,068 )

 

The accompanying notes are an integral part of these financial statements.

 

F- 14

 

 

Vitaxel SDN BHD

STATEMENTS OF CASH FLOWS

(In U.S. dollars)

(UNAUDITED)

 

    Nine months ended September
30
 
    2015     2014  
             
CASH FLOWS FROM OPERATING ACTIVITIES                
Net loss   $ (758,213 )   $ (215,659 )
Adjustments to reconcile net loss to cash used in operating activities:                
Depreciation – property, plant and equipment     3,034       2,106  
Bad debt allowance – Other receivable     56,794       -  
Inventory loss                
(Increase) decrease in:                
Accounts receivable                
Other receivables     (48,695 )     165,439  
Inventories     11,807       (219,116 )
Defer revenue     166,570       -  
Increase (decrease) in:                
Other payables and accrued expenses     1,085,347       4,214  
Net cash generated from (used in) operating activities     516,644       (263,016 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchase of property, plant and equipment     (19,626 )     (26,040 )
Net cash used in investing activities     (19,626 )     (26,040 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
(Repayments to) /Proceeds from stockholders     (134,713 )     295,581  
(Repayments to) /Proceeds from director     (11,897 )     -  
Net cash (used in) provided by financing activities     (146,610 )     295,581  
                 
EFFECT OF EXCHANGE RATES ON CASH     135,293       238  
                 
NET (DECREASE) INCREASE  IN CASH AND CASH EQUIVALENTS     485,701       6,763  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR     29,224       911  
                 
CASH AND CASH EQUIVALENTS AT END OF YEAR   $ 514,925     $ 7,674  
                 
SUPPLEMENTAL OF CASH FLOW INFORMATION                
                 
Cash paid for interest expenses   $ -     $ -  
Cash paid for income tax   $ -     $ -  

 

The accompanying notes are an integral part of these financial statements.

 

F- 15

 

 

Vitaxel SDN BHD

NOTES TO FINANCIAL STATEMENTS

(In U.S. dollars)

 

1. ORGANIZATION AND BUSINESS

 

Vitaxel SDN BHD ("Vitaxel"), was incorporated in Malaysia on August 10, 2012. The Company is primarily engaged in the direct selling industry utilizing a multi-level marketing model with an emphasis on travel, entertainment and lifestyle products and services.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information article 10 of Regulation S-X.

 

This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s financial statements are expressed in U.S. dollars.

 

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Foreign currency translation and transactions

The functional currency of the Company is the Malaysian Ringgit (“MYR”) and reporting currency of the Company is United States Dollar “USD”). The financial statements of the Company are translated into USD using the exchange rate as of the balance sheet date for assets and liabilities and average exchange rate for the year for income and expense items. Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders' equity.

 

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments, which are unrestricted from withdrawal or use, and which have original maturities of three months or less when purchased.

 

Accounts receivable

Accounts receivable are recognized and carried at original invoiced amount less an allowance for any potential uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. The Company generally does not require collateral from its customers. For the year ended December 31, 2014 and 2013, the Company did not write off any accounts receivable as bad debts.

 

F- 16

 

 

NOTES TO FINANCIAL STATEMENTS - continued

(In U.S. dollars, except share and share related data, or stated otherwise)

 

Fair value of financial instruments

FASB ASC 820, “Fair Value Measurement,” specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). In accordance with ASC 820, the following summarizes the fair value hierarchy:

 

Level 1 Inputs – Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

 

Level 2 Inputs – Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

 

Level 3 Inputs – Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurements.

 

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurements. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. As of September 30, 2015 and 2014, none of the Company’s assets and liabilities were required to be reported at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash, accounts receivables, payables and accrued liabilities, approximate their fair values due to the short term nature of these financial instruments. There were no changes in methods or assumptions during the periods presented.

 

Inventories

Inventories are stated at lower of cost or market, with cost determined on a weighted-average method, and not to exceed net realizable value. The Company writes down its inventory balances for obsolete amounts estimated on an individual basis for the finished goods and the raw material items with large amounts, and by a category basis for low value raw material items.

 

Property, plant and equipment, net

Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation are calculated on a straight-line basis over the following estimated useful lives:

 

Office equipment 10 years
Furniture and fixtures 10 years
Leasehold improvement 10years

 

Revenue recognition

Product sales The Company generally recognizes revenue upon delivery and when both the title and risk and rewards pass to the independent members or purchasers of the products. Product sales are recognized net of product returns, discounts and taxes. A reserve for product returns is accrued based on historical experience. The deferred revenue accrued as of September 30, 2015 and December 31, 2014 was $47,090 and 0, respectively.

 

Membership fee The Company recognizes the membership fee revenue over the term of the membership, which is 12 months. The revenue will not be recognized until the 10 days cooling-off period is expired. For the period ended September 30, 2015 and December 31, 2014, all membership fee was waived by the Company for promotion purpose.

 

F- 17

 

 

NOTES TO FINANCIAL STATEMENTS - continued

(In U.S. dollars, except share and share related data, or stated otherwise)

 

Loyalty program

The Company operates loyalty program which allows customer to accumulate redemption points when they purchase products from the Company. The redemption points can be used to purchase a selection of products at discounted price or redeem products.

 

The Company allocates consideration received from the sale of goods to the goods sold and the redemption points issued that are expected to be redeemed.

 

The consideration allocated to the redemptions points issued is measured at fair value of the redemption points. It is recognized as a liability (deferred revenue) in the statement of financial position and recognized as revenue when the points are redeemed, have expired or are no longer expected to be redeemed. The amount of revenue recognized is based on the number of points that have been redeemed, relative to the number expected to redeem.

 

As of September 30, 2015 and December 31, 2014, there was no such deferred revenue recorded.

 

Income taxes

Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the combined financial statements.Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics.

 

The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes are classified as a component of the provisions for income taxes. The Company did not recognize any income tax due to uncertain tax positions or incur any interest and penalties related to potential underpaid income tax expense as of December 31, 2014, and 2013.

 

Comprehensive loss

Comprehensive loss includes net loss and cumulative foreign currency translation adjustments and is reported in the Combined Statement of Comprehensive Loss.

 

Loss per share

The loss per share is computed using the weighted average number of shares outstanding during the fiscal years. For the years ended December 31, 2014 and 2013, there is no dilutive effect due to net loss for the periods.

 

Recently issued accounting pronouncements

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU No. 2014-09: Revenue from Contracts with Customers (Topic 606). The ASU establishes a principles-based approach for accounting for revenue arising from contracts with customers and supersedes existing revenue recognition guidance. The ASU provides that an entity should apply a five-step approach for recognizing revenue, including:

 

(vi) identify the contract with a customer;
(vii) identify the performance obligations in the contract;
(viii) determine the transaction price;

 

F- 18

 

 

NOTES TO FINANCIAL STATEMENTS - continued

(In U.S. dollars, except share and share related data, or stated otherwise)

 

(ix) allocate the transaction price to the performance obligations in the contract; and
(x) recognize revenue when, or as, the entity satisfies a performance obligation.

 

Also, the entity must provide various disclosures concerning the nature, amount and timing of revenue and cash flows arising from contracts with customers. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and early application is not permitted. The Company is currently analyzing the impact of this accounting guidance.

 

Disclose going-concern uncertainties

In August 2014, the FASB issued a new pronouncement which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements. Further, an entity must provide certain disclosure if there is "substantial doubt about the entity's ability to continue as a going concern." The new standard is effective for fiscal years ending after December 15, 2016. The Company does not expect the adoption of this guidance to have a significant effect on its combined financial statements.

 

Amendments to the Consolidation Analysis

In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the combined financial statements.

 

3. GOING CONCERN

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since its inception resulting in an accumulated deficit of $1,762,457 as of September 30, 2015. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These combined financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company expects to finance operations primarily through cash flow from revenue and capital contributions from principal shareholders. In the event that we require additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, our principal shareholders have indicated the intent and ability to provide additional equity financing.

 

F- 19

 

 

NOTES TO FINANCIAL STATEMENTS - continued

(In U.S. dollars, except share and share related data, or stated otherwise)

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on our ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. The financial statements do not include any adjustments that might result from the outcome of this- uncertainty.

 

4. OTHER RECEIVABLES, NET

 

Other receivables consist of the following:

 

         

As of

September 30,

2015

(Unaudited)

   

As of

December 31,

2014

 

 
                   
Deposits     (1 )   $ 64,699     $ 28,232  
Others     (2 )     4,210       1,144  
Bad debt     (3 )     (48,862 )     -  
            $ 20,047     $ 29,376  

 

(1)           Deposits represented payments for rental and construction funds to government department.

(2)           Others mainly consists other miscellaneous payments.

(3)           The Company recognized $48,862 and $0 provision for bad debt on other receivables as of September 30, 2015 and December 31, 2014.

 

5. PROPERTY, PLANT AND EQUIPMENT, NET

 

Property, plant and equipment, net consist of the following:

 

   

As of

September 30,

2015

(Unaudited)

   

As of

December 31,

2014

 

 
             
Office equipment   $ 9,584     $ 6,061  
Computer equipment     17,857       3,458  
Furniture and fittings     1,835       2,120  
Renovations     12,895       16,212  
      42,171       27,851  
                 
Less: Accumulated depreciation     (4,700 )     (2,627 )
                 
Balance at end of period/year   $ 37,471     $ 25,224  

 

Depreciation expenses charged to the statements of operations for the periods ended September 30, 2015 and December 31, 2014 were $3,034 and $2,808, respectively.

 

F- 20

 

 

NOTES TO FINANCIAL STATEMENTS - continued

(In U.S. dollars, except share and share related data, or stated otherwise)

 

6. ACCRUALS AND OTHER PAYABLES

 

Accruals and other payables consist of the following:

 

   

As of

September 30,

2015

(Unaudited)

   

As of

December 31,

2014

 

 
             
Provisions   $ 924,503     $ -  
Output Goods and Services Tax     16,426       -  
Others     1,638       9,578  
 Balance at end of period/year   $ 942,567     $ 9,578  

 

7. AMOUNT DUE TO A SHAREHOLDERAND A DIRECOR

 

   

As of

September 30,

2015

(Unaudited)

   

As of

December 31,

2014

 

 
Amounts due to a shareholder                
Ho WahGentingBerhad   $ 406,113     $ 567,640  
Amounts due to a director                
Lim Wee Kiat   $ -     $ 11,131  

 

The amounts due to a shareholder and a director represent borrowings from ultimate holding company.

 

8. RELATED PARTIES TRANSCTION

 

The Company entered into a distributorship agreement with ConnectcountyHoldings Berhad (“Connectcounty”) on 24th December 2013.Anovation agreement was made on 10th January 2014 to transfer all rights and obligations from Connectcounty to Borderless Fame Sdn. Bhd..

 

The Company received $30,584 distributor fee income from Borderless Fame Sdn. Bhd., a wholly owned subsidiary of Connectcounty during the year ended 31 December 2014. The distributorship agreement was terminated on 13th November 2014.

 

The Company recognized an expense of $2,294 pertaining to a forfeited deposit for a group air ticket during the year ended 31 December 2014, which was paid to its fellow subsidiary, Ho WahGenting Holiday Sdn. Bhd..

 

9. COMMITMENTS AND CONTINGENCIES

 

Capital Commitments

The Company engaged a third party to develop an operation software with the total contract amount of $48,069. As of September 31, 205 and December 31, 2014, Company has capital commitments of $15,153 and $15,153, respectively.

 

Operation Commitments

The total future minimum lease payments under the non-cancellable operating lease with respect to the office and the dormitory, as well as hardware trading platform as of September 30, 2015 are payable as follows:

 

 

F- 21

 

 

NOTES TO FINANCIAL STATEMENTS - continued

(In U.S. dollars, except share and share related data, or stated otherwise)

 

Remaining 2015     1,065  
         
Year ending December 31, 2016     710  
Total   $ 1,775  

 

Rental expense of the Company was $3,195 and $2,854for the nine months ended September 30, 2015 and 2014.

 

F- 22

 

 

Vitaxel Online Mall SBN BHD

BALANCE SHEETS

(Stated in US Dollars)

(Unaudited)

 

    As of September 30,  
    2015  
       
CURRENT ASSETS      
Cash and cash equivalents   $ -  
Total Current Assets     -  
         
TOTAL ASSETS   $ -  
         
TOTAL LIABILITIES   $    
         
Commitments and Contingencies     -  
         
STOCKHOLDERS' EQUITY        
Paid-in capital     -  
Total Stockholders' Equity     -  
         
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ -  

 

The accompanying notes are an integral part of these financial statements.

 

F- 23

 

 

Vitaxel Online Mall SBN BHD

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Stated in US Dollars)

 

    From September 22, 2015
(inception) to September 30,
2015
 
     
NET INCOME (LOSS) BEFORE TAXES   $ -  
         
Income tax expense     -  
         
NET INCOME (LOSS)     -  
         
COMPREHENSIVE LOSS   $ -  

 

The accompanying notes are an integral part of these financial statements.

 

F- 24

 

 

Vitaxel Online Mall SBN BHD

STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

 

    From
September 22,
2015
(inception) to
September 30,
2015
 
       
CASH FLOWS FROM OPERATING ACTIVITIES        
Net Income (loss)   $ - )
Adjustments to reconcile net income (loss_ to cash used in operating activities:        
Net cash generated from (used in) operating activities     -  
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Capital contribution by shareholders     -  
Net cash (used in) provided by financing activities     -  
         
EFFECT OF EXCHANGE RATES ON CASH     -  
         
NET (DECREASE) INCREASE  IN CASH AND CASH EQUIVALENTS     -  
         
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     -  
         
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ -  
         
SUPPLEMENTAL OF CASH FLOW INFORMATION        
         
Cash paid for interest expenses   $ -  
Cash paid for income tax   $ -  

 

The accompanying notes are an integral part of these financial statements.

 

F- 25

 

 

Vitaxel Online Mall SBN BHD

NOTES TO FINANCIAL STATEMENTS

(In U.S. dollars)

 

1. ORGANIZATION AND BUSINESS

 

Vitaxel Online Mall SBN BHD ("Vionmall"), was incorporated in Malaysia on September 22, 2015. The Company is primarily in developing online shopping platforms geared to Vitaxel and its members and the third party suppliers of products and services.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information article 10 of Regulation S-X.

 

This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s financial statements are expressed in U.S. dollars.

 

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Foreign currency translation and transactions

The functional currency of the Company is the Malaysian Ringgit (“MYR”) and reporting currency of the Company is United States Dollar “USD”). The financial statements of the Company are translated into USD using the exchange rate as of the balance sheet date for assets and liabilities and average exchange rate for the year for income and expense items. Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders' equity.

 

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments, which are unrestricted from withdrawal or use, and which have original maturities of three months or less when purchased.

 

Fair value of financial instruments

FASB ASC 820, “Fair Value Measurement,” specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). In accordance with ASC 820, the following summarizes the fair value hierarchy:

 

Level 1 Inputs – Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

 

Level 2 Inputs – Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

 

F- 26

 

 

Level 3 Inputs – Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurements.

 

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurements. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. As of September 30, 2015 and 2014, none of the Company’s assets and liabilities were required to be reported at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash, accounts receivables, payables and accrued liabilities, approximate their fair values due to the short term nature of these financial instruments. There were no changes in methods or assumptions during the periods presented.

 

Recently issued accounting pronouncements

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU No. 2014-09: Revenue from Contracts with Customers (Topic 606). The ASU establishes a principles-based approach for accounting for revenue arising from contracts with customers and supersedes existing revenue recognition guidance. The ASU provides that an entity should apply a five-step approach for recognizing revenue, including:

 

(xi) identify the contract with a customer;
(xii) identify the performance obligations in the contract;
(xiii) determine the transaction price;
(xiv) allocate the transaction price to the performance obligations in the contract; and
(xv) recognize revenue when, or as, the entity satisfies a performance obligation.

 

Also, the entity must provide various disclosures concerning the nature, amount and timing of revenue and cash flows arising from contracts with customers. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and early application is not permitted. The Company is currently analyzing the impact of this accounting guidance.

 

Disclose going-concern uncertainties

In August 2014, the FASB issued a new pronouncement which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements. Further, an entity must provide certain disclosure if there is "substantial doubt about the entity's ability to continue as a going concern." The new standard is effective for fiscal years ending after December 15, 2016. The Company does not expect the adoption of this guidance to have a significant effect on its combined financial statements.

 

Amendments to the Consolidation Analysis

In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the combined financial statements.

 

F- 27

 

 

Unaudited Pro Forma Condensed Combined Financial Information

 

The accompanying unaudited pro forma condensed financial information have been prepared to present the balance sheet and statements of operations of Albero, Corp. (the “Company”), to indicate how the consolidated financial statements of the Company might have looked like if the acquisition of Vitaxel SDN BHD, (“Vitaxel”) and Vitaxel Online Mall SBN BHD (“Vionmall”) and transactions related to the acquisition had occurred as of the beginning of the periods presented.

 

The unaudited pro forma condensed combined balance sheet as of October 31, 2015 is presented as if the acquisition of Vitaxel and Vionmall had occurred on October 31, 2015.

 

The unaudited pro forma condensed combined statements of operations for the year ended October 31, 2015, are presented as if the acquisition of Vitaxel and Vionmall had occurred on November 1, 2014 and were carried forward through each of the aforementioned periods presented.

 

The pro forma condensed financial statements should be read in conjunction with a reading of the historical financial statements and accompanying notes of the Company included in the Annual Report on Form 10-K for the fiscal year ended October 31, 2015 and of Vitaxel and Vionmall included in this Form 8-K for the nine months ended September 30, 2015.

 

These pro forma condensed financial statements are presented for illustrative purposes only and are not intended to be indicative of actual consolidated financial position and consolidated results of operations had the purchase been in effect during the periods presented, or of consolidated financial condition or consolidated results of operations that may be reported in the future.

 

Note the pro forma adjustments contained in the pro forma condensed financial statements relate to the assumptions of all prior and existing liabilities of the Company upon consummation of the purchase.

 

Vionmall was incorporated in September 2015 and has no assets, liabilities or any activities as of and for the period ended September 30, 2015, therefore Vionmall is not included in the pro forma condensed financial statements presented below.

 

F- 28

 

 

Proforma Condensed Balance Sheet

As of October 31, 2015

(Stated in US Dollars)

 

    Historical     Pro Forma  
    October 31, 2015
Albero, Corp.
    September 30, 2015
Vitaxel SDN BHD
(Note 1)
    Adjustments     Note 2     Combined  
                               
ASSETS                                        
Current assets                                        
Cash and cash equivalents   $ 3,659       469,844       (3,659 )     (1 )     469,844  
Prepaid rent     1,233       -       (1,233 )     (1 )     -  
Prepaid expenses     8,333       -       (8,333 )     (1 )     -  
Security deposit     300       -       (300 )     (1 )     -  
Other receivables, net     -       22,851                       22,851  
Total current assets     13,525       492,695       (13,525 )     (1 )     492,695  
                                         
Non-current assets                                        
Property, plant and equipment     3,061       38,776       (3,061 )     (1 )     38,776  
Total non-current assets     3,061       38,776       (3,061 )     (1 )     38,776  
Total assets     16,586       531,471       (16,586 )     (1 )     531,471  
                                         
LIABILITIES AND STOCKHOLDERS’ DEFICIT                                        
                                         
LIABILITIES                                        
Current liabilities                                        
Advances from stockholder     30,436       -       (30,436 )     (1 )     -  
Amounts due to holding company     -       415,764                       415,764  
Accruals and other payables     -       1,016,084                       1,016,084  
Total current liabilities     30,436       1,431,848       (30,436 )     (1 )     1,431,848  
                                         
Total liabilities     30,436       1,431,848       (30,436 )     (1 )     1,431,848  
                                         
STOCKHOLDERS’ DEFICIT                                        
Common stock     3,825       -       (3,000 )     (2 )     3,825  
                      3,000       (2 )        
Share capital     -       349,487       (349,487 )     (3 )     -  
Additional paid-in capital     23,925       -       (23,925 )     (1 )     349,487  
                      345,662       (3 )        
Accumulated Deficit     (41,600 )     (1,249,864 )     41,600       (1 )     (1,249,864 )
Total stockholders’ (deficit) equity     (13,850 )     (900,377 )     13,850               (900,377 )
Total liabilities and stockholders’ deficit     16,586       531,471       (16,586 )             531,471  

 

F- 29

 

 

Proforma Condensed Statement of Operations

For the Year Ended October 31, 2015

(Stated in US Dollars)

 

    Historical     Pro Forma  
   

October 31, 2015
Albero, Corp. 

    September 30, 2015
Vitaxel SDN BHD
(Note 1)
    Adjustments     Note 2     Combined  
                               
Revenue     -       2,271,179       -       -       2,271,179  
Cost of revenue     -       (2,191,604 )     -       -       (2,191,604 )
Gross Profit     -       79,575       -       -       79,575  
Operating expenses                                        
General and administrative     (41,094 )     (782,388 )     41,094       (4 )     (782,388 )
Income/(Loss) before income taxes     (41,094 )     (702,813 )     41,094       -       (702,813 )
Provision for income taxes     -       -       -               -  
Net loss     (41,094 )     (702,813 )     41,094       -       (702,813 )

   

F- 30

 

 

Notes to Pro Forma Condensed Financial Statements

 

Note 1 – Basis of Presentation

 

The unaudited pro forma condensed combined balance sheet as of October 31, 2015, and the unaudited pro forma condensed combined statements of operations for the year ended October 31, 2015, are based on the historical financial statements of the Company and Vitaxel after giving effect of the reverse merger between the Company and Vitaxel on October 31, 2015 , and the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information.

 

Note 2 –Adjustments

 

(1) To eliminate assets and liabilities retained by predecessor owners of the Company

 

(2) To record cancellation of 3,000,000 shares of predecessor owners of the Company, and record of issuance of 2,625,000 shares of our Common Stock for all of the outstanding capital stock of Vitaxel and issuance of 375,000 shares of our Common Stock for all of the outstanding capital stock of Vionmall with the result that both Vitaxel and Vionmall became wholly owned subsidiaries of ours.

 

(3) To eliminate paid in capital for Vitaxel’s shares

 

(4) To eliminate the Company's expenses as the result of the elimination of assets and liabilities of the Company’s as of October 31, 2015.

 

F- 31

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  VITAXEL GROUP LIMITED  
       
Date: January 22, 2016 By: /s/ Lim Wee Kiat  
  Name: Lim Wee Kiat  
  Title: President  

 

 

 

 

EXHIBIT 2.1

 

 

 

SHARE EXCHANGE AGREEMENT

 

BY AND AMONG

 

VITAXEL GROUP LIMITED, a Nevada corporation,

 

VITAXEL SDN BHD, a Malaysian corporation,

 

VITAXEL ONLINE MALL SBN BHD, a Malaysian corporation,

 

THE SHAREHOLDERS OF VITAXEL SDN BHD

 

AND

 

THE SHAREHOLDERS OF VITAXEL ONLINE MALL SDN BHD

 

Dated as of January 18, 2016

   

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
Article I TERMS OF THE EXCHANGE 2
1.1 The Exchange. 2
1.2 The Closing; Closing Date; Effect. 2
1.3 Actions at the Closing. 2
1.4 Additional Actions. 3
1.5 Exchange of Shares. 3
1.6 Other Effects of the Exchange. 4
1.7 Exemption From Registration. 4
     
Article II REPRESENTATIONS AND WARRANTIES OF VITAXEL 4
2.1 Due Organization and Good Standing. 4
2.2 Title to Securities; Capitalization. 5
2.3 Subsidiaries. 6
2.4 Authorization; Binding Agreement. 7
2.5 Governmental Approvals. 7
2.6 No Violations. 8
2.7 Financial Statements. 8
2.8 Absence of Certain Changes. 10
2.9 Absence of Undisclosed Liabilities. 10
2.10 Compliance with Laws. 10
2.11 Regulatory Agreements; Permits. 10
2.12 Litigation. 11
2.13 Restrictions on Business Activities. 11
2.14 Material Contracts. 11
2.15 Intellectual Property. 13
2.16 Employee Benefit Plans. 14
2.17 Taxes and Returns. 16
2.18 Finders and Investment Bankers. 17
2.19 Title to Properties; Assets. 18
2.20 Employee Matters. 20
2.21 Environmental Matters. 21
2.22 Transactions with Affiliates. 22
2.23 Insurance. 22
2.24 Books and Records. 22
2.25 Accounts Receivable. 22
2.26 Investment Company Act. 23
2.27 Information Supplied. 23
2.28 Disclosure. 23
     
Article III REPRESENTATIONS AND WARRANTIES OF VIONMALL 23
3.1 Due Organization and Good Standing. 24
3.2 Title to Securities; Capitalization. 24
3.3 Subsidiaries. 26
3.4 Authorization; Binding Agreement. 26

 

  i  

 

 

    Page
     
3.5 Governmental Approvals. 27
3.6 No Violations. 27
3.7 Record Keeping. 28
3.8 Absence of Certain Changes. 28
3.9 Absence of Undisclosed Liabilities. 28
3.10 Compliance with Laws. 29
3.11 Regulatory Agreements; Permits. 29
3.12 Litigation. 29
3.13 Restrictions on Business Activities. 30
3.14 Material Contracts. 30
3.15 Intellectual Property. 32
3.16 Employee Benefit Plans. 33
3.17 Taxes and Returns. 35
3.18 Finders and Investment Bankers. 36
3.19 Title to Properties; Assets. 36
3.20 Employee Matters. 38
3.21 Environmental Matters. 40
3.22 Transactions with Affiliates. 40
3.23 Insurance. 41
3.24 Books and Records. 41
3.25 Accounts Receivable. 41
3.26 Investment Company Act. 41
3.27 Information Supplied. 41
3.28 Disclosure. 42
     
Article IV REPRESENTATIONS AND WARRANTS OF PARENT 42
4.1 Due Organization and Good Standing. 42
4.2 Title to Securities; Capitalization. 43
4.3 Subsidiaries. 44
4.4 Authorization; Binding Agreement. 44
4.5 Governmental Approvals. 45
4.6 No Violations. 45
4.7 Parent Financial Statements. 45
4.8 Absence of Certain Changes. 46
4.9 Absence of Undisclosed Liabilities. 46
4.10 Compliance with Laws. 47
4.11 Regulatory Agreements; Permits. 48
4.12 Litigation. 48
4.13 Restrictions on Business Activities. 48
4.14 Employee Benefit Plans. 49
4.15 Taxes and Returns. 49
4.16 Finders and Investment Bankers. 50
4.17 Employee Matters. 50
4.18 Environmental Matters. 51
4.19 Transactions with Affiliates. 52
4.20 Investment Company Act. 52
4.21 Parent SEC Filings. 52

 

  ii  

 

 

    Page
     
4.22 Disclosure. 52
4.23 Books and Records. 53
     
Article V REPRESENTATIONS AND WARRANTIES OF THE VITAXEL SHAREHOLDERS 53
5.1 Vitaxel Shares. 53
5.2 Power and Authority. 53
5.3 No Conflicts. 53
5.4 Purchase Entirely for Own Account. 53
5.5 Acquisition of Exchange Shares for Investment. 54
     
Article VI REPRESENTATIONS AND WARRANTIES OF THE VIonmall SHAREHOLDERS 54
6.1 Vionmall Shares. 54
6.2 Power and Authority. 55
6.3 No Conflicts. 55
6.4 Purchase Entirely for Own Account. 55
6.5 Acquisition of Exchange Shares for Investment. 55
     
Article VII COVENANTS 56
7.1 Conduct of Business of Vitaxel, Vionmall and the Vitaxel Subsidiaries and Vionmall Subsidiaries. 56
7.2 Access and Information; Confidentiality. 59
7.3 Notification of Certain Matters. 60
7.4 Commercially Reasonable Efforts. 61
7.5 Public Announcements. 62
7.6 Regulatory Matters. 62
7.7 Vitaxel, Vionmall and Parent Approvals. 63
7.8 Other Actions. 63
7.9 Officers and Directors of Parent After Closing. 63
7.10 No Parent Assets or Liabilities. 64
7.11 Further Assurances. 64
7.12 Assumption of Obligations. 64
     
Article VIII SURVIVAL AND INDEMNIFICATION 64
8.1 Survival. 64
8.2 (a) Indemnification by Vitaxel and the Vitaxel Shareholders. 65
(b) Indemnification by Vionmall and the Vionmall Shareholders. 65
8.3 Indemnification by Parent. 65
8.4 Payment of Claim. 66
8.5 Limitations and General Indemnification Provisions. 66
8.6 Indemnification Procedures. 67
     
Article IX CONDITIONS 68
9.1 Conditions to Each Party’s Obligations. 68
9.2 Conditions to Obligations of Parent. 68
9.3 Conditions to Obligations of Vitaxel, Vionmall and their respective Shareholders. 70

 

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    Page
     
Article X TERMINATION AND ABANDONMENT 71
10.1 Termination. 71
10.2 Effect of Termination. 72
10.3 Fees and Expenses. 72
10.4 Amendment. 72
     
Article XI MISCELLANEOUS 73
11.1 Waiver. 73
11.2 Notices. 73
11.3 Binding Effect; Assignment. 75
11.4 Governing Law; Jurisdiction. 75
11.5 Waiver of Jury Trial. 75
11.6 Counterparts. 76
11.7 Interpretation. 76
11.8 Entire Agreement. 76
11.9 Severability. 76
11.10 Specific Performance. 77
11.11 Third Parties. 77
11.12 Disclosure Letters. 77
11.13 Certain Definitions. 77

 

Schedules and Exhibits

 

Schedules A-1 and A-2 – List of Vitaxel and Vionmall Shareholders and Number of Exchange Shares to be Received

 

Exhibit A – Split-Off Agreement

Exhibit B – General Release Agreement

Exhibit C – 2016 Equity Incentive Plan

Exhibit 9.2(g) – Vitaxel and Vionmall Requisite Consents

Exhibit 9.3(f) – Parent Requisite Consents

 

  iv  

 

 

SHARE EXCHANGE AGREEMENT

 

This Share Exchange Agreement (this “ Agreement ”) is made and entered into as of January 18, 2016 by and among Vitaxel Group Limited (f/k/a Albero, Corp.), a Nevada corporation (the “ Parent ”), Vitaxel SDN BHD, a Malaysian corporation (“ Vitaxel” ), Vitaxel Online Mall SBN BHD, a Malaysian corporation (“ Vionmall” ), the shareholders of Vitaxel listed on Schedule A-1 hereto (collectively, the “ Vitaxel Shareholders ”), and the shareholders of Vionmall listed on Schedule A-2 hereto (collectively, the “ Vionmall Shareholders ”). Parent, Vitaxel, Vionmall, the Vitaxel Shareholders and the Vionmall Shareholders are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties ”.

 

WITNESSETH:

 

WHEREAS , Parent is a publicly reporting company organized under the laws of Nevada; and

 

WHEREAS , the Vitaxel Shareholders collectively own and will own immediately prior to Closing (as such term is defined in Section 1.4), 100% of the issued and outstanding equity securities of Vitaxel consisting of stock (the “ Vitaxel Securities ”); and

 

WHEREAS , the Vionmall Shareholders collectively own and will own immediately prior to Closing (as such term is defined in Section 1.4), 100% of the issued and outstanding equity securities of Vionmall consisting of stock (the “ Vionmall Securities ”); and

 

WHEREAS, as of the date of this Agreement, there are 3,825,000 shares of Parent common stock issued and outstanding including 3,000,000 shares which are to be cancelled in conjunction with the Closing in connection with the Split-Off transaction; and

 

WHEREAS , Parent desires to acquire, in a bona fide strategic transaction, the Vitaxel Securities and the Vionmall Securities from the Vitaxel Shareholders and Vionmall Shareholders, respectively, in exchange (the “ Exchange ”) for the issuance by Parent to the Vitaxel Shareholders and the Vionmall Shareholders of an aggregate of 3,000,000 newly issued shares of Parent common stock, par value $0.000001 per share (the “ Common Stock ” or the “ Exchange Shares ”); and

 

WHEREAS, in conjunction with the closing of the Exchange, Parent shall split-off its wholly owned subsidiary, Albero Enterprise Corp., a Nevada corporation (the “ Split-Off Subsidiary ”), through the distribution of all of the outstanding capital stock of the Split-Off Subsidiary (the “ Split-Off ”) upon the terms and conditions of a split-off agreement by and among Parent, Andriy Berezhnyy (the “ Buyer ”), and the Split-Off Subsidiary, substantially in the form of Exhibit A attached hereto (the “ Split-Off Agreement ”); and

 

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WHEREAS, Parent, Vitaxel, Vionmall, the Vitaxel Shareholders and the Vionmall Shareholders desire that the Exchange qualify as a tax-free “reorganization” under the Internal Revenue Code of 1986, as amended (the “ Code ”) and not subject the holders of Vitaxel Securities and Vionmall Securities to tax liability under the Code; and

 

WHEREAS , on the Closing Date, and as a result of the transactions contemplated hereby, each of Vitaxel and Vionmall will become wholly-owned subsidiaries of Parent; and

 

WHEREAS , the board of directors and shareholders of Parent and the boards of directors and shareholders of Vitaxel and Vionmall, respectively, have approved this Agreement and each of them has determined that this Agreement, the Exchange and the other transactions contemplated hereby are advisable and in the respective best interests of each of Parent, Vitaxel, Vionmall and their respective stockholders.

 

NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties hereto agree as follows:

 

article I

 

TERMS OF THE EXCHANGE

 

1.1           The Exchange.

 

Upon the terms and subject to the conditions of this agreement, at the Closing the Vitaxel Shareholders and the Vionmall Shareholders shall assign, transfer and deliver to Parent, free and clear of all encumbrances (hereinafter defined), all of the Vitaxel Securities and Vionmall Securities.

 

In consideration of the transfer of the Vitaxel Securities and Vionmall Securities to Parent by the Vitaxel Shareholders and the Vionmall Shareholders, respectively, at the Closing, subject to the terms and conditions of this Agreement, Parent shall issue to Vitaxel Shareholders and Vionmall Shareholders an aggregate of 3,000,000 newly issued Exchange Shares, in the amounts set forth on Schedules A-1 and A-2 hereto, such Exchange Shares representing in the aggregate 78.43% of the issued and outstanding shares of Parent Common Stock at Closing, after giving effect to such issuance and the Split-Off share cancellation.

 

1.2           The Closing; Closing Date; Effect.

 

The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of CKR Law LLP in New York, New York on the date hereof, or, if all of the conditions to the obligations of the Parties to consummate the transactions contemplated hereby have not been satisfied or waived by such date, on such mutually agreeable later date as soon as practicable (and in any event not later than three (3) business days) after the satisfaction or waiver of all conditions (excluding the delivery of any documents to be delivered at the Closing by any of the Parties) set forth in Article V hereof (the “ Closing Date ”).

 

1.3           Actions at the Closing.

 

At the Closing or, in the case of securities issuances, as soon thereafter as is practicable:

 

(a)          Vitaxel and Vionmall shall deliver to Parent the various certificates, instruments and documents referred to in Section 7.2 ;

 

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(b)          Parent shall deliver to Vitaxel and Vionmall the various certificates, instruments and documents referred to in Section 7.3 ;

 

(c)          each of the Vitaxel Shareholders and Vionmall Shareholders shall deliver to Parent the certificate(s) representing their Vitaxel Shares and Vionmall Shares, respectively.

 

(d)          Parent shall deliver certificates for the Exchange Shares to the Vitaxel Shareholders and Vionmall Shareholders in accordance with Section 1.1(b) ;

 

(e)          Parent shall deliver to each of Vitaxel and Vionmall (i) evidence that the Parent’s board of directors is authorized to consist of two individuals, (ii) the resignations of all individuals who served as directors and/or officers of Parent immediately prior to the Closing Date, which resignations shall be effective as of the effective time of the Exchange (the “ Effective Time ”), (iii) evidence of the appointment of two directors to serve immediately following the Effective Time and (v) evidence of the appointment of such executive officers of the Parent to serve immediately upon the Effective Time as shall have been designated by the Company including Leong Yee Ming who will serve as Chief Executive Officer, Lim Wee Kiat who will serve as President and Secretary, and Lee Wei Boon who will serve as Chief Financial Officer and Treasurer.

 

(f)          Parent shall enter into the Split-Off Agreement with the Buyer and the Split-Off Subsidiary;

 

(g)          Parent shall enter into a General Release Agreement with the Buyer and the Split-Off Subsidiary in the form of Exhibit B attached hereto (the “ General Release Agreement ”);

 

(h)          Parent’s board of directors and shareholders shall authorize and approve Parent’s 2016 Equity Incentive Plan, substantially in the form of Exhibit C hereto (the “ 2016 EIP ”).

 

1.4           Additional Actions.

 

If at any time after the Effective Time the Company shall consider or be advised that any deeds, bills of sale, assignments or assurances or any other acts or things are necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in Parent, its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of the Company or (b) otherwise to carry out the purposes of this Agreement, the Company and its proper officers and directors or their designees shall be authorized (to the fullest extent allowed under applicable law) to execute and deliver, in the name and on behalf of the Company, all such deeds, bills of sale, assignments and assurances and do, in the name and on behalf of the Company, all such other acts and things necessary, desirable or proper to vest, perfect or confirm its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of the Company, as applicable, and otherwise to carry out the purposes of this Agreement.

 

1.5           Exchange of Shares.

 

At the Effective Time, by virtue of the Exchange:

 

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(a)          The issued and outstanding Vitaxel Shares and Vionmall Shares immediately prior to the Effective Time shall be exchanged for an aggregate of 3,000,000 Exchange Shares.

 

1.6           Other Effects of the Exchange.   The Exchange shall have all further effects as specified in the applicable provisions of the Nevada Revised Statutes (the “ NRS ”).

 

1.7           Exemption From Registration.   Parent and the Company intend that the Exchange Shares to be issued pursuant to Section 1.1(b) hereof, in each case in connection with the Exchange, will be issued in a transaction exempt from registration under the Securities Act, by reason of Section 4(a)(2) of the Securities Act, Rule 506 of Regulation D promulgated by the SEC thereunder (“ Regulation D ”) and/or Regulation S under the Securities Act, all recipients of such Exchange Shares, shall be “accredited investors” as such term is defined under Regulation D and/or “non-US Persons” as such term is defined under Regulation S.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF VITAXEL

 

Except as set forth in the disclosure letter delivered by Vitaxel to Parent on the date hereof (the “ Vitaxel Disclosure Letter ”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer ( provided , however , that an item disclosed in any Section of the Vitaxel Disclosure Letter shall be deemed to have been disclosed on all other Sections of this Agreement (if such disclosure is in sufficient detail to make it readily apparent to a reasonable Person that such disclosure applies to the other Sections thereof to which such disclosure is responsive)), Vitaxel represents and warrants to Parent as follows, on the date hereof and on the Closing Date:

 

2.1           Due Organization and Good Standing.

 

Vitaxel and each Subsidiary of Vitaxel, (singly, a “ Vitaxel Subsidiary ” and collectively, the “ Vitaxel Subsidiaries ”) is a corporation, limited liability company or other entity, duly incorporated, formed, or organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, formation, or organization as set forth in Section 2.1 of the Vitaxel Disclosure Letter and has all requisite corporate, limited liability, or other organizational power and authority to own, lease and operate its respective properties and to carry on its respective business as now being conducted. Vitaxel and each Vitaxel Subsidiary is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, all of which jurisdictions are listed on Section 2.1 of the Vitaxel Disclosure Letter . Vitaxel has heretofore made available to Parent accurate and complete copies of the certificate of incorporation, by-laws or equivalent organizational document of Vitaxel (the “ Vitaxel Organization Documents ”) and accurate and complete copies of the certificate of incorporation, by-laws or equivalent organizational document of each Vitaxel Subsidiary, each as amended to date and as currently in effect (together with the Vitaxel Organization Documents, the “ Vitaxel Group Organization Documents ”). Neither Vitaxel nor any Vitaxel Subsidiary is in violation of any Vitaxel Organization Documents.

 

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2.2           Title to Securities; Capitalization.

 

(a)          The authorized share capital of Vitaxel consists of 5,000,000 ordinary shares, RM 1.00 (the “ Vitaxel Shares ”), 1,500,000 of which are issued and outstanding. All of the outstanding Vitaxel Shares were duly authorized, validly issued, fully paid and nonassessable, free of Encumbrances and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the relevant law in the jurisdiction of incorporation, Vitaxel Organization Documents or any contract to which Vitaxel is a party or by which Vitaxel is bound. There are no outstanding contractual obligations of Vitaxel to repurchase, redeem or otherwise acquire any of the Vitaxel Shares or any capital equity of Vitaxel and there are no outstanding contractual obligations of Vitaxel to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. None of the outstanding Vitaxel Shares has been issued in violation of any applicable securities Laws.

 

(b)          Except as set forth in Section 2.2(b) of the Vitaxel Disclosure Letter , there are no (i) outstanding options, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights, or (iii) except as expressly contemplated by this Agreement, subscriptions or other rights, agreements, arrangements, contracts or commitments of any character, relating to the issued or unissued capital equity of Vitaxel or any Vitaxel Subsidiary obligating Vitaxel or any Vitaxel Subsidiary to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options, equity securities or securities convertible into or exchangeable for such securities, or obligating Vitaxel or any Vitaxel Subsidiary to grant, extend or enter into any option, warrant, call, subscription or other right, agreement, arrangement or commitment for such securities.

 

(c)          There are no registration rights and there is no voting trust, proxy, rights plan, shareholder’s agreement, anti-takeover plan or other contracts or understandings to which Vitaxel or any Vitaxel Subsidiary is a party or by which Vitaxel, any Vitaxel Subsidiary or any Vitaxel Shareholder is bound with respect to any of the capital stock of Vitaxel or any Vitaxel Subsidiary. Except as set forth in this Agreement or disclosed in Section 2.2(c) of the Vitaxel Disclosure Letter , as a result of the consummation of the Share Exchange, no shares of capital stock, warrants, options or other securities of Vitaxel or any Vitaxel Subsidiary are issuable and no rights in connection with any shares, warrants, rights, options or other securities of Vitaxel or any Vitaxel Subsidiary accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).

 

(d)          All Indebtedness of Vitaxel and the Vitaxel Subsidiaries are disclosed in Section 2.2(d) of the Vitaxel Disclosure Letter . Except as disclosed therein, no Indebtedness of Vitaxel or any of the Vitaxel Subsidiaries contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by Vitaxel or any of the Vitaxel Subsidiaries, or (iii) the ability of Vitaxel or any of the Vitaxel Subsidiaries to grant any Encumbrance on its properties or assets.

 

(e)          Except as set forth in Section 2.2(e) of the Vitaxel Disclosure Letter , since their respective formations, neither Vitaxel nor any Vitaxel Subsidiary has made, declared or paid any distribution or dividend and has not repurchased, redeemed or otherwise acquired any of its securities or equity interests, and no board of directors or other governing board of Vitaxel or any Vitaxel Subsidiary has authorized any of the foregoing.

 

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(f)          Other than as set forth on Section 2.2(f) of the Vitaxel Disclosure Letter , there are no options, warrants or other rights to subscribe for or purchase any equity interests of Vitaxel or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any equity interests of Vitaxel, or preemptive rights or rights of first refusal or first offer, nor are there any Contracts, commitments, arrangements or restrictions to which Vitaxel or, to the knowledge of Vitaxel, any of its stockholders is a party or bound relating to any equity securities of Vitaxel, whether or not outstanding. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to Vitaxel, nor are there any voting trusts, proxies, shareholder agreements or any other agreements or understandings with respect to the voting of Vitaxel Stock. Except as set forth in Section 2.2(f) of the Vitaxel Disclosure Letter , there are no outstanding contractual obligations of Vitaxel to repurchase, redeem or otherwise acquire any equity interests or securities of Vitaxel, nor has Vitaxel granted any registration rights to any Person with respect to Vitaxel’s equity securities. All of Vitaxel’s securities have been granted, offered, sold and issued in compliance with all applicable foreign, state and federal securities Laws. As a result of the consummation of the transactions contemplated by this Agreement, no equity interests of Vitaxel are issuable and no rights in connection with any interests, warrants, rights, options or other securities of Vitaxel accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).

 

2.3           Subsidiaries.

 

Section 2.3 of the Vitaxel Disclosure Letter sets forth a true, complete and correct list of each Vitaxel Subsidiary and their respective jurisdictions of incorporation, formation or organization. Except as otherwise set forth in Section 2.3 of the Vitaxel Disclosure Letter , all of the capital stock and other equity interests of Vitaxel Subsidiaries are owned, directly or indirectly, by Vitaxel free and clear of any Encumbrance (other than any restriction under the applicable securities Laws) with respect thereto. All of the outstanding equity securities of each Vitaxel Subsidiary are duly authorized and validly issued, were offered, sold and delivered in compliance with all applicable Laws governing the issuance of securities, fully paid and nonassessable. There are no contracts to which Vitaxel or any of its Affiliates is a party or bound with respect to the voting (including voting trusts or proxies) of the equity interests of any Vitaxel Subsidiary other than the Organizational Documents of any such Vitaxel Subsidiary. There are no outstanding or authorized options, warrants, rights, agreements, subscriptions, convertible securities or commitments to which any Vitaxel Subsidiary is a party or which are binding upon any Vitaxel Subsidiary providing for the issuance or redemption of any equity interests of any Vitaxel Subsidiary. There are no outstanding equity appreciation, phantom equity, profit participation or similar rights granted by any Vitaxel Subsidiary. Except for the interests of Vitaxel Subsidiaries listed in Section 2.3 of the Vitaxel Disclosure Letter , Vitaxel does not own or have any rights to acquire, directly or indirectly, any capital stock or other equity interests of any Person. Except as set forth in Section 2.3 of the Vitaxel Disclosure Letter , none of Vitaxel or the Vitaxel Subsidiaries is a participant in any joint venture, partnership or similar arrangement. Except as set forth in Section 2.3 of the Vitaxel Disclosure Letter , there are no outstanding contractual obligations of Vitaxel or the Vitaxel Subsidiaries to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person.

 

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2.4           Authorization; Binding Agreement.

 

Vitaxel has all requisite corporate power and authority to execute and deliver this Agreement and each other ancillary agreement related hereto to which it is a party, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each other ancillary agreement related hereto to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Vitaxel Board, and no other corporate proceedings on the part of Vitaxel are necessary to authorize the execution and delivery of this Agreement and each other ancillary agreement related hereto to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each ancillary agreement to which Vitaxel is a party shall be when delivered, duly and validly executed and delivered by Vitaxel and, assuming the due authorization, execution and delivery of this Agreement and such ancillary agreements by the other Parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of Vitaxel, enforceable against Vitaxel in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally, and the fact that equitable remedies or relief (including, but not limited to, the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “ Enforceability Exceptions ”).

 

2.5           Governmental Approvals.

 

Except as otherwise described in Section 2.5 of the Vitaxel Disclosure Letter , no consent, approval, waiver, authorization or permit of, or notice to or declaration or filing with (each, a “ Consent ”), any nation or government, any state or other political subdivision thereof, any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental or regulatory authority, agency, department, board, commission, administration or instrumentality, any court, tribunal or arbitrator or any self-regulatory organization (each, a “ Governmental Authority ”), on the part of Vitaxel or any of the Vitaxel Subsidiaries is required to be obtained or made in connection with the execution, delivery or performance by Vitaxel of this Agreement and each other ancillary agreement related hereto to which it is a party or the consummation by Vitaxel of the transactions contemplated hereby and thereby, other than such filings as may be required in any jurisdiction where Vitaxel or any Vitaxel Subsidiary is qualified or authorized to do business as a foreign corporation in order to maintain such qualification or authorization.

 

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2.6           No Violations.

 

Except as otherwise described in Section 2.6 of the Vitaxel Disclosure Letter , the execution and delivery by Vitaxel of this Agreement and each other ancillary agreement related hereto to which it is a party, the consummation by Vitaxel of the transactions contemplated hereby and thereby, and compliance by Vitaxel with any of the provisions hereof and thereof, will not, (i) conflict with or violate any provision of any Vitaxel Organization Documents, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, amendment or acceleration) under, any Vitaxel Material Contract (as defined below), (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by any Target under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result (immediately or with the passage of time or otherwise) in the creation or imposition of any Encumbrances (as hereafter defined) upon any of the properties, rights or assets of Vitaxel or any of the Vitaxel Subsidiaries, or (viii) subject to obtaining the Consents from Governmental Authorities referred to in Section 2.5 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such consent, approval, authorization or waiver having been satisfied, conflict with or violate any foreign, federal, state or local Order, statute, law, rule, regulation, ordinance, principle of common law, constitution, treaty enacted, or any writ, arbitration award, injunction, directive, judgment, or decree, promulgated, issued, enforced or entered by any Governmental Authority (each, a “ Law ” and collectively, the “ Laws ”) to which Vitaxel or any of the Vitaxel Subsidiaries or any of their respective assets or properties is subject.

 

2.7           Financial Statements.

 

(a)          Vitaxel has provided to Parent (i) the audited consolidated balance sheets of Vitaxel as of December 31, 2014 and December 31, 2013 and the related audited consolidated statements of operations, stockholders’ equity and cash flows for the fiscal years ended, December 31, 2014 and December 31, 2013 together with the notes to such statements and the opinion of AWC (CPA) Limited, independent certified public accountants, and (ii) the unaudited consolidated financial statements of Vitaxel for the nine months ended September 30, 2015 and September 30, 2014 (the “ Vitaxel Interim Financials ”) (the Vitaxel Audited Financials and Vitaxel Interim Financials, collectively, the “ Vitaxel Financials ”).

 

(b)          The Vitaxel Financials have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved. The Vitaxel balance sheets included as part of the Vitaxel Financials are true and accurate and present fairly as of their respective dates the financial condition of Vitaxel. As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, Vitaxel 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 Vitaxel, in accordance with generally accepted accounting principles. The statements of operations, stockholders’ equity and cash flows included as part of Vitaxel Financials reflect fairly the information required to be set forth therein by generally accepted accounting principles. The Vitaxel Financials (i) accurately reflect Vitaxel’s books and records as of the times and for the periods referred to therein, (ii) were prepared in accordance with GAAP methodologies applied on a consistent basis throughout the periods involved (except as set forth on Section 2.7(b) of the Vitaxel Disclosure Letter and except for the absence of footnotes and audit adjustments in the case of unaudited Vitaxel Financials), (iii) fairly present in all material respects the consolidated financial position of Vitaxel as of the respective dates thereof and the consolidated results of Vitaxel’s operations and cash flows for the periods indicated and (iv) to the extent required for inclusion in the filings with the SEC and the Registration Statement, comply, in all material respects with the Securities Act, Regulation S-X and the published general rules and regulations of the SEC. Any Vitaxel Financials delivered pursuant to the terms of this Agreement will, when delivered, (i) accurately reflect Vitaxel’s books and records as of the times and for the periods referred to therein, and (ii) be prepared in accordance with GAAP methodologies applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and except for the absence of footnotes and audit adjustments in the case of unaudited Vitaxel Financials), (iii) fairly present in all material respects the consolidated financial position of Vitaxel as of the respective dates thereof and the consolidated results of Vitaxel’s operations and cash flows for the periods indicated, and (iv) to the extent required for inclusion in the filings with the SEC and to the Registration Statement, will comply as of the Closing Date in all material respects with the Securities Act, Regulation S-X and the published general rules and regulations of the SEC.

 

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(c)          Vitaxel and each Vitaxel Subsidiary maintains accurate books and records reflecting its assets and liabilities and maintains proper and adequate internal accounting controls that provide reasonable assurance that (i) such Person does not maintain any off-the-book accounts and that such Person’s assets are used only in accordance with such Person’s management directives, (ii) transactions are executed with management’s authorization, (iii) transactions are recorded as necessary to permit preparation of the financial statements of such Person and to maintain accountability for such Person’s assets, (iv) access to such Person’s assets is permitted only in accordance with management’s authorization, (v) the reporting of such Person’s assets is compared with existing assets at regular intervals and verified for actual amounts and (vi) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection of accounts, notes and other receivables on a current and timely basis. Neither Vitaxel nor any Vitaxel Subsidiary has been subject to or involved in any material fraud that involves management or other employees who have a significant role in the internal controls over financial reporting of Vitaxel and its Subsidiaries. Since their respective formations, neither Vitaxel nor any Vitaxel Subsidiary, or any of their Representatives, or any auditor or accountant of Vitaxel or the Vitaxel Subsidiaries has received any written complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of Vitaxel or any Vitaxel Subsidiary or their respective internal accounting controls, including any complaint, allegation, assertion or claim that Vitaxel or any Vitaxel Subsidiary has engaged in questionable accounting or auditing practices. No employee and no member of the Vitaxel Board nor any attorney representing Vitaxel or any Vitaxel Subsidiary, whether or not employed by Vitaxel or any Vitaxel Subsidiary, has ever received written notice from any Governmental Authority or any Person of any violation of consumer protection, insurance or securities Laws, breach of fiduciary duty or similar violation by Vitaxel, the Vitaxel Subsidiaries or any of their respective officers, managers, directors, employees or agents or reported written evidence of any such violation to the Vitaxel Board or any committee thereof or to any director or executive officer of the Vitaxel or any Vitaxel Subsidiary.

 

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(d)          Neither Vitaxel nor any Vitaxel Subsidiary has ever been subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act.

 

2.8           Absence of Certain Changes.

 

From January 1, 2015 through the date hereof, except as described in Section 2.8 of the Vitaxel Disclosure Letter and as expressly contemplated by this Agreement, Vitaxel and the Vitaxel Subsidiaries have conducted their respective businesses in the ordinary course of business consistent with past practice and then has not been any fact, change, effect, occurrence, event, development or state of circumstances that has had or would reasonably be expected to result in a Vitaxel Material Adverse Effect.

 

2.9           Absence of Undisclosed Liabilities.

 

Neither Vitaxel nor any Vitaxel Subsidiary is subject to any material liabilities or obligations that is not adequately reflected or reserved on or provided for in the Vitaxel Financials, other than (i) liabilities or obligations of the type that have been incurred in the ordinary course of business consistent with past practice, (ii) liabilities or obligations reflected in Section 2.9 of the Vitaxel Disclosure Letter , and (iii) liabilities or obligations under the payment terms of Vitaxel Material Contracts (but not including liabilities for breaches or for indemnification obligations thereunder), except, in each case, for immaterial liabilities or obligations.

 

2.10         Compliance with Laws.

 

Except as set forth in Section 2.10 of the Vitaxel Disclosure Letter , neither Vitaxel nor any of the Vitaxel Subsidiaries are in conflict with, or in default or violation of, nor has it received, since their respective formations, any written notice of any conflict with, or default or violation of, (A) any applicable Law by which it or any property or asset of Vitaxel or any Vitaxel Subsidiary is bound or affected, including, without limitation, consumer protection, insurance or securities Laws, or (B) any Vitaxel Material Contract.

 

2.11         Regulatory Agreements; Permits.

 

(a)          Except as disclosed in Section 2.11(a) of the Vitaxel Disclosure Letter , there are no material written agreements, memoranda of understanding, commitment letters, or Orders to which Vitaxel or any Vitaxel Subsidiary is a party, on the one hand, and any Governmental Authority is a party or addressee, on the other hand.

 

(b)          Except as disclosed in Section 2.11(b) of the Vitaxel Disclosure Letter , each of Vitaxel, the Vitaxel Subsidiaries, and each employee of Vitaxel or any Vitaxel Subsidiary who is legally required to be licensed by a Governmental Authority in order to perform his or her duties with respect to his or her employment with Vitaxel or such Vitaxel Subsidiary, hold all material permits, licenses, franchises, grants, authorizations, consents, exceptions, variances, exemptions, orders and other authorizations of Governmental Authorities, certificates, consents and approvals necessary to lawfully conduct Vitaxel’s or the Vitaxel Subsidiaries’ respective business as presently conducted, and to own, lease and operate Vitaxel’s or the Vitaxel Subsidiaries’ respective assets and properties (collectively, the “ Vitaxel Permits ”), except for any such permits, licenses, franchises, grants, authorizations, consents, exceptions, variances, exemptions, certificates and approvals, the failure of which to obtain would not be reasonably expected to result in a Vitaxel Material Adverse Effect. Vitaxel has made available to Parent true, correct and complete copies of all material Vitaxel Permits. All of the Vitaxel Permits are in full force and effect, and no suspension or cancellation of any of Vitaxel Permits is pending or, to Vitaxel’s knowledge, threatened. Neither Vitaxel nor any Vitaxel Subsidiary is in violation in any material respect with the terms of any Vitaxel Permit.

 

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2.12         Litigation.

 

Except as disclosed in Section 2.12(a) of the Vitaxel Disclosure Letter , there is no material private, regulatory or governmental inquiry, action, suit, proceeding, litigation, claim, arbitration or investigation pending by or before any Governmental Authority (each, an “ Action ”), or, to the knowledge of Vitaxel, threatened against Vitaxel, any of the Vitaxel Subsidiaries or any of their respective properties, rights or assets or any of their respective managers, officers or directors (in their capacities as such). There is no decree, directive, order, writ, judgment, stipulation, determination, decision, award, injunction, temporary restraining order, cease and desist order or other order by, or any supervisory agreement or memorandum of understanding with any Governmental Authority (each, an “ Order ”) binding against Vitaxel, any of the Vitaxel Subsidiaries or any of their respective properties, rights or assets or any of their respective managers, officers or directors (in their capacities as such) that would prohibit, prevent, enjoin, restrict or alter or delay any of the transactions contemplated by this Agreement. Vitaxel and the Vitaxel Subsidiaries are in compliance with all Orders, except for any non-compliance which would not reasonably be expected to result in a Vitaxel Material Adverse Effect. Except as disclosed in Section 2.12(b) of the Vitaxel Disclosure Letter , there is no material Action that Vitaxel or any of the Vitaxel Subsidiaries has pending against other parties. There is no Action pending or, to the knowledge of Vitaxel, threatened against Vitaxel or any Vitaxel Subsidiary involving a claim against Vitaxel or any Vitaxel Subsidiary for false advertising with respect to any of Vitaxel’s or any Vitaxel Subsidiary’s products or services. Since the dates of formation of Vitaxel and the Vitaxel Subsidiaries, none of the current or former officers, managers or directors of any of Vitaxel or the Vitaxel Subsidiaries have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.

 

2.13         Restrictions on Business Activities.

 

There is no Order binding upon Vitaxel or any of the Vitaxel Subsidiaries that has or would reasonably be expected to have the effect of prohibiting, preventing, restricting or impairing in any respect, any business practice of Vitaxel or any of the Vitaxel Subsidiaries as their businesses are currently conducted, any acquisition of property by Vitaxel or any of the Vitaxel Subsidiaries, the conduct of business by Vitaxel or any of the Vitaxel Subsidiaries as currently conducted, or the ability of Vitaxel or any Vitaxel Subsidiary to compete with other parties.

 

2.14         Material Contracts.

 

(a)           Section 2.14(a) of the Vitaxel Disclosure Letter sets forth a true, correct and complete list of, and Vitaxel has made available to Parent, true, correct and complete copies of, each material written contract, agreement, commitment, arrangement, lease, license, or plan and each other instrument in effect to which Vitaxel or any Vitaxel Subsidiary is a party or by which Vitaxel, any Vitaxel Subsidiary, or any of their respective properties or assets are bound or affected, in each case as of the date hereof (each, a “ Vitaxel Material Contract ”) that:

 

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(i)          contains covenants that materially limit the ability of Vitaxel or any Vitaxel Subsidiary (A) to compete in any line of business or with any Person or in any geographic area or to sell, or provide any service or product or solicit any Person, including any non-competition covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or (B) to purchase or acquire an interest in any other Person;

 

(ii)         involves any joint venture, partnership, limited liability company or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture;

 

(iii)        involves any exchange traded, over the counter or other swap, cap, floor, collar, futures, contract, forward contract, option or other derivative financial instrument or contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest rates, foreign currency and indices;

 

(iv)        evidences Indebtedness (whether incurred, assumed, guaranteed or secured by any asset) having an outstanding principal amount in excess of $50,000;

 

(v)         involves the acquisition or disposition (to the extent such transaction would be consummated after the date hereof), directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $50,000 (other than in the ordinary course of business) or capital stock or other equity interests of another Person;

 

(vi)        by its terms calls for aggregate payments by Vitaxel or any Vitaxel Subsidiary under such contract of more than $50,000 per year or $200,000 in the aggregate over the length of the contract;

 

(vii)       with respect to any acquisition or disposition of another Person, pursuant to which Vitaxel or any Vitaxel Subsidiary has (A) any continuing indemnification obligations in excess of $50,000 or (B) any “earn out” or other contingent payment obligations;

 

(viii)      relates to any merger, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity or its business or material assets or the sale of Vitaxel, any Vitaxel Subsidiary, their businesses or material assets;

 

(ix)         obligates Vitaxel or any Vitaxel Subsidiary to provide continuing indemnification or a guarantee of obligations of a third party after the date hereof in excess of $50,000;

 

(x)          is between Vitaxel or any Vitaxel Subsidiary and any of their respective directors, executive officers, shareholders or Affiliates, including all non-competition, severance and indemnification agreements;

 

(xi)         relates to a material settlement entered into within three (3) years prior to the date of this Agreement or under which Vitaxel or any Vitaxel Subsidiary has outstanding obligations (other than customary confidentiality obligations);

 

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(xii)        provides another Person (other than Vitaxel or any Vitaxel Subsidiary) with a power of attorney;

 

(xiii)       obligates Vitaxel or any Vitaxel Subsidiary to make any capital commitment or expenditure in excess of $50,000 (including pursuant to any joint venture);

 

(xiv)      relates to the development, ownership, licensing or use of any Intellectual Property material to the business of Vitaxel or any Vitaxel Subsidiary; or

 

(xv)       is otherwise material to Vitaxel or any Vitaxel Subsidiary or outside of the ordinary course of business of Vitaxel or any Vitaxel Subsidiary and not described in clauses (i) through (xiv) above.

 

(b)          Except as disclosed in Section 2.14(b) of the Vitaxel Disclosure Letter , with respect to each Vitaxel Material Contract: (i) such Vitaxel Material Contract is valid and binding and enforceable in all respects against Vitaxel or the Vitaxel Subsidiary party thereto (subject to Enforceability Exceptions) and, to Vitaxel’s knowledge, the other party thereto, and other than such contracts that have expired by their terms, are in full force and effect; (ii) the consummation of the transactions contemplated by this Agreement will not affect the validity or enforceability of the Vitaxel Material Contract against Vitaxel or such Vitaxel Subsidiary and, to Vitaxel’s knowledge, the other party thereto; (iii) neither Vitaxel nor any Vitaxel Subsidiary is in breach or default in any respect, and no event has occurred that with the passage of time or giving of notice or both would constitute a breach or default by Vitaxel or any Vitaxel Subsidiary, or permit termination or acceleration by the other party thereto, under such Vitaxel Material Contract; (iv) to Vitaxel’s knowledge, no other party to such Vitaxel Material Contract is in breach or default in any respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by Vitaxel or any of the Vitaxel Subsidiaries, under such Vitaxel Material Contract, (v) no other party to such Vitaxel Material Contract has notified Vitaxel or any Vitaxel Subsidiary in writing that it is terminating or considering terminating the handling of its business by Vitaxel or any Vitaxel Subsidiary or in respect of any particular product, project or service of Vitaxel or any Vitaxel Subsidiary, or is planning to materially reduce its future business with Vitaxel or any Vitaxel Subsidiary in any manner; and (vi) neither Vitaxel nor any Vitaxel Subsidiary has waived any rights under such Vitaxel Material Contract.

 

2.15         Intellectual Property.

 

(a)           Section 2.15(a)(i) of the Vitaxel Disclosure Letter contains a list of: (i) all right, title and interest in and to all registered Intellectual Property and Intellectual Property that is the subject of a pending application for registration in each case that is, owned by Vitaxel or any of the Vitaxel Subsidiaries and is material to the business of Vitaxel or any Vitaxel Subsidiary as currently conducted (“ Vitaxel Intellectual Property ”); and (ii) all material Intellectual Property that is licensed to Vitaxel or any of the Vitaxel Subsidiaries and is material to the business of Vitaxel or any Vitaxel Subsidiaries (“ Vitaxel Licensed Intellectual Property ”). Each of Vitaxel and the Vitaxel Subsidiaries (x) has all right, title and interest in and to Vitaxel Intellectual Property owned by it, free and clear of all Encumbrances, other than rights and interest licensed to any other Person and Permitted Encumbrances, and (y) has valid rights to use the Vitaxel Licensed Intellectual Property. Except as set forth in Section 2.15(a)(ii) of the Vitaxel Disclosure Letter , neither Vitaxel nor any of the Vitaxel Subsidiaries has received any written notice alleging that it has infringed, diluted or misappropriated, or, by conducting its business as currently conducted, has infringed, diluted or misappropriated, the Intellectual Property rights of any Person and, except as set forth in Section 2.15(a)(iii) of the Vitaxel Disclosure Letter , to the knowledge of Vitaxel, there is no valid basis for any such allegation. Except as set forth in Section 2.15(a)(iv) of the Vitaxel Disclosure Letter , neither the execution nor delivery of this Agreement nor the consummation of the transactions contemplated hereby will materially impair or materially alter Vitaxel’s or any Vitaxel Subsidiary’s rights to any Vitaxel Intellectual Property or Vitaxel Licensed Intellectual Property. All of Vitaxel Intellectual Property and the license rights to the Vitaxel Licensed Intellectual Property are valid, enforceable and subsisting and, as of the date hereof, there is no material Action that is pending or, to Vitaxel’s knowledge, threatened that challenges the rights of Vitaxel or any of the Vitaxel Subsidiaries to any Vitaxel Intellectual Property or Vitaxel Licensed Intellectual Property or the validity, enforceability or effectiveness thereof. Vitaxel Intellectual Property and the Vitaxel Licensed Intellectual Property constitute all material Intellectual Property owned by or licensed to Vitaxel or the Vitaxel Subsidiaries and used in or necessary for the operation by Vitaxel and the Vitaxel Subsidiaries of their respective businesses as currently conducted. Neither Vitaxel nor any of the Vitaxel Subsidiaries is in breach or default (or would with the giving of notice or lapse of time or both be in such breach or default) under any license to use any of the Vitaxel Licensed Intellectual Property.

 

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(b)          For purposes of this Agreement, “ Intellectual Property ” means (i) United States, international and foreign patents and patent applications, including divisionals, continuations, continuations-in-part, reissues, reexaminations and extensions thereof and counterparts claiming priority therefrom; utility models; invention disclosures; and statutory invention registrations and certificates; (ii) United States and foreign registered, pending and unregistered trademarks, service marks, trade dress, logos, trade names, corporate names and other source identifiers, domain names and registrations and applications for registration for any of the foregoing, together with all of the goodwill associated therewith; (iii) United States and foreign copyrights, and registrations and applications for registration thereof; and copyrightable works, including website content; (iv) all inventions and design rights (whether patentable or unpatentable) and all categories of trade secrets as defined in the Uniform Trade Secrets Act, including business, technical and financial information; and (v) confidential and proprietary information including, without limitation, know-how, recipes and formulas.

 

2.16         Employee Benefit Plans.

 

(a)           Section 2.16(a) of the Vitaxel Disclosure Letter lists, with respect to Vitaxel and the Vitaxel Subsidiaries, (i) all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)), (ii) material loans from Vitaxel or any of the Vitaxel Subsidiaries to officers and directors other than advances for expense reimbursements incurred in the ordinary course of business, (iii) any securities option, securities stock purchase, phantom securities, securities appreciation right, equity-related, supplemental retirement, severance, sabbatical, medical, dental, vision care, disability, employee relocation, cafeteria benefit (Code section 125) or dependent care (Code Section 129), life insurance or accident insurance plans, programs, agreements or arrangements, (iv) all bonus, pension, retirement, profit sharing, savings, deferred compensation or incentive plans, programs, policies, agreements or arrangements, (v) other material fringe, perquisite, or employee benefit plans, programs, policies, agreements or arrangements, and (vi) any current or former employment, change of control, retention or executive compensation, termination or severance plans, programs, policies, collective bargaining, agreements or arrangements, written or otherwise, as to which material unsatisfied liabilities or obligations, contingent or otherwise, remain for the benefit of, or relating to, any present or former employee, consultant, manager or director, or which could reasonably be expected to have any material liabilities or obligations (together, the “ Vitaxel Benefit Plans ”). The term Vitaxel Benefit Plans also includes all benefit plans subject to Title IV of ERISA in connection with which any trade or business (whether or not incorporated) that is treated as a single employer with Vitaxel and the Vitaxel Subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the Code (a “ Vitaxel ERISA Affiliate ”) may have any liability.

 

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(b)          Other than as would not reasonably be expected to result in a Vitaxel Material Adverse Effect, (i) there has been no “prohibited transaction,” as such term is defined in Section 406 of ERISA and Section 4975 of the Code, by Vitaxel, by any Vitaxel Subsidiary, or by any trusts created thereunder, any trustee or administrator thereof or any other Person, with respect to any Vitaxel Benefit Plan, (ii) each Vitaxel Benefit Plan has been administered in material accordance with its terms and in compliance with the requirements prescribed by any and all applicable Laws (including ERISA and the Code), (iii) Vitaxel and each Vitaxel ERISA Affiliate have performed all obligations required to be performed by them under, are not in any respect in default under or violation of, and have no knowledge of any default or violation by any other party to, any Vitaxel Benefit Plans that are subject to Title IV of ERISA, and (iv) all contributions and premiums required to be made by Vitaxel or any Vitaxel ERISA Affiliate to any Vitaxel Benefit Plan have been made on or before their due dates, including any legally permitted extensions.

 

(c)          Except as disclosed in Section 2.16(c) of the Vitaxel Disclosure Letter , or as otherwise provided in this Agreement, any ancillary agreement related hereto or as provided by applicable Law, with respect to Vitaxel Benefit Plans, the consummation of the transactions contemplated by this Agreement and any ancillary agreement related hereto to which Vitaxel is a party, will not, either alone or in combination with any other event or events, (i) entitle any current or former employee, manager, director or consultant of Vitaxel or any of the Vitaxel Subsidiaries to any payment of severance pay, golden parachute payments, or bonuses, (ii) accelerate, forgive indebtedness, vest, distribute, or increase benefits or obligations to fund benefits with respect to any employee or director of Vitaxel or any of the Vitaxel Subsidiaries, or (iii) accelerate the time of payment or vesting of options to purchase securities of Vitaxel, or increase the amount of compensation due any such employee, director or consultant.

 

(d)          None of Vitaxel Benefit Plans contains any provision requiring a gross-up pursuant to Section 280G or 409A of the Code or similar Tax provisions.

 

(e)          No Vitaxel Benefit Plan maintained by Vitaxel or any of the Vitaxel Subsidiaries provides material benefits, including death or medical benefits (whether or not insured), with respect to current or former employees of Vitaxel or any of the Vitaxel Subsidiaries after termination of employment (other than (i) coverage mandated by applicable Laws, (ii) death benefits or retirement benefits under any “employee pension benefit plan,” as that term is defined in Section 3(2) of ERISA, or (iii) benefits, the full direct cost of which is borne by the current or former employee (or beneficiary thereof)).

 

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(f)          Neither Vitaxel nor any Vitaxel ERISA Affiliate has any liability with respect to any (i) employee pension benefit plan that is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code, (ii) “multiemployer plan” as defined in Section 3(37) of ERISA or (iii) “multiple employer plan” within the meaning of Sections 4063 and 4064 of ERISA or Section 413(c) of the Code.

 

(g)          Except as set forth in Section 2.16(g) of the Vitaxel Disclosure Letter , no Vitaxel Benefit Plan is maintained outside the jurisdiction of the United States (any such Vitaxel Benefit Plan set forth in Section 2.16(g) of the Vitaxel Disclosure Schedule, “ Vitaxel Foreign Benefit Plans ”). All Vitaxel Foreign Benefit Plans have been established, maintained and administered in compliance in all material respects with their terms and all applicable statutes, laws, ordinances, rules, orders, decrees, judgments, writs, and regulations of any controlling governmental authority or instrumentality and all Vitaxel Foreign Benefit Plans that are required to be funded are fully funded, and with respect to all other Vitaxel Foreign Benefit Plans, adequate reserves therefor have been established in accordance with applicable foreign accounting standards on the accounting statements of the applicable Vitaxel or Vitaxel Subsidiary entity.

 

2.17         Taxes and Returns.

 

(a)          Vitaxel has or will have timely filed, or caused to be timely filed, all material federal, state, local and foreign Tax returns and reports required to be filed by Vitaxel or any Vitaxel Subsidiary (taking into account all available extensions) (collectively, “ Tax Returns ”), which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Vitaxel Financials have been established.

 

(b)           Section 2.17(b) of the Vitaxel Disclosure Letter sets forth each jurisdiction where Vitaxel and each Vitaxel Subsidiary files or is required to file a Tax Return.

 

(c)          Neither Vitaxel nor any of the Vitaxel Subsidiaries is being audited by any taxing authority or has been notified by any Tax authority that any such audit is contemplated or pending.

 

(d)          There are no material claims, assessments, audits, examinations, investigations or other proceedings pending against Vitaxel or any of the Vitaxel Subsidiaries in respect of any Tax, and neither Vitaxel nor any of the Vitaxel Subsidiaries has been notified in writing of any proposed Tax claims or assessments against Vitaxel or any of the Vitaxel Subsidiaries (other than, in each case, claims or assessments for which adequate reserves in the Vitaxel Financials have been established).

 

(e)          There are no Encumbrances with respect to any Taxes upon any of Vitaxel’s or the Vitaxel Subsidiaries’ assets, other than (i) Taxes, the payment of which is not yet due, or (ii) Taxes or charges being contested in good faith by appropriate proceedings and for which adequate reserves in the Vitaxel Financials have been established.

 

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(f)          Neither Vitaxel nor any of the Vitaxel Subsidiaries has any outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by Vitaxel or any of the Vitaxel Subsidiaries for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.

 

(g)          Neither Vitaxel nor any of the Vitaxel Subsidiaries has made any change in accounting method or received a ruling from, or signed an agreement with, any taxing authority that would reasonably be expected to have a material impact on Taxes following the Closing.

 

(h)          Neither Vitaxel nor any of the Vitaxel Subsidiaries participated in, or sold, distributed or otherwise promoted, any “reportable transaction,” as defined in Treasury Regulation section 1.6011-4.

 

(i)          Neither Vitaxel nor any Vitaxel Subsidiary has any liability or potential liability for the Taxes of another Person (i) under any applicable Tax Law, (ii) as a transferee or successor, or (iii) by contract, indemnity or otherwise.

 

(j)          Neither Vitaxel nor any Vitaxel Subsidiary is a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement, arrangement or practice with respect to material Taxes (including advance pricing agreement, closing agreement or other agreement relating to Taxes with any taxing authority) that will be binding on Vitaxel or any Vitaxel Subsidiary with respect to any period following the Closing Date.

 

(k)          Neither Vitaxel nor any Vitaxel Subsidiary has requested or is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any taxing authority with respect to any material Taxes, nor is any such request outstanding.

 

(l)          For purposes of this Agreement, the term “ Tax ” or “ Taxes ” shall mean any tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, imposed by any Governmental Authority (including any federal, state, local, foreign or provincial income, gross receipts, property, sales, use, net worth, premium, license, excise, franchise, employment, payroll, social security, workers compensation, unemployment compensation, alternative or added minimum, ad valorem, transfer or excise tax) together with any interest, addition or penalty imposed thereon.

 

2.18         Finders and Investment Bankers.

 

Except as set forth in Section 2.18 of the Vitaxel Disclosure Letter , neither Vitaxel nor any Vitaxel Subsidiary has incurred, nor will they incur, any liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of any member of Vitaxel or any Vitaxel Subsidiary.

 

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2.19         Title to Properties; Assets.

 

(a)           Section 2.19(a) of the Vitaxel Disclosure Letter contains a correct and complete list, of all real property and interests in real property leased or subleased by or for the benefit of Vitaxel or any of the Vitaxel Subsidiaries from or to any Person (collectively, the “ Vitaxel Real Property ”). The list set forth in Section 2.19(a)(i) of the Vitaxel Disclosure Letter contains, with respect to each of Vitaxel Real Properties, all existing leases, subleases, licenses, guarantees or other occupancy contracts to which Vitaxel or any of the Vitaxel Subsidiaries is a party or by which Vitaxel or any of the Vitaxel Subsidiaries is bound, and all assignments, amendments, modifications, extensions and supplements thereto (collectively, the “ Vitaxel Leases ”), the terms of which have been complied with by Vitaxel and any Vitaxel Subsidiary. The Vitaxel Real Property set forth in Section 2.19(a) of the Vitaxel Disclosure Letter comprises all of the real property necessary and/or currently used in the operations of the business of Vitaxel and the Vitaxel Subsidiaries. Except as set forth in Section 2.19(a) of the Vitaxel Disclosure Letter , neither Vitaxel nor any Vitaxel Subsidiary owns any real property.

 

(b)          A true, correct, complete and full execution copy of each Vitaxel Lease set forth in Section 2.19(a) of the Vitaxel Disclosure Letter has been made available to Parent. Except as set forth in Section 2.19(b)(i) of the Vitaxel Disclosure Letter , Vitaxel or Vitaxel Subsidiary’s interests in each of Vitaxel Leases are free and clear of all Encumbrances, other than Permitted Encumbrances, and each of Vitaxel Leases is in full force and effect and are free and clear of all Encumbrances, other than Permitted Encumbrances, and each of the Vitaxel Leases is in full force and effect. Except as set forth in Section 2.19(b)(ii) of the Vitaxel Disclosure Letter , neither Vitaxel nor any of the Vitaxel Subsidiaries nor, to the knowledge of Vitaxel, any other party to any Vitaxel Lease is in breach of or in default under (with or without notice or lapse of time or both), in any material respect, any of the Vitaxel Leases. Vitaxel and the Vitaxel Subsidiaries enjoy peaceful and undisturbed possession under all such Vitaxel Leases and have not received notice of any material default, delinquency or breach on the part of Vitaxel or any Vitaxel Subsidiary. For purposes of this Agreement, the term “ Permitted Encumbrances ” means (i) Encumbrances for water and sewer charges, Taxes or assessments and similar governmental charges or levies, which either are [A] not delinquent or [B] being contested in good faith and by appropriate proceedings, and adequate reserves have been established with respect thereto, (ii) other Encumbrances imposed by operation of Law (including mechanics’, couriers’, workers’, repairers’, materialmen’s, warehousemen’s, landlord’s and other similar Encumbrances) arising in the ordinary course of business for amounts which are not due and payable and as would not in the aggregate materially adversely affect the value of, or materially adversely interfere with the use of, the property subject thereto, (iii) Encumbrances incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other types of social security, (iv) Encumbrances on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business, (v) title of a lessor under a capital or operating lease and the terms and conditions of a lease creating any leasehold interest, (vi) Encumbrances arising under this Agreement or any ancillary agreement hereto, and (vii) such other imperfections in title as are not, in the aggregate, reasonably likely to result in a Vitaxel Material Adverse Effect or a Parent Material Adverse Effect (as defined below), as the case may be.

 

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(c)          All items of Personal Property which are owned, used or leased by Vitaxel or a Vitaxel Subsidiary with a book value or fair market value of greater than $250,000 are set forth in Section 2.19(c)(i) of the Vitaxel Disclosure Letter , along with, to the extent applicable, a list of leases, lease guarantees, agreements and documents related thereto, including all amendments, terminations and modifications thereof (“ Vitaxel Personal Property Leases ”). Except as set forth in Section 2.19(c)(ii) of the Vitaxel Disclosure Letter , all such items of Personal Property are in good operating condition and repair (reasonable wear and tear excepted consistent with the age of such items), and are suitable for their intended use in the business of Vitaxel or any Vitaxel Subsidiary. The operation of each of Vitaxel and the Vitaxel Subsidiaries’ respective business as it is now conducted or presently proposed to be conducted is not dependent upon the right to use the Personal Property of Persons other than a member of Vitaxel or any Vitaxel Subsidiary, except for such Personal Property that is owned by, leased, licensed or otherwise contracted to such entity. Vitaxel has provided to Parent a true and complete copy of each of the Vitaxel Personal Property Leases, and in the case of any oral Vitaxel Personal Property Lease, a written summary of the material terms of such Vitaxel Personal Property Lease. The Vitaxel Personal Property Leases are valid, binding and enforceable in accordance with their terms and are in full force and effect. No event has occurred which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default on the part of Vitaxel or any Vitaxel Subsidiary under any of the Vitaxel Personal Property Leases. Vitaxel has no knowledge of the occurrence of any event which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default by any other party under any of the Vitaxel Personal Property Leases, and neither Vitaxel nor any Vitaxel Subsidiary has received notice of any such condition. Neither Vitaxel nor any Vitaxel Subsidiary has waived any rights under any Vitaxel Personal Property Lease which would be in effect at or after the Closing. No event has occurred which either entitles, or would, on notice or lapse of time or both, entitle the other party to any Vitaxel Personal Property Lease with either Vitaxel or a Vitaxel Subsidiary to declare a default or to accelerate, or which does accelerate, the maturity of any obligations of Vitaxel or Vitaxel Subsidiary under any Vitaxel Personal Property Lease.

 

(d)          Except as set forth on Section 2.19(d) of the Vitaxel Disclosure Letter , Vitaxel and each Vitaxel Subsidiary has good and marketable title to, or a valid leasehold interest in or right to use, all of its assets, free and clear of all Encumbrances other than Permitted Encumbrances. The assets (including Intellectual Property rights and contractual rights) of Vitaxel and the Vitaxel Subsidiaries constitute all of the assets, rights and properties that are used in the operation of the businesses of Vitaxel and the Vitaxel Subsidiaries as they are now conducted and presently proposed to be conducted or that are used or held by Vitaxel and the Vitaxel Subsidiaries for use in the operation of the businesses of Vitaxel and the Vitaxel Subsidiaries, and taken together, are adequate and sufficient for the operation of the businesses of Vitaxel and the Vitaxel Subsidiaries as currently conducted and as presently proposed to be conducted.

 

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2.20         Employee Matters.

 

(a)          There are no Actions pending or, to the knowledge of Vitaxel, threatened involving Vitaxel or any Vitaxel Subsidiary and any of their respective employees or former employees (with respect to their status as an employee or former employee, as applicable) including any harassment, discrimination, retaliatory act or similar claim. To Vitaxel’s knowledge, since the dates of formation of Vitaxel and the Vitaxel Subsidiaries, there has been: (i) no labor union organizing or attempting to organize any employee of Vitaxel or any of the Vitaxel Subsidiaries into one or more collective bargaining units with respect to their employment with Vitaxel or any of the Vitaxel Subsidiaries; and (ii) no labor dispute, strike, work slowdown, work stoppage or lock out or other collective labor action by or with respect to any employees of Vitaxel or any of the Vitaxel Subsidiaries pending with respect to their employment with Vitaxel or any of the Vitaxel Subsidiaries or threatened against Vitaxel or any of the Vitaxel Subsidiaries. Neither Vitaxel nor any of the Vitaxel Subsidiaries is a party to, or bound by, any collective bargaining agreement or other agreement with any labor organization applicable to the employees of Vitaxel or any of the Vitaxel Subsidiaries and no such agreement is currently being negotiated.

 

(b)          Except as set forth in Section 2.20(b) of the Vitaxel Disclosure Letter , Vitaxel and the Vitaxel Subsidiaries (i) are in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, including Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations, and have not received written notice, or any other form of notice, that there is any Action involving unfair labor practices against Vitaxel or any of the Vitaxel Subsidiaries pending, (ii) are not liable for any material arrears of wages or any material penalty for failure to comply with any of the foregoing, and (iii) are not liable for any material payment to any trust or to any Governmental Authority, with respect to unemployment compensation benefits, social security or other benefits or obligations for employees, independent contractors or consultants (other than routine payments to be made in the ordinary course of business and consistent with past practice). There are no Actions pending or, to the knowledge of Vitaxel, threatened against Vitaxel or any Vitaxel Subsidiary brought by or on behalf of any applicant for employment, any current or former employee, any Person alleging to be a current or former employee, or any Governmental Authority, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment relationship.

 

(c)           Section 2.20(c) of the Vitaxel Disclosure Letter hereto sets forth a complete and accurate list of all significant employees of Vitaxel and the Vitaxel Subsidiaries showing for each as of that date (i) the employee’s name, job title or description, employer, location, salary level (including any bonus, commission, deferred compensation or other remuneration payable (other than any such arrangements under which payments are at the discretion of Vitaxel and the Vitaxel Subsidiaries)), (ii) any bonus, commission or other remuneration other than salary paid during the calendar year ended December 31, 2014 or the nine month period ended September 30, 2015, and (iii) any wages, salary, bonus, commission or other compensation due and owing to each significant employee for the calendar year ended December 31, 2014 or the nine month period ended September 30, 2015. Except as set forth on Section 2.20(c) of the Vitaxel Disclosure Letter , (A) no employee is a party to a written employment agreement or contract with Vitaxel or a Vitaxel Subsidiary and each is employed “at will”, and (B) each of Vitaxel and each Vitaxel Subsidiaries has paid in full to all such employees all wages, salaries, commission, bonuses and other compensation due to such employees, including overtime compensation, and there are no severance payments which are or could become payable by Vitaxel and the Vitaxel Subsidiaries to any such employees under the terms of any written or, to Vitaxel’s knowledge, oral agreement, or commitment or any Law, custom, trade or practice. Except as set forth in Section 2.20(c) of the Vitaxel Disclosure Letter , each such significant employee has entered into Vitaxel or the applicable Vitaxel Subsidiary’s standard form of employee non-disclosure, inventions and restrictive covenants agreement with Vitaxel or its Subsidiaries, a copy of which has been provided to Parent by Vitaxel.

 

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(d)           Section 2.20(d) of the Vitaxel Disclosure Letter contains a list of all significant independent contractors (including consultants) currently engaged by Vitaxel and the Vitaxel Subsidiaries, along with the position, the entity engaging such Person, date of retention and rate of remuneration, most recent increase (or decrease) in remuneration and amount thereof, for each such Person. Except as set forth on Schedule 2.20(d), all of such independent contractors are a party to a written agreement or contract with either Vitaxel or a Vitaxel Subsidiary. Each such independent contractor has entered into customary covenants regarding confidentiality, non-competition and assignment of inventions and copyrights in such Person’s agreement with either Vitaxel or a Vitaxel Subsidiary, a copy of which has been provided to Parent by Vitaxel. For the purposes of applicable Law, including the Code, all independent contractors who are currently, or within the last three (3) years have been, engaged by either Vitaxel or a Vitaxel Subsidiary are bona fide independent contractors and not employees of either Vitaxel or the Vitaxel Subsidiary. Each independent contractor is terminable on fewer than thirty (30) days’ notice, without any obligation of Vitaxel and the Vitaxel Subsidiaries to pay severance or a termination fee.

 

2.21         Environmental Matters.

 

Except as set forth in Section 2.21 of the Vitaxel Disclosure Letter :

 

(a)          Neither Vitaxel nor any of the Vitaxel Subsidiaries is the subject of any national, international, federal, state, local or foreign Order, judgment or written claim, and neither Vitaxel nor any of the Vitaxel Subsidiaries has received any written notice or claim, or entered into any negotiations or agreements with any Person, in each case that would impose a liability or obligation under any Environmental Law;

 

(b)          Vitaxel and the Vitaxel Subsidiaries are in compliance in all material respects with all applicable Environmental Laws;

 

(c)          Neither Vitaxel nor any of the Vitaxel Subsidiaries has manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or released any Hazardous Substance, or owned or operated any property or facility, in a manner that has given or would reasonably be expected to give rise to any liability or obligation under applicable Environmental Laws; and

 

(d)          Each of Vitaxel and the Vitaxel Subsidiaries holds and is in compliance in all material respects with all the Vitaxel Permits required to conduct its business and operations under all applicable Environmental Laws.

 

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2.22         Transactions with Affiliates.

 

Other than (i) for payment of salary and benefits for services rendered, (ii) reimbursement for expenses incurred on behalf of Vitaxel or any Vitaxel Subsidiary, (iii) for other employee benefits made generally available to all employees, (iv) with respect to any Person’s ownership of membership interests, capital stock or other securities of Vitaxel or any Vitaxel Subsidiary or such Person’s employment with Vitaxel or any Vitaxel Subsidiary, (v) as set forth in Section 2.22 of the Vitaxel Disclosure Letter , or (vi) as stated in the Vitaxel Financials, there are no contracts or arrangements (each, a “ Vitaxel Affiliate Transaction ”) that were in existence in the past three (3) years or are in existence as of the date of this Agreement under which there are any material existing or future liabilities or obligations between Vitaxel or any of the Vitaxel Subsidiaries, on the one hand, and, on the other hand, any (x) present manager, officer or director of either Vitaxel or any of the Vitaxel Subsidiaries or (y) record or beneficial owner of more than five percent (5%) of the outstanding Vitaxel Shares or more than five percent (5%) of the outstanding equity interest of any Vitaxel Subsidiary as of the date hereof (each of (x), (y) and (z), a “ Vitaxel Affiliate ,” and collectively, the “ Vitaxel Affiliates ”).

 

2.23         Insurance.

 

Section 2.23 of the Vitaxel Disclosure Letter sets forth a correct and complete list of all insurance policies issued in favor of Vitaxel or any Vitaxel Subsidiary, or pursuant to which Vitaxel, any Vitaxel Subsidiary or any of their respective directors and/or officers are a named insured or otherwise a beneficiary. With respect to each such insurance policy, (i) the policy is in full force and effect and all premiums due thereon have been paid and (ii) neither Vitaxel nor any Vitaxel Subsidiary is in any material respect, in breach of or default under, and neither Vitaxel nor any Vitaxel Subsidiary has taken any action or failed to take any action which, with notice or the lapse of time or both, would constitute such a breach or default, or permit termination or modification of, any such policy.

 

2.24         Books and Records.

 

All of the financial books and records of Vitaxel and the Vitaxel Subsidiaries are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws.

 

2.25         Accounts Receivable.

 

All accounts, notes and other receivables, whether or not accrued, and whether or not billed, of Vitaxel and/or the Vitaxel Subsidiaries, in accordance with GAAP (the “ Vitaxel Accounts Receivable ”) arose from sales actually made or services actually performed in the ordinary course of business and represent valid obligations to Vitaxel and/ or the Vitaxel Subsidiaries arising from their respective businesses. To Vitaxel’s knowledge, none of the Vitaxel Accounts Receivable are subject to any right of recourse, defense, deduction, return of goods, counterclaim, offset, or set off on the part of the obligor in excess of any amounts reserved therefore on the Vitaxel Financials.

 

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2.26         Investment Company Act.

 

Neither Vitaxel nor any Company Subsidiary is an “investment company” or a person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.

 

2.27         Information Supplied.

 

None of the information supplied or to be supplied by Vitaxel expressly for inclusion or incorporation by reference in any report, form, registration or other filing made with any Governmental Authority with respect to the transactions contemplated by this Agreement and/or ancillary document contemplated thereto at the date of filing, or any amendment thereto, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading (subject to the qualifications and limitations set forth in the materials provided by Vitaxel and the Vitaxel Subsidiaries or that is included in the SEC filings). None of the information supplied or to be supplied by Vitaxel and the Vitaxel Subsidiaries expressly for inclusion or incorporation by reference in any of the Signing Filing, the Signing Press Release, the Closing Filing and the Closing Press Release (each such capitalized term, as hereafter defined) (collectively, the “ Ancillary Public Disclosures ”) will, at the time filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading (subject to the qualifications and limitations set forth in the materials provided by Vitaxel and the Vitaxel Subsidiaries or that is included in the Ancillary Public Disclosures).

 

2.28         Disclosure.

 

No representations or warranties by Vitaxel in this Agreement (including the disclosure schedules hereto) or the ancillary documents contemplated thereto to which it is a party, (a) contains or will contain any untrue statement of a material fact, or (b) omits or will omit to state, when read in conjunction with all of the information contained in this Agreement, the disclosure schedules and ancillary documents hereto and thereto, any fact necessary to make the statements or facts contained therein not materially misleading.

 

article iii

 

REPRESENTATIONS AND WARRANTIES OF VIONMALL

 

Except as set forth in the disclosure letter delivered by Vionmall to Parent on the date hereof (the “ Vionmall Disclosure Letter ”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer ( provided , however , that an item disclosed in any Section of the Vionmall Disclosure Letter shall be deemed to have been disclosed on all other Sections of this Agreement (if such disclosure is in sufficient detail to make it readily apparent to a reasonable Person that such disclosure applies to the other Sections thereof to which such disclosure is responsive)), Vionmall represents and warrants to Parent as follows, on the date hereof and on the Closing Date:

 

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3.1           Due Organization and Good Standing.

 

Vionmall and each Subsidiary of Vionmall, (singly, a “ Vionmall Subsidiary ” and collectively, the “ Vionmall Subsidiaries ”) is a corporation, limited liability company or other entity, duly incorporated, formed, or organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, formation, or organization as set forth in Section 3.1 of the Vionmall Disclosure Letter and has all requisite corporate, limited liability, or other organizational power and authority to own, lease and operate its respective properties and to carry on its respective business as now being conducted. Vionmall and each Vionmall Subsidiary is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, all of which jurisdictions are listed on Section 3.1 of the Vionmall Disclosure Letter . Vionmall has heretofore made available to Parent accurate and complete copies of the certificate of incorporation, by-laws or equivalent organizational document of Vionmall (the “ Vionmall Organization Documents ”) and accurate and complete copies of the certificate of incorporation, by-laws or equivalent organizational document of each Vionmall Subsidiary, each as amended to date and as currently in effect (together with the Vionmall Organization Documents, the “ Vionmall Group Organization Documents ”). Neither Vionmall nor any Vionmall Subsidiary is in violation of any Vionmall Organization Documents.

 

3.2           Title to Securities; Capitalization.

 

(a)          The authorized share capital of Vionmall consists of 400,000 ordinary shares, RM 1.00, of which (the “ Vionmall Shares ”) 100,000 are issued and outstanding. All of the outstanding Vionmall Shares were duly authorized, validly issued, fully paid and nonassessable, free of Encumbrances and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the relevant law in the jurisdiction of incorporation, Vionmall Organization Documents or any contract to which Vionmall is a party or by which Vionmall is bound. There are no outstanding contractual obligations of Vionmall to repurchase, redeem or otherwise acquire any of the Vionmall Shares or any capital equity of Vionmall and there are no outstanding contractual obligations of Vionmall to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. None of the outstanding Vionmall Shares has been issued in violation of any applicable securities Laws.

 

(b)          Except as set forth in Section 3.2(b) of the Vionmall Disclosure Letter , there are no (i) outstanding options, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights, or (iii) except as expressly contemplated by this Agreement, subscriptions or other rights, agreements, arrangements, contracts or commitments of any character, relating to the issued or unissued capital equity of Vionmall or any Vionmall Subsidiary obligating Vionmall or any Vionmall Subsidiary to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options, equity securities or securities convertible into or exchangeable for such securities, or obligating Vionmall or any Vionmall Subsidiary to grant, extend or enter into any option, warrant, call, subscription or other right, agreement, arrangement or commitment for such securities.

 

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(c)          There are no registration rights and there is no voting trust, proxy, rights plan, shareholder’s agreement, anti-takeover plan or other contracts or understandings to which Vionmall or any Vionmall Subsidiary is a party or by which Vionmall, any Vionmall Subsidiary or any Vionmall Shareholder is bound with respect to any of the capital stock of Vionmall or any Vionmall Subsidiary. Except as set forth in this Agreement or disclosed in Section 3.2(c) of the Vionmall Disclosure Letter , as a result of the consummation of the Share Exchange, no shares of capital stock, warrants, options or other securities of Vionmall or any Vionmall Subsidiary are issuable and no rights in connection with any shares, warrants, rights, options or other securities of Vionmall or any Vionmall Subsidiary accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).

 

(d)          All Indebtedness of Vionmall and the Vionmall Subsidiaries are disclosed in Section 3.2(d) of the Vionmall Disclosure Letter . Except as disclosed therein, no Indebtedness of Vionmall or any of the Vionmall Subsidiaries contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by Vionmall or any of the Vionmall Subsidiaries, or (iii) the ability of Vionmall or any of the Vionmall Subsidiaries to grant any Encumbrance on its properties or assets.

 

(e)          Except as set forth in Section 3.2(e) of the Vionmall Disclosure Letter , since their respective formations, neither Vionmall nor any Vionmall Subsidiary has made, declared or paid any distribution or dividend and has not repurchased, redeemed or otherwise acquired any of its securities or equity interests, and no board of directors or other governing board of Vionmall or any Vionmall Subsidiary has authorized any of the foregoing.

 

(f)          Other than as set forth on Section 3.2(f) of the Vionmall Disclosure Letter , there are no options, warrants or other rights to subscribe for or purchase any equity interests of Vionmall or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any equity interests of Vionmall, or preemptive rights or rights of first refusal or first offer, nor are there any Contracts, commitments, arrangements or restrictions to which Vionmall or, to the knowledge of Vionmall, any of its stockholders is a party or bound relating to any equity securities of Vionmall, whether or not outstanding. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to Vionmall, nor are there any voting trusts, proxies, shareholder agreements or any other agreements or understandings with respect to the voting of Vionmall Stock. Except as set forth in Section 3.2(f) of the Vionmall Disclosure Letter , there are no outstanding contractual obligations of Vionmall to repurchase, redeem or otherwise acquire any equity interests or securities of Vionmall, nor has Vionmall granted any registration rights to any Person with respect to Vionmall’s equity securities. All of Vionmall’s securities have been granted, offered, sold and issued in compliance with all applicable foreign, state and federal securities Laws. As a result of the consummation of the transactions contemplated by this Agreement, no equity interests of Vionmall are issuable and no rights in connection with any interests, warrants, rights, options or other securities of Vionmall accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).

 

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3.3           Subsidiaries.

 

Section 3.3 of the Vionmall Disclosure Letter sets forth a true, complete and correct list of each Vionmall Subsidiary and their respective jurisdictions of incorporation, formation or organization. Except as otherwise set forth in Section 3.3 of the Vionmall Disclosure Letter , all of the capital stock and other equity interests of Vionmall Subsidiaries are owned, directly or indirectly, by Vionmall free and clear of any Encumbrance (other than any restriction under the applicable securities Laws) with respect thereto. All of the outstanding equity securities of each Vionmall Subsidiary are duly authorized and validly issued, were offered, sold and delivered in compliance with all applicable Laws governing the issuance of securities, fully paid and nonassessable. There are no contracts to which Vionmall or any of its Affiliates is a party or bound with respect to the voting (including voting trusts or proxies) of the equity interests of any Vionmall Subsidiary other than the Organizational Documents of any such Vionmall Subsidiary. There are no outstanding or authorized options, warrants, rights, agreements, subscriptions, convertible securities or commitments to which any Vionmall Subsidiary is a party or which are binding upon any Vionmall Subsidiary providing for the issuance or redemption of any equity interests of any Vionmall Subsidiary. There are no outstanding equity appreciation, phantom equity, profit participation or similar rights granted by any Vionmall Subsidiary. Except for the interests of Vionmall Subsidiaries listed in Section 3.3 of the Vionmall Disclosure Letter , Vionmall does not own or have any rights to acquire, directly or indirectly, any capital stock or other equity interests of any Person. Except as set forth in Section 3.3 of the Vionmall Disclosure Letter , none of Vionmall or the Vionmall Subsidiaries is a participant in any joint venture, partnership or similar arrangement. Except as set forth in Section 3.3 of the Vionmall Disclosure Letter , there are no outstanding contractual obligations of Vionmall or the Vionmall Subsidiaries to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person.

 

3.4           Authorization; Binding Agreement.

 

Vionmall has all requisite corporate power and authority to execute and deliver this Agreement and each other ancillary agreement related hereto to which it is a party, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each other ancillary agreement related hereto to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Vionmall Board, and no other corporate proceedings on the part of Vionmall are necessary to authorize the execution and delivery of this Agreement and each other ancillary agreement related hereto to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each ancillary agreement to which Vionmall is a party shall be when delivered, duly and validly executed and delivered by Vionmall and, assuming the due authorization, execution and delivery of this Agreement and such ancillary agreements by the other Parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of Vionmall, enforceable against Vionmall in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally, and the fact that equitable remedies or relief (including, but not limited to, the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “ Enforceability Exceptions ”).

 

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3.5           Governmental Approvals.

 

Except as otherwise described in Section 3.5 of the Vionmall Disclosure Letter , no consent, approval, waiver, authorization or permit of, or notice to or declaration or filing with (each, a “ Consent ”), any nation or government, any state or other political subdivision thereof, any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any governmental or regulatory authority, agency, department, board, commission, administration or instrumentality, any court, tribunal or arbitrator or any self-regulatory organization (each, a “ Governmental Authority ”), on the part of Vionmall or any of the Vionmall Subsidiaries is required to be obtained or made in connection with the execution, delivery or performance by Vionmall of this Agreement and each other ancillary agreement related hereto to which it is a party or the consummation by Vionmall of the transactions contemplated hereby and thereby, other than such filings as may be required in any jurisdiction where Vionmall or any Vionmall Subsidiary is qualified or authorized to do business as a foreign corporation in order to maintain such qualification or authorization.

 

3.6           No Violations.

 

Except as otherwise described in Section 3.6 of the Vionmall Disclosure Letter , the execution and delivery by Vionmall of this Agreement and each other ancillary agreement related hereto to which it is a party, the consummation by Vionmall of the transactions contemplated hereby and thereby, and compliance by Vionmall with any of the provisions hereof and thereof, will not, (i) conflict with or violate any provision of any Vionmall Organization Documents, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, amendment or acceleration) under, any Vionmall Material Contract (as defined below), (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by any Target under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result (immediately or with the passage of time or otherwise) in the creation or imposition of any Encumbrances (as hereafter defined) upon any of the properties, rights or assets of Vionmall or any of the Vionmall Subsidiaries, or (viii) subject to obtaining the Consents from Governmental Authorities referred to in Section 3.5 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such consent, approval, authorization or waiver having been satisfied, conflict with or violate any foreign, federal, state or local Order, statute, law, rule, regulation, ordinance, principle of common law, constitution, treaty enacted, or any writ, arbitration award, injunction, directive, judgment, or decree, promulgated, issued, enforced or entered by any Governmental Authority (each, a “ Law ” and collectively, the “ Laws ”) to which Vionmall or any of the Vionmall Subsidiaries or any of their respective assets or properties is subject.

 

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3.7           Record Keeping.

 

(a)          Vionmall and each Vionmall Subsidiary maintains accurate books and records reflecting its assets and liabilities and maintains proper and adequate internal accounting controls that provide reasonable assurance that (i) such Person does not maintain any off-the-book accounts and that such Person’s assets are used only in accordance with such Person’s management directives, (ii) transactions are executed with management’s authorization, (iii) transactions are recorded as necessary to permit preparation of the financial statements of such Person and to maintain accountability for such Person’s assets, (iv) access to such Person’s assets is permitted only in accordance with management’s authorization, (v) the reporting of such Person’s assets is compared with existing assets at regular intervals and verified for actual amounts and (vi) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection of accounts, notes and other receivables on a current and timely basis. Neither Vionmall nor any Vionmall Subsidiary has been subject to or involved in any material fraud that involves management or other employees who have a significant role in the internal controls over financial reporting of Vionmall and its Subsidiaries. Since their respective formations, neither Vionmall nor any Vionmall Subsidiary, or any of their Representatives, or any auditor or accountant of Vionmall or the Vionmall Subsidiaries has received any written complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of Vionmall or any Vionmall Subsidiary or their respective internal accounting controls, including any complaint, allegation, assertion or claim that Vionmall or any Vionmall Subsidiary has engaged in questionable accounting or auditing practices. No employee and no member of the Vionmall Board nor any attorney representing Vionmall or any Vionmall Subsidiary, whether or not employed by Vionmall or any Vionmall Subsidiary, has ever received written notice from any Governmental Authority or any Person of any violation of consumer protection, insurance or securities Laws, breach of fiduciary duty or similar violation by Vionmall, the Vionmall Subsidiaries or any of their respective officers, managers, directors, employees or agents or reported written evidence of any such violation to the Vionmall Board or any committee thereof or to any director or executive officer of the Vionmall or any Vionmall Subsidiary.

 

(b)          Neither Vionmall nor any Vionmall Subsidiary has ever been subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act.

 

3.8           Absence of Certain Changes.

 

From its inception in September 2015 through the date hereof, except as described in Section 3.8 of the Vionmall Disclosure Letter and as expressly contemplated by this Agreement, Vionmall and the Vionmall Subsidiaries have conducted their respective businesses in the ordinary course of business and there has not been any fact, change, effect, occurrence, event, development or state of circumstances that has had or would reasonably be expected to result in a Vionmall Material Adverse Effect.

 

3.9           Absence of Undisclosed Liabilities.

 

Neither Vionmall nor any Vionmall Subsidiary is subject to any material liabilities or obligations other than (i) liabilities or obligations reflected in Section 3.9 of the Vionmall Disclosure Letter , and (ii) liabilities or obligations under the payment terms of Vionmall Material Contracts (but not including liabilities for breaches or for indemnification obligations thereunder), except, in each case, for immaterial liabilities or obligations.

 

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3.10         Compliance with Laws.

 

Except as set forth in Section 3.10 of the Vionmall Disclosure Letter , neither Vionmall nor any of the Vionmall Subsidiaries are in conflict with, or in default or violation of, nor has it received, since their respective formations, any written notice of any conflict with, or default or violation of, (A) any applicable Law by which it or any property or asset of Vionmall or any Vionmall Subsidiary is bound or affected, including, without limitation, consumer protection, insurance or securities Laws, or (B) any Vionmall Material Contract.

 

3.11         Regulatory Agreements; Permits.

 

(a)          Except as disclosed in Section 3.11(a) of the Vionmall Disclosure Letter , there are no material written agreements, memoranda of understanding, commitment letters, or Orders to which Vionmall or any Vionmall Subsidiary is a party, on the one hand, and any Governmental Authority is a party or addressee, on the other hand.

 

(b)          Except as disclosed in Section 3.11(b) of the Vionmall Disclosure Letter , each of Vionmall, the Vionmall Subsidiaries, and each employee of Vionmall or any Vionmall Subsidiary who is legally required to be licensed by a Governmental Authority in order to perform his or her duties with respect to his or her employment with Vionmall or such Vionmall Subsidiary, hold all material permits, licenses, franchises, grants, authorizations, consents, exceptions, variances, exemptions, orders and other authorizations of Governmental Authorities, certificates, consents and approvals necessary to lawfully conduct Vionmall’s or the Vionmall Subsidiaries’ respective business as presently conducted, and to own, lease and operate Vionmall’s or the Vionmall Subsidiaries’ respective assets and properties (collectively, the “ Vionmall Permits ”), except for any such permits, licenses, franchises, grants, authorizations, consents, exceptions, variances, exemptions, certificates and approvals, the failure of which to obtain would not be reasonably expected to result in a Vionmall Material Adverse Effect. Vionmall has made available to Parent true, correct and complete copies of all material Vionmall Permits. All of the Vionmall Permits are in full force and effect, and no suspension or cancellation of any of Vionmall Permits is pending or, to Vionmall’s knowledge, threatened. Neither Vionmall nor any Vionmall Subsidiary is in violation in any material respect with the terms of any Vionmall Permit.

 

3.12         Litigation.

 

Except as disclosed in Section 3.12(a) of the Vionmall Disclosure Letter , there is no material private, regulatory or governmental inquiry, action, suit, proceeding, litigation, claim, arbitration or investigation pending by or before any Governmental Authority (each, an “ Action ”), or, to the knowledge of Vionmall, threatened against Vionmall, any of the Vionmall Subsidiaries or any of their respective properties, rights or assets or any of their respective managers, officers or directors (in their capacities as such). There is no decree, directive, order, writ, judgment, stipulation, determination, decision, award, injunction, temporary restraining order, cease and desist order or other order by, or any supervisory agreement or memorandum of understanding with any Governmental Authority (each, an “ Order ”) binding against Vionmall, any of the Vionmall Subsidiaries or any of their respective properties, rights or assets or any of their respective managers, officers or directors (in their capacities as such) that would prohibit, prevent, enjoin, restrict or alter or delay any of the transactions contemplated by this Agreement. Vionmall and the Vionmall Subsidiaries are in compliance with all Orders, except for any non-compliance which would not reasonably be expected to result in a Vionmall Material Adverse Effect. Except as disclosed in Section 3.12(b) of the Vionmall Disclosure Letter , there is no material Action that Vionmall or any of the Vionmall Subsidiaries has pending against other parties. There is no Action pending or, to the knowledge of Vionmall, threatened against Vionmall or any Vionmall Subsidiary involving a claim against Vionmall or any Vionmall Subsidiary for false advertising with respect to any of Vionmall’s or any Vionmall Subsidiary’s products or services. Since the dates of formation of Vionmall and the Vionmall Subsidiaries, none of the current or former officers, managers or directors of any of Vionmall or the Vionmall Subsidiaries have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.

 

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3.13         Restrictions on Business Activities.

 

There is no Order binding upon Vionmall or any of the Vionmall Subsidiaries that has or would reasonably be expected to have the effect of prohibiting, preventing, restricting or impairing in any respect, any business practice of Vionmall or any of the Vionmall Subsidiaries as their businesses are currently conducted, any acquisition of property by Vionmall or any of the Vionmall Subsidiaries, the conduct of business by Vionmall or any of the Vionmall Subsidiaries as currently conducted, or the ability of Vionmall or any Vionmall Subsidiary to compete with other parties.

 

3.14         Material Contracts.

 

(a)           Section 3.14(a) of the Vionmall Disclosure Letter sets forth a true, correct and complete list of, and Vionmall has made available to Parent, true, correct and complete copies of, each material written contract, agreement, commitment, arrangement, lease, license, or plan and each other instrument in effect to which Vionmall or any Vionmall Subsidiary is a party or by which Vionmall, any Vionmall Subsidiary, or any of their respective properties or assets are bound or affected, in each case as of the date hereof (each, a “ Vionmall Material Contract ”) that:

 

(i)          contains covenants that materially limit the ability of Vionmall or any Vionmall Subsidiary (A) to compete in any line of business or with any Person or in any geographic area or to sell, or provide any service or product or solicit any Person, including any non-competition covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or (B) to purchase or acquire an interest in any other Person;

 

(ii)         involves any joint venture, partnership, limited liability company or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture;

 

(iii)        involves any exchange traded, over the counter or other swap, cap, floor, collar, futures, contract, forward contract, option or other derivative financial instrument or contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest rates, foreign currency and indices;

 

(iv)        evidences Indebtedness (whether incurred, assumed, guaranteed or secured by any asset) having an outstanding principal amount in excess of $50,000;

 

(v)         involves the acquisition or disposition (to the extent such transaction would be consummated after the date hereof), directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $50,000 (other than in the ordinary course of business) or capital stock or other equity interests of another Person;

 

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(vi)        by its terms calls for aggregate payments by Vionmall or any Vionmall Subsidiary under such contract of more than $50,000 per year or $200,000 in the aggregate over the length of the contract;

 

(vii)       with respect to any acquisition or disposition of another Person, pursuant to which Vionmall or any Vionmall Subsidiary has (A) any continuing indemnification obligations in excess of $50,000 or (B) any “earn out” or other contingent payment obligations;

 

(viii)      relates to any merger, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity or its business or material assets or the sale of Vionmall, any Vionmall Subsidiary, their businesses or material assets;

 

(ix)         obligates Vionmall or any Vionmall Subsidiary to provide continuing indemnification or a guarantee of obligations of a third party after the date hereof in excess of $50,000;

 

(x)          is between Vionmall or any Vionmall Subsidiary and any of their respective directors, executive officers, shareholders or Affiliates, including all non-competition, severance and indemnification agreements;

 

(xi)         relates to a material settlement entered into within three (3) years prior to the date of this Agreement or under which Vionmall or any Vionmall Subsidiary has outstanding obligations (other than customary confidentiality obligations);

 

(xii)        provides another Person (other than Vionmall or any Vionmall Subsidiary) with a power of attorney;

 

(xiii)       obligates Vionmall or any Vionmall Subsidiary to make any capital commitment or expenditure in excess of $50,000 (including pursuant to any joint venture);

 

(xiv)      relates to the development, ownership, licensing or use of any Intellectual Property material to the business of Vionmall or any Vionmall Subsidiary; or

 

(xv)       is otherwise material to Vionmall or any Vionmall Subsidiary or outside of the ordinary course of business of Vionmall or any Vionmall Subsidiary and not described in clauses (i) through (xiv) above.

 

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(b)          Except as disclosed in Section 3.14(b) of the Vionmall Disclosure Letter , with respect to each Vionmall Material Contract: (i) such Vionmall Material Contract is valid and binding and enforceable in all respects against Vionmall or the Vionmall Subsidiary party thereto (subject to Enforceability Exceptions) and, to Vionmall’s knowledge, the other party thereto, and other than such contracts that have expired by their terms, are in full force and effect; (ii) the consummation of the transactions contemplated by this Agreement will not affect the validity or enforceability of the Vionmall Material Contract against Vionmall or such Vionmall Subsidiary and, to Vionmall’s knowledge, the other party thereto; (iii) neither Vionmall nor any Vionmall Subsidiary is in breach or default in any respect, and no event has occurred that with the passage of time or giving of notice or both would constitute a breach or default by Vionmall or any Vionmall Subsidiary, or permit termination or acceleration by the other party thereto, under such Vionmall Material Contract; (iv) to Vionmall’s knowledge, no other party to such Vionmall Material Contract is in breach or default in any respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by Vionmall or any of the Vionmall Subsidiaries, under such Vionmall Material Contract, (v) no other party to such Vionmall Material Contract has notified Vionmall or any Vionmall Subsidiary in writing that it is terminating or considering terminating the handling of its business by Vionmall or any Vionmall Subsidiary or in respect of any particular product, project or service of Vionmall or any Vionmall Subsidiary, or is planning to materially reduce its future business with Vionmall or any Vionmall Subsidiary in any manner; and (vi) neither Vionmall nor any Vionmall Subsidiary has waived any rights under such Vionmall Material Contract.

 

3.15         Intellectual Property.

 

(a)           Section 3.15(a)(i) of the Vionmall Disclosure Letter contains a list of: (i) all right, title and interest in and to all registered Intellectual Property and Intellectual Property that is the subject of a pending application for registration in each case that is, owned by Vionmall or any of the Vionmall Subsidiaries and is material to the business of Vionmall or any Vionmall Subsidiary as currently conducted (“ Vionmall Intellectual Property ”); and (ii) all material Intellectual Property that is licensed to Vionmall or any of the Vionmall Subsidiaries and is material to the business of Vionmall or any Vionmall Subsidiaries (“ Vionmall Licensed Intellectual Property ”). Each of Vionmall and the Vionmall Subsidiaries (x) has all right, title and interest in and to Vionmall Intellectual Property owned by it, free and clear of all Encumbrances, other than rights and interest licensed to any other Person and Permitted Encumbrances, and (y) has valid rights to use the Vionmall Licensed Intellectual Property. Except as set forth in Section 3.15(a)(ii) of the Vionmall Disclosure Letter , neither Vionmall nor any of the Vionmall Subsidiaries has received any written notice alleging that it has infringed, diluted or misappropriated, or, by conducting its business as currently conducted, has infringed, diluted or misappropriated, the Intellectual Property rights of any Person and, except as set forth in Section 3.15(a)(iii) of the Vionmall Disclosure Letter , to the knowledge of Vionmall, there is no valid basis for any such allegation. Except as set forth in Section 3.15(a)(iv) of the Vionmall Disclosure Letter , neither the execution nor delivery of this Agreement nor the consummation of the transactions contemplated hereby will materially impair or materially alter Vionmall’s or any Vionmall Subsidiary’s rights to any Vionmall Intellectual Property or Vionmall Licensed Intellectual Property. All of Vionmall Intellectual Property and the license rights to the Vionmall Licensed Intellectual Property are valid, enforceable and subsisting and, as of the date hereof, there is no material Action that is pending or, to Vionmall’s knowledge, threatened that challenges the rights of Vionmall or any of the Vionmall Subsidiaries to any Vionmall Intellectual Property or Vionmall Licensed Intellectual Property or the validity, enforceability or effectiveness thereof. Vionmall Intellectual Property and the Vionmall Licensed Intellectual Property constitute all material Intellectual Property owned by or licensed to Vionmall or the Vionmall Subsidiaries and used in or necessary for the operation by Vionmall and the Vionmall Subsidiaries of their respective businesses as currently conducted. Neither Vionmall nor any of the Vionmall Subsidiaries is in breach or default (or would with the giving of notice or lapse of time or both be in such breach or default) under any license to use any of the Vionmall Licensed Intellectual Property.

 

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(b)          For purposes of this Agreement, “ Intellectual Property ” means (i) United States, international and foreign patents and patent applications, including divisionals, continuations, continuations-in-part, reissues, reexaminations and extensions thereof and counterparts claiming priority therefrom; utility models; invention disclosures; and statutory invention registrations and certificates; (ii) United States and foreign registered, pending and unregistered trademarks, service marks, trade dress, logos, trade names, corporate names and other source identifiers, domain names and registrations and applications for registration for any of the foregoing, together with all of the goodwill associated therewith; (iii) United States and foreign copyrights, and registrations and applications for registration thereof; and copyrightable works, including website content; (iv) all inventions and design rights (whether patentable or unpatentable) and all categories of trade secrets as defined in the Uniform Trade Secrets Act, including business, technical and financial information; and (v) confidential and proprietary information including, without limitation, know-how, recipes and formulas.

 

3.16         Employee Benefit Plans.

 

(a)           Section 3.16(a) of the Vionmall Disclosure Letter lists, with respect to Vionmall and the Vionmall Subsidiaries, (i) all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)), (ii) material loans from Vionmall or any of the Vionmall Subsidiaries to officers and directors other than advances for expense reimbursements incurred in the ordinary course of business, (iii) any securities option, securities stock purchase, phantom securities, securities appreciation right, equity-related, supplemental retirement, severance, sabbatical, medical, dental, vision care, disability, employee relocation, cafeteria benefit (Code section 125) or dependent care (Code Section 129), life insurance or accident insurance plans, programs, agreements or arrangements, (iv) all bonus, pension, retirement, profit sharing, savings, deferred compensation or incentive plans, programs, policies, agreements or arrangements, (v) other material fringe, perquisite, or employee benefit plans, programs, policies, agreements or arrangements, and (vi) any current or former employment, change of control, retention or executive compensation, termination or severance plans, programs, policies, collective bargaining, agreements or arrangements, written or otherwise, as to which material unsatisfied liabilities or obligations, contingent or otherwise, remain for the benefit of, or relating to, any present or former employee, consultant, manager or director, or which could reasonably be expected to have any material liabilities or obligations (together, the “ Vionmall Benefit Plans ”). The term Vionmall Benefit Plans also includes all benefit plans subject to Title IV of ERISA in connection with which any trade or business (whether or not incorporated) that is treated as a single employer with Vionmall and the Vionmall Subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the Code (a “ Vionmall ERISA Affiliate ”) may have any liability.

 

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(b)          Other than as would not reasonably be expected to result in a Vionmall Material Adverse Effect, (i) there has been no “prohibited transaction,” as such term is defined in Section 406 of ERISA and Section 4975 of the Code, by Vionmall, by any Vionmall Subsidiary, or by any trusts created thereunder, any trustee or administrator thereof or any other Person, with respect to any Vionmall Benefit Plan, (ii) each Vionmall Benefit Plan has been administered in material accordance with its terms and in compliance with the requirements prescribed by any and all applicable Laws (including ERISA and the Code), (iii) Vionmall and each Vionmall ERISA Affiliate have performed all obligations required to be performed by them under, are not in any respect in default under or violation of, and have no knowledge of any default or violation by any other party to, any Vionmall Benefit Plans that are subject to Title IV of ERISA, and (iv) all contributions and premiums required to be made by Vionmall or any Vionmall ERISA Affiliate to any Vionmall Benefit Plan have been made on or before their due dates, including any legally permitted extensions.

 

(c)          Except as disclosed in Section 3.16(c) of the Vionmall Disclosure Letter , or as otherwise provided in this Agreement, any ancillary agreement related hereto or as provided by applicable Law, with respect to Vionmall Benefit Plans, the consummation of the transactions contemplated by this Agreement and any ancillary agreement related hereto to which Vionmall is a party, will not, either alone or in combination with any other event or events, (i) entitle any current or former employee, manager, director or consultant of Vionmall or any of the Vionmall Subsidiaries to any payment of severance pay, golden parachute payments, or bonuses, (ii) accelerate, forgive indebtedness, vest, distribute, or increase benefits or obligations to fund benefits with respect to any employee or director of Vionmall or any of the Vionmall Subsidiaries, or (iii) accelerate the time of payment or vesting of options to purchase securities of Vionmall, or increase the amount of compensation due any such employee, director or consultant.

 

(d)          None of Vionmall Benefit Plans contains any provision requiring a gross-up pursuant to Section 280G or 409A of the Code or similar Tax provisions.

 

(e)          No Vionmall Benefit Plan maintained by Vionmall or any of the Vionmall Subsidiaries provides material benefits, including death or medical benefits (whether or not insured), with respect to current or former employees of Vionmall or any of the Vionmall Subsidiaries after termination of employment (other than (i) coverage mandated by applicable Laws, (ii) death benefits or retirement benefits under any “employee pension benefit plan,” as that term is defined in Section 3(2) of ERISA, or (iii) benefits, the full direct cost of which is borne by the current or former employee (or beneficiary thereof)).

 

(f)          Neither Vionmall nor any Vionmall ERISA Affiliate has any liability with respect to any (i) employee pension benefit plan that is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code, (ii) “multiemployer plan” as defined in Section 3(37) of ERISA or (iii) “multiple employer plan” within the meaning of Sections 4063 and 4064 of ERISA or Section 413(c) of the Code.

 

(g)          Except as set forth in Section 3.16(g) of the Vionmall Disclosure Letter , no Vionmall Benefit Plan is maintained outside the jurisdiction of the United States (any such Vionmall Benefit Plan set forth in Section 3.16(g) of the Vionmall Disclosure Schedule, “ Vionmall Foreign Benefit Plans ”). All Vionmall Foreign Benefit Plans have been established, maintained and administered in compliance in all material respects with their terms and all applicable statutes, laws, ordinances, rules, orders, decrees, judgments, writs, and regulations of any controlling governmental authority or instrumentality and all Vionmall Foreign Benefit Plans that are required to be funded are fully funded, and with respect to all other Vionmall Foreign Benefit Plans, adequate reserves therefor have been established in accordance with applicable foreign accounting standards on the accounting statements of the applicable Vionmall or Vionmall Subsidiary entity.

 

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3.17         Taxes and Returns.

 

(a)          Vionmall has or will have timely filed, or caused to be timely filed, all material federal, state, local and foreign Tax returns and reports required to be filed by Vionmall or any Vionmall Subsidiary (taking into account all available extensions) (collectively, “ Tax Returns ”), which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld.

 

(b)           Section 3.17(b) of the Vionmall Disclosure Letter sets forth each jurisdiction where Vionmall and each Vionmall Subsidiary files or is required to file a Tax Return.

 

(c)          Neither Vionmall nor any of the Vionmall Subsidiaries is being audited by any taxing authority or has been notified by any Tax authority that any such audit is contemplated or pending.

 

(d)          There are no material claims, assessments, audits, examinations, investigations or other proceedings pending against Vionmall or any of the Vionmall Subsidiaries in respect of any Tax, and neither Vionmall nor any of the Vionmall Subsidiaries has been notified in writing of any proposed Tax claims or assessments against Vionmall or any of the Vionmall Subsidiaries.

 

(e)          There are no Encumbrances with respect to any Taxes upon any of Vionmall’s or the Vionmall Subsidiaries’ assets, other than Taxes, the payment of which is not yet due.

 

(f)          Neither Vionmall nor any of the Vionmall Subsidiaries has any outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by Vionmall or any of the Vionmall Subsidiaries for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.

 

(g)          Neither Vionmall nor any of the Vionmall Subsidiaries has made any change in accounting method or received a ruling from, or signed an agreement with, any taxing authority that would reasonably be expected to have a material impact on Taxes following the Closing.

 

(h)          Neither Vionmall nor any of the Vionmall Subsidiaries participated in, or sold, distributed or otherwise promoted, any “reportable transaction,” as defined in Treasury Regulation section 1.6011-4.

 

(i)          Neither Vionmall nor any Vionmall Subsidiary has any liability or potential liability for the Taxes of another Person (i) under any applicable Tax Law, (ii) as a transferee or successor, or (iii) by contract, indemnity or otherwise.

 

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(j)          Neither Vionmall nor any Vionmall Subsidiary is a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement, arrangement or practice with respect to material Taxes (including advance pricing agreement, closing agreement or other agreement relating to Taxes with any taxing authority) that will be binding on Vionmall or any Vionmall Subsidiary with respect to any period following the Closing Date.

 

(k)          Neither Vionmall nor any Vionmall Subsidiary has requested or is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any taxing authority with respect to any material Taxes, nor is any such request outstanding.

 

(l)          For purposes of this Agreement, the term “ Tax ” or “ Taxes ” shall mean any tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, imposed by any Governmental Authority (including any federal, state, local, foreign or provincial income, gross receipts, property, sales, use, net worth, premium, license, excise, franchise, employment, payroll, social security, workers compensation, unemployment compensation, alternative or added minimum, ad valorem, transfer or excise tax) together with any interest, addition or penalty imposed thereon.

 

3.18         Finders and Investment Bankers.

 

Except as set forth in Section 3.18 of the Vionmall Disclosure Letter , neither Vionmall nor any Vionmall Subsidiary has incurred, nor will they incur, any liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of any member of Vionmall or any Vionmall Subsidiary.

 

3.19         Title to Properties; Assets.

 

(a)           Section 3.19(a) of the Vionmall Disclosure Letter contains a correct and complete list, of all real property and interests in real property leased or subleased by or for the benefit of Vionmall or any of the Vionmall Subsidiaries from or to any Person (collectively, the “ Vionmall Real Property ”). The list set forth in Section 3.19(a)(i) of the Vionmall Disclosure Letter contains, with respect to each of Vionmall Real Properties, all existing leases, subleases, licenses, guarantees or other occupancy contracts to which Vionmall or any of the Vionmall Subsidiaries is a party or by which Vionmall or any of the Vionmall Subsidiaries is bound, and all assignments, amendments, modifications, extensions and supplements thereto (collectively, the “ Vionmall Leases ”), the terms of which have been complied with by Vionmall and any Vionmall Subsidiary. The Vionmall Real Property set forth in Section 3.19(a) of the Vionmall Disclosure Letter comprises all of the real property necessary and/or currently used in the operations of the business of Vionmall and the Vionmall Subsidiaries. Except as set forth in Section 3.19(a) of the Vionmall Disclosure Letter , neither Vionmall nor any Vionmall Subsidiary owns any real property.

 

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(b)          A true, correct, complete and full execution copy of each Vionmall Lease set forth in Section 3.19(a) of the Vionmall Disclosure Letter has been made available to Parent. Except as set forth in Section 3.19(b)(i) of the Vionmall Disclosure Letter , Vionmall or Vionmall Subsidiary’s interests in each of Vionmall Leases are free and clear of all Encumbrances, other than Permitted Encumbrances, and each of Vionmall Leases is in full force and effect and are free and clear of all Encumbrances, other than Permitted Encumbrances, and each of the Vionmall Leases is in full force and effect. Except as set forth in Section 3.19(b)(ii) of the Vionmall Disclosure Letter , neither Vionmall nor any of the Vionmall Subsidiaries nor, to the knowledge of Vionmall, any other party to any Vionmall Lease is in breach of or in default under (with or without notice or lapse of time or both), in any material respect, any of the Vionmall Leases. Vionmall and the Vionmall Subsidiaries enjoy peaceful and undisturbed possession under all such Vionmall Leases and have not received notice of any material default, delinquency or breach on the part of Vionmall or any Vionmall Subsidiary. For purposes of this Agreement, the term “ Permitted Encumbrances ” means (i) Encumbrances for water and sewer charges, Taxes or assessments and similar governmental charges or levies, which either are [A] not delinquent or [B] being contested in good faith and by appropriate proceedings, and adequate reserves have been established with respect thereto, (ii) other Encumbrances imposed by operation of Law (including mechanics’, couriers’, workers’, repairers’, materialmen’s, warehousemen’s, landlord’s and other similar Encumbrances) arising in the ordinary course of business for amounts which are not due and payable and as would not in the aggregate materially adversely affect the value of, or materially adversely interfere with the use of, the property subject thereto, (iii) Encumbrances incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other types of social security, (iv) Encumbrances on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business, (v) title of a lessor under a capital or operating lease and the terms and conditions of a lease creating any leasehold interest, (vi) Encumbrances arising under this Agreement or any ancillary agreement hereto, and (vii) such other imperfections in title as are not, in the aggregate, reasonably likely to result in a Vionmall Material Adverse Effect or a Parent Material Adverse Effect (as defined below), as the case may be.

 

(c)          All items of Personal Property which are owned, used or leased by Vionmall or a Vionmall Subsidiary with a book value or fair market value of greater than $250,000 are set forth in Section 3.19(c)(i) of the Vionmall Disclosure Letter , along with, to the extent applicable, a list of leases, lease guarantees, agreements and documents related thereto, including all amendments, terminations and modifications thereof (“ Vionmall Personal Property Leases ”). Except as set forth in Section 3.19(c)(ii) of the Vionmall Disclosure Letter , all such items of Personal Property are in good operating condition and repair (reasonable wear and tear excepted consistent with the age of such items), and are suitable for their intended use in the business of Vionmall or any Vionmall Subsidiary. The operation of each of Vionmall and the Vionmall Subsidiaries’ respective business as it is now conducted or presently proposed to be conducted is not dependent upon the right to use the Personal Property of Persons other than a member of Vionmall or any Vionmall Subsidiary, except for such Personal Property that is owned by, leased, licensed or otherwise contracted to such entity. Vionmall has provided to Parent a true and complete copy of each of the Vionmall Personal Property Leases, and in the case of any oral Vionmall Personal Property Lease, a written summary of the material terms of such Vionmall Personal Property Lease. The Vionmall Personal Property Leases are valid, binding and enforceable in accordance with their terms and are in full force and effect. No event has occurred which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default on the part of Vionmall or any Vionmall Subsidiary under any of the Vionmall Personal Property Leases. Vionmall has no knowledge of the occurrence of any event which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default by any other party under any of the Vionmall Personal Property Leases, and neither Vionmall nor any Vionmall Subsidiary has received notice of any such condition. Neither Vionmall nor any Vionmall Subsidiary has waived any rights under any Vionmall Personal Property Lease which would be in effect at or after the Closing. No event has occurred which either entitles, or would, on notice or lapse of time or both, entitle the other party to any Vionmall Personal Property Lease with either Vionmall or a Vionmall Subsidiary to declare a default or to accelerate, or which does accelerate, the maturity of any obligations of Vionmall or Vionmall Subsidiary under any Vionmall Personal Property Lease.

 

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(d)          Except as set forth on Section 3.19(d) of the Vionmall Disclosure Letter , Vionmall and each Vionmall Subsidiary has good and marketable title to, or a valid leasehold interest in or right to use, all of its assets, free and clear of all Encumbrances other than Permitted Encumbrances. The assets (including Intellectual Property rights and contractual rights) of Vionmall and the Vionmall Subsidiaries constitute all of the assets, rights and properties that are used in the operation of the businesses of Vionmall and the Vionmall Subsidiaries as they are now conducted and presently proposed to be conducted or that are used or held by Vionmall and the Vionmall Subsidiaries for use in the operation of the businesses of Vionmall and the Vionmall Subsidiaries, and taken together, are adequate and sufficient for the operation of the businesses of Vionmall and the Vionmall Subsidiaries as currently conducted and as presently proposed to be conducted.

 

3.20         Employee Matters.

 

(a)          There are no Actions pending or, to the knowledge of Vionmall, threatened involving Vionmall or any Vionmall Subsidiary and any of their respective employees or former employees (with respect to their status as an employee or former employee, as applicable) including any harassment, discrimination, retaliatory act or similar claim. To Vionmall’s knowledge, since the dates of formation of Vionmall and the Vionmall Subsidiaries, there has been: (i) no labor union organizing or attempting to organize any employee of Vionmall or any of the Vionmall Subsidiaries into one or more collective bargaining units with respect to their employment with Vionmall or any of the Vionmall Subsidiaries; and (ii) no labor dispute, strike, work slowdown, work stoppage or lock out or other collective labor action by or with respect to any employees of Vionmall or any of the Vionmall Subsidiaries pending with respect to their employment with Vionmall or any of the Vionmall Subsidiaries or threatened against Vionmall or any of the Vionmall Subsidiaries. Neither Vionmall nor any of the Vionmall Subsidiaries is a party to, or bound by, any collective bargaining agreement or other agreement with any labor organization applicable to the employees of Vionmall or any of the Vionmall Subsidiaries and no such agreement is currently being negotiated.

 

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(b)          Except as set forth in Section 3.20(b) of the Vionmall Disclosure Letter , Vionmall and the Vionmall Subsidiaries (i) are in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, including Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations, and have not received written notice, or any other form of notice, that there is any Action involving unfair labor practices against Vionmall or any of the Vionmall Subsidiaries pending, (ii) are not liable for any material arrears of wages or any material penalty for failure to comply with any of the foregoing, and (iii) are not liable for any material payment to any trust or to any Governmental Authority, with respect to unemployment compensation benefits, social security or other benefits or obligations for employees, independent contractors or consultants (other than routine payments to be made in the ordinary course of business and consistent with past practice). There are no Actions pending or, to the knowledge of Vionmall, threatened against Vionmall or any Vionmall Subsidiary brought by or on behalf of any applicant for employment, any current or former employee, any Person alleging to be a current or former employee, or any Governmental Authority, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment relationship.

 

(c)           Section 3.20(c) of the Vionmall Disclosure Letter hereto sets forth a complete and accurate list of all significant employees of Vionmall and the Vionmall Subsidiaries showing for each as of that date (i) the employee’s name, job title or description, employer, location, salary level (including any bonus, commission, deferred compensation or other remuneration payable (other than any such arrangements under which payments are at the discretion of Vionmall and the Vionmall Subsidiaries)), (ii) any bonus, commission or other remuneration other than salary paid during the calendar year ended May 31, 2014 or the six month period ended November 30, 2014, and (iii) any wages, salary, bonus, commission or other compensation due and owing to each significant employee for the calendar year ended May 31, 2014 or the six month period ended November 30, 2014. Except as set forth on Section 3.20(c) of the Vionmall Disclosure Letter , (A) no employee is a party to a written employment agreement or contract with Vionmall or a Vionmall Subsidiary and each is employed “at will”, and (B) each of Vionmall and each Vionmall Subsidiaries has paid in full to all such employees all wages, salaries, commission, bonuses and other compensation due to such employees, including overtime compensation, and there are no severance payments which are or could become payable by Vionmall and the Vionmall Subsidiaries to any such employees under the terms of any written or, to Vionmall’s knowledge, oral agreement, or commitment or any Law, custom, trade or practice. Except as set forth in Section 3.20(c) of the Vionmall Disclosure Letter , each such significant employee has entered into Vionmall or the applicable Vionmall Subsidiary’s standard form of employee non-disclosure, inventions and restrictive covenants agreement with Vionmall or its Subsidiaries, a copy of which has been provided to Parent by Vionmall.

 

(d)           Section 3.20(d) of the Vionmall Disclosure Letter contains a list of all significant independent contractors (including consultants) currently engaged by Vionmall and the Vionmall Subsidiaries, along with the position, the entity engaging such Person, date of retention and rate of remuneration, most recent increase (or decrease) in remuneration and amount thereof, for each such Person. Except as set forth on Schedule 3.20(d), all of such independent contractors are a party to a written agreement or contract with either Vionmall or a Vionmall Subsidiary. Each such independent contractor has entered into customary covenants regarding confidentiality, non-competition and assignment of inventions and copyrights in such Person’s agreement with either Vionmall or a Vionmall Subsidiary, a copy of which has been provided to Parent by Vionmall. For the purposes of applicable Law, including the Code, all independent contractors who are currently, or within the last three (3) years have been, engaged by either Vionmall or a Vionmall Subsidiary are bona fide independent contractors and not employees of either Vionmall or the Vionmall Subsidiary. Each independent contractor is terminable on fewer than thirty (30) days’ notice, without any obligation of Vionmall and the Vionmall Subsidiaries to pay severance or a termination fee.

 

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3.21         Environmental Matters.

 

Except as set forth in Section 3.21 of the Vionmall Disclosure Letter :

 

(a)          Neither Vionmall nor any of the Vionmall Subsidiaries is the subject of any national, international, federal, state, local or foreign Order, judgment or written claim, and neither Vionmall nor any of the Vionmall Subsidiaries has received any written notice or claim, or entered into any negotiations or agreements with any Person, in each case that would impose a liability or obligation under any Environmental Law;

 

(b)          Vionmall and the Vionmall Subsidiaries are in compliance in all material respects with all applicable Environmental Laws;

 

(c)          Neither Vionmall nor any of the Vionmall Subsidiaries has manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or released any Hazardous Substance, or owned or operated any property or facility, in a manner that has given or would reasonably be expected to give rise to any liability or obligation under applicable Environmental Laws; and

 

(d)          Each of Vionmall and the Vionmall Subsidiaries holds and is in compliance in all material respects with all the Vionmall Permits required to conduct its business and operations under all applicable Environmental Laws.

 

3.22         Transactions with Affiliates.

 

Other than (i) for payment of salary and benefits for services rendered, (ii) reimbursement for expenses incurred on behalf of Vionmall or any Vionmall Subsidiary, (iii) for other employee benefits made generally available to all employees, (iv) with respect to any Person’s ownership of membership interests, capital stock or other securities of Vionmall or any Vionmall Subsidiary or such Person’s employment with Vionmall or any Vionmall Subsidiary, or (v) as set forth in Section 3.22 of the Vionmall Disclosure Letter , there are no contracts or arrangements (each, a “ Vionmall Affiliate Transaction ”) that were in existence in the past three (3) years or are in existence as of the date of this Agreement under which there are any material existing or future liabilities or obligations between Vionmall or any of the Vionmall Subsidiaries, on the one hand, and, on the other hand, any (x) present manager, officer or director of either Vionmall or any of the Vionmall Subsidiaries or (y) record or beneficial owner of more than five percent (5%) of the outstanding Vionmall Shares or more than five percent (5%) of the outstanding equity interest of any Vionmall Subsidiary as of the date hereof (each of (x), (y) and (z), a “ Vionmall Affiliate ,” and collectively, the “ Vionmall Affiliates ”).

 

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3.23         Insurance.

 

Section 3.23 of the Vionmall Disclosure Letter sets forth a correct and complete list of all insurance policies issued in favor of Vionmall or any Vionmall Subsidiary, or pursuant to which Vionmall, any Vionmall Subsidiary or any of their respective directors and/or officers are a named insured or otherwise a beneficiary. With respect to each such insurance policy, (i) the policy is in full force and effect and all premiums due thereon have been paid and (ii) neither Vionmall nor any Vionmall Subsidiary is in any material respect, in breach of or default under, and neither Vionmall nor any Vionmall Subsidiary has taken any action or failed to take any action which, with notice or the lapse of time or both, would constitute such a breach or default, or permit termination or modification of, any such policy.

 

3.24         Books and Records.

 

All of the financial books and records of Vionmall and the Vionmall Subsidiaries are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws.

 

3.25         Accounts Receivable.

 

All accounts, notes and other receivables, whether or not accrued, and whether or not billed, of Vionmall and/or the Vionmall Subsidiaries, in accordance with GAAP (the “ Vionmall Accounts Receivable ”) arose from sales actually made or services actually performed in the ordinary course of business and represent valid obligations to Vionmall and/ or the Vionmall Subsidiaries arising from their respective businesses. To Vionmall’s knowledge, none of the Vionmall Accounts Receivable are subject to any right of recourse, defense, deduction, return of goods, counterclaim, offset, or set off on the part of the obligor.

 

3.26         Investment Company Act.

 

Neither Vionmall nor any Company Subsidiary is an “investment company” or a person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.

 

3.27         Information Supplied.

 

None of the information supplied or to be supplied by Vionmall expressly for inclusion or incorporation by reference: (i) in any report, form, registration or other filing made with any Governmental Authority with respect to the transactions contemplated by this Agreement and/or ancillary document contemplated thereto; or (ii) any filings with the SEC as it relates to the Registration Statement will, at the date of filing, or any amendment thereto, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading (subject to the qualifications and limitations set forth in the materials provided by Vionmall and the Vionmall Subsidiaries or that is included in the SEC filings). None of the information supplied or to be supplied by Vionmall and the Vionmall Subsidiaries expressly for inclusion or incorporation by reference in any of the Signing Filing, the Signing Press Release, the Closing Filing and the Closing Press Release (each such capitalized term, as hereafter defined) (collectively, the “ Ancillary Public Disclosures ”) will, at the time filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading (subject to the qualifications and limitations set forth in the materials provided by Vionmall and the Vionmall Subsidiaries or that is included in the Ancillary Public Disclosures).

 

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3.28         Disclosure.

 

No representations or warranties by Vionmall in this Agreement (including the disclosure schedules hereto) or the ancillary documents contemplated thereto to which it is a party, (a) contains or will contain any untrue statement of a material fact, or (b) omits or will omit to state, when read in conjunction with all of the information contained in this Agreement, the disclosure schedules and ancillary documents hereto and thereto, any fact necessary to make the statements or facts contained therein not materially misleading.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTS OF PARENT

 

Except as set forth in the disclosure letter delivered by Parent to each of Vitaxel and Vionmall on the date hereof (the “ Parent Disclosure Letter ”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer ( provided , however , that an item disclosed in any Section of the Parent Disclosure Letter shall be deemed to have been disclosed on all other Sections of this Agreement (if such disclosure is in sufficient detail to make it readily apparent to a reasonable Person that such disclosure applies to the other Sections thereof to which such disclosure is responsive)), Parent hereby represents and warrants to each of Vitaxel and Vionmall as follows:

 

4.1           Due Organization and Good Standing.

 

Each of Parent and each wholly owned or partially owned subsidiary of Parent (collectively, the “ Parent Subsidiaries ”) is a corporation, limited liability company, or other entity duly incorporated, formed or organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, formation or organization and has all requisite corporate, limited liability or other organizational power and authority to own, lease and operate its respective properties and to carry on its respective business as now being conducted. Except as set forth in Section 4.1 of the Parent Disclosure Letter , each of Parent and the Parent Subsidiaries is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, or leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not reasonably be expected to result in a Parent Material Adverse Effect. Except as set forth in Section 4.1 of the Parent Disclosure Letter , Parent has heretofore made available to Vitaxel and Vionmall accurate and complete copies of Parent’s certificate of incorporation and by-laws, each as amended to date and as currently in effect (the “ Parent Organization Documents ”) and the equivalent organizational documents of each Parent Subsidiary (collectively, the “ Parent Subsidiary Organization Documents ”), each as amended to date and as currently in effect. Neither Parent nor any Parent Subsidiary is in violation of any provision of the Parent Organization Documents or Parent Subsidiary Organization Documents, as the case may be.

 

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4.2           Title to Securities; Capitalization.

 

(a)          The authorized capital stock of Parent consists of 7,000,000,000 shares of Parent Common Stock, par value $0.000001 per share, and 100,000,000 shares of “blank check” preferred stock, par value $0.00001 per share. The shares of Parent Common Stock are eligible for quotation on the OTC Markets. As of the date of this Agreement, there are 3,825,000 shares of Common Stock issued and outstanding including 3,000,000 shares which are to be cancelled in conjunction with the Closing in connection with the Split-Off transaction. Accordingly, following the Closing, after giving effect to the Split-Off but not the Share Exchange, 825,000 of the 3,825,000 shares of Parent Common Stock shall remain outstanding. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the NRS, the Parent Organization Documents or any contract to which Parent is a party or by which Parent is bound. Except as set forth herein, there are no outstanding contractual obligations of Parent to repurchase, redeem or otherwise acquire any shares of Parent Common Stock or any capital equity of any of Parent or the Parent Subsidiaries. There are no outstanding contractual obligations of Parent to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.

 

(b)          Except as set forth in Section 4.2(b) of the Parent Disclosure Letter , there are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights, or (iii) except as expressly contemplated by this Agreement, subscriptions or other rights, agreements, arrangements, contracts or commitments of any character, relating to the issued or unissued capital equity of Parent or obligating Parent to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options, their respective capital stock or securities convertible into or exchangeable for such shares or interests, or obligating Parent to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital equity. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable.

 

(c)          Except as set forth in Section 4.2(c) of the Parent Disclosure Letter , there are no registration rights, and there is no voting trust, proxy, rights plan, anti-takeover plan or other contracts or understandings to which Parent is a party or by which Parent is bound with respect to any of its capital stock. Except as set forth in Section 4.2(c) of the Parent Disclosure Letter , as a result of the consummation of the Share Exchange, no shares of capital stock, warrants, options or other securities of Parent are issuable and no rights in connection with any shares, warrants, rights, options or other securities of Parent accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).

 

(d)          Except as disclosed on Section 4.2(d) of the Parent Disclosure Letter , no Indebtedness of Parent or any of the Parent Subsidiaries contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by Parent or any of the Parent Subsidiaries, or (iii) the ability of Parent or any of the Parent Subsidiaries to grant any Encumbrance on its properties or assets.

 

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(e)          Since its inception, Parent has not made, declared or paid any distribution or dividend in respect of the Parent Common Stock and has not repurchased, redeemed or otherwise acquired any securities or equity interests of Parent, and the Parent Board has not authorized any of the foregoing.

 

4.3           Subsidiaries.

 

(a)           Section 4.3(a)(i) of the Parent Disclosure Letter sets forth a true, complete and correct list of each of the Parent Subsidiaries and their respective jurisdictions of incorporation, formation or organization. Except as otherwise set forth on Section 4.3(a)(ii) of the Parent Disclosure Letter , all of the capital stock and other equity interests of the Parent Subsidiaries are owned, directly or indirectly, by Parent free and clear of any Encumbrance (other than any restriction under the Securities Act, or any state “blue sky” securities Laws) with respect thereto. All of the outstanding shares of capital stock or other equity interests in each of the Parent Subsidiaries that is a corporation are duly authorized, validly issued, fully paid and non-assessable, and with respect to the Parent Subsidiaries that are limited liability companies, are duly authorized, validly issued, fully paid and non-assessable and were issued free of preemptive rights and were not issued in material violation of any applicable foreign, federal or state securities Laws. Neither Parent nor any Parent Subsidiary owns, directly or indirectly, any shares of capital stock or other equity or voting interests in (including any securities exercisable or exchangeable for or convertible into capital stock or other equity or voting interests in) any other Person, other than capital stock or other equity interests of the Parent Subsidiaries owned by Parent or another Parent Subsidiary.

 

(b)           Section 4.3(b) of the Parent Disclosure Letter lists all jurisdictions in which each of Parent and each Parent Subsidiary is qualified to conduct its respective businesses.

 

4.4           Authorization; Binding Agreement.

 

Parent has all requisite corporate power and authority to execute and deliver this Agreement and each other ancillary agreement related hereto to which it is a party, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each other ancillary agreement related hereto to which it is a party and the consummation of the transactions contemplated hereby and thereby, (i) have been duly and validly authorized by the Parent Board and (ii) except for the approval of the stockholders of Parent (the “ Parent Stockholder Approval ”), no other corporate proceedings on the part of Parent are necessary to authorize the execution and delivery of this Agreement and each other ancillary agreement related hereto to which it is a party or to consummate the Share Exchange, and the other transactions contemplated hereby and thereby. This Agreement has been, and each ancillary agreement to which Parent is a party shall be when delivered, duly and validly executed and delivered by Parent and assuming the due authorization, execution and delivery of this Agreement and any such ancillary agreements by the other Parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, subject to the Enforceability Exceptions.

 

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4.5           Governmental Approvals.

 

Except as otherwise described in Section 4.5 of the Parent Disclosure Letter , no Consent of or with any Governmental Authority on the part of Parent or any of the Parent Subsidiaries is required to be obtained or made in connection with the execution, delivery or performance by Parent of this Agreement or any ancillary agreement related hereto or the consummation by Parent of the transactions contemplated hereby or thereby other than (i) such filings as may be required in any jurisdiction where Parent or any Parent Subsidiary is qualified or authorized to do business as a foreign corporation in order to maintain such qualification or authorization, (ii) such filings as contemplated by this Agreement, (iii) such filings as contemplated by this Agreement pursuant to the Share Exchange, (iv) for applicable requirements, if any, of the Securities Act of 1933, as amended (the “ Securities Act ”), the Exchange Act of 1934, as amended (the “ Exchange Act ”), the Financial Industry Regulatory Authority (“ FINRA ”) or any state “blue sky” securities Laws, and the rules and regulations thereunder, or (v) where the failure to obtain or make such Consents or to make such filings or notifications would not reasonably be expected to result in a Parent Material Adverse Effect or prevent the consummation of the transactions contemplated by this Agreement.

 

4.6           No Violations.

 

Except as otherwise described in Section 4.6 of the Parent Disclosure Letter , the execution and delivery by Parent of this Agreement and each other ancillary agreement related hereto and the consummation by Parent of the transactions contemplated hereby and thereby and compliance by Parent with any of the provisions hereof or thereof will not (i) conflict with or violate any provision of the Parent Organization Documents or Parent Subsidiary Organization Documents, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, amendment or acceleration) under, any Parent Material Contract, (iii) result (immediately or with the passage of time or otherwise) in the creation or imposition of any Encumbrance (except for Permitted Encumbrances) upon any of the properties, rights or assets of Parent or any of the Parent Subsidiaries or (iv) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.5 hereof, and the waiting periods referred to therein have expired, and any condition precedent to such consent, approval, authorization or waiver has been satisfied, conflict with, contravene or violate in any respect any Law to which Parent or any of the Parent Subsidiaries or any of their assets or properties is subject, except, in the case of clauses (ii), (iii) and (iv) above, for any deviations from the foregoing that would not reasonably be expected to result in a Parent Material Adverse Effect.

 

4.7           Parent Financial Statements.

 

(a)          Parent has filed with the SEC (i) the audited balance sheets of Parent as of October 31, 2015 and 2014 and the related audited statements of operations, stockholders’ equity and cash flows for the year ended October 31, 2015 and the period from November 19, 2013 (inception) through October 30, 2015 together with the notes to such statements and the opinions of KLJ & Associates, LLP and Li and Company, PC, independent certified public accountants (the “ Parent Financial Statements ”).

 

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(b)          The Parent Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved. The Parent balance sheets included as part of the Parent Financial Statements are true and accurate and present fairly as of their respective dates the financial condition of Parent. As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, Parent 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 Parent, in accordance with generally accepted accounting principles. The statements of operations, stockholders’ equity and cash flows included as part of the Parent Financial Statements reflect fairly the information required to be set forth therein by generally accepted accounting principles.

 

(c)          Since November 1, 2015, none of Parent, any Parent Subsidiary, or any director, officer or employee of Parent or any Parent Subsidiary, any auditor or accountant of Parent or any Parent Subsidiary has received any written complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of Parent or any Parent Subsidiary or their respective internal accounting controls, including any material written complaint, allegation, assertion or claim that Parent or any Parent Subsidiary has engaged in questionable accounting or auditing practices. To Parent’s knowledge, no employee and no member of the Parent Board nor any attorney representing Parent or any Parent Subsidiary, whether or not employed by Parent or any Parent Subsidiary, has ever received written notice from any Governmental Authority or any Person of any violation of consumer protection, insurance or securities Laws, breach of fiduciary duty or similar violation by Parent, any Parent Subsidiary or any of their respective officers, directors, employees or agents or reported written evidence of any such violations to the Parent Board or any committee thereof or to any director or executive officer of Parent.

 

4.8           Absence of Certain Changes.

 

From November 1, 2015 through the date hereof, except as described in Section 4.8(a) of the Parent Disclosure Letter and as expressly contemplated by this Agreement, Parent and the Parent Subsidiaries have (i) conducted their respective businesses in the ordinary course of business consistent with past practice (ii) not been any fact, change, effect, occurrence, event, development or state of circumstances that has had or would reasonably be expected to result in a Parent Material Adverse Effect.

 

4.9           Absence of Undisclosed Liabilities.

 

Neither the Parent nor any Parent Subsidiary is subject to any material liabilities or obligations that is not adequately reflected or reserved on or provided for in the Parent Financial Statements, other than (i) liabilities or obligations of the type that have been incurred in the ordinary course of business consistent with past practice, (ii) liabilities or obligations reflected in Section 4.9 of the Parent Disclosure Letter , and (iii) liabilities or obligations under the payment terms of Parent Material Contracts (but not including liabilities for breaches or for indemnification obligations thereunder), except, in each case, for immaterial liabilities or obligations.

 

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4.10         Compliance with Laws.

 

(a)          Except as set forth in Section 4.10 of the Parent Disclosure Letter , neither the Parent nor any of the Parent Subsidiaries are in conflict with, or in default or violation of, nor has it received, since their respective formations, any written notice of any conflict with, or default or violation of, (A) any applicable Law by which it or any property or asset of the Parent or any Parent Subsidiary is bound or affected, including, without limitation, consumer protection, insurance or securities Laws, or (B) any Parent Material Contract.

 

(b)          Parent has complied with all applicable federal and state securities laws and regulations, including being current in all of its reporting obligations under federal securities laws and regulations; and all prior issuances of securities have been either registered under the Securities Act, or exempt from registration; and Parent is not in violation or breach of, conflict with, in default under (with or without the passage of time or the giving of notice or both) any provisions of any mortgage, indenture, lease, license or any other agreement or instrument.

 

(c)          No order suspending the effectiveness of any registration statement of Parent under the Securities Act or the Exchange Act has been issued by the SEC and, to Parent’s knowledge, no proceedings for that purpose have been initiated or threatened by the SEC; and there are no outstanding comments issued by the SEC with respect to any reports or other filings with the SEC, any state securities law regulatory authority or any other federal, state or local governmental authority.

 

(d)          Parent is not and has not, and the past and present officers, directors and affiliates of Parent are not and have not, been the subject of, nor does any officer or director of Parent have any reason to believe that Parent or any of its officers, directors or affiliates will be the subject of, any civil or criminal proceeding or investigation by any federal or state agency alleging a violation of the securities laws.

 

(e)          Parent is not and has not been the subject of any voluntary or involuntary bankruptcy proceeding, nor is it or has it been a party to any material litigation or, within the past two years, the subject of any threat of material litigation. Litigation shall be deemed “material” if the amount at issue exceeds the lesser of $10,000 per matter or $25,000 in the aggregate.

 

(f)          Parent has not, and the past and present officers, directors and affiliates of Parent have not, been the subject of, nor does any officer or director of Parent have any reason to believe that Parent or any of its officers, directors or affiliates will be the subject of, any civil, criminal or administrative investigation or proceeding brought by any federal or state agency.

 

(g)          Parent shall not, on the Closing Date, have any liabilities, contingent or otherwise, including but not limited to notes payable and accounts payable, except as set forth herein (which shall not exceed $25,000 in the aggregate, exclusive of professional fees and expenses related to the Transactions.

 

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4.11         Regulatory Agreements; Permits.

 

(a)          Except as disclosed in Section 4.11(a) of the Parent Disclosure Letter , there are no material written agreements, memoranda of understanding, commitment letters, or Orders to which Parent or any Parent Subsidiary is a party, on the one hand, and any Governmental Authority is a party or addressee, on the other hand.

 

(b)          Except as disclosed in Section 4.11(b) of the Parent Disclosure Letter , each of the Parent, the Parent Subsidiaries, and each employee of the Parent or any Parent Subsidiary who is legally required to be licensed by a Governmental Authority in order to perform his or her duties with respect to his or her employment with the Parent or such Parent Subsidiary, hold all material permits, licenses, franchises, grants, authorizations, consents, exceptions, variances, exemptions, orders and other authorizations of Governmental Authorities, certificates, consents and approvals necessary to lawfully conduct the Parent’s or the Parent Subsidiaries’ respective business as presently conducted, and to own, lease and operate the Parent’s or the Parent Subsidiaries’ respective assets and properties (collectively, the “ Parent Permits ”), except for any such permits, licenses, franchises, grants, authorizations, consents, exceptions, variances, exemptions, certificates and approvals, the failure of which to obtain would not be reasonably expected to result in a parent material adverse effect. Parent has made available to the Company true, correct and complete copies of all material Parent Permits. All of the Parent Permits are in full force and effect, and no suspension or cancellation of any of Parent Permits is pending or, to Parent’s knowledge, threatened. Neither the Parent nor any Parent Subsidiary is in violation in any material respect with the terms of any Parent Permit.

 

4.12         Litigation.

 

Except as disclosed in Section 4.12 of the Parent Disclosure Letter , there is no Action pending, or, to the knowledge of Parent, threatened against Parent, any Parent Subsidiary, any of their respective subsidiaries or any of their respective properties, rights or assets or, any of their respective officers, directors, partners, managers or members (in their capacities as such) that would reasonably be expected to result in a Parent Material Adverse Effect. There is no Order binding against Parent, any Parent Subsidiary, any of their respective subsidiaries or any of their respective properties, rights or assets or any of their respective managers, officers, directors or partners (in their capacities as such) that would prohibit, prevent, enjoin, restrict or alter or delay any of the transactions contemplated by this Agreement, or that would reasonably be expected to result in a Parent Material Adverse Effect. Parent and the Parent Subsidiaries are in compliance with all Orders, except for any non-compliance which would not reasonably be expected to result in a Parent Material Adverse Effect. Except as disclosed in Section 4.12 of the Parent Disclosure Letter , there is no material Action that Parent or any of the Parent Subsidiaries has pending against other parties. There is no Action pending or, to the knowledge of Parent, threatened against Parent or any Parent Subsidiary involving a claim against Parent or any Parent Subsidiary for false advertising with respect to any of Parent’s or any Parent Subsidiary’s products or services, except for any such Action(s) which would not reasonably be expected to result in an Parent Material Adverse Effect.

 

4.13         Restrictions on Business Activities.

 

There is no Order binding upon Parent or any of the Parent Subsidiaries that has or would reasonably be expected to have the effect of prohibiting, preventing, restricting or impairing in any respect, any business practice of Parent or any of the Parent Subsidiaries as their businesses are currently conducted, any acquisition of property by the Parent or any of the Parent Subsidiaries, the conduct of business by the Parent or any of the Parent Subsidiaries as currently conducted, or the ability of the Parent to compete with other parties.

 

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4.14         Employee Benefit Plans.

 

Except for the 2016 Equity Incentive Plan, Parent does not presently maintain and has not maintained any employee benefit plan (as defined in Section 3(3) of ERISA) since its inception.

 

4.15         Taxes and Returns.

 

(a)          Parent has or will have timely filed, or caused to be timely filed, all material federal, state, local and foreign Tax returns and reports required to be filed by Parent or any Parent Subsidiary (taking into account all available extensions) (collectively, “ Tax Returns ”), which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Parent Financial Statements have been established.

 

(b)           Section 4.15(b) of the Parent Disclosure Letter sets forth each jurisdiction where Parent and each Parent Subsidiary files or is required to file a Tax Return.

 

(c)          Neither Parent nor any of the Parent Subsidiaries is being audited by any taxing authority or has been notified by any Tax authority that any such audit is contemplated or pending.

 

(d)          There are no material claims, assessments, audits, examinations, investigations or other proceedings pending against Parent or any of the Parent Subsidiaries in respect of any Tax, and neither Parent nor any of the Parent Subsidiaries has been notified in writing of any proposed Tax claims or assessments against Parent or any of the Parent Subsidiaries (other than, in each case, claims or assessments for which adequate reserves in the Parent Financial Statements have been established).

 

(e)          There are no Encumbrances with respect to any Taxes upon any of Parent’s or the Parent Subsidiaries’ assets, other than (i) Taxes, the payment of which is not yet due, or (ii) Taxes or charges being contested in good faith by appropriate proceedings and for which adequate reserves in the Parent Financial Statements have been established.

 

(f)          Neither Parent nor any of the Parent Subsidiaries has any outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by Parent or any of the Parent Subsidiaries for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.

 

(g)          Neither Parent nor any of the Parent Subsidiaries has made any change in accounting method or received a ruling from, or signed an agreement with, any taxing authority that would reasonably be expected to have a material impact on Taxes following the Closing.

 

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(h)          Neither Parent nor any of the Parent Subsidiaries participated in, or sold, distributed or otherwise promoted, any “reportable transaction,” as defined in Treasury Regulation section 1.6011-4.

 

(i)          Neither Parent nor any Parent Subsidiary has any liability or potential liability for the Taxes of another Person (i) under any applicable Tax Law, (ii) as a transferee or successor, or (iii) by contract, indemnity or otherwise.

 

(j)          Neither Parent nor any Parent Subsidiary is a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement, arrangement or practice with respect to material Taxes (including advance pricing agreement, closing agreement or other agreement relating to Taxes with any taxing authority) that will be binding on Parent or any Parent Subsidiary with respect to any period following the Closing Date.

 

(k)          Neither Parent nor any Parent Subsidiary has requested or is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any taxing authority with respect to any material Taxes, nor is any such request outstanding.

 

4.16         Finders and Investment Bankers.

 

Parent has not incurred, nor will it incur, any liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Parent or any Parent Subsidiary.

 

4.17         Employee Matters.

 

(a)          There are no Actions pending or, to the knowledge of Parent and the Parent Subsidiaries, threatened involving Parent or any Parent Subsidiary and any of their respective employees or former employees (with respect to their status as an employee or former employee, as applicable) including any harassment, discrimination, retaliatory act or similar claim. To Parent’s knowledge, since the dates of formation of Parent and the Parent Subsidiaries, there has been: (i) no labor union organizing or attempting to organize any employee of Parent or any of the Parent Subsidiaries into one or more collective bargaining units with respect to their employment with Parent or any of the Parent Subsidiaries; and (ii) no labor dispute, strike, work slowdown, work stoppage or lock out or other collective labor action by or with respect to any employees of Parent or any of the Parent Subsidiaries pending with respect to their employment with Parent or any of the Parent Subsidiaries or threatened against Parent or any of the Parent Subsidiaries. Neither Parent nor any of the Parent Subsidiaries is a party to, or bound by, any collective bargaining agreement or other agreement with any labor organization applicable to the employees of Parent or any of the Parent Subsidiaries and no such agreement is currently being negotiated.

 

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(b)          Except as set forth in Section 4.17(b) of the Parent Disclosure Letter, Parent and the Parent Subsidiaries (i) are in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, including Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations, and have not received written notice, or any other form of notice, that there is any Action involving unfair labor practices against Parent or any of the Parent Subsidiaries pending, (ii) are not liable for any material arrears of wages or any material penalty for failure to comply with any of the foregoing, and (iii) are not liable for any material payment to any trust or to any Governmental Authority, with respect to unemployment compensation benefits, social security or other benefits or obligations for employees, independent contractors or consultants (other than routine payments to be made in the ordinary course of business and consistent with past practice). There are no Actions pending or, to the knowledge of Parent, threatened against Parent or any Parent Subsidiary brought by or on behalf of any applicant for employment, any current or former employee, any Person alleging to be a current or former employee, or any Governmental Authority, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment relationship.

 

4.18         Environmental Matters.

 

Except as set forth in Section 4.18 of the Parent Disclosure Letter :

 

(a)          Neither Parent nor any of the Parent Subsidiaries is the subject of any national, international, federal, state, local or foreign Order, judgment or written claim, and neither Parent nor any of the Parent Subsidiaries has received any written notice or claim, or entered into any negotiations or agreements with any Person, in each case that would impose a liability or obligation under any Environmental Law;

 

(b)          Parent and the Parent Subsidiaries are in compliance in all material respects with all applicable Environmental Laws;

 

(c)          Neither Parent nor any of the Parent Subsidiaries has manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or released any Hazardous Substance, or owned or operated any property or facility, in a manner that has given or would reasonably be expected to give rise to any liability or obligation under applicable Environmental Laws; and

 

(d)          Each of Parent and the Parent Subsidiaries holds and is in compliance in all material respects with all the Parent Permits required to conduct its business and operations under all applicable Environmental Laws.

 

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4.19         Transactions with Affiliates.

 

Other than (i) for payment of salary and benefits for services rendered, (ii) reimbursement for expenses incurred on behalf of Parent or any Parent Subsidiary, (iii) for other employee benefits made generally available to all employees, (iv) with respect to any Person’s ownership of membership interests, capital stock or other securities of Parent or any Parent Subsidiary or such Person’s employment with Parent or any Parent Subsidiary, (v) as set forth in Section 4.19 of the Parent Disclosure Letter, or (vi) as stated in the Parent Financial Statements, there are no contracts or arrangements (each, a “ Parent Affiliate Transaction ”) that are in existence in the past three (3) years or as of the date of this Agreement under which there are any material existing or future liabilities or obligations between Parent or any of the Parent Subsidiaries, on the one hand, and, on the other hand, any (x) present manager, officer or director of either Parent or any of the Parent Subsidiaries or (y) record or beneficial owner of more than five percent (5%) of the outstanding Parent Shares or more than five percent (5%) of the outstanding equity interest of any Parent Subsidiary as of the date hereof (each of (x), (y) and (z), a “ Parent Affiliate ,” and collectively, the “ Parent Affiliates ”).

 

4.20         Investment Company Act.

 

Neither Parent nor any Parent Subsidiary is an “investment company” or a person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.

 

4.21         Parent SEC Filings.

 

Parent has filed all SEC reports required to be filed by it under the Exchange Act or otherwise, including pursuant to Section 13(a) or 15(d) thereof, since its inception (the foregoing materials being collectively referred to herein as the “ SEC Documents ”). As of their respective dates, the SEC Documents and any registration statements filed under the Securities Act (the “ Registration Statements ”) complied in all material respects with the requirements of the Exchange Act and the Securities Act, as applicable, and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Documents or Registration Statements, when filed, contained any untrue statement of a material fact or omitted 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. All Material Contracts to which Parent is a party or to which the property or assets of Parent are subject have been appropriately filed as exhibits to the SEC Documents and the Registration Statements as and to the extent required under the Exchange Act and the Securities Act, as applicable. The financial statements of Parent included in the Registration Statement and the SEC Documents comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of unaudited statements as permitted by Form 10-Q of the Commission), and fairly present in all material respects (subject in the case of unaudited statements, to normal, recurring audit adjustments) the financial position of Parent as at the dates thereof and the results of its operations and cash flows for the periods then ended. The disclosure set forth in the SEC Documents and Registration Statements regarding Parents business is current and complete and accurately reflects Parent operations as it exists as of the date hereof.

 

4.22         Disclosure.

 

No representations or warranties by Parent in this Agreement (including the disclosure schedules hereto) or the ancillary documents contemplated thereto to which it is a party, (a) contains or will contain any untrue statement of a material fact, or (b) omits or will omit to state, when read in conjunction with all of the information contained in this Agreement, the disclosure schedules and ancillary documents hereto and thereto, any fact necessary to make the statements or facts contained therein not materially misleading.

 

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4.23         Books and Records.

 

All of the financial books and records of Parent and the Parent Subsidiaries are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF THE VITAXEL SHAREHOLDERS

 

As an inducement to Parent to enter into this Agreement, each Vitaxel Shareholder, severally but not jointly, hereby represents and warrants to Parent as follows.

 

5.1           Vitaxel Shares.

 

The Vitaxel Shares represent 100% of the issued and outstanding capital stock of Vitaxel. Vitaxel. Such Vitaxel Shareholder is the record owner, and has good, valid and marketable title to, the Vitaxel Shares appearing next to such shareholder’s name on Schedule A-1 hereto. Such Vitaxel Shareholder has the right and authority to sell and deliver its Vitaxel Shares, free and clear of all Encumbrances or adverse claims of any nature whatsoever. Upon delivery of any certificate or certificates duly assigned, representing the Vitaxel Shares as herein contemplated and/or upon registering of Parent as the new owner of the Vitaxel Shares in the share register of Vitaxel, Parent will receive good title to the Vitaxel Shares owned by such Vitaxel Shareholder.

 

5.2           Power and Authority.

 

Such Vitaxel Shareholder 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, her or its obligations under this Agreement. This Agreement constitutes a legal, valid and binding obligation of such Vitaxel Shareholder, enforceable against such Vitaxel Shareholder in accordance with the terms hereof, 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.

 

5.3           No Conflicts.

 

The execution and delivery of this Agreement by such Vitaxel Shareholder and the performance by such Vitaxel Shareholder of its 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 such Vitaxel Shareholder and (c) will not violate or breach any contractual obligation to which such Vitaxel Shareholder is a party.

 

5.4           Purchase Entirely for Own Account.

 

The Exchange Shares proposed to be acquired by such Vitaxel Shareholder pursuant to the terms hereof will be acquired for investment for such Vitaxel Shareholder’s own account, and not with a view to the resale or distribution of any part thereof.

 

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5.5           Acquisition of Exchange Shares for Investment.

 

(a)          Such Vitaxel Shareholder is acquiring the Exchange Shares for investment purposes and for such Vitaxel 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 such Vitaxel Shareholder has no present intention of selling, granting any participation in, or otherwise distributing the same.

 

(b)          Such Vitaxel Shareholder represents and warrants that it: (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 Parent and its securities.

 

(c)          Such Vitaxel Shareholder is not a “U.S. Person” as defined in Rule 902(k) of Regulation S of the Securities Act (“ Regulation S ”) and understands that the Exchange Shares are not and will not be registered under the Securities Act and that the issuance thereof to such Vitaxel Shareholder is intended to be exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act, Rule 506 of Regulation D and/or Regulation S. Such Vitaxel 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, such Vitaxel Shareholder was outside of the United States.

 

(d)          Such Vitaxel 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.

 

(e)          Such Vitaxel 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.

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF THE VIonmall SHAREHOLDERS

 

As an inducement to Parent to enter into this Agreement, each Vionmall Shareholder, severally but not jointly, hereby represents and warrants to Parent as follows.

 

6.1           Vionmall Shares.

 

The Vionmall Shares represent 100% of the issued and outstanding capital stock of Vionmall. Such Vionmall Shareholder is the record owner, and has good, valid and marketable title to, the Vionmall Shares appearing next to such shareholder’s name on Schedule A-2 hereto. Such Vionmall Shareholder has the right and authority to sell and deliver its Vionmall Shares, free and clear of all Encumbrances or adverse claims of any nature whatsoever. Upon delivery of any certificate or certificates duly assigned, representing the Vionmall Shares as herein contemplated and/or upon registering of Parent as the new owner of the Vionmall Shares in the share register of Vionmall, Parent will receive good title to the Vionmall Shares owned by such Vionmall Shareholder.

 

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6.2           Power and Authority.

 

Such Vionmall Shareholder 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, her or its obligations under this Agreement. This Agreement constitutes a legal, valid and binding obligation of such Vionmall Shareholder, enforceable against such Vionmall Shareholder in accordance with the terms hereof, 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.

 

6.3           No Conflicts.

 

The execution and delivery of this Agreement by such Vionmall Shareholder and the performance by such Vionmall Shareholder of its 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 such Vionmall Shareholder and (c) will not violate or breach any contractual obligation to which such Vionmall Shareholder is a party.

 

6.4           Purchase Entirely for Own Account.

 

The Exchange Shares proposed to be acquired by such Vionmall Shareholder pursuant to the terms hereof will be acquired for investment for such Vionmall Shareholder’s own account, and not with a view to the resale or distribution of any part thereof.

 

6.5           Acquisition of Exchange Shares for Investment.

 

(a)          Such Vionmall Shareholder is acquiring the Exchange Shares for investment purposes and for such Vionmall 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 such Vionmall Shareholder has no present intention of selling, granting any participation in, or otherwise distributing the same.

 

(b)          Such Vionmall Shareholder represents and warrants that it: (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 Parent and its securities.

 

(c)          Such Vionmall Shareholder is not a “U.S. Person” as defined in Rule 902(k) of Regulation S of the Securities Act (“ Regulation S ”) and understands that the Exchange Shares are not and will not be registered under the Securities Act and that the issuance thereof to such Vionmall Shareholder is intended to be exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act, Rule 506 of Regulation D and/or Regulation S. Such Vionmall 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, such Vionmall Shareholder was outside of the United States.

 

(d)          Such Vionmall 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.

 

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(e)          Such Vionmall 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.

 

ARTICLE VII

 

COVENANTS

 

7.1           Conduct of Business of Vitaxel, Vionmall and the Vitaxel Subsidiaries and Vionmall Subsidiaries.

 

(a)          Unless Parent shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with Section 10.1 or the Closing (the “ Executory Period ”), except as expressly contemplated by this Agreement or as set forth on Section 7.1 of the Vitaxel Disclosure Letter or Section 7.1 of the Vionmall Disclosure Letter , Vitaxel and Vionmall shall cause their respective Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course of business consistent with past practice; (ii) comply with all Laws applicable to Vitaxel and Vionmall and their respective Subsidiaries and their respective businesses, assets and employees, and (iii) preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, to maintain, in all material respects, their existing relationships with all Persons with whom they do significant business, and to preserve the possession, control and condition of their respective assets, all as consistent with past practice.

 

(b)          Without limiting the generality of the foregoing clause (a), and except as contemplated by the terms of this Agreement or as set forth in Section 7.1 of the Company Disclosure Letter or Section 7.1 of the Vionmall Disclosure Letter , as applicable, without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed), Vitaxel and Vionmall shall not, and shall cause each of their respective Subsidiaries to not:

 

(i)          amend, waive or otherwise change, in any respect, any of the Vitaxel Group Organizational Documents or Vionmall Group Organizational Documents, as applicable;

 

(ii)         authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities or other securities or interests, including any securities convertible into or exchangeable for any of its equity securities or securities interests of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such equity securities or other securities or equity interests;

 

(iii)        split, combine, recapitalize or reclassify any of its equity interests or issue any other securities in respect thereof or declare, pay or set aside any distribution or other dividend (whether in cash, equity or property or any combination thereof) in respect of its equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its equity securities or securities interests;

 

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(iv)        incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise), make a loan or advance to or investment in any third party, or guarantee or endorse any Indebtedness, liability or obligation of any Person;

 

(v)         increase the wages, salaries or compensation of any of its employees by more than five percent (5%), or increase bonuses for the foregoing individuals in excess of five percent (5%), or make commitments to advance with respect to bonuses [for fiscal year 2015], or materially increase other benefits of any of the foregoing individuals, or enter into, establish, materially amend or terminate any Company Benefit Plan with, for or in respect of any current consultant, officer, manager, director or employee, in each case other than as required by applicable Law, pursuant to the terms of any Company Benefit Plan, or in the ordinary course of business consistent with past practice;

 

(vi)        make or rescind any material election relating to Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP;

 

(vii)       transfer or license to any Person or otherwise extend, materially amend or modify, permit to lapse or fail to preserve any Company Intellectual Property, or disclose to any Person who has not entered into a confidentiality agreement any trade secrets;

 

(viii)      terminate or waive or assign any material right under any Vitaxel Material Contract, Vionmall Material Contract, Vitaxel Lease or Vionmall Lease, as the case may be, or enter into any contract (A) involving amounts potentially exceeding $50,000 per year, (B) that would be a Vitaxel Material Contract or Vionmall Material Contract, as applicable or (C) with a term longer than one year that cannot be terminated without payment of a material penalty and upon notice of 60 days or less;

 

(ix)         fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;

 

(x)          establish any new Vitaxel Subsidiary or Vionmall Subsidiary, as applicable, or enter into any new line of business;

 

(xi)         fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to the assets, operations and activities of Vitaxel, Vionmall or their respective Subsidiaries, in an amount and scope of coverage as is comparable to that which are currently in effect;

 

(xii)        revalue any of its material assets or make any change in accounting methods, principles or practices, except in compliance with GAAP and approved by their respective outside auditors;

 

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(xiii)       waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation relating to this Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by them or their Affiliates) not in excess of $50,000 (individually or in the aggregate), or otherwise pay, discharge or satisfy any claims, liabilities or obligations, unless such amount has been reserved in their respective Financials;

 

(xiv)      close or materially reduce any activities, or effect any layoff or other personnel reduction or change, at any of its facilities;

 

(xv)       acquire, including by merger, consolidation, acquisition of stock or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business;

 

(xvi)      make capital expenditures in excess of $50,000 (individually or in the aggregate);

 

(xvii)     adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;

 

(xviii)    voluntarily incur any liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $50,000 in the aggregate other than pursuant to the terms of a Vitaxel Material Contract, Vionmall Material Contract, Vitaxel Lease, Vionmall Lease, Vitaxel Benefit Plan or Vionmall Benefit Plan, as applicable;

 

(xix)       sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights;

 

(xx)        enter into any agreement, understanding or arrangement with respect to the voting of the securities or the capital equity of Vitaxel, Vionmall or their respective Subsidiaries, as applicable;

 

(xxi)       take any action that would reasonably be expected to delay or impair the obtaining of any consents or approvals of any Governmental Authority to be obtained in connection with this Agreement;

 

(xxii)      enter into, amend, waive or terminate (other than terminations in accordance with their terms) any Vitaxel Affiliate Transaction or Vionmall Affiliate Transaction, as applicable; or

 

(xxiii)     authorize or agree to do any of the foregoing actions.

 

For purposes of this Agreement, “ Charter Documents ” means any of the Vitaxel Organization Documents, Vionmall Organization Documents, Vitaxel Subsidiary Organization Documents, Vionmall Subsidiary Organization Documents, Parent Organization Documents, or Parent Subsidiary Organization Documents.

 

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7.2           Access and Information; Confidentiality.

 

(a)          During the Executory Period, each of Vitaxel, Vionmall and their respective Subsidiaries shall give, and shall direct its accountants and legal counsel to give, Parent and the Parent Subsidiaries, at reasonable times during normal business hours and upon reasonable intervals and notice, and subject to any confidentiality agreements with third Persons (the existence and scope of which have been disclosed to Parent or the Parent Subsidiaries), access to all offices and other facilities and to all employees, properties, contracts, agreements, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client contracts and director service agreements), of or pertaining to Vitaxel, Vionmall or their respective Subsidiaries, as applicable, as the requesting Party may reasonably request regarding their or their Subsidiaries’ business, assets, liabilities, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, each as they become available during the Executory Period, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountant’s work papers (subject to the consent or any other conditions required by such accountant, if any)) and instruct such Party’s Representatives to reasonably cooperate with the requesting Party in its investigation; provided that the requesting Party shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Party providing such information; provided further that in no event shall Parent or the Parent Subsidiaries have access to any information that, based on advice of counsel, disclosure of such information (A) would violate applicable Laws or at the request of any Governmental Authority having jurisdiction over such Party or (B) would waive attorney-client privilege, and, in each such case, such Party shall only be entitled to withhold those portions of such information which are subject to the foregoing limitations. No information or knowledge obtained by any Party hereto pursuant to this Section 7.2(a) will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the Parties to consummate the Exchange.

 

(b)          During the Executory Period, each of Parent and the Parent Subsidiaries shall give, and shall direct its accountants and legal counsel to give, Vitaxel, Vionmall and their respective Subsidiaries, at reasonable times during normal business hours and upon reasonable intervals and notice, and subject to any confidentiality agreements with third Persons (the existence and scope of which have been disclosed to the Company or the Company Subsidiaries), access to all offices and other facilities and to all employees, properties, contracts, agreements, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client contracts and director service agreements), of or pertaining to the Parent or the Parent Subsidiaries, as the requesting Party or its Representatives may reasonably request regarding Parent’s business, assets, liabilities, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, each as they become available during the Executory Period, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountant’s work papers (subject to the consent or any other conditions required by such accountant, if any)) and instruct such Party’s Representatives to reasonably cooperate with the requesting Party in its investigation; provided that the requesting Party shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Party providing such information; provided further that in no event shall Vitaxel, Vionmall or their respective Subsidiaries have access to any information that, based on advice of counsel, disclosure of such information (A) would violate applicable Laws or at the request of any Governmental Authority having jurisdiction over such Party or (B) would waive attorney-client privilege, and, in each such case, such Party shall only be entitled to withhold those portions of such information which are subject to the foregoing limitations. No information or knowledge obtained by any Party hereto pursuant to this Section 7.2(b) will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the Parties to consummate the Exchange.

 

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(c)          The Parties acknowledge and agree that the existence and terms of this Agreement and the Exchange are strictly confidential and that they and their respective officers, managers, directors, employees, accountants, consultants, legal counsel, financial advisors, agents or other representatives (collectively, the “ Representatives ”) shall not disclose to the public or to any third Person the terms of this Agreement and the Exchange other than with the express prior written consent of the other Parties, except (i) as may be required by applicable Law or at the request of any Governmental Authority having jurisdiction over the such Party or any of its Representatives, control persons or affiliates (including, without limitation, to the extent applicable, the rules and regulations of the SEC and FINRA), (ii) as required to carry out a Party’s obligations hereunder, or (iii) as may be required to defend any action brought against such Person in connection with the Exchange.

 

7.3           Notification of Certain Matters.

 

Each of Parent, Vitaxel and Vionmall shall give prompt notice to the others (and, if in writing, furnish copies of) if any of the following occurs during the Executory Period: (i) there has been a material failure on the part of the Party providing the notice to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; (ii) receipt of any notice or other communication in writing from any third Person alleging that the Consent of such third Person is or may be required in connection with the transactions contemplated by this Agreement; (iii) receipt of any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; (iv) the discovery of any fact or circumstance that, or the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would reasonably be expected to cause or result in any of the conditions to the Exchange set forth in Article IX not being satisfied or the satisfaction of any of those conditions being materially delayed; or (v) the commencement or threat, in writing, of any Action against any Party or any of its affiliates, or any of their respective properties or assets, or, to the knowledge of Vitaxel, Vionmall or Parent, as applicable, any officer, director or partner, in his or her capacity as such, of Vitaxel, Vionmall or Parent, as applicable, or any of their affiliates with respect to the consummation of the Exchange. No such notice to any Party shall constitute an acknowledgement or admission by the Party providing notice regarding whether or not any of the conditions to Closing or to the consummation of the Exchange have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached. Moreover, no information or knowledge obtained by any Party hereto pursuant to this Section 7.3 will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the Parties to consummate the Exchange.

 

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7.4           Commercially Reasonable Efforts.

 

(a)          Subject to the terms and conditions of this Agreement, prior to the expiration of the Executory Period, each Party shall use commercially reasonable efforts, and shall cooperate fully with the other Parties, 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 the Exchange and the other transactions contemplated by this Agreement (including the receipt of all Requisite Regulatory Approvals), and to comply as promptly as practicable with all requirements of Governmental Authorities applicable to the transactions contemplated by this Agreement.

 

(b)          For purposes of Section 7.4 , “commercially reasonable efforts” shall not include nor require any Party or any of its Subsidiaries to (A) propose, negotiate, or offer to commit or agree to or effect by consent decree, hold separate order, or otherwise, the sale, divestiture, license, disposition or hold separate of any asset, in each case if such sale, divestiture, license, disposition or hold separate with respect thereto would, individually or in the aggregate, reasonably be expected to have a Vitaxel Material Adverse Effect, Vionmall Material Adverse Effect, or a Parent Material Adverse Effect (after giving effect to the Exchange), as the case may be, or (B) conduct or agree to conduct its business in any particular manner if such conduct or agreement with respect thereto would, individually or in the aggregate, reasonably be expected to have a Vitaxel Material Adverse Effect, Vionmall Material Adverse Effect or a Parent Material Adverse Effect (after giving effect to the Exchange), as the case may be. Notwithstanding anything herein to the contrary, neither Vitaxel, Vionmall, Parent, nor any of their respective Subsidiaries shall propose, negotiate or offer to commit to any sale, divestiture, license, disposition or hold separate of any asset contemplated to be held by the Surviving Company following the consummation of the Exchange without the prior written consent of the other Parties.

 

(c)          In the event that any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by a Governmental Authority or private Person challenging the Exchange or any other transaction contemplated by this Agreement, or any other ancillary agreement contemplated hereby, each of Parent, Vitaxel and Vionmall shall cooperate in all respects with each other and use its respective commercially reasonable efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement.

 

(d)          Prior to the expiration of the Executory Period, Parent shall use its commercially reasonable efforts to obtain any Consents of third Persons with respect to any Parent Material Contract as may be necessary or appropriate for the consummation of the transactions contemplated hereby or required by the terms of any contract as a result of the execution, performance or consummation of the transactions contemplated hereby. Prior to the expiration of the Executory Period, Vitaxel shall use its commercially reasonable efforts to obtain any Consents of third Persons with respect to any Vitaxel Material Contract as may be necessary or appropriate for the consummation of the transactions contemplated hereby or required by the terms of any contract as a result of the execution, performance or consummation of the transactions contemplated hereby. Prior to the expiration of the Executory Period, Vionmall shall use its commercially reasonable efforts to obtain any Consents of third Persons with respect to any Vionmall Material Contract as may be necessary or appropriate for the consummation of the transactions contemplated hereby or required by the terms of any contract as a result of the execution, performance or consummation of the transactions contemplated hereby.

 

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7.5           Public Announcements.

 

Parent, Vitaxel and Vionmall agree that no public release or announcement concerning this Agreement or the Exchange shall be issued by them or any of their Affiliates without the prior written consent of the other Parties (which consent shall not be unreasonably withheld, conditioned or delayed), except as such release or announcement may be required by applicable Law or the rules or regulations of any securities exchange, in which case the applicable Party shall use commercially reasonable efforts to allow the other Parties reasonable time to comment on, and arrange for any required filing with respect to, such release or announcement in advance of such issuance; provided , however , that Parent, Vitaxel or Vionmall may make any public statement in response to specific questions by the press, analysts, investors or those attending industry conferences or financial analyst conference calls, so long as any such statements are not inconsistent with previous public releases or announcements made by them in compliance with this Agreement and so long as appropriate filings are timely made with the SEC with respect to the statements.

 

7.6           Regulatory Matters.

 

(a)          Each of Parent, Vitaxel and Vionmall shall, upon request, furnish to the others all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with preparation and filing of any statement, filing, notice or application made by or on behalf of Parent, Vitaxel and Vionmall or any of their respective Subsidiaries to any Governmental Authority, including, without limitation, FINRA, in connection with the Exchange and the other transactions contemplated by this Agreement.

 

(b)          Each of Parent, Vitaxel and Vionmall shall promptly advise the other upon receiving any communication from any Governmental Authority the consent or approval of which is required for consummation of the transactions contemplated by this Agreement, or from FINRA, that causes such party to believe that there is a reasonable likelihood that any requisite approval will not be obtained or that the receipt of any such approval may be materially delayed, and, to the extent permitted by applicable Law, shall promptly provide the other Parties with a copy of such communication.

 

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7.7           Vitaxel, Vionmall and Parent Approvals.

 

(a)          Vitaxel shall take all action necessary in accordance with applicable Law and the Vitaxel Organization Documents to (i) have the Vitaxel Stockholders consider and consent on a proposal to adopt and approve the consummation of the Exchange and transactions contemplated by this Agreement.

 

(b)          Vionmall shall take all action necessary in accordance with applicable Law and the Vionmall Organization Documents to (i) have the Vionmall Stockholders consider and consent on a proposal to adopt and approve the consummation of the Exchange and transactions contemplated by this Agreement.

 

(c)          The Parent Board shall use commercially reasonable efforts to (i) solicit from its stockholders holding a majority of Parent’s common stock votes in favor of the approval of the consummation of the Exchange and transactions contemplated by this Agreement and (ii) take all other action necessary or advisable to secure such approval.

 

7.8           Other Actions.

 

Notwithstanding anything to the contrary in Section 7.5:

 

(a)          as promptly as practicable after the Closing, and in all events within four business day thereof, Vitaxel, Vionmall, the Vitaxel Shareholders and the Vionmall Shareholders shall ensure that Parent files a Current Report on Form 8-K announcing the Closing (“ Closing Filing ”), which Parent shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing. In connection with the preparation of the Closing Filing, or any other report, statement, filing notice or application made by or on behalf of Vitaxel, Vionmall and or Parent to any Government Authority, FINRA or other third Person in connection with the Exchange and the other transactions contemplated hereby, and for such other reasonable purposes, Parent, Vitaxel and Vionmall each shall, upon request by one of the others, furnish the others with all information concerning themselves, their respective Subsidiaries, directors, officers and stockholders, and such other matters as may be reasonably necessary or advisable in connection with the Exchange, or any other report, statement, filing, notice or application made by or on behalf of Parent, Vitaxel or Vionmall to any third party and/or any Governmental Authority in connection with the Exchange and the other transactions contemplated hereby.

 

7.9           Officers and Directors of Parent After Closing.

 

(a)           Change in Board . Effective at Closing, Andriy Berezhnyy, the Parent’s sole director, shall resign and Lim Wee Kiat (Chairman) and Leong Yee Ming (such incoming directors, the “ New Parent Directors ”) shall be appointed as directors of the Parent Board. Prior to Closing, Parent shall take all necessary action to ensure that the New Parent Directors’ appointments have been duly authorized and are effective at Closing.

 

(b)           Change in Officers . Effective at Closing, Andriy Berezhnyy, the Parent’s sole executive officer, shall resign as an Officer of Parent and Parent shall have appointed Lim Wee Kiat as President and Secretary, Leong Yee Ming as Chief Executive Officer, Lei Wei Boon as Treasurer and Chief Financial Officer, Lim Boon Seng as Chief Operating Officer and Yee Hing Yip as Vice President of Marketing.

 

(c)           No Termination Payments . Prior to Closing, Parent shall take all necessary action to ensure that no payments, including but not limited to parachute payments or accrued but unpaid salaries, shall be due or outstanding to any of the Parent officers or directors, in their capacities as such, following their resignation pursuant to Section 7.9(a) or 7.9(b) hereto.

 

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7.10         No Parent Assets or Liabilities.

 

Giving effect to the Split-Off but not the Exchange, Parent shall have no assets or liabilities at the Effective Time.

 

7.11         Further Assurances.

 

Parent, Vitaxel and Vionmall shall further cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate the Exchange and the other transactions contemplated by this Agreement as soon as practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings and to obtain (in accordance with this Agreement) as soon as practicable all Requisite Regulatory Approvals (as defined below), all Vitaxel Requisite Consents (as defined below), all Vionmall Requisite Consents (as defined below) all Parent Requisite Consents (as defined below) and any other consents, registrations, approvals, permits and authorizations as may be agreed upon by the Parties.

 

7.12         Assumption of Obligations.

 

In the event the Exchange is consummated, if Parent or any Parent Subsidiary shall thereafter (i) consolidate with or merge into any other Person and shall not be the continuing or surviving Person of such consolidation or merger or (ii) transfer all or substantially all of its properties and assets to any Person, then, in each such case, proper provisions shall be made so that the successors and assigns of Parent or any Parent Subsidiary, as applicable, assume all of their respective obligations as set forth in this Section 7.12 .

 

ARTICLE VIII

SURVIVAL AND INDEMNIFICATION

 

8.1           Survival.

 

Survival of Representations and Warranties . The representations and warranties of Vitaxel, the Vitaxel Shareholders, Vionmall, the Vionmall Shareholders, and Parent which are contained in or made pursuant to this Agreement will survive the Closing until that date which is the first anniversary of the Closing Date; provided , however , that any representation or warranty the breach or violation of which is made the basis of a claim for indemnification will survive until such time as such claim is finally resolved in accordance with this Agreement. Section 7.2(a) , Section 7.2(b) , Section 10.2 , Section 10.3 , Article XI , and this Article VIII shall survive any termination of this Agreement in accordance with Section 10.1 .

 

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8.2          (a) Indemnification by Vitaxel and the Vitaxel Shareholders.

 

Subject to the terms and conditions of this Article VIII, Vitaxel and the Vitaxel Shareholders (including their Affiliates and successors or assigns) (the “ Vitaxel Indemnifying Parties ”) shall indemnify and hold harmless Parent and its Affiliates, Vionmall and its Affiliates, and their respective successors and permitted assigns (each, an “ Indemnified Party ”) from and against any and all losses, any liabilities, claims (including claims by third parties), judgments, damages (including consequential damages), diminution in value, Taxes, interest, penalties, liens, amounts paid in settlement, costs and expenses (including reasonable expenses of investigation and court costs and reasonable attorneys’ fees and expenses), (any of the foregoing, a “ Loss ”) paid, suffered or incurred by, or imposed upon, any Indemnified Party arising in whole or in part out of or resulting directly or indirectly from any breach by the Vitaxel Indemnifying Party of any representations, warranties, covenants or agreements contained in this Agreement or in any ancillary document related hereto to which it is a party.

 

(b) Indemnification by Vionmall and the Vionmall Shareholders.

 

Subject to the terms and conditions of this Article VIII, Vionmall and the Vionmall Shareholders (including their Affiliates and successors or assigns) (the “ Vionmall Indemnifying Parties ”) shall indemnify and hold harmless Parent and its Affiliates, Vitaxel and its Affiliates, and their respective successors and permitted assigns (each, an “ Indemnified Party ”) from and against any and all losses, any liabilities, claims (including claims by third parties), judgments, damages (including consequential damages), diminution in value, Taxes, interest, penalties, liens, amounts paid in settlement, costs and expenses (including reasonable expenses of investigation and court costs and reasonable attorneys’ fees and expenses), (any of the foregoing, a “ Loss ”) paid, suffered or incurred by, or imposed upon, any Indemnified Party arising in whole or in part out of or resulting directly or indirectly from any breach by the Vionmall Indemnifying Party of any representations, warranties, covenants or agreements contained in this Agreement or in any ancillary document related hereto to which it is a party.

 

8.3           Indemnification by Parent.

 

Subject to the terms and conditions of this Article VIII , Parent (including its Affiliates and successors or assigns) (the “ Parent Indemnifying Parties ”) shall indemnify and hold harmless Vitaxel, the Vitaxel Shareholders, Vionmall and the Vionmall Shareholders and their Affiliates and their respective successors and permitted assigns (each, an “ Indemnified Party ”) from and against any and all losses, any liabilities, claims (including claims by third parties), judgments, damages (including consequential damages), diminution in value, Taxes, interest, penalties, liens, amounts paid in settlement, costs and expenses (including reasonable expenses of investigation and court costs and reasonable attorneys’ fees and expenses), (any of the foregoing, a “ Loss ”) paid, suffered or incurred by, or imposed upon, any Indemnified Party arising in whole or in part out of or resulting directly or indirectly from any breach by the Parent Indemnifying Party of any representations, warranties, covenants or agreements contained in this Agreement or in any ancillary document related hereto to which it is a party.

 

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8.4           Payment of Claim.

 

Except as otherwise set forth in this Article VI , any amount owing by any Indemnifying Party shall be paid within two (2) Business Days after determination of such amount.

 

8.5           Limitations and General Indemnification Provisions.

 

(a)          Each of the Parties hereto hereby acknowledge and agree that following the Closing, except with respect to actions for specific performance or other equitable remedies (including as provided for in Section 11.10 hereof), the provisions of this Article VIII shall be the sole and exclusive remedies of any Indemnified Party for any breach by another Party of this Agreement, and the Parties hereto hereby acknowledge and agree that no Party hereto shall have any remedies or cause of action (whether in contract or in tort) for any statements, communications, disclosures, failures to disclose, representations or warranties not set forth in this Agreement.

 

(b)          Except as otherwise expressly provided in this Article VIII , an Indemnified Party will not be entitled to receive any indemnification payments under Section 8.2 or Section 8.3 until the aggregate amount of Losses incurred by the Indemnified Parties exceed $100,000 (the “ Basket ”), in which case the Indemnifying Party shall be obligated to the Indemnified Parties for the amount of all Losses of the Indemnified Parties (including the first dollar of Losses of the Indemnified Parties required to reach the Basket); provided , however , that the Basket shall not apply to indemnification claims that are based in whole or in part upon fraud, willful misconduct or intentional misrepresentation.

 

(c)          For purposes of determining whether there has been a breach and the amount of Losses that are the subject matter of an indemnification claim hereunder, each representation and, warranty and covenant set forth in this Agreement (including the Disclosure Schedules) or any ancillary document that are qualified by materiality, Material Adverse Effect or words of similar import or effect will be deemed to have been made without any such qualification.

 

(d)          No investigation or knowledge by an Indemnified Party of a breach of a representation, warranty, covenant or agreement of an Indemnifying Party shall affect the representations, warranties, covenants and agreements of the Indemnifying Party or the recourse available to the Indemnified Parties under any provision of this Agreement, including this Article VIII , with respect thereto.

 

(e)          The amount of any Losses suffered or incurred by any Indemnified Party shall be reduced by the amount of any insurance proceeds paid to the Indemnified Party or any Affiliate thereof as a reimbursement with respect to such Losses (and no right of subrogation shall accrue to any insurer hereunder, except to the extent that such waiver of subrogation would prejudice any applicable insurance coverage), net of the costs of collection and any related anticipated future increases in insurance premiums resulting from such Loss or insurance payment.

 

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8.6           Indemnification Procedures.

 

(a)          In order to make a claim for indemnification hereunder, an Indemnified Party must provide written notice (a “ Claim Notice ”) of such claim to the appropriate Indemnifying Party, which Claim Notice shall include (i) a reasonable description of the facts and circumstances which relate to the subject matter of such indemnification claim to the extent then known and (ii) the amount of Losses suffered by the Indemnified Party in connection with the claim to the extent known or reasonably estimable (provided, that the Indemnified Party may thereafter in good faith adjust the amount of Losses with respect to the claim by providing a revised Claim Notice to the Indemnifying Party.

 

(b)          In the case of any claim for indemnification under Section 8.2 or Section 8.3 arising from a claim of a third party (including the IRS or any other Governmental Authority) (a “ Third Party Claim ”), the Indemnified Party must give a Claim Notice with respect to such Third Party Claim to the Indemnifying Party promptly (but in no event later than twenty (20) days) after the Indemnified Party's receipt of notice of such Third Party Claim; provided, that the failure to give such notice will not relieve the Indemnifying Party or parties of their indemnification obligations except to the extent that the Indemnifying Party is actually harmed thereby. The Indemnifying Party will have the right to defend and to direct the defense against any such Third Party Claim in its name and at its expense, and with counsel selected by the Indemnifying Party unless (i) the Indemnifying Party fails to acknowledge fully its obligations to the Indemnified Party within twenty (20) days after receiving notice of such Third Party Claim or contests, in whole or in part, its indemnification obligations therefor or (ii) there is a conflict of interest between the Indemnifying Party and the Indemnified Party in the conduct of such defense. If the Indemnifying Party elects, and is entitled, to compromise or defend such Third Party Claim, it will within twenty (20) days (or sooner, if the nature of the Third Party Claim so requires) notify the Indemnified Party of its intent to do so, and the Indemnified Party will, at the request and expense of the Indemnifying Party, cooperate in the defense of such Third Party Claim. If the Indemnifying Party elects not to, or is not entitled under this Section 6.6 to, compromise or defend such Third Party Claim, fails to notify the Indemnified Party of its election as herein provided or refuses to acknowledge or contests its obligation to indemnify under this Agreement, the Indemnified Party may pay, compromise or defend such Third Party Claim. Notwithstanding anything to the contrary contained herein, the Indemnifying Party will have no indemnification obligations with respect to any such Third Party Claim which has been or will be settled by the Indemnified Party without the prior written consent of the Indemnifying Party (which consent will not be unreasonably withheld, delayed or conditioned); provided , however , that notwithstanding the foregoing, the Indemnified Party will not be required to refrain from paying any Third Party Claim which has matured by a court judgment or decree, unless an appeal is duly taken therefrom and exercise thereof has been stayed, nor will it be required to refrain from paying any Third Party Claim where the delay in paying such claim would result in the foreclosure of a Lien upon any of the property or assets then held by the Indemnified Party or where any delay in payment would cause the Indemnified Party material economic loss. The Indemnifying Party's right to direct the defense will include the right to compromise or enter into an agreement settling any Third Party Claim; provided that no such compromise or settlement will obligate the Indemnified Party to agree to any settlement that that requires the taking or restriction of any action (including the payment of money and competition restrictions) by the Indemnified Party other than the delivery of a release for such Third Party Claim, except with the prior written consent of the Indemnified Party (such consent to be withheld, conditioned or delayed only for a good faith reason). Notwithstanding the Indemnifying Party's right to compromise or settle in accordance with the immediately preceding sentence, the Indemnifying Party may not settle or compromise any Third Party Claim over the objection of the Indemnified Party; provided , however , that consent by the Indemnified Party to settlement or compromise will not be unreasonably withheld, delayed or conditioned. The Indemnified Party will have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party's right to direct the defense.

 

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(c)          With respect to any direct indemnification claim that is not a Third Party Claim, the Indemnifying Party will have a period of thirty (30) days after receipt of the Claim Notice to respond thereto. If the Indemnifying Party does not respond within such thirty (30) days, the Indemnifying Party will be deemed to have accepted responsibility for the Losses set forth in such Claim Notice and will have no further right to contest the validity of such Claim Notice. If the Indemnifying Party responds within such thirty (30) days after the receipt of the Claim Notice and rejects such claim in whole or in part, the Indemnified Parties will be free to pursue such remedies as may be available under this Agreement, any other ancillary documents contemplated by the Agreement, or applicable Law.

 

ARTICLE IX

CONDITIONS

 

9.1           Conditions to Each Party’s Obligations.

 

The obligations of each Party to consummate the Exchange and other transactions described herein shall be subject to the satisfaction or waiver (where permissible), at or prior to the earlier of the Closing Date, of the following conditions:

 

(a)           Requisite Regulatory Approvals and Stockholder Approvals . All authorizations, approvals and permits required to be obtained from or made with any Governmental Authority in order to consummate the transactions contemplated by this Agreement, except for any such authorizations, approvals and/or permits the failure of which to obtain would not reasonably be expected to result in a Vitaxel Material Adverse Effect, a Vionmall Material Adverse Effect, or a Parent Material Adverse Effect (the “ Requisite Regulatory Approvals ”), and the Parent Stockholder Approval, Vitaxel Stockholder Approval, and Vionmall Stockholder Approval shall have been obtained or made.

 

(b)           No Law . No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) or Order that is then in effect and which has the effect of making the Exchange or the other transactions or agreements contemplated by this Agreement illegal or which otherwise prevents or prohibits consummation of the Exchange or any other transactions contemplated by this Agreement or the other ancillary agreements related to this Agreement.

 

9.2           Conditions to Obligations of Parent.

 

The obligations of Parent to consummate the Exchange are subject to the satisfaction of Vitaxel and Vionmall or waiver by Parent, at or prior to the Closing Date, of the following additional conditions:

 

(a)           Representations and Warranties . Each of the representations and warranties of Vitaxel and Vionmall set forth in this Agreement (without giving effect to any limitation as to “ materiality, ” “ Vitaxel Material Adverse Effect ” or “ Vionmall Material Adverse Effect ”) shall be true and correct as of date of this Agreement and as of the Closing Date as though made as of the Closing Date (except to the extent that such representations and warranties refer specifically to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date), except where the failure to be so true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate with respect to all such failures, a Vitaxel Material Adverse Effect or a Vionmall Material Adverse Effect, as applicable.

 

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(b)           Agreements and Covenants . Each of Vitaxel, Vionmall and their respective Subsidiaries shall have performed in all material respects all of their respective obligations and complied in all material respects with all of their respective agreements and covenants to be performed or complied with by them under this Agreement at or prior to the Closing Date.

 

(c)           Officer Certificate . Each of Vitaxel and Vionmall shall have delivered to Parent a certificate, dated the Closing Date, signed by their respective chief executive officers certifying in such capacity as to the satisfaction of the conditions specified in Sections 9.2(a), 9.2(b) and 9.2(e) .

 

(d)           Secretary’s Certificate . Each of Vitaxel and Vionmall shall have delivered to Parent: (i) true copies of their respective certificates of incorporation and bylaws (or similar applicable organizational documents) as in effect as of the Closing Date, (ii) certificates of good standing (or similar documents applicable for such jurisdictions) for each of Vitaxel and Vionmall and their respective Subsidiaries, certified as of a date no later than five (5) Business Days prior to the Closing Date from the proper Governmental Authority of the entity’s jurisdiction of organization; (iii) true copies of the resolutions of their respective boards of directors and shareholders authorizing the execution, delivery and performance of this Agreement and each of the other ancillary documents contemplated thereto to which it is a party or by which it is bound, and the consummation of the Exchange and each of the transactions contemplated hereby and thereby, and (iv) the incumbency of officers authorized to execute this Agreement or any other ancillary documents contemplated thereto to which it is a party or by which it is be bound.

 

(e)           Vitaxel Material Adverse Effect and Vionmall Material Adverse Effect . No Vitaxel Material Adverse Effect or Vionmall Material Adverse Effect shall have occurred since the date of this Agreement.

 

(f)           Surrender of Vitaxel and Vionmall Certificates . The Vitaxel Shareholders and Vionmall Shareholders shall have surrendered to Parent or its registrar or transfer agent the certificates representing the Vitaxel Shares and Vionmall Shares owned by each such Vitaxel Shareholder and Vionmall Shareholder, duly endorsed or accompanied by stock powers duly executed in blank and otherwise in a form acceptable for transfer on the books of Vitaxel and Vionmall, as applicable.

 

(g)           Vitaxel and Vionmall Requisite Consents . The authorizations, approvals and permits required to be obtained from or made with any third party in order to consummate the transactions contemplated by this Agreement, as set forth in Exhibit 9.2(g) attached hereto (the “ Vitaxel Requisite Consents ” and the “ Vionmall Requisite Consents ”), shall have each been obtained or made.

 

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9.3           Conditions to Obligations of Vitaxel, Vionmall and their respective Shareholders.

 

The obligations of Vitaxel, Vionmall and their respective shareholders to consummate the Exchange are subject to the satisfaction by Parent or waiver by Vitaxel, Vionmall and their respective shareholders, at or prior to the Closing Date, of the following additional conditions:

 

(a)           Representations and Warranties . Each of the representations and warranties of Parent set forth in this Agreement (without giving effect to any limitation as to “materiality” or “ Parent Material Adverse Effect ”) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made as of the Closing Date (except to the extent that such representations and warranties refer specifically to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date), except where the failure to be so true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate with respect to all such failures, an Parent Material Adverse Effect.

 

(b)           Agreements and Covenants . Parent shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants to be performed or complied with by it under this Agreement at or prior to the Closing Date.

 

(c)           Officer Certificate . Parent shall have delivered to each of Vitaxel and Vionmall a certificate, dated the Closing Date, signed by the chief executive officer of Parent, certifying in such capacity as to the satisfaction of the conditions specified in Sections 9.3(a), 9.3(b) and 9.3(e) .

 

(d)           Secretary’s Certificate . Parent shall have delivered to each of Vitaxel and Vionmall: (i) true copies of Parent’s certificate of incorporation and bylaws (or similar applicable organizational documents) as in effect as of the Closing Date, (ii) a certificate of good standing for Parent, certified by the Secretary of State of Nevada as of a date on later than five (5) Business Days prior to the Closing Date, (iii) true copies of the resolutions of Parent’s board of directors authorizing the execution, delivery and performance of this Agreement and each of the other ancillary documents contemplated thereto to which it is a party or by which it is bound, and the consummation of the Exchange and each of the transactions contemplated hereby and thereby, and (iv) the incumbency of officers authorized to execute this Agreement or any other ancillary documents contemplated thereto to which it is a party or by which it is be bound.

 

(e)           Parent Material Adverse Effect . No Parent Material Adverse Effect shall have occurred since the date of this Agreement.

 

(f)           Parent Requisite Consents . The authorizations, approvals and permits required to be obtained from or made with any third party in order to consummate the transactions contemplated by this Agreement, as set forth in Exhibit 9.3(f) attached hereto (the “ Parent Requisite Consents ”), shall have each been obtained or made.

 

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(g)           No Pending Regulatory Notices . There are no material pending notifications from FINRA or comments from the SEC.

 

ARTICLE X

TERMINATION AND ABANDONMENT

 

10.1         Termination.

 

This Agreement may be terminated and the Exchange and the other transactions contemplated hereby may be abandoned at any time prior to the Closing Date, notwithstanding any approval of the matters presented in connection with the Exchange by the stockholders of Parent, Vitaxel or Vionmall (the date of any such termination, the “ Termination Date ”), as follows:

 

(a)          by mutual written consent of each of Vitaxel, Vionmall and Parent, as duly authorized by the Parent Board, Vitaxel Board and Vionmall Board;

 

(b)          by written notice by either Parent, Vitaxel or Vionmall, if (i) any Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Order or Law or taken any other Action that is, in each case, then in effect and is final and nonappealable and has the effect of restraining, enjoining or otherwise preventing or prohibiting the transactions contemplated by this Agreement or the agreements contemplated hereby or (ii) any Governmental Authority shall have finally, without the right to appeal, declined to grant any of the Requisite Regulatory Approvals; provided , however , that the right to terminate this Agreement under this Section 10.1(b) shall not be available to any Party who has failed to comply with Section 8.2 as it relates to such Order or Action or whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, any such Order to have been enacted, issued, promulgated, enforced or entered;

 

(c)          by written notice by Parent, if there has been a breach by Vitaxel or Vionmall of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of Vitaxel or Vionmall shall have become untrue or inaccurate which, in either case, would result in a failure of a condition set forth in Section 9.2(a) (a “ Terminating Vitaxel or Vionmall Breach ”); provided , however , that if such Terminating Vitaxel or Vionmall Breach is curable by Vitaxel or Vionmall, as applicable, prior to the Closing Date, then Parent may not terminate this Agreement under this Section 10.1(c) for ten (10) calendar days after delivery of written notice from Parent to Vitaxel or Vionmall, as applicable, of such Terminating Vitaxel or Vionmall Breach, provided Vitaxel or Vionmall, as applicable, continues to exercise commercially reasonable efforts to cure such breach (it being understood that Parent may not terminate this Agreement pursuant to this Section 10.1(c) if it shall have materially breached this Agreement or if such Terminating Vitaxel or Vionmall Breach by Vitaxel or Vionmall, as applicable, is cured during such ten (10) calendar day period);

 

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(d)          by written notice by Vitaxel and Vionmall, if there has been a breach by Parent of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of Parent shall have become untrue or inaccurate which, in either case, would result in a failure of a condition set forth in Section 9.3 (a “ Terminating Parent Breach ”); provided , however , that if such Terminating Parent Breach is curable by Parent prior to the Closing Date, then Vitaxel and Vionmall may not terminate this Agreement under this Section 10.1(d) for ten (10) calendar days after delivery of written notice from Vitaxel or Vionmall, as applicable to Parent of such Terminating Parent Breach, provided Parent continues to exercise commercially reasonable efforts to cure such Terminating Parent Breach (it being understood that Vitaxel and Vionmall may not terminate this Agreement pursuant to this Section 10.1(d) if they shall have materially breached this Agreement or if such Terminating Parent Breach by Parent is cured during such ten (10) calendar day period);

 

(e)          by written notice by Parent if the Exchange shall not have been consummated on or before the Closing Date; provided, however, that the right to terminate this Agreement under this Section 10.1(e) shall not be available to Parent if Parent or any Parent Subsidiary is in material breach of any representation, warranty, covenant or agreement contained in this Agreement, or materially fails to fulfill any of its respective obligations under this Agreement, which, in any such case, results in, or otherwise causes, the failure of the Exchange to be consummated on or before the Closing Date; or

 

(f)          by written notice by Vitaxel or Vionmall if the Exchange shall not have been consummated on or before the Closing Date; provided , however , that the right to terminate this Agreement under this Section 10.1(f) shall not be available to Vitaxel or Vionmall if they or any of their Subsidiaries is in material breach of any representation, warranty, covenant or agreement contained in this Agreement, or materially fails to fulfill any of their respective obligations under this Agreement, which, in any such case, results in, or otherwise causes, the failure of the Exchange to be consummated on or before the Closing Date.

 

10.2         Effect of Termination.

 

In the event of the termination of this Agreement and the abandonment of the Exchange pursuant to Section 10.1 , this Agreement shall forthwith become void, and there shall be no liability on the part of any Party hereto or any of their respective affiliates or the directors, officers, partners, employees, agents or other Representatives of any of them, and all rights and obligations of each Party hereto shall cease, except nothing herein shall relieve any Party from liability for any fraud or willful breach of any of its respective representations, warranties, covenants or agreements contained in this Agreement prior to termination.

 

10.3         Fees and Expenses.

 

All Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses, whether or not the Exchange or any other related transaction is consummated.

 

10.4         Amendment.

 

This Agreement may only be amended pursuant to a written agreement signed by each of the Parties hereto.

 

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ARTICLE XI

MISCELLANEOUS

 

11.1         Waiver.

 

At any time prior to the Closing Date, subject to applicable Law, any Party hereto may in its sole discretion (i) extend the time for the performance of any obligation or other act of any other non-affiliated Party hereto, (ii) waive any inaccuracy in the representations and warranties by such other non-affiliated Party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance by such other non-affiliated Party with any agreement or condition contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by the Company or Parent in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.

 

11.2         Notices.

 

All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile or other electronic means, receipt affirmatively confirmed, or on the next Business Day when sent by reliable overnight courier to the respective Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):

 

(a)          if to Parent, to:

 

Vitaxel Group Limited

Wisma Ho Wah Genting, No. 35

Jalan Maharajalela, 50150

Kuala Lumpur, Malaysia

Attention:  Lim Wee Kiat, President

 

with a copy to (but which shall not constitute notice to Parent):

 

CKR Law LLP

1330 Avenue of the Americas

14 th Floor

New York, NY 10019

Attention:

Facsimile:  212.259.8200

 

(b)          if to Vitaxel, to:

 

Vitaxel SDN BHD

Wisma Ho Wah Genting, No. 35

Jalan Maharajalela, 50150

Kuala Lumpur, Malaysia

Attention:  Leong Yee Ming, CEO

 

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with a copy to (but which shall not constitute notice to Vitaxel):

 

CKR Law LLP

1330 Avenue of the Americas

14 th Floor

New York, NY 10019

Attention:

Facsimile:  212.259.8200

 

(c)          if to Vionmall, to:

 

Vitaxel Online Mall SBN BHD

Wisma Ho Wah Genting, No. 35

Jalan Maharajalela, 50150

Kuala Lumpur, Malaysia

Attention:  Wong Chien Nan, CEO

 

with a copy to (but which shall not constitute notice to Vionmall):

 

CKR Law LLP

1330 Avenue of the Americas

14 th Floor

New York, NY 10019

Attention:

Facsimile:  212.259.8200

 

(d)          If to the Vitaxel Shareholders to:

 

Lim Wee Kiat

Wisma Ho Wah Genting, No. 35

Jalan Maharajalela, 50150

Kuala Lumpur, Malaysia

 

with a copy to (but which shall not constitute notice to Vitaxel Shareholders

 

CKR Law LLP

1330 Avenue of the Americas

14 th Floor

New York, NY 10019

Attention:

Facsimile:  212.259.8200

 

(e)          If to the Vionmall Shareholders to:

 

Lim Chun Hoo

Wisma Ho Wah Genting, No. 35

Jalan Maharajalela, 50150

 

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Kuala Lumpur, Malaysia

 

with a copy to (but which shall not constitute notice to Vionmall Shareholders

 

CKR Law LLP

1330 Avenue of the Americas

14 th Floor

New York, NY 10019

Attention:

Facsimile:  212.259.8200

 

11.3          Binding Effect; Assignment.

 

This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of the other Parties, and any assignment without such consent shall be null and void; provided that no such assignment shall relieve the assigning Party of its obligations hereunder.

 

11.4         Governing Law; Jurisdiction.

 

This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of New York without regard to the conflict of laws principles thereof. All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any state or federal court located in New York county. The Parties hereto hereby (A) submit to the exclusive jurisdiction of any New York county state or federal court for the purpose of any Action arising out of or relating to this Agreement brought by any Party hereto and (B) irrevocably waive, and agree not to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any of the above-named courts. Each of Parent, Vitaxel and Vionmall agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each of Parent, Vitaxel and Vionmall irrevocably consents to the service of the summons and complaint and any other process in any other action or proceeding relating to the transactions contemplated by this Agreement, on behalf of itself or its property, by personal delivery of copies of such process to such Party. Nothing in this Section 11.4 shall affect the right of any Party to serve legal process in any other manner permitted by Law.

 

11.5         Waiver of Jury Trial.

 

Each of the Parties hereto hereby waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any Action directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby. Each of the Parties hereto (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of any Action, seek to enforce that foregoing waiver and (ii) acknowledges that it and the other Parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 11.5 .

 

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11.6         Counterparts.

 

This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

11.7         Interpretation.

 

The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein,” “hereby” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

11.8         Entire Agreement.

 

This Agreement and the documents or instruments referred to herein, including any exhibits attached hereto and the Vitaxel Disclosure Letter, Vionmall Disclosure Letter, and the Parent Disclosure Letter referred to herein, which exhibits and disclosure letters are incorporated herein by reference, and the Confidentiality Agreement embody the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. This Agreement and such other agreements supersede all prior agreements and the understandings among the Parties with respect to such subject matter.

 

11.9         Severability.

 

In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the Exchange be consummated as originally contemplated to the fullest extent possible.

 

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11.10         Specific Performance.

 

The Parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by Parent, Vitaxel or Vionmall in accordance with their specific terms or were otherwise breached. Accordingly, each Party shall be entitled to seek an injunction or restraining order to prevent breaches of this Agreement and to seek to enforce specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such Party may be entitled under this Agreement, at law or in equity.

 

11.11         Third Parties.

 

Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any Person that is not a Party hereto or thereto or a successor or permitted assign of such a Party, unless otherwise specified herein, including but not limited to the terms set forth in Section 8.12 .

 

11.12         Disclosure Letters.

 

The disclosure of any matter in the Vitaxel Disclosure Letter, Vionmall Disclosure Letter, or the Parent Disclosure Letter, as the case may be, shall be deemed to be a disclosure on all other sections of the Vitaxel Disclosure Letter, Vionmall Disclosure Letter, or the Parent Disclosure Letter, as the case may be, if such disclosure is in sufficient detail to make it readily apparent to a reasonable Person that such disclosure applies to the other sections thereof to which such disclosure is responsive. Certain of the information set forth in each of the Vitaxel Disclosure Letter, Vionmall Disclosure Letter, and the Parent Disclosure Letter is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgement that such information is required to be disclosed in connection with the representations and warranties made by the Parties in this Agreement, nor shall such information be deemed to establish a standard of materiality. If there is any inconsistency between the statements in this Agreement and those in the Vitaxel Disclosure Letter, Vionmall Disclosure Letter, or Parent Disclosure Letter (other than an exception set forth in such Vitaxel Disclosure Letter, Vionmall Disclosure Letter, or Parent Disclosure Letter), the statements in this Agreement will control.

 

11.13         Certain Definitions.

 

For purposes of this Agreement, the following capitalized terms have the following meanings, unless otherwise specified herein:

 

Affiliate ,” with respect to any Person, shall mean and include any Person, directly or indirectly, through one or more intermediaries controlling, controlled by or under common control with such Person.

 

Business Day” means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks in New York, New York, are not required or authorized by Law to close.

 

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Encumbrance ” means any charge, claim, community or other marital property interest, condition, equitable interest, lien, license, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first offer or first refusal, buy/sell agreement and any other restrictions or covenants with respect to, or conditions governing the use, construction, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership.

 

“Environmental Laws ” means any Law relating to (a) the protection, preservation or restoration of the environment (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (b) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Substances, and including restrictions on Hazardous Substances in electrical and electronic equipment, in each case as in effect before or at the date hereof.

 

Expenses ” shall include all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financing sources, experts and consultants to a Party hereto and/or any of its affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution or performance of this Agreement or any ancillary agreement related hereto and all other matters related to the consummation of the Exchange.

 

Hazardous Substance ” means any substance listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous or as a pollutant or contaminant under any Environmental Law. Hazardous Substances include any substance to which exposure is regulated by any Governmental Authority or any Environmental Law, including (a) petroleum or any derivative or byproduct thereof, toxic mold, asbestos or asbestos containing material or polychlorinated biphenyls, (b) all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National and Hazardous Substances Contingency Plan, 40 C.F.R. Section 300.5 and (c) substances restricted under the European Union Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment, 2002/95/EC.

 

Indebtedness ” of any Person means (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest) or for the deferred purchase price of property or services, (b) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument, (c) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP, (d) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (e) all obligations of such Person in respect of acceptances issued or created, (f) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (g) all obligations secured by an Lien on any property of such Person and (h) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person and (h) all obligation described in clauses (a) through (g) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.

 

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Parent Material Adverse Effect ” shall mean, any change or effect that, individually or in the aggregate, has, or would reasonably be expected to have, a material adverse effect upon the financial condition or operating results of Parent and the Parent Subsidiaries, taken as a whole, except any changes or effects directly or indirectly attributable to, resulting from, relating to or arising out of the following (by themselves or when aggregated with any other, changes or effects) shall not be deemed to be, constitute, or be taken into account when determining whether there has or may, would, or could have occurred an Parent Material Adverse Effect: (i) the effect of any change in the general political, economic, financial, capital market or industry-wide conditions (except to the extent that Parent and the Parent Subsidiaries are affected in a disproportionate manner relative to other companies in the industries in which Parent and the Parent Subsidiaries conduct business), (ii) the effect of any change that generally affects any industry or market in which Parent or any of the Parent Subsidiaries operate to the extent that it does not disproportionately affect, individually or in aggregate, Parent and the Parent Subsidiaries taken as a whole, relative to other participants in the industries in which Parent and the Parent Subsidiaries operate; (iii) the effect of any change arising in connection with any international or national calamity, commencement, continuation or escalation of a war, armed hostilities or act of terrorism which does not disproportionately affect Parent and the Parent Subsidiaries taken as a whole, relative to other participants in the industries in which Parent and the Parent Subsidiaries operate; (iv) the announcement of the execution of this Agreement, the pendency of or the consummation of the Exchange or the other transaction expressly contemplated hereby, (v) any change in applicable Law or GAAP or interpretation thereof, (vi) the execution by Parent and performance of or compliance by Parent with this Agreement or the taking of any action expressly contemplated or permitted by this Agreement, (vii) any shareholder litigation brought or threatened against Parent or any member of the Parent Board by shareholder(s) of Parent owning less than ten percent (10%) of the issued and outstanding Parent Common Stock in the aggregate in respect of this Agreement or the transactions contemplated hereby; (viii) any matter disclosed in the Parent Disclosure Letter or (ix) any failure to meet any financial or other projections.

 

Person ” shall mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an association, an unincorporated organization, a Governmental Authority and any other entity.

 

Subsidiary ” of any specified Person shall mean any corporation a majority of the outstanding voting power of which, or any partnership, joint venture, limited liability company or other entity a majority of the total equity interests of which, is directly or indirectly (either alone or through or together with any other subsidiary) owned by such specified Person, or any entity which is otherwise controlled by such Person, whether through securities ownership or contractual arrangements, or as would otherwise be required to be consolidated in such Person’s financial statements in accordance with GAAP.

 

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Trading Day ” means any day on which the Parent Common Stock is traded on the principal securities exchange or securities.

 

Vitaxel Material Adverse Effect ” shall mean, with respect to Vitaxel or any Vitaxel Subsidiary, any event, fact, condition, change, circumstance, occurrence or effect, which, either individually or in the aggregate with all other events, facts, conditions, changes, circumstances, occurrences or effects, (a) has had, or would reasonably be expected to have, a material adverse effect on the business, properties, prospects, assets, liabilities, condition (financial or otherwise), operations, licenses or other franchises or results of operations of Vitaxel or any Vitaxel Subsidiary, or materially diminish the value of the Vitaxel Shares or (b) does or would reasonably be expected to materially impair or delay the ability of Vitaxel to perform its respective obligations under this Agreement, including but not limited to all agreements and covenants to be performed or complied by it under the Agreement, or to consummate the transactions contemplated hereby and thereby; provided, however , that a Vitaxel Material Adverse Effect will not include any adverse effect or change resulting from any change, circumstance or effect relating to (A) the economy in general, (B) securities markets, regulatory or political conditions in the United States (including terrorism or the escalation of any war, whether declared or undeclared or other hostilities), (C) changes in applicable Laws or GAAP or the application or interpretation thereof, (D) with respect to Vitaxel or any Vitaxel Subsidiary, the industries in which Vitaxel primarily operates and not specifically relating to such Vitaxel or (E) a natural disaster (provided, that in the cases of clauses (A) through (E), the applicable Company is not disproportionately affected by such event as compared to other similar companies and businesses in similar industries and geographic regions as such company).

 

Vionmall Material Adverse Effect ” shall mean, with respect to Vionmall or any Vionmall Subsidiary, any event, fact, condition, change, circumstance, occurrence or effect, which, either individually or in the aggregate with all other events, facts, conditions, changes, circumstances, occurrences or effects, (a) has had, or would reasonably be expected to have, a material adverse effect on the business, properties, prospects, assets, liabilities, condition (financial or otherwise), operations, licenses or other franchises or results of operations of Vionmall or any Vionmall Subsidiary, or materially diminish the value of the Vionmall Shares or (b) does or would reasonably be expected to materially impair or delay the ability of Vionmall to perform its respective obligations under this Agreement, including but not limited to all agreements and covenants to be performed or complied by it under the Agreement, or to consummate the transactions contemplated hereby and thereby; provided, however , that a Vionmall Material Adverse Effect will not include any adverse effect or change resulting from any change, circumstance or effect relating to (A) the economy in general, (B) securities markets, regulatory or political conditions in the United States (including terrorism or the escalation of any war, whether declared or undeclared or other hostilities), (C) changes in applicable Laws or GAAP or the application or interpretation thereof, (D) with respect to Vionmall or any Vionmall Subsidiary, the industries in which Vionmall primarily operates and not specifically relating to such Vionmall or (E) a natural disaster (provided, that in the cases of clauses (A) through (E), the applicable company is not disproportionately affected by such event as compared to other similar companies and businesses in similar industries and geographic regions as such company).

 

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The following sets forth the location of capitalized terms defined in the body of this Agreement:

 

Terms   Section
     
2016 EIP   1.3(i)
Action   3.12, 2.12
Affiliate   11.13
Agreement   Preamble
Ancillary Public Disclosures   3.27, 2.27
Basket   8.5(b)
Business Day   11.13
Buyer   Recitals
Charter Documents   7.1(b)
Claim Notice   8.6(a)
Closing   1.2
Closing Date   1.2
Closing Filing   7.8(a)
Code   Recitals
Common Stock   Recitals
Consent   3.5, 2.5
Effective Time   1.3(e)
Encumbrance   11.13
Enforceability Exceptions   3.4, 2.4
Environmental Laws   11.13
ERISA   3.16(a), 2.16(a)
Exchange   Recitals
Exchange Act   4.5
Exchange Shares   Recitals
Executory Period   7.1(a)
Expenses   11.13
FINRA   3.5
General Release Agreement   1.3(g)
Governmental Authority   3.5, 2.5
Hazardous Substance   11.13
Indebtedness   11.13
Indemnified Party   8.3, 8.2(b), 8.2(a)
Intellectual Property   3.15(b), 2.15(b)
Law   3.6, 2.6
Laws   3.6, 2.6
Loss   8.3, 8.2(b), 8.2(a)
materiality   9.2(a)
New Parent Directors   7.9(a)
NRS   1.6
Order   3.12, 2.12
Parent   Preamble
Parent Affiliate   4.19

 

  81  

 

 

Terms   Section
     
Parent Affiliate Transaction   4.19
Parent Affiliates   4.19
Parent Disclosure Letter   Article IV
Parent Financial Statements   4.7(a)
Parent Indemnifying Parties   8.3
Parent Material Adverse Effect   11.13, 9.3(a)
Parent Organization Documents   4.1
Parent Permits   4.11(b)
Parent Requisite Consents   9.3(f)
Parent Stockholder Approval   4.4
Parent Subsidiaries   4.1
Parent Subsidiary Organization Documents   4.1
Parties   Preamble
Party   Preamble
Permitted Encumbrances   3.19(b), 2.19(b)
Person   11.13
Registration Statements   4.21
Regulation D   1.7
Regulation S   6.5(c), 5.5(c)
Representatives   7.2(c)
Requisite Regulatory Approvals   9.1(a)
SEC Documents   4.21
Securities Act   4.5
Split-Off   Recitals
Split-Off Agreement   Recitals
Split-Off Subsidiary   Recitals
Subsidiary   11.13
Tax   3.17(l), 2.17(l)
Tax Returns   4.15(a), 3.17(a), 2.17(a)
Taxes   3.17(l), 2.17(l)
Terminating Parent Breach   10.1(d)
Terminating Vitaxel or Vionmall Breach   10.1(c)
Termination Date   10.1
Third Party Claim   8.6(b)
Trading Day   11.13
Vionmall   Preamble
Vionmall Accounts Receivable   3.25
Vionmall Affiliate   3.22
Vionmall Affiliate Transaction   3.22
Vionmall Affiliates   3.22
Vionmall Benefit Plans   3.16(a)
Vionmall Disclosure Letter   Article II
Vionmall ERISA Affiliate   3.16(a)
Vionmall Foreign Benefit Plans   3.16(g)
Vionmall Group Organization Documents   3.1
Vionmall Indemnifying Parties   8.2(b)

 

  82  

 

 

Terms   Section
     
Vionmall Intellectual Property   3.15(a)
Vionmall Leases   3.19(a)
Vionmall Licensed Intellectual Property   3.15(a)
Vionmall Material Adverse Effect   11.13, 9.2(a)
Vionmall Material Contract   3.14(a)
Vionmall Organization Documents   3.1
Vionmall Permits   3.11(b)
Vionmall Personal Property Leases   3.19(c)
Vionmall Real Property   3.19(a)
Vionmall Requisite Consents   9.2(h)
Vionmall Securities   Recitals
Vionmall Shareholders   Preamble
Vionmall Shares   3.2(a)
Vionmall Subsidiaries   3.1
Vionmall Subsidiary   3.1
Vitaxel   Preamble
Vitaxel Accounts Receivable   2.25
Vitaxel Affiliate   2.22
Vitaxel Affiliate Transaction   2.22
Vitaxel Affiliates   2.22
Vitaxel Benefit Plans   2.16(a)
Vitaxel Disclosure Letter   Article II
Vitaxel ERISA Affiliate   2.16(a)
Vitaxel Financials   2.7(a)
Vitaxel Foreign Benefit Plans   2.16(g)
Vitaxel Group Organization Documents   2.1
Vitaxel Indemnifying Parties   8.2(a)
Vitaxel Intellectual Property   2.15(a)
Vitaxel Interim Financials   2.7(a)
Vitaxel Leases   2.19(a)
Vitaxel Licensed Intellectual Property   2.15(a)
Vitaxel Material Adverse Effect   11.13, 9.2(a)
Vitaxel Material Contract   2.14(a)
Vitaxel Organization Documents   2.1
Vitaxel Permits   2.11(b)
Vitaxel Personal Property Leases   2.19(c)
Vitaxel Real Property   2.19(a)
Vitaxel Requisite Consents   9.2(h)
Vitaxel Securities   Recitals
Vitaxel Shareholders   Preamble
Vitaxel Shares   2.2(a)
Vitaxel Subsidiaries   2.1
Vitaxel Subsidiary   2.1

 

[ Signature Page Follows ]

 

  83  

 

 

SIGNATURE PAGE TO

SHARE EXCHANGE AGREEMENT

 

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed and delivered by its respective duly authorized officer as of the date first above written.

 

      VITAXEL GROUP LIMITED
         
      By: /s/ Andriy Berezhnyy
      Name: Andriy Berezhnyy
      Title: President
         
VITAXEL SDN BHD   VITAXEL ONLINE MALL SDN BHD
         
By: /s/ Lim Wee Kiat   By: /s/ Lim Chun Hoo
Name: Lim Wee Kiat   Name: Lim Chun Hoo
Title: President, Director   Title: Director

 

VITAXEL SHAREHOLDERS :   VIONMALL SHAREHOLDERS :
     
/s/ Lim Chun Yen   /s/ Low Tee Bee
 Lim Chun Yen   Low Tee Bee
     
/s/ Leong Yee Ming   /s/ Cheng Choi Yin
Leong Yee Ming   Cheng Choi Yin
     
/s/ Lim Wee Kiat   /s/ Lim Chun Hoo
 Lim Wee Kiat   Lim Chun Hoo
     
/s/ Megat D. Shahriman Bin Zaharudin   /s/ Yeow Li Li
 Megat D. Shahriman Bin Zaharudin   Yeow Li Li

 

  84  

 

 

EXHIBIT 10.1

 

SPLIT-OFF AGREEMENT

 

This SPLIT-OFF AGREEMENT , dated as of January 18, 2016 (this “Agreement”), is entered into by and among Vitaxel Group Limited (formerly known as Albero, Corp.), a Nevada corporation (the “Seller”), Albero Enterprise Corp , a Nevada corporation (“Split-Off Subsidiary”), and Andriy Berezhnyy (the “Buyer”).

 

RECITALS:

 

WHEREAS, Seller is the owner of all of the issued and outstanding capital stock of Split-Off Subsidiary; Split-Off Subsidiary is a wholly owned subsidiary of Seller which will acquire the business assets and liabilities previously held by Seller; and Seller has no other businesses or operations prior to the Share Exchange (as defined herein);

 

WHEREAS, contemporaneously with the execution of this Agreement, Seller, Vitaxel SDN BHD, and Vitaxel Online Mall SBN BHD (each, a “PrivateCo” and, collectively, “Private Companies”), and the securities holders of each PrivateCo will enter into the Share Exchange Agreement by and between the Seller and the Private Companies (the “Share Exchange Agreement”) pursuant to which the securities holders of each PrivateCo will receive securities of Seller in exchange for their equity interests in Private Companies (the “Share Exchange”);

 

WHEREAS, the execution and delivery of this Agreement is required by Private Companies as a condition to their execution of the Share Exchange Agreement, and the consummation of the assignment, assumption, purchase and sale transactions contemplated by this Agreement is also a condition to the completion of the Share Exchange pursuant to the Share Exchange Agreement, and Seller has represented to Private Companies in the Share Exchange Agreement that the transactions contemplated by this Agreement will be consummated contemporaneously with the closing of the Share Exchange, and Private Companies relied on such representation in entering into the Share Exchange Agreement;

 

WHEREAS, in connection with and, in furtherance of the closing of the transactions contemplated by the Share Exchange, including consummation of the transactions contemplated by this Agreement, the Buyer has entered into that certain Split-Off Escrow Agreement, dated December 18, 2015 (the “Split-Off Escrow Agreement) with Ong Kool Tatt, as Buyers’ Representative (as defined in the Split-Off Escrow Agreement) and CKR Law, LLP, as the Escrow Agent, and executed and delivered the items required to be delivered thereunder;

 

WHEREAS, the Buyer desires to purchase the Shares (as defined in Section 2.1) from Seller, and to assume, as between Seller and Buyer, all responsibility for any pre-Share Exchange debts, obligations and liabilities of Seller and Split-Off Subsidiary, on the terms and subject to the conditions specified in this Agreement; and

 

 

 

 

WHEREAS, Seller desires to sell and transfer the Shares to the Buyer, on the terms and subject to the conditions specified in this Agreement;

 

NOW, THEREFORE, in consideration of the premises and the covenants, promises and agreements herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, agree as follows:

 

I. ASSIGNMENT AND ASSUMPTION OF SELLER’S ASSETS AND LIABILITIES.

 

Subject to the terms and conditions provided below:

 

1.1            Assignment of Assets .  Seller hereby contributes, assigns, conveys and transfers to Split-Off Subsidiary, and Split-Off Subsidiary hereby receives, acquires and accepts, all assets and properties of Seller as of the Closing Date (as defined below) immediately prior to giving effect to the Share Exchange, including but not limited to the following, but excluding in all cases (i) the right, title and assets of Seller in, to and under the Transaction Documents (as defined in the Share Exchange Agreement), and (ii) the capital stock of each PrivateCo:

 

(a)          all pre-Share Exchange cash and cash equivalents;

 

(b)          all pre-Share Exchange accounts receivable;

 

(c)          all of Seller’s pre-Share Exchange rights, title and interests in, to and under all contracts, agreements, leases, licenses (including software licenses), supply agreements, consulting agreements, commitments, purchase orders, customer orders and work orders, and including all of Seller’s rights thereunder to use and possess equipment provided by third parties, and all representations, warranties, covenants and guarantees related to the foregoing (provided that to the extent any of the foregoing or any claim or right or benefit arising thereunder or resulting therefrom is not assignable by its terms, or the assignment thereof shall require the consent or approval of another party thereto, this Agreement shall not constitute an assignment thereof if an attempted assignment would be in violation of the terms thereof or if such consent is not obtained prior to the Closing, and in lieu thereof Seller shall reasonably cooperate with Split-Off Subsidiary in any reasonable arrangement designed to provide Split-Off Subsidiary the benefits thereunder or any claim or right arising thereunder);

 

(d)          all pre-Share Exchange intellectual property, including but not limited to issued patents, patent applications (whether or not patents are issued thereon and whether modified, withdrawn or resubmitted), unpatented inventions, product designs, copyrights (whether registered or unregistered), know-how, technology, trade secrets, technical information, notebooks, drawings, software, computer coding (both object and source) and all documentation, manuals and drawings related thereto, trademarks or service marks and applications therefor, unregistered trademarks or service marks, trade names, logos and icons and all rights to sue or recover for the infringement or misappropriation thereof;

 

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(e)          all pre-Share Exchange fixed assets, including but not limited to the machinery, equipment, furniture, vehicles, office equipment and other tangible personal property owned or leased by Seller;

 

(f)          all pre-Share Exchange customer lists, business records, customer records and files, customer financial records, and all other files and information related to customers, all customer proposals, all open service agreements with customers and all uncompleted customer contracts and agreements;

 

(g) to the extent legally assignable, all pre-Share Exchange licenses, permits, certificates, approvals and authorizations issued by any governmental entity and necessary to own, lease or operate the assets and properties of Seller and to conduct Seller’s business as it is presently conducted; and

 

(h)          all pre-Share Exchange real property or interests therein.

 

all of the foregoing being referred to herein as the “Assigned Assets.”

 

1.2            Assignment and Assumption of Liabilities.  Seller hereby assigns to Split-Off Subsidiary, and Split-Off Subsidiary hereby assumes and agrees to pay, honor and discharge all debts, adverse claims, liabilities, judgments and obligations, including tax obligations, of Seller as of the Closing Date (as defined in Section 3.1) immediately prior to the effective time of the Share Exchange, whether accrued, contingent or otherwise and whether known or unknown, including those arising under any law (including the common law) or any rule or regulation of any governmental entity or imposed by any court or any arbitrator in a binding arbitration resulting from, arising out of or relating to the assets, activities, operations, actions or omissions of Seller, or products manufactured or sold thereby or services provided thereby, or under contracts, agreements (whether written or oral), leases, commitments or undertakings thereof, but excluding in all cases the obligations of Seller under the Transaction Documents (all of the foregoing being referred to herein as the “Assigned Liabilities”).

 

The assignment and assumption of Seller’s assets and liabilities provided for in this Article I is referred to as the “Assignment.”

 

II. PURCHASE AND SALE OF STOCK.

 

2.1            Purchased Shares .  Subject to the terms and conditions provided below, Seller shall sell and transfer to the Buyer and the Buyer shall purchase from Seller, on the Closing Date (as defined in Section 3.1), all of the issued and outstanding shares of capital stock of Split-Off Subsidiary (the “Shares”).

 

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2.2            Purchase Price .  The purchase price (the “Purchase Price”) for the Shares shall consist of the transfer and delivery by the Buyer to Seller 3,000,000 shares of common stock of Seller that Buyer owns (the “Purchase Price Securities”) deliverable as provided in Section 3.3.

 

III. CLOSING.

 

3.1            Closing .  The closing of the transactions contemplated in this Agreement (the “Closing”) shall take place simultaneously with the closing of the Share Exchange. The date on which the Closing occurs shall be referred to herein as the “Closing Date.”

 

3.2            Transfer of Shares .  At the Closing, Seller shall deliver to Buyer a certificate representing the Shares purchased by Buyer, duly endorsed to the Buyer or as directed by the Buyer, which delivery shall vest Buyer with good and marketable title to such Shares, free and clear of all liens and encumbrances.

 

3.3            Payment of Purchase Price .  At the Closing, Buyer shall deliver to Seller a certificate or certificates representing the Buyer’s Purchase Price Securities duly endorsed to Seller, which delivery shall vest Seller with good and marketable title to the Purchase Price Securities, free and clear of all liens and encumbrances.

 

3.4            Transfer of Records .  On or before the Closing, Seller shall transfer to Split-Off Subsidiary all existing corporate books and records in Seller’s possession relating to Split-Off Subsidiary and its business, including but not limited to all agreements, litigation files, real estate files, personnel files and filings with governmental agencies; provided, however, when any such documents relate to both Seller and Split-Off Subsidiary, only copies of such documents need be furnished. On or before the Closing, the Buyer and Split-Off Subsidiary shall transfer to Seller all existing corporate books and records in the possession of Buyer or Split-Off Subsidiary relating to Seller, including but not limited to all corporate minute books, stock ledgers, certificates and corporate seals of Seller and all agreements, litigation files, real property files, personnel files and filings with governmental agencies; provided, however, when any such documents relate to both Seller and Split-Off Subsidiary or its business, only copies of such documents need be furnished.

 

3.5            Instruments of Assignment .  At the Closing, Seller and Split-Off Subsidiary shall deliver to each other such instruments providing for the Assignment as the other may reasonably request (the “Instruments of Assignment”).

 

IV. BUYER’S REPRESENTATIONS AND WARRANTIES.

 

The Buyer represents and warrants to Seller and Split-Off Subsidiary that:

 

4.1            Capacity and Enforceability .  Buyer has the legal capacity to execute and deliver this Agreement and the documents to be executed and delivered by the Buyer at the Closing pursuant to the transactions contemplated hereby. This Agreement and all such documents constitute the valid and binding agreement of the Buyer, enforceable in accordance with their terms.

 

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4.2            Compliance .  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby by the Buyer will result in the breach of any term or provision of, or constitute a default under, or violate any agreement, indenture, instrument, order, law or regulation to which Buyer is a party or by which Buyer is bound.

 

4.3            Purchase for Investment .  Buyer is financially able to bear the economic risks of acquiring the Shares and the other transactions contemplated hereby and has no need for liquidity in his investment in the Shares. Buyer has such knowledge and experience in financial and business matters in general, and with respect to businesses of a nature similar to the business of Split-Off Subsidiary (after giving effect to the Assignment), so as to be capable of evaluating the merits and risks of, and making an informed business decision with regard to, the acquisition of the Shares and the other transactions contemplated hereby. Buyer is acquiring the Shares solely for his own account and not with a view to or for resale in connection with any distribution or public offering thereof, within the meaning of any applicable securities laws and regulations, unless such distribution or offering is registered under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from such registration is available. Buyer has (i) received all the information he has deemed necessary to make an informed decision with respect to the acquisition of the Shares and the other transactions contemplated hereby; (ii) had an opportunity to make such investigation as he has desired pertaining to Split-Off Subsidiary (after giving effect to the Assignment) and the acquisition of an interest therein and the other transactions contemplated hereby, and to verify the information which is, and has been, made available to him; and (iii) had the opportunity to ask questions of Seller concerning Split-Off Subsidiary (after giving effect to the Assignment). Buyer acknowledges that he is a current director and officer of Seller, and a current director and officer of Split-Off Subsidiary and, as such, has actual knowledge of the business, operations and financial affairs of Split-Off Subsidiary (after giving effect to the Assignment). Buyer has received no public solicitation or advertisement with respect to the offer or sale of the Shares. Buyer realizes that the Shares are “restricted securities” as that term is defined in Rule 144 promulgated by the Securities and Exchange Commission under the Securities Act, the resale of the Shares is restricted by federal and state securities laws and, accordingly, the Shares must be held indefinitely unless their resale is subsequently registered under the Securities Act or an exemption from such registration is available for their resale. Buyer understands that any resale of the Shares by him must be registered under the Securities Act (and any applicable state securities law) or be effected in circumstances that, in the opinion of counsel for Split-Off Subsidiary at the time, create an exemption or otherwise do not require registration under the Securities Act (or applicable state securities laws). Buyer acknowledges and consents that certificates now or hereafter issued for the Shares will bear a legend substantially as follows:

 

5  

 

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES LAWS.

 

Buyer understands that the Shares are being sold to him pursuant to the exemption from registration contained in Section 4(1) of the Securities Act and that Seller is relying upon the representations made herein as one of the bases for claiming the Section 4(1) exemption.

 

4.4            Liabilities .  Following the Closing, Seller will have no liability for any debts, liabilities or obligations of Split-Off Subsidiary or its business or activities, or the business or activities of Seller prior to the Closing that are unrelated to the business of Private Companies, and there are no outstanding guaranties, performance or payment bonds, letters of credit or other contingent contractual obligations that have been undertaken by Seller directly or indirectly in relation to Split-Off Subsidiary or its business, or the business of Seller prior to the Closing that are unrelated to the business of Private Companies, and that may survive the Closing.

 

4.5            Title to Purchase Price Securities .  The Buyer is the record and beneficial owners of the Purchase Price Securities. At Closing, the Buyer will have good and marketable title to the Purchase Price Securities, which Purchase Price Securities are, and at the Closing will be, free and clear of all options, warrants, pledges, claims, liens and encumbrances, and any restrictions or limitations prohibiting or restricting transfer to Seller, except for restrictions on transfer as contemplated by applicable securities laws.

 

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V. SELLER’S AND SPLIT-OFF SUBSIDIARY’S REPRESENTATIONS AND WARRANTIES.

 

Seller and Split-Off Subsidiary, as applicable, represent and warrant to Buyer that:

 

5.1            Organization and Good Standing . Each of Seller and Split-Off Subsidiary is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Nevada.

 

5.2            Authority and Enforceability . The execution and delivery of this Agreement and the documents to be executed and delivered at the Closing pursuant to the transactions contemplated hereby, and performance in accordance with the terms hereof and thereof, have been duly authorized by Seller and Split-Off Subsidiary and all such documents constitute valid and binding agreements of Seller and Split-Off Subsidiary enforceable in accordance with their terms.

 

5.3            Title to Shares . Seller is the sole record and beneficial owner of the Shares. At Closing, Seller will have good and marketable title to the Shares, which Shares are, and at the Closing will be, free and clear of all options, warrants, pledges, claims, liens and encumbrances, and any restrictions or limitations prohibiting or restricting transfer to the Buyer, except for restrictions on transfer as contemplated by Section 4.3 above. The Shares constitute all of the issued and outstanding shares of capital stock of Split-Off Subsidiary.

 

5.4            Representations in the Share Exchange Agreement . Split-Off Subsidiary represents and warrants that all of the representations and warranties by Seller, insofar as they relate to Split-Off Subsidiary, contained in the Share Exchange Agreement are true and correct.

 

VI. OBLIGATIONS OF BUYER PENDING CLOSING.

 

Buyer covenants and agrees that between the date hereof and the Closing:

 

6.1            Not Impair Performance . Buyer shall not take any intentional action that would cause the conditions upon the obligations of the parties hereto to effect the transactions contemplated hereby not to be fulfilled, including, without limitation, taking or causing to be taken any action that would cause the representations and warranties made by any party herein not to be true, correct and accurate as of the Closing, or in any way impairing the ability of Seller to satisfy its obligations as provided in Article VII.

 

6.2            Assist Performance . Buyer shall exercise reasonable best efforts to cause to be fulfilled those conditions precedent to Seller’s obligations to consummate the transactions contemplated hereby which are dependent upon actions of the Buyer and to make and/or obtain any necessary filings and consents in order to consummate the transactions contemplated by this Agreement.

 

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VII. OBLIGATIONS OF SELLER AND SPLIT-OFF SUBSIDIARY PENDING CLOSING.

 

Seller and Split-Off Subsidiary covenant and agree that between the date hereof and the Closing:

 

7.1            Business as Usual . Split-Off Subsidiary shall operate and Seller shall cause Split-Off Subsidiary to operate in accordance with past practices and shall use best efforts to preserve its goodwill and the goodwill of its employees, customers and others having business dealings with Split-Off Subsidiary. Without limiting the generality of the foregoing, from the date of this Agreement until the Closing Date, Split-Off Subsidiary shall (a) make all normal and customary repairs to its equipment, assets and facilities, (b) keep in force all insurance, (c) preserve in full force and effect all material franchises, licenses, contracts and real property interests and comply in all material respects with all laws and regulations, (d) collect all accounts receivable and pay all trade creditors in the ordinary course of business at intervals historically experienced, and (e) preserve and maintain Split-Off Subsidiary’s assets in their current operating condition and repair, ordinary wear and tear excepted. From the date of this Agreement until the Closing Date, Split-Off Subsidiary shall not (i) amend, terminate or surrender any material franchise, license, contract or real property interest, or (ii) sell or dispose of any of its assets except in the ordinary course of business. Neither Split-Off Subsidiary nor Seller shall take or omit to take any action that results in Buyer incurring any liability or obligation prior to or in connection with the Closing.

 

7.2            Not Impair Performance . Seller shall not take any intentional action that would cause the conditions upon the obligations of the parties hereto to effect the transactions contemplated hereby not to be fulfilled, including, without limitation, taking or causing to be taken any action which would cause the representations and warranties made by any party herein not to be materially true, correct and accurate as of the Closing, or in any way impairing the ability of the Buyer to satisfy his obligations as provided in Article VI.

 

7.3            Assist Performance . Seller shall exercise its reasonable best efforts to cause to be fulfilled those conditions precedent to Buyer’s obligations to consummate the transactions contemplated hereby which are dependent upon the actions of Seller and to work with the Buyer to make and/or obtain any necessary filings and consents. Seller shall cause Split-Off Subsidiary to comply with its obligations under this Agreement.

 

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7.4            Indemnification of the Escrow Agent. In consideration of the benefits to be derived by Seller from the Split-Off Escrow Agreement, as a third-party beneficiary under the Split-Off Escrow Agreement, Seller shall, from and at all times after the date of the Split-Off Escrow Agreement, indemnify and hold harmless the Escrow Agent and each partner, director, officer, employee, attorney, agent and affiliate of Escrow Agent (collectively, the “Indemnified Parties”), to the fullest extent permitted by law and to the extent provided herein, against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including without limitation reasonable attorney’s fees, costs and expenses) incurred by or asserted against any of the Indemnified Parties from and after the date hereof, whether direct, indirect or consequential, as a result of or arising from or in any way relating to any claim, demand, suit, action, or proceeding (including any inquiry or investigation) by any person, including without limitation the parties to the Split-Off Escrow Agreement, whether threatened or initiated, asserting a claim for any legal or equitable remedy against any person under any statute or regulation, including, but not limited to, any federal or state securities laws, or under any common law or equitable cause or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure of performance of the Split-Off Escrow Agreement or any transaction contemplated herein, whether or not any such Indemnified Party is a party to any such action or proceeding, suit or the target of any such inquiry or investigation; provided, however, that no Indemnified Party shall have the right to be indemnified hereunder for liability finally determined by a court of competent jurisdiction, subject to no further appeal, to have resulted from the gross negligence or willful misconduct of such Indemnified Party. The obligations of the parties under this section shall survive any termination of this Agreement.

 

VIII. SELLER’S AND SPLIT-OFF SUBSIDIARY’S CONDITIONS PRECEDENT TO CLOSING.

 

The obligations of Seller and Split-Off Subsidiary to close the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Closing of each of the following conditions precedent (any or all of which may be waived by Seller and Private Companies in writing):

 

8.1            Representations and Warranties; Performance . All representations and warranties of Buyer contained in this Agreement shall have been true and correct, in all material respects, when made and shall be true and correct, in all material respects, at and as of the Closing, with the same effect as though such representations and warranties were made at and as of the Closing. Buyer shall have performed and complied with all covenants and agreements and satisfied all conditions, in all material respects, required by this Agreement to be performed or complied with or satisfied by the Buyer at or prior to the Closing.

 

8.2            Additional Documents . Buyer shall deliver or cause to be delivered such additional documents as may be necessary in connection with the consummation of the transactions contemplated by this Agreement and the performance of their obligations hereunder.

 

8.3            Release by Split-Off Subsidiary . At the Closing, Split-Off Subsidiary shall execute and deliver to Seller a general release which in substance and effect releases Seller and each PrivateCo from any and all liabilities and obligations that Seller and each PrivateCo may owe to Split-Off Subsidiary in any capacity, and from any and all claims that Split-Off Subsidiary may have against Seller, each PrivateCo or their respective managers, members, officers, directors, stockholders, employees and agents (other than those arising pursuant to this Agreement or any document delivered in connection with this Agreement).

 

8.4            Completion of the Share Exchange. The closing of the Share Exchange pursuant to the Share Exchange Agreement, and all of the transactions contemplated thereby, shall occur simultaneously.

 

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IX. BUYER’S CONDITIONS PRECEDENT TO CLOSING.

 

The obligation of Buyer to close the transactions contemplated by this Agreement is subject to the satisfaction at or prior to the Closing of each of the following conditions precedent (any and all of which may be waived by the Buyer in writing):

 

9.1            Representations and Warranties; Performance . All representations and warranties of Seller and Split-Off Subsidiary contained in this Agreement shall have been true and correct, in all material respects, when made and shall be true and correct, in all material respects, at and as of the Closing with the same effect as though such representations and warranties were made at and as of the Closing. Seller and Split-Off Subsidiary shall have performed and complied with all covenants and agreements and satisfied all conditions, in all material respects, required by this Agreement to be performed or complied with or satisfied by them at or prior to the Closing.

 

X. OTHER AGREEMENTS.

 

10.1          Expenses . Each party hereto shall bear its expenses separately incurred in connection with this Agreement and with the performance of its obligations hereunder.

 

10.2          Confidentiality . Buyer shall not make any public announcements concerning this transaction without the prior written agreement of Private Companies, other than as may be required by applicable law or judicial process. If for any reason the transactions contemplated hereby are not consummated, then the Buyer shall return any information received by the Buyer from Seller or Split-Off Subsidiary, and the Buyer shall cause all confidential information obtained by Buyer concerning Split-Off Subsidiary and its business to be treated as such.

 

10.3          Brokers’ Fees . In connection with the transaction specifically contemplated by this Agreement, no party to this Agreement has employed the services of a broker and each agrees to indemnify the other against all claims of any third parties for fees and commissions of any brokers claiming a fee or commission related to the transactions contemplated hereby.

 

10.4          Access to Information Post-Closing; Cooperation .

 

(a)          Following the Closing, Buyer and Split-Off Subsidiary shall afford to Seller and its authorized accountants, counsel and other designated representatives, reasonable access (and including using reasonable efforts to give access to persons or firms possessing information) and duplicating rights during normal business hours to allow records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) within the possession or control of Buyer or Split-Off Subsidiary insofar as such access is reasonably required by Seller. Information may be requested under this Section 10.4(a) for, without limitation, audit, accounting, claims, litigation and tax purposes, as well as for purposes of fulfilling disclosure and reporting obligations and performing this Agreement and the transactions contemplated hereby. No files, books or records of Split-Off Subsidiary existing at the Closing Date shall be destroyed by Buyer or Split-Off Subsidiary after Closing but prior to the expiration of any period during which such files, books or records are required to be maintained and preserved by applicable law without giving Seller at least 30 days’ prior written notice, during which time Seller shall have the right to examine and to remove any such files, books and records prior to their destruction.

 

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(b)          Following the Closing, Seller shall afford to Split-Off Subsidiary and its authorized accountants, counsel and other designated representatives reasonable access (including using reasonable efforts to give access to persons or firms possessing information) and duplicating rights during normal business hours to Information within Seller’s possession or control relating to the business of Split-Off Subsidiary insofar as such access is reasonably required by the Buyer. Information may be requested under this Section 10.4(b) for, without limitation, audit, accounting, claims, litigation and tax purposes as well as for purposes of fulfilling disclosure and reporting obligations and for performing this Agreement and the transactions contemplated hereby. No files, books or records of Split-Off Subsidiary existing at the Closing Date shall be destroyed by Seller after Closing but prior to the expiration of any period during which such files, books or records are required to be maintained and preserved by applicable law without giving the Buyer at least 30 days’ prior written notice, during which time the Buyer shall have the right to examine and to remove any such files, books and records prior to their destruction.

 

(c)          At all times following the Closing, Seller, Buyer and Split-Off Subsidiary shall use their reasonable efforts to make available to the other on written request, the current and former officers, directors, employees and agents of Seller or Split-Off Subsidiary for any of the purposes set forth in Section 10.4(a) or (b) above or as witnesses to the extent that such persons may reasonably be required in connection with any legal, administrative or other proceedings in which Seller or Split-Off Subsidiary may from time to be involved.

 

(d)          The party to whom any Information or witnesses are provided under this Section 10.4 shall reimburse the provider thereof for all out-of-pocket expenses actually and reasonably incurred in providing such Information or witnesses.

 

(e)          Seller, Buyer, Split-Off Subsidiary and their respective employees and agents shall each hold in strict confidence all Information concerning the other party in their possession or furnished by the other or the other’s representative pursuant to this Agreement with the same degree of care as such party utilizes as to such party’s own confidential information (except to the extent that such Information is (i) in the public domain through no fault of such party or (ii) later lawfully acquired from any other source by such party), and each party shall not release or disclose such Information to any other person, except such party’s auditors, attorneys, financial advisors, bankers, other consultants and advisors or persons to whom such party has a valid obligation to disclose such Information, unless compelled to disclose such Information by judicial or administrative process or, as advised by its counsel, by other requirements of law.

 

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(f)          Seller, Buyer and Split-Off Subsidiary shall each use their best efforts to forward promptly to the other party all notices, claims, correspondence and other materials which are received and determined to pertain to the other party.

 

10.5          Guarantees, Surety Bonds and Letter of Credit Obligations . In the event that Seller is obligated for any debts, obligations or liabilities of Split-Off Subsidiary by virtue of any outstanding guarantee, performance or surety bond or letter of credit provided or arranged by Seller on or prior to the Closing Date, Buyer and Split-Off Subsidiary shall use their best efforts to cause to be issued replacements of such bonds, letters of credit and guarantees and to obtain any amendments, novations, releases and approvals necessary to release and discharge fully Seller from any liability thereunder following the Closing. Buyer and Split-Off Subsidiary, jointly and severally, shall be responsible for, and shall indemnify, hold harmless and defend Seller from and against, any costs or losses incurred by Seller arising from such bonds, letters of credit and guarantees and any liabilities arising therefrom and shall reimburse Seller for any payments that Seller may be required to pay pursuant to enforcement of its obligations relating to such bonds, letters of credit and guarantees.

 

10.6          Filings and Consents . Buyer, at his risk, shall determine what, if any, filings and consents must be made and/or obtained prior to Closing to consummate the purchase and sale of the Shares. The Buyer shall indemnify the Seller Indemnified Parties (as defined in Section 12.1 below) against any Losses (as defined in Section 12.1 below) incurred by such Seller Indemnified Parties by virtue of the failure to make and/or obtain any such filings or consents. Recognizing that the failure to make and/or obtain any filings or consents may cause Seller to incur Losses or otherwise adversely affect Seller, Buyer and Split-Off Subsidiary confirm that the provisions of this Section 10.6 will not limit Seller’s right to treat such failure as the failure of a condition precedent to Seller’s obligation to close pursuant to Article VIII above.

 

10.7          Insurance . The Buyer acknowledges that on the Closing Date, effective as of the Closing, any insurance coverage and bonds provided by Seller for the Buyer or for Split-Off Subsidiary, and all certificates of insurance evidencing that Buyer or Split-Off Subsidiary maintain any required insurance by virtue of insurance provided by Seller, will terminate with respect to any insured damages resulting from matters occurring subsequent to Closing.

 

10.8          Agreements Regarding Taxes .

 

(a)           Tax Sharing Agreements . Any tax sharing agreement between Seller and Split-Off Subsidiary is terminated as of the Closing Date and will have no further effect for any taxable year (whether the current year, a future year or a past year).

 

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(b)           Returns for Periods Through the Closing Date . Seller will include the income and loss of Split-Off Subsidiary (including any deferred income triggered into income by Reg. §1.1502-13 and any excess loss accounts taken into income under Reg. §1.1502-19) on Seller’s consolidated federal income tax returns for all periods through the Closing Date and pay any federal income taxes attributable to such income. Seller and Split-Off Subsidiary agree to allocate income, gain, loss, deductions and credits between the period up to Closing (the “Pre-Closing Period”) and the period after Closing (the “Post-Closing Period”) based on a closing of the books of Split-Off Subsidiary, and both Seller and Split-Off Subsidiary agree not to make an election under Reg. §1.1502-76(b)(2)(ii) to ratably allocate the year’s items of income, gain, loss, deduction and credit. Seller, Split-Off Subsidiary and Buyer agree to report all transactions not in the ordinary course of business occurring on the Closing Date after Buyer’s purchase of the Shares on Split-Off Subsidiary’s tax returns to the extent permitted by Reg. §1.1502-76(b)(1)(ii)(B). The Buyer agrees to indemnify Seller for any additional tax owed by Seller (including tax owed by Seller due to this indemnification payment) resulting from any transaction engaged in by Split-Off Subsidiary or Seller (not related to the Share Exchange) during the Pre-Closing Period or on the Closing Date before each Buyer’s purchase of the Shares. Split-Off Subsidiary will furnish tax information to Seller for inclusion in Seller’s consolidated federal income tax return for the period which includes the Closing Date in accordance with Split-Off Subsidiary’s past custom and practice.

 

(c)           Audits . Seller will allow Split-Off Subsidiary and its counsel to participate at Split-Off Subsidiary’s expense in any audit of Seller’s consolidated federal income tax returns to the extent that such audit raises issues that relate to and increase the tax liability of Split-Off Subsidiary. Seller shall have the absolute right, in its sole discretion, to engage professionals and direct the representation of Seller in connection with any such audit and the resolution thereof, without receiving the consent of Buyer or Split-Off Subsidiary or any other party acting on behalf of Buyer or Split-Off Subsidiary, provided that Seller will not settle any such audit in a manner which would materially adversely affect Split-Off Subsidiary after the Closing Date unless such settlement would be reasonable in the case of a person that owned Split-Off Subsidiary both before and after the Closing Date. In the event that after Closing any tax authority informs Buyer or Split-Off Subsidiary of any notice of proposed audit, claim, assessment or other dispute concerning an amount of taxes which pertain to Seller, or to Split-Off Subsidiary during the period prior to Closing, Buyer or Split-Off Subsidiary must promptly notify Seller of the same within 15 calendar days of the date of the notice from the tax authority. In the event Buyer or Split-Off Subsidiary do not notify Seller within such 15 day period, Buyer and Split-Off Subsidiary, jointly and severally, will indemnify Seller for any incremental interest, penalty or other assessments resulting from the delay in giving notice. To the extent of any conflict or inconsistency, the provisions of this Section 10.8 shall control over the provisions of Section 12.2 below.

 

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(d)           Cooperation on Tax Matters . Buyer, Seller and Split-Off Subsidiary shall cooperate fully, as and to the extent reasonably requested by any party, in connection with the filing of tax returns pursuant to this Section and any audit, litigation or other proceeding with respect to taxes. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Split-Off Subsidiary shall (i) retain all books and records with respect to tax matters pertinent to Split-Off Subsidiary and Seller relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Seller, any extensions thereof) of the respective taxable periods, and abide by all record retention agreements entered into with any taxing authority, and (ii) give Seller reasonable written notice prior to transferring, destroying or discarding any such books and records and, if Seller so requests, Buyer agrees to cause Split-Off Subsidiary to allow Seller to take possession of such books and records.

 

10.9          ERISA . Effective as of the Closing Date, Split-Off Subsidiary shall terminate its participation in, and withdraw from, any employee benefit plans sponsored by Seller, and Seller and Buyer shall cooperate fully in such termination and withdrawal. Without limitation, Split-Off Subsidiary shall be solely responsible for (i) all liabilities under those employee benefit plans notwithstanding any status as an employee benefit plan sponsored by Seller, and (ii) all liabilities for the payment of vacation pay, severance benefits, and similar obligations, including, without limitation, amounts which are accrued but unpaid as of the Closing Date with respect thereto. Buyer and Split-Off Subsidiary acknowledge and agree that Split-Off Subsidiary is solely responsible for providing continuation health coverage, as required under the Consolidated Omnibus Reconciliation Act of 1985, as amended (“COBRA”), to each person, if any, participating in an employee benefit plan subject to COBRA with respect to such employee benefit plan as of the Closing Date, including, without limitation, any person whose employment with Split-Off Subsidiary is terminated after the Closing Date.

 

XI. TERMINATION.

 

This Agreement may be terminated at, or at any time prior to, the Closing by mutual written consent of Seller, Buyer and each PrivateCo. If this Agreement is terminated as provided herein, it shall become wholly void and of no further force and effect and there shall be no further liability or obligation on the part of any party except to pay such expenses as are required of such party.

 

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XII. INDEMNIFICATION.

 

12.1          Indemnification by Buyer and Split-Off Subsidiary . Buyer and Split-Off Subsidiary, jointly and severally, covenant and agree to indemnify, defend, protect and hold harmless Seller and each PrivateCo, and their respective officers, directors, employees, stockholders, agents, representatives and Affiliates (collectively, the “Seller Indemnified Parties”) at all times from and after the date of this Agreement from and against all losses, liabilities, damages, claims, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), whether or not involving a third party claim and regardless of any negligence of any Seller Indemnified Party (collectively, “Losses”), incurred by any Seller Indemnified Party as a result of or arising from (i) any breach of the representations and warranties of Buyer set forth herein or in certificates delivered in connection herewith, (ii) any breach or nonfulfillment of any covenant or agreement (including any other agreement of Buyer to indemnify set forth in this Agreement) on the part of Buyer under this Agreement, (iii) any Assigned Asset or Assigned Liability or any other debt, liability or obligation of Split-Off Subsidiary, (iv) the conduct and operations, (A) prior to Closing, of the business of Seller unrelated to the assets that are the subject of the Share Exchange (B) whether before or after Closing, of (X) the business of Seller pertaining to the Assigned Assets and Assigned Liabilities or (Y) the business of Split-Off Subsidiary, (v) claims asserted (including claims for payment of taxes), whether before or after Closing, (A) against Split-Off Subsidiary or (B) pertaining to the Assigned Assets and Assigned Liabilities or to the business of Seller prior to the Closing, or (vi) any federal or state income tax payable by Seller or Private Companies and attributable to the transactions contemplated by this Agreement or to the business of Seller prior to the Closing. For the purposes of this Agreement, an “Affiliate” is a person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, another specified person or entity.

 

12.2          Third Party Claims .

 

(a)           Defense . If any claim or liability (a “Third-Party Claim”) should be asserted against any of the Seller Indemnified Parties (the “Indemnitees”) by a third party after the Closing for which Buyer has an indemnification obligation under the terms of Section 12.1, then the Indemnitee shall notify Buyer (the “Indemnitor”) within 20 days after the Third-Party Claim is asserted by a third party (said notification being referred to as a “Claim Notice”) and give the Indemnitor a reasonable opportunity to take part in any examination of the books and records of the Indemnitee relating to such Third-Party Claim and to assume the defense of such Third-Party Claim and, in connection therewith, to conduct any proceedings or negotiations relating thereto and necessary or appropriate to defend the Indemnitee and/or settle the Third-Party Claim. The expenses (including reasonable attorneys’ fees) of all negotiations, proceedings, contests, lawsuits or settlements with respect to any Third-Party Claim shall be borne by the Indemnitor. If the Indemnitor agrees to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, through counsel reasonably satisfactory to Indemnitee, then the Indemnitor shall be entitled to control the conduct of such defense, and any decision to settle such Third-Party Claim, and shall be responsible for any expenses of the Indemnitee in connection with the defense of such Third-Party Claim so long as the Indemnitor continues such defense until the final resolution of such Third-Party Claim. The Indemnitor shall be responsible for paying all settlements made or judgments entered with respect to any Third-Party Claim the defense of which has been assumed by the Indemnitor. Except as provided in subsection (b) below, both the Indemnitor and the Indemnitee must approve any settlement of a Third-Party Claim. A failure by the Indemnitee to timely give the Claim Notice shall not excuse Indemnitor from any indemnification liability except only to the extent that the Indemnitor is materially and adversely prejudiced by such failure.

 

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(b)           Failure to Defend . If the Indemnitor shall not agree to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, or shall fail to continue such defense until the final resolution of such Third-Party Claim, then the Indemnitee may defend against such Third-Party Claim in such manner as it may deem appropriate and the Indemnitee may settle such Third-Party Claim, in its sole discretion, on such terms as it may deem appropriate; provided however, that the Indemnitor shall (i) promptly reimburse the Indemnitee for the amount of all settlement payments and expenses, legal and otherwise, incurred by the Indemnitee in connection with the defense or settlement of such Third-Party Claim, or (ii) shall pay, in advance of any settlement or proceedings and in installments as reasonably agreed to by the parties, such sums and expenses reasonably expected to be incurred in connection with the defense of the Third-Party Claim and any settlement thereof. If no settlement of such Third-Party Claim is made, then the Indemnitor shall satisfy any judgment rendered with respect to such Third-Party Claim before the Indemnitee is required to do so, and pay all expenses, legal or otherwise, incurred by the Indemnitee in the defense against such Third-Party Claim.

 

12.3          Non-Third-Party Claims . Upon discovery of any claim for which the Buyer has an indemnification obligation under the terms of Section 12.1 which does not involve a claim by a third party against the Indemnitee, the Indemnitee shall give prompt notice to Buyer of such claim and, in any case, shall give Buyer such notice within 30 days of such discovery. A failure by Indemnitee to timely give the foregoing notice to Buyer shall not excuse Buyer from any indemnification liability except to the extent that Buyer is materially and adversely prejudiced by such failure.

 

12.4          Survival . Except as otherwise provided in this Section 12.4, all representations and warranties made by Buyer, Split-Off Subsidiary and Seller in connection with this Agreement shall survive the Closing. Anything in this Agreement to the contrary notwithstanding, the liability of all Indemnitors under this Article XII shall terminate on the third (3rd) anniversary of the Closing Date, except with respect to (a) liability for any item as to which, prior to the third (3rd) anniversary of the Closing Date, any Indemnitee shall have asserted a Claim in writing, which Claim shall identify its basis with reasonable specificity, in which case the liability for such Claim shall continue until it shall have been finally settled, decided or adjudicated, (b) liability of any party for Losses for which such party has an indemnification obligation, incurred as a result of such party’s breach of any covenant or agreement to be performed by such party after the Closing, (c) liability of Buyer for Losses incurred by a Seller Indemnified Party due to breaches of its representations and warranties in Article IV of this Agreement, and (d) liability of Buyer for Losses arising out of Third-Party Claims for which Buyer has an indemnification obligation, which liability shall survive until the statute of limitation applicable to any third party’s right to assert a Third-Party Claim bars assertion of such claim.

 

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XIII. MISCELLANEOUS.

 

13.1          Definitions . Capitalized terms used herein without definition have the meanings ascribed to them in the Share Exchange Agreement.

 

13.2          Notices . All notices and communications required or permitted hereunder shall be in writing and deemed given when received by means of the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, or personal delivery, or overnight courier, as follows:

 

(a) If to Seller, addressed to:

 

Vitaxel Group Limited

Wisma Ho Wah Genting, No. 35

Jalan Maharajalela, 50150

Kuala Lumpur, Malaysia

Attention: Lim Wee Kiat, President

 

(b) If to Buyer or Split-Off Subsidiary, addressed to:

 

22 Mount Davys Rd.

Cullybackey Co., Antrim County

Ballymena, BT421JH Northern Ireland

Attn:  Andriy Berezhnyy

Email: alberocorp@gmail.com

 

or to such other address as any party hereto shall specify pursuant to this Section 13.2 from time to time.

 

13.3          Exercise of Rights and Remedies . Except as otherwise provided herein, no delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.

 

13.4          Time . Time is of the essence with respect to this Agreement.

 

13.5          Reformation and Severability . In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable but so as to most nearly retain the intent of the parties, and if such modification is not possible, such provision shall be severed from this Agreement, and in either case the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

 

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13.6          Further Acts and Assurances . From and after the Closing, Seller, Buyer and Split-Off Subsidiary agree that each will act in a manner supporting compliance, including compliance by its Affiliates, with all of its obligations under this Agreement and, from time to time, shall, at the request of another party hereto, and without further consideration, cause the execution and delivery of such other instruments of conveyance, transfer, assignment or assumption and take such other action or execute such other documents as such party may reasonably request in order more effectively to convey, transfer to and vest in Buyer, and to put Split-Off Subsidiary in possession of, all Assigned Assets and Assigned Liabilities, and to convey, transfer to and vest in Seller and Buyer, and to them in possession of, the Purchase Price Securities and the Shares (respectively), and, in the case of any contracts and rights that cannot be effectively transferred without the consent or approval of another person that is unobtainable, to use its best reasonable efforts to ensure that Split-Off Subsidiary receives the benefits thereof to the maximum extent permissible in accordance with applicable law or other applicable restrictions, and shall perform such other acts which may be reasonably necessary to effectuate the purposes of this Agreement.

 

13.7          Entire Agreement; Amendments . This Agreement contains the entire understanding of the parties relating to the subject matter contained herein. This Agreement cannot be amended or changed except through a written instrument signed by all of the parties hereto and by Private Companies. No provisions of this Agreement or any rights hereunder may be waived by any party without the prior written consent of Private Companies.

 

13.8          Assignment . No party may assign his, her or its rights or obligations hereunder, in whole or in part, without the prior written consent of the other parties.

 

13.9          Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflicts or choice of laws thereof.

 

13.10        Counterparts . This Agreement may be executed in one or more counterparts, with the same effect as if all parties had signed the same document. Each such counterpart shall be an original, but all such counterparts taken together shall constitute a single agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page was an original thereof.

 

13.11        Section Headings and Gender . The section headings used herein are inserted for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. All personal pronouns used in this Agreement shall include the other genders, whether used in the masculine, feminine or neuter and the singular shall include the plural, and vice versa, whenever and as often as may be appropriate.

 

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13.12        Third-Party Beneficiary . Each of Seller, Buyer and Split-Off Subsidiary acknowledges and agrees that this Agreement is entered into for the express benefit of Private Companies, and that Private Companies are relying hereon and on the consummation of the transactions contemplated by this Agreement in entering into and performing its obligations under the Share Exchange Agreement, and that Private Companies shall be in all respects entitled to the benefit hereof and to enforce this Agreement as a result of any breach hereof.

 

13.13        Specific Performance; Remedies . Each of the parties to this Agreement acknowledges and agrees that, if any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached, irreparable damages would be incurred by the other parties to this Agreement and by Private Companies. Accordingly, the parties to this Agreement agree that any party or Private Companies will be entitled to seek an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and its terms and provisions in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter, subject to Section 13.9, in addition to any other remedy to which they may be entitled, at law or in equity. Except as expressly provided herein, the rights, obligations and remedies created by this Agreement are cumulative and are in addition to any other rights, obligations or remedies otherwise available at law or in equity, and nothing herein will be considered an election of remedies.

 

13.14        Submission to Jurisdiction; Process Agent; No Jury Trial .

 

(a)          Each party to the Agreement hereby submits to the jurisdiction of any state or federal court sitting in the Borough of Manhattan, City and State of New York, in any action arising out of or relating to this Agreement, and agrees that all claims in respect of the action may be heard and determined in any such court. Each party to the Agreement also agrees not to bring any action arising out of or relating to this Agreement in any other court. Each party to the Agreement agrees that a final judgment in any action so brought will be conclusive and may be enforced by action on the judgment or in any other manner provided at law or in equity. Each party to the Agreement waives any defense of inconvenient forum to the maintenance of any action so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.

 

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(b)          EACH PARTY TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope of this waiver is intended to be all encompassing of any and all actions that may be filed in any court and that relate to the subject matter of the transactions, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each party to the Agreement hereby acknowledges that this waiver is a material inducement to enter into a business relationship and that they will continue to rely on the waiver in their related future dealings. Each party to the Agreement further represents and warrants that it has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of commencement of any action, this Agreement may be filed as a written consent to trial by a court.

 

13.15       Construction . The parties hereto have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any federal, state, local or foreign law will be deemed also to refer to law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties hereto intend that each representation, warranty and covenant contained herein will have independent significance. If any party hereto has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which that party has not breached will not detract from or mitigate the fact that such party is in breach of the first representation, warranty or covenant.

 

[ Signature Page Follows This Page ]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Split-Off Agreement as of the date and year above written.

 

  SELLER:
   
  ALBERO, CORP.
     
  By: /s/ Andriy Berezhnyy
  Name:  Andriy Berezhnyy
  Title:  President and CEO
     
  SPLIT OFF SUBSIDIARY:
     
  By: /s/ Andriy Berezhnyy
  Name:  Andriy Berezhnyy
  Title:  President
     
  BUYER:
     
  /s/ Andriy Berezhnyy
  Andriy Berezhnyy

  

 

 

 

EXHIBIT 10.2

 

General RELEASE agreement

 

This General Release Agreement (this “ Agreement ”), dated as of January 18, 2016, is entered into by and among Vitaxel Group Limited, formerly known as Albero, Corp, a Nevada corporation (“ Seller ”), Albero Enterprise Corp., a Nevada corporation and a wholly owned subsidiary of Seller (“ Split-Off Subsidiary ”), and Andriy Berezhnyy (“ Buyer ”). In consideration of the mutual benefits to be derived from this Agreement, the covenants and agreements set forth herein, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the execution and delivery hereof, the parties hereto hereby agree as follows:

 

1.             Split-Off Agreement . This Agreement is executed and delivered pursuant to the requirements of that certain Split-Off Agreement (the “ Split-Off Agreement ”) by and among Seller, Split-Off Subsidiary and Buyer, as a condition to the closing of the purchase and sale transaction contemplated thereby (the “ Transaction ”).

 

2.             Release and Waiver by Split-Off Subsidiary . For and in consideration of the covenants and promises contained herein and in the Split-Off Agreement, the receipt and sufficiency of which are hereby acknowledged, Split-Off Subsidiary, on behalf of itself and its assigns, representatives and agents, if any, hereby covenants not to sue and fully, finally and forever completely releases Seller, Vitaxel SDN BHD, and Vitaxel Online Mall SBN BHD, (each a “ PrivateCo ”), along with their respective present, future and former officers, directors, stockholders, members, employees, agents, attorneys and representatives (collectively, the “ Seller Released Parties ”), of and from any and all claims, actions, obligations, liabilities, demands and/or causes of action, of whatever kind or character, whether now known or unknown, which Split-Off Subsidiary has or might claim to have against the Seller Released Parties for any and all injuries, harm, damages (actual and punitive), costs, losses, expenses, attorneys’ fees and/or liability or other detriment, if any, whenever incurred or suffered by Split-Off Subsidiary arising from, relating to, or in any way connected with, any fact, event, transaction, action or omission that occurred or failed to occur at or prior to the closing of the Transaction.

 

3.             Release and Waiver by Buyer . For and in consideration of the covenants and promises contained herein and in the Split-Off Agreement, the receipt and sufficiency of which are hereby acknowledged, Buyer on behalf of herself and her assigns, representatives and agents, if any, hereby covenants not to sue and fully, finally and forever completely releases the Seller Released Parties of and from any and all claims, actions, obligations, liabilities, demands and/or causes of action, of whatever kind or character, whether now known or unknown, which Buyer has or might claim to have against the Seller Released Parties for any and all injuries, harm, damages (actual and punitive), costs, losses, expenses, attorneys’ fees and/or liability or other detriment, if any, whenever incurred or suffered by such Buyer arising from, relating to, or in any way connected with, any fact, event, transaction, action or omission that occurred or failed to occur on or prior to the date of the Closing.

 

 

 

 

4.             Additional Covenants and Agreements .

 

(a)          Each of Split-Off Subsidiary and Buyer, on the one hand, and Seller, on the other hand, waives and releases the other from any claims that this Agreement was procured by fraud or signed under duress or coercion so as to make this Agreement not binding.

 

(b)          Each of the parties hereto acknowledges and agrees that the releases set forth herein do not include any claims the other party hereto may have against such party for such party’s failure to comply with or breach of any provision in this Agreement or the Split-Off Agreement.

 

(c)          Notwithstanding anything contained herein to the contrary, this Agreement shall not release or waive, or in any manner affect or void, any party’s rights and obligations under the following:

 

(i)          the Split-Off Agreement; and

 

(ii)         the Share Exchange Agreement among Seller, each PrivateCo, and stockholders of each PrivateCo. (the “ Share Exchange Agreement ”), and the other the Transaction Documents.

 

5.             Modification . This Agreement cannot be modified orally and can only be modified through a written document signed by all parties and each PrivateCo.

 

6.             Severability . If any provision contained in this Agreement is determined to be void, illegal or unenforceable, in whole or in part, then the other provisions contained herein shall remain in full force and effect as if the provision that was determined to be void, illegal or unenforceable had not been contained herein.

 

7.             Expenses . The parties hereto agree that each party shall pay its respective costs, including attorneys’ fees, if any, associated with this Agreement.

 

8.             Further Acts and Assurances . Each of Split-Off Subsidiary and Buyer agrees that it will act in a manner supporting compliance, including compliance by its Affiliates, with all of its obligations under this Agreement and, from time to time, shall, at the request of Seller or each PrivateCo, and without further consideration, cause the execution and delivery of such other instruments of release or waiver and take such other action or execute such other documents as such party may reasonably request in order to confirm or effect the releases, waivers and covenants contained herein, and, in the case of any claims, actions, obligations, liabilities, demands and/or causes of action that cannot be effectively released or waived without the consent or approval of other Persons that is unobtainable, to use its best reasonable efforts to ensure that the Seller Released Parties receive the benefits thereof to the maximum extent permissible in accordance with applicable law or other applicable restrictions, and shall perform such other acts which may be reasonably necessary to effectuate the purposes of this Agreement.

 

9.             Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflicts or choice of laws thereof.

 

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10.          Third-Party Beneficiary . Each of Seller, Buyers and Split-Off Subsidiary acknowledges and agrees that this Agreement is entered into for the express benefit of each PrivateCo, and that each PrivateCo is relying hereon and on the consummation of the transactions contemplated by this Agreement in entering into and performing its obligations under the Share Exchange Agreement, and that each PrivateCo shall be in all respects entitled to the benefit hereof and to enforce this Agreement as a result of any breach hereof.

 

11.          Specific Performance; Remedies . Each of Seller, Buyer and Split-Off Subsidiary acknowledges and agrees that each PrivateCo would be damaged irreparably if any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Accordingly, each of Seller, Buyer and Split-Off Subsidiary agrees that each PrivateCo will be entitled to seek an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and its terms and provisions in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter, subject to Section 9 , in addition to any other remedy to which they may be entitled, at law or in equity. Except as expressly provided herein, the rights, obligations and remedies created by this Agreement are cumulative and are in addition to any other rights, obligations or remedies otherwise available at law or in equity, and nothing herein will be considered an election of remedies.

 

12.          Entire Agreement . This Agreement constitutes the entire understanding and agreement of Seller, Split-Off Subsidiary and Buyer and supersedes prior understandings and agreements, if any, among or between Seller, Split-Off Subsidiary and Buyer with respect to the subject matter of this Agreement, other than as specifically referenced herein. This Agreement does not, however, operate to supersede or extinguish any confidentiality, non-solicitation, non-disclosure or non-competition obligations owed by Split-Off Subsidiary to Seller under any prior agreement.

 

13.          Definitions . Capitalized terms used herein without definition have the meanings ascribed to them in the Share Exchange Agreement.

 

[Signature page follows this page.]

 

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IN WITNESS WHEREOF , the undersigned have executed this General Release Agreement as of the day and year first above written.

 

  SELLER
     
  By: /s/ Andriy Berezhnyy
  Name:  Andriy Berezhnyy
  Title:  President
     
  SPLIT OFF SUBSIDIARY
     
  By: /s/ Andriy Berezhnyy
  Name:  Andriy Berezhnyy
  Title:  President
     
  BUYER
     
  /s/ Andriy Berezhnyy
  Andriy Berezhnyy

  

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EXHIBIT 10.3

 

VITAXEL GROUP LIMITED

 

2016 EQUITY INCENTIVE PLAN

 

1. Purposes of the Plan .  The purposes of this Plan are:

 

to attract and retain the best available personnel for positions of substantial responsibility,

 

to provide incentives to individuals who perform services for the Company, and

 

to promote the success of the Company’s business.

 

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine.

 

2. Definitions .  As used herein, the following definitions will apply:

 

(a)          “ Administrator ” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 hereof.

 

(b)          “ Affiliate ” means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company.

 

(c)          “ Applicable Laws ” means the requirements relating to the administration of equity-based awards under U.S. federal and state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plans.

 

(d)          “ Award ” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine.

 

(e)          “ Award Agreement ” means the written agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

 

(f)          “ Board ” means the Board of Directors of the Company.

 

(g)          “ Change in Control ” means the occurrence of any of the following events after the Effective Date:

 

(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of stock in the Company that, together with the stock already held by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection (i), the acquisition of additional stock by any Person who is considered to own more than 50% of the total voting power of the stock of the Company before the acquisition will not be considered a Change in Control; or

 

 

 

 

(ii) The individuals who constitute the members of the Board cease, by reason of a financing, merger, combination, acquisition, takeover or other non-ordinary course transaction affecting the Company, to constitute at least fifty-one percent (51%) of the members of the Board; or

 

(iii) The consummation of any of the following events: (A) a change in the ownership of a substantial portion of the Company’s assets, which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such Person) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions, or (B) a merger, consolidation or reorganization involving the Company, where either or both of the events described in clauses (i) or (ii) above would be the result. For purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets or a Change in Control: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total equity or voting power of which is owned, directly or indirectly, by a Person described in subsection (iii)(B)(3) above. For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

For purposes of this Section 2(g), persons will be considered to be acting as a group if they are owners of a corporation or other entity that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

 

(h)          “ Code ” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.

 

(i)          “ Committee ” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

 

(j)          “ Common Stock ” means the common stock, par value $0.000001 per share, of the Company.

 

(k)          “ Company ” means Vitaxel Group Limited , a Nevada corporation, or any successor thereto.

 

(l)          “ Consultant ” means any person, including an advisor, other than an Employee engaged by the Company or a Parent, Subsidiary or Affiliate to render services to such entity.

 

(m)          “ Determination Date ” means the latest possible date that will not jeopardize the qualification of an Award granted under the Plan as “performance-based compensation” under Section 162(m) of the Code.

 

(n)          “ Director ” means a member of the Board.

 

(o)          “ Disability ” means permanent and total disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

 

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(p)          “ Effective Date ” shall have the meaning set forth in Section 18 hereof.

 

(q)          “ Employee ” means any person, including Officers and Directors, other than a Consultant employed by the Company or any Parent, Subsidiary or Affiliate of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

 

(r)          “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

(s)          “ Exchange Program ” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise prices and different terms), Awards of a different type, and/or cash, and/or (ii) the exercise price of an outstanding Award is reduced. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.

 

(t)          “ Fair Market Value ” means, as of any date, the value of the Common Stock as the Administrator may determine in good faith, by reference to the closing price of such stock on any established stock exchange or on a national market system on the day of determination, if the Common Stock is so listed on any established stock exchange or on a national market system. If the Common Stock is not listed on any established stock exchange or on a national market system, the value of the Common Stock will be determined as the Administrator may determine in good faith using (i) a valuation methodology set forth in Treasury Regulation 1.409A-1(b)(5)(iv)(B) or (ii) with respect to valuations applicable to Awards that are not subject to Code Section 409A, such other valuation methods as the Administrator may select.

 

(u)          “ Fiscal Year ” means the fiscal year of the Company.

 

(v)         “ Incentive Stock Option ” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

 

(w)          “ Nonstatutory Stock Option ” means an Option that by its terms does not qualify or expressly provides that it is not intended to qualify as an Incentive Stock Option.

 

(x)          “ Officer ” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

(y)          “ Option ” means a stock option granted pursuant to Section 6 hereof.

 

(z)          “ Parent ” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(aa)         “ Participant ” means the holder of an outstanding Award.

 

(bb)         “ Performance Goals ” will have the meaning set forth in Section 11 hereof.

 

(cc)         “ Performance Period ” means any Fiscal Year of the Company or such other period as determined by the Administrator in its sole discretion.

 

(dd)         “ Performance Share ” means an Award denominated in Shares which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine pursuant to Section 10 hereof.

 

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(ee)         “ Performance Unit ” means an Award which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10 hereof.

 

(ff)         “ Period of Restriction ” means the period during which transfers of Shares of Restricted Stock are subject to restrictions and, therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events specified in the applicable Award, as interpreted and construed by the Administrator.

 

(gg)         “ Plan ” means this 2016 Equity Incentive Plan.

 

(hh)         “ Restricted Stock ” means Shares issued pursuant to an Award of Restricted Stock under Section 8 hereof, or issued pursuant to the early exercise of an Option.

 

(ii)         “ Restricted Stock Unit ” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 9 hereof. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

 

(jj)         “ Rule 16b-3 ” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

 

(kk)         “ Section 16(b) ” means Section 16(b) of the Exchange Act.

 

(ll)         “ Service Provider ” means an Employee, Director, or Consultant.

 

(mm)         “ Share ” means a share of the Common Stock, as adjusted in accordance with Section 14 hereof.

 

(nn)         “ Stock Appreciation Right ” means an Award, granted alone or in connection with an Option, that pursuant to Section 7 is designated as a Stock Appreciation Right.

 

(oo)         “ Subsidiary ” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

3.            Stock Subject to the Plan .

 

(a)          Subject to the provisions of Section 14 hereof, the maximum aggregate number of Shares that may be awarded and sold under the Plan is One Billion (1,000,000,000) Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

 

(b)           Lapsed Awards .  If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, is forfeited to or repurchased by the Company, the unpurchased Shares (or for Awards other than Options and Stock Appreciation Rights, the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). Upon exercise of a Stock Appreciation Right settled in Shares, the gross number of Shares covered by the portion of the Award so settled will cease to be available under the Plan. Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if unvested Shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares subject to an Award that are transferred to or retained by the Company to pay the tax and/or exercise price of an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan and, for the elimination of doubt, the number of Shares of equal value to such cash payment shall become available for future grant or sale under the Plan. Notwithstanding the foregoing provisions of this Section 3(b), subject to adjustment provided in Section 14 hereof, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a) above, plus, to the extent allowable under Section 422 of the Code, any Shares that become available for issuance under the Plan under this Section 3(b).

 

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(c)           Share Reserve .  The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.

 

4. Administration of the Plan .

 

(a) Procedure .

 

(i) Multiple Administrative Bodies .  Different Committees may be established with respect to different groups of Service Providers; in that event, the Committee established with respect to a group of Service Providers shall administer the Plan with respect to Awards granted to members of such group.

 

(ii) Section 162(m) .  To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, and if the Company is then a “publicly held corporation” as defined therein, the Plan will be administered by a Committee of two (2) or more “outside directors” within the meaning of Section 162(m) of the Code.

 

(iii) Rule 16b-3 .  To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.

 

(iv) Other Administration .  Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.

 

(b)           Powers of the Administrator .  Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:

 

(i) to determine Fair Market Value;

 

(ii) to select the Service Providers to whom Awards may be granted hereunder;

 

(iii) to determine the terms and condition, not inconsistent with the terms of the Plan, of any Award granted hereunder;

 

(iv) to institute an Exchange Program and to determine the terms and conditions, not inconsistent with the terms of the Plan, for (1) the surrender or cancellation of outstanding Awards in exchange for Awards of the same type, Awards of a different type, and/or cash, or (2) the reduction of the exercise price of outstanding Awards;

 

(v) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

 

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(vi) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

 

(vii) to modify or amend each Award (subject to Section 19(c) hereof);

 

(viii) to authorize any person to execute on behalf of the Company any instrument required to reflect or implement the grant of an Award previously granted by the Administrator;

 

(ix) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award pursuant to such procedures as the Administrator may determine consistent with the requirements for compliance with or exemption from the provisions of Code Section 409A; and

 

(x) to make all other determinations deemed necessary or advisable for administering the Plan.

 

(c)           Effect of Administrator’s Decision .  The Administrator’s decisions, determinations, and interpretations will be final and binding on all Participants and any other holders of Awards.

 

5.           Eligibility .  Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares, and such other cash or stock awards as the Administrator determines may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

 

6. Stock Options .

 

(a) Limitations .

 

(i) Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000 (U.S.), such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.

 

(ii) (ii) Subject to the limits set forth in Section 3, the Administrator will have complete discretion to determine the number of Shares subject to an Option granted to any Participant.

 

(b)           Term of Option .  The Administrator will determine the term of each Option in its sole discretion; provided, however, that the term will be no more than ten (10) years from the date of grant thereof in the case of Incentive Stock Options Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

 

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(c) Option Exercise Price and Consideration .

 

(i) Exercise Price .  The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, but will be no less than 100% of the Fair Market Value per Share on the date of grant. In addition, in the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing provisions of this Section 6(c), Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to the issuance or assumption of an Option in a transaction to which Section 424(a) of the Code applies in a manner consistent with said Section 424(a).

 

(ii) Waiting Period and Exercise Dates .  At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

 

(iii) Form of Consideration .  The Administrator will determine the acceptable form(s) of consideration for exercising an Option, including the method of payment, to the extent permitted by Applicable Laws including but not limited to tendering capital stock of the Company owned by a Participant, duly endorsed for transfer to the Company.

 

(d) Exercise of Option .

 

(i) Procedure for Exercise; Rights as a Stockholder .  Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.

 

An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Administrator specifies from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with any applicable withholding taxes). No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 hereof.

 

(ii) Termination of Relationship as a Service Provider .  If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by Award Agreement or by operation of this Section 6(d)(3), the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

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(iii) Disability of Participant .  If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of cessation (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for six (6) months following the date the Participant ceases to be a Service Provider. Unless otherwise provided by the Administrator, if on the date of cessation the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after cessation the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

(iv) Death of Participant .  If a Participant dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for six (6) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will continue to vest in accordance with the Award Agreement. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

7. Stock Appreciation Rights .

 

(a)           Grant of Stock Appreciation Rights .  Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.

 

(b)           Number of Shares .  The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Participant.

 

(c)           Exercise Price and Other Terms .  The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan; provided, however, that the exercise price will be not less than 100% of the Fair Market Value of a Share on the date of grant.

 

(d)           Stock Appreciation Rights Agreement .  Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the number of Shares with respect to which the Award is granted, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

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(e)           Expiration of Stock Appreciation Rights .  A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement; provided, however, that the term will be no more than ten (10) years from the date of grant thereof. Notwithstanding the foregoing, the rules of Section 6(d) above also will apply to Stock Appreciation Rights.

 

(f)           Payment of Stock Appreciation Right Amount .  Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

 

(i) The difference between the Fair Market Value of a Share on the date of exercise over the “stock appreciation right exercise price,” as defined under Treasury Regulation Section 1.409A-1(b)(i)(B)(2), i.e.,, the Fair Market Value of a Share on the date of grant of the Stock Appreciation Right; times

 

(ii) The number of Shares with respect to which the Stock Appreciation Right is exercised.

 

At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

 

8.           Restricted Stock .

 

(a)           Grant of Restricted Stock .  Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

 

(b)           Restricted Stock Agreement .  Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

(c)           Transferability .  Except as provided in this Section 8, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until such Shares become non-forfeitable at the end of the applicable Period of Restriction.

 

(d)           Other Restrictions .  The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.

 

(e)           Removal of Restrictions .  Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.

 

(f)           Voting Rights .  During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise in a manner not prohibited by the Award Agreement.

 

(g)           Dividends and Other Distributions .  During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and provisions for forfeiture as the Shares of Restricted Stock with respect to which they were paid.

 

  9  

 

 

(h)           Return of Restricted Stock to Company .  On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.

 

(i)           Section 162(m) Performance Restrictions .  For purposes of qualifying grants of Restricted Stock as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may condition the lapse of restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock which is intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).

 

9. Restricted Stock Units .

 

(a)           Grant .  Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. Each Restricted Stock Unit grant will be evidenced by an Award Agreement that will specify such other terms and conditions as the Administrator, in its sole discretion, will determine in accordance with the terms and conditions of the Plan, including all terms, conditions, and restrictions related to the grant, the number of Restricted Stock Units and the form of payout, which, subject to Section 9(d) hereof, may be left to the discretion of the Administrator.

 

(b)           Vesting Criteria and Other Terms .  The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. After the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any restrictions for such Restricted Stock Units. Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will specify the vesting criteria, and such other terms and conditions as the Administrator, in its sole discretion will determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed, subject to the prohibition on acceleration of the timing of distribution of deferred compensation subject to Section 409A of the Code, to the extent applicable to the Award.

 

(c)           Earning Restricted Stock Units .  Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as specified in the Award Agreement.

 

(d)           Form and Timing of Payment .  Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) set forth in the Award Agreement, which shall satisfy the requirements of Section 409A of the Code, to the extent applicable to such Award. The Administrator, in its sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof. Shares represented by Restricted Stock Units that are fully paid in cash again will be available for grant under the Plan.

 

(e)           Cancellation .  On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.

 

(f)           Section 162(m) Performance Restrictions .  For purposes of qualifying grants of Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock Units which are intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).

 

  10  

 

 

10. Performance Units and Performance Shares .

 

(a)           Grant of Performance Units/Shares .  Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units/Shares granted to each Participant.

 

(b)           Value of Performance Units/Shares .  Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.

 

(c)           Performance Objectives and Other Terms .  The Administrator will set performance objectives or other vesting provisions. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the Administrator in its discretion. Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

(d)           Earning of Performance Units/Shares .  After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share.

 

(e)           Form and Timing of Payment of Performance Units/Shares .  Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period or, if earlier, after the date on which a Participant’s interest in such Performance Units/Shares is no longer subject to a substantial risk of forfeiture, provided however, that in no event shall such payment be made after the later to occur of (i) December 31 of the year in which such risk of forfeiture lapses or (ii) two and one-half months after such risk of forfeiture lapses. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.

 

(f)           Cancellation of Performance Units/Shares .  On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.

 

(g)           Section 162(m) Performance Restrictions .  For purposes of qualifying grants of Performance Units/Shares as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Performance Units/Shares which are intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals).

 

11. Performance-Based Compensation Under Code Section 162(m) .

 

(a)           General .  If the Administrator, in its discretion, decides to grant an Award intended to qualify as “performance-based compensation” under Code Section 162(m), the provisions of this Section 11 will control over any contrary provision in the Plan; provided, however, that the Administrator may in its discretion grant Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code to such Participants that are based on Performance Goals or other specific criteria or goals but that do not satisfy the requirements of this Section 11.

 

  11  

 

 

(b)           Performance Goals .  The granting and/or vesting of Awards of Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units and other incentives under the Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Code Section 162(m) and may provide for a targeted level or levels of achievement (“Performance Goals”) including (i) earnings per Share, (ii) operating cash flow, (iii) operating income, (iv) profit after-tax, (v) profit before-tax, (vi) return on assets, (vii) return on equity, (viii) return on sales, (ix) revenue, and (x) total shareholder return. Any Performance Goals may be used to measure the performance of the Company as a whole or a business unit of the Company and may be measured relative to a peer group or index. The Performance Goals may differ from Participant to Participant and from Award to Award. Prior to the Determination Date, the Administrator will determine whether any significant element(s) will be included in or excluded from the calculation of any Performance Goal with respect to any Participant.

 

(c)           Procedures .  To the extent necessary to comply with the performance-based compensation provisions of Code Section 162(m), with respect to any Award granted subject to Performance Goals, within the first twenty-five percent (25%) of the Performance Period, but in no event more than ninety (90) days following the commencement of any Performance Period (or such other time as may be required or permitted by Code Section 162(m)), the Administrator will, in writing, (i) designate one or more Participants to whom an Award will be made, (ii) select the Performance Goals applicable to the Performance Period, (iii) establish the amounts of such Awards, as applicable, which may be earned for such Performance Period, and (iv) specify the relationship between Performance Goals and the amounts of such Awards, as applicable, to be earned by each Participant for such Performance Period. Following the completion of each Performance Period but in no event later than December 31 of the year in which such Performance Period ends or, if later, the date that is two and one-half months after the end of such Performance Period, the Administrator will certify in writing whether the applicable Performance Goals have been achieved for such Performance Period and pay any amount to which a Participant is entitled under an Award with respect to such Performance Period. In determining the amounts earned by a Participant, the Administrator will have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Administrator may deem relevant to the assessment of individual or corporate performance for the Performance Period. A Participant will be eligible to receive payment pursuant to an Award for a Performance Period only if the Performance Goals for such period are achieved.

 

(d)           Additional Limitations .  Notwithstanding any other provision of the Plan, any Award which is granted to a Participant and is intended to constitute qualified performance based compensation under Code Section 162(m) will be subject to any additional limitations set forth in the Code (including any amendment to Section 162(m)) or any regulations and ruling issued thereunder that are requirements for qualification as qualified performance-based compensation as described in Section 162(m) of the Code, and the Plan will be deemed amended to the extent necessary to conform to such requirements.

 

12.          Leaves of Absence .  Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Service Provider will not cease to be an Employee in the case of (i) any leave of absence approved by the Company, or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months and one day following the commencement of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.

 

  12  

 

 

13.          Transferability of Awards .  Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award may only be transferred (i) by will, (ii) by the laws of descent and distribution, (iii) to a revocable trust, or (iv) as permitted by Rule 701 of the Securities Act of 1933, as amended.

 

14. Adjustments; Dissolution or Liquidation; Merger or Change in Control .

 

(a)           Adjustments .  In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits set forth in Sections 3, 6, 7, 8, 9 and 10 hereof.

 

(b)           Dissolution or Liquidation .  In the event of the proposed dissolution or liquidation of the Company, any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off; a reverse merger in which the Company is the surviving entity, but the shares of Company stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or the transfer of more than fifty percent (50%) of the then outstanding voting stock of the Company to another person or entity. the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Company, to the extent permitted by applicable law but otherwise in its sole discretion may provide for: (i) the continuation Awards by the Company (if the Company is surviving entity or its parent; (ii) the assumption of the Plan and such outstanding Awards by the surviving entity or its parent; (iii) the substitution by the surviving entity or its parent of rights with substantially the same terms for such outstanding Awards; or (iv) the cancellation of such outstanding Rights without payment of any consideration provided that in the case of this clause (iv), the Administrator will provide notice of its intention to cancel Award and offer a reasonable opportunity to exercise vested Awards.

 

(c)           Change in Control .  In the event of a merger or Change in Control, each outstanding Award will be treated as the Administrator determines, including, without limitation, that each Award will be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation (the “Successor Corporation”). The Administrator will not be required to treat all Awards similarly in the transaction.

 

In the event that the Successor Corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock will lapse, and, with respect to Restricted Stock Units, Performance Shares and Performance Units, all Performance Goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted for in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

 

  13  

 

 

For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines to settle in cash or a Performance Share or Performance Unit which the Administrator can determine to settle in cash, the fair market value of the consideration received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Performance Share or Performance Unit, for each Share subject to such Award (or in the case of Performance Units, the number of implied shares determined by dividing the value of the Performance Units by the per share consideration received by holders of Common Stock in the Change in Control), to be solely common stock of the Successor Corporation equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.

 

Notwithstanding anything in this Section 14(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more Performance Goals will not be considered assumed if the Company or its successor modifies any of such Performance Goals without the Participant’s consent; provided, however, a modification to such Performance Goals only to reflect the Successor Corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

 

15. Tax Withholding .

 

(a)           Withholding Requirements .  Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).

 

(b)           Withholding Arrangements .  The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum amount required to be withheld, (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld, or (iv) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld. The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

 

16.          No Effect on Employment or Service .  Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.

 

17.          Date of Grant .  The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.

 

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18.          Term of Plan .  Subject to Section 22 hereof, the Plan will become effective upon its adoption by the Board (the “Effective Date”). It will continue in effect for a term of ten (10) years unless terminated earlier under Section 19 hereof; provided, however, that such expiration shall not affect Awards then outstanding, and the terms and conditions of this Plan shall continue to apply to such Awards.

 

19. Amendment and Termination of the Plan .

 

(a)           Amendment and Termination .  The Administrator may at any time amend, alter, suspend or terminate the Plan.

 

(b)           Stockholder Approval .  Subject to Section 22, the Company will obtain stockholder approval of the Plan and any Plan amendment to the extent necessary or desirable to comply with Applicable Laws.

 

(c)           Effect of Amendment or Termination .  No amendment, alteration, suspension, or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

20. Conditions Upon Issuance of Shares .

 

(a)           Legal Compliance .  Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)           Investment Representations .  As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

 

(c)           Restrictive Legends .  All Award Agreements and all securities of the Company issued pursuant thereto shall bear such legends regarding restrictions on transfer and such other legends as the appropriate officer of the Company shall determine to be necessary or advisable to comply with applicable securities and other laws.

 

21.          Inability to Obtain Authority .  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.

 

22.          Stockholder Approval .  The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws, including without limitation Section 422 of the Code. In the event that stockholder approval is not obtained within twelve (12) months after the date the Plan is adopted by the Board, all Incentive Stock Options granted hereunder shall be void ab initio and of no effect. Notwithstanding any other provisions of the Plan, no Awards shall be exercisable until the date of such stockholder approval.

 

23.          Notification of Election Under Section 83(b) of the Code .  If any Service Provider shall, in connection with the acquisition of Shares under the Plan, make the election permitted under Section 83(b) of the Code, such Service Provider shall notify the Company of such election within ten (10) days of filing notice of the election with the Internal Revenue Service and provide the Company with a copy thereof, in addition to any filing and a notification required pursuant to regulations issued under the authority of Section 83(b) of the Code. A Service Provider shall not be permitted to make a Section 83(b) election with respect to an Award of a Restricted Stock Unit.

 

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24.          Notification Upon Disqualifying Disposition Under Section 421(b) of the Code .  Each Service Provider shall notify the Company of any disposition of Shares issued pursuant to the exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), within ten (10) days of such disposition.

 

25.          409A Timing Rule for Specified Employees .  If at the time of a Service Provider’s separation from service, such individual is considered a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, and if any payment that such Service Provider becomes entitled to under the Plan or any Award is deemed payable on account of such individual’s separation from service, then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the individual’s separation from service, or (ii) the individual’s death.

 

26.          Governing Law .  The law of the State of Nevada shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of laws rules, subject to the Company’s intention that the Plan satisfy the requirements of jurisdictions outside of the United States of America with respect to Awards subject to such jurisdictions.

 

27. General Provisions .

 

(a)           No Rights as Stockholder .  Except as specifically provided in this plan, a Participant or a transferee of an Award shall have no rights as a stockholder with respect to any shares covered by the Award until the date of the issuance of such shares to the Participant, and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the date such Stock is issued.

 

(b)           Other Compensation Arrangements .  Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

 

(c)           Disqualifying Dispositions .  Any participant who shall make a “disposition” (as defined in Section 424 of the Code) of all or any portion of an Incentive Stock Option within two (2) years from the date of grant of such Incentive Stock Option or within (1) year after the issuance of the shares of Stock acquired upon exercise of such Incentive Stock Option shall be required to immediately advise the Company in writing as to the occurrence of the sale and the price realized upon the sale of such shares of Stock.

 

(d)           Regulatory Matters .  Each Stock Option Agreement and Stock Purchase Agreement shall provide that no shares shall be purchased or sold thereunder unless and until (i) any then applicable requirements of state or federal laws and regulatory agencies shall have been fully compiled with to the satisfaction of the Company and its counsel and (ii) if required to do so by the Company, the Optionee or Offeree shall have executed and delivered to the Company a letter of investment intent in such form and containing such provisions as the Board or Committee may require.

 

(e)           Delivery .  Upon exercise of an Award granted under this Plan, the Company shall issue Stock or pay any amounts due within a reasonable period of time thereafter. Subject to any statutory obligations the Company may otherwise have, for purposes of this Plan, thirty days shall be considered a reasonable period of time.

 

(f)           Other Provisions .  The Stock Option Agreements and Stock Purchase Agreements authorized under the Plan may contain such other provisions not inconsistent with this Plan, including, without limitation, restrictions upon the exercise of the Rights, as the Administrator may deem advisable.

 

(g)           Section 409A .  Awards under the Plan are intended either to be exempt from the rules of Section 409A of the Code or to satisfy those rules, and the Plan and such awards shall be construed accordingly. Granted rights may be modified at any time, in the Administrator’s direction, so as to increase the likelihood of exemption from or compliance with the rules of Section 409A of the Code.

 

  16  

 

EXHIBIT 10.4

 

Our Ref : PSL/HWGB/0414/0041  
       
Date : 1 st April 2014  

 

MR LIM WEE KIAT, BERNARD

AT PRESENT

 

PRIVATE &

CONFIDENTIAL

 

Dear Bernard,

 

RE : LETTER OF TRANSFER

 

We are pleased to inform you that you have been transferred from HWG TIN MINING SDN BHD to VITAXEL SDN BHD with effect from 1 .4.2014

 

Other terms and conditions of service remain the same.

 

Kindly sign the duplicate copy of this letter and return it to HR Department.

 

We look forward to your continue support and untiring effort.

 

Yours faithfully

HO WAH GENTING BERHAD

 

/s/ Datuk William Teo

DATUK WILLIAM TEO

Group Executive Chairman

 

c.c. Payroll Master

 

 

I hereby accept the aforesaid terms and conditions

 

Name : Lim Wee Kiat I/C No. :
         
Signature : /s/ Lim Wee Kiat Date :  3/5/2014

 

 

 

 

 

HWG TIN MINING SDN BHD (7aooo9-V)

(Formerly known as Oxystreams Sdn Bhd)

Wisma Ho Wah Genting, No . 35 Jalan Maharajalela, 50150 Kuala Lumpur, Malaysia

Tel:+ 603 2143 8811 Fax:+ 603 2141 7477

 

  Our Ref: APP/HWGTM/0308/0002
     
  Date 28 March 2008

 

PRIVATE & CONFIDENTIAL

MR LIM WEE KIAT

No . 22A, Jalan PJU 3/168

Damansara lndah

Homes Resort

47410 Petaling Jaya

Selangor

 

Dear Mr. Lim ,

 

LETTER OF APPOINTMENT : DI RECTOR / DIRECTOR  OF OPERATIONS

 

We are pleased to offer you the abovementioned position with the Company under the following terms and conditions of employment:-

 

1. Position DIRECTOR / DIRECTOR OF OPERATIONS
     
2 . Grade & Level Grade 1 & Level “8002”
     
3 . Commencing Salary RM 5,000.00 PER MONTH
     
4 . Claim Reimbursement: RM 2,000.00 PER MONTH (maximum)
     
5 . Commencement Date: 1 APRIL 2008
     
6 . Bonus  

 

Payment of bonus shall be at the absolute discretion of the Company and depending on the Company and individual performance . Bonus is only payable to confirmed employees who are in the service of the Company on 31 51 December of the respective year . (refer to Employee's Handbook of Article 33)

 

7 . Medical Benefits

 

You are entitled to clinical benefits during the probationary period . (refer to Employee's Handbook of Article 22)

 

 

 

  

Our Ref APP/HWGTM/0308/0002
Page 2

 

8 . Probationary Period

 

The probationary period of the Company shall be six (6) months and the Company reserves the right to extend the probationary period at the sole discretion of the Company . During or at the end of the period of probation or any extension thereof, employment may be terminated at anytime by either party giving to the other party by giving one (1) month's notice without assigning any reasons whatsoever . Confirmation shall depend upon satisfactory review of your performance , conduct and aptitude during the probation period. (refer to Employee's Handbook of Article 5)

 

9 . Annual Increment

 

Annual increment will be subjected to review by the Board of Directors and at the sole discretion of the Company's Management.

 

10 . Termination of Service After Confirmation

 

Each party to this agreement may at any time give to the opposite party a written notice of intention of termination.

 

After confirmation, the length of such notice, which is the same for each party , shall be as follows :-

 

(i) Three (3) month's notice or three (3) month salary in lieu of notice

 

(refer to Employee's Handbook of Article 27)

 

11. Confidentiality

 

It is understood and accepted that you will at no circumstances divulge or make public, in any way, any of the Company's confidential matters . This clause shall continue to apply even after the termination of your service . (refer to Employee's Handbook of Article 38)

 

12 . Duties and Job Functions

 

You will be required to carry out such duties and job functions as may be instructed from time to time by the Company and you are subject to transfer from one associated or subsidiary company to another at the sole discretion of the Company .

 

13 . Other Terms and Conditions

 

(i) You agree that your salary will be made by cheque/bank .

 

(ii) You will be required to observe and adhere to the other terms and conditions of employment as prescribed in the Employee's Handbook that these terms and conditions may be varied from time to time by the Management.

 

 

 

 

Our Ref APP/HWGTM/0308/0002
Page 3

 

14 . General

 

It is an express condition of your employment w i th the Company that you engage yourself exclusively in the Company's business and do not undertake any other terms of employment which in anyway may conflict with the Company's business or interest.

 

We would like to take this opportunity to welcome you as a member of the Company and trust that you will treat this engagement as a chance to grow with the Company .

 

If the above terms and conditions are acceptable to you , kindly confirm your acceptance of the employment by signing and returning the duplicate copy of this letter.

 

Yours faithfully,

HWG TIN MINING SON BHD

 

/s/ Sally Tee

SALLY TEE

Group HR Manager

c . c . Payroll Master

 

I hereby accept the offer of employment upon the terms and conditions as stated above .

 

Signature /s/ Lim Wee Kiat NRIC No.
     
Name Lim Wee Kiat E . P . F . NO.
     
Socso No.   Income Tax

  

 

 

 

EXHIBIT 10.5

 

1 st November 2015

 

PRIVATE &

CONFIDENTIAL

 

Mr. Leong Yee Ming, Ryan

c/o Interasean Focus Agency

C-7-11, Oakleaf Park Condo

68000 Ampang

Selangor

 

Dear Mr Leong

 

RE : CONSULTANCY SERVICE

 

We refer to the above matter.

 

We are pleased to offer you the above and you are required to read and fully understand the terms and conditions stipulated in this Consultancy Service before signing the acceptance to render your service. This agreement is not a contract of service and thus you shall not hold the company liable and/or responsible as an employer.

 

Project : Vitaxel Sdn Bhd – Wisma Ho Wah Genting, No. 35 Jalan Maharajalela,

50150 Kuala Lumpur

 

Service Offered To : Leong Yee Ming, Ryan

c/o Interasean Focus Agency 

 

Company No. : 002345452-W

 

Scope of Work : as in the attachment

 

Commencing Date : 1 st November 2015 

 

Expiry Date : 31 st July2016

 

The above is based on the following terms and conditions as follows: -

 

1) Monthly Consultancy Fee : RM12,000.00
      (Ringgit Malaysia : Twelve Thousand Only)
       
2) Claims : RM2,000.00 (max.) per month  (Rgt. M’sia : Two Thousand only) for petrol, toll charges, accommodation & other expenses incurred during official assignment shall be based on the HWGB Employee Handbook.
       
3) Medical Benefits : You are entitled to clinical benefits during your service with the Company in accordance with limit and condition as follows : -

 

 

 

 

  · Reimbursed for a full cost of outpatient treatment as long as it does not exceed the yearly medical expenses which includes the Company’s panel doctor/non appointed Company’s doctor as below :-
    - RM1,500.00 per year (To be decided by Company)

 

4) Termination of Service Agreement
  This Agreement shall be terminated without any compensation whatsoever upon either party giving to the other party one (1) month written notice of intention to terminate the Contract.
   
5) Business License
  You are to ensure that your Agency has an existing business license issued by the relevant authority throughout the contract period.
   
6) Confidentiality
  It is understood and accepted that you will at no circumstances divulge or make public, in any way, any of the Company’s confidential matters, accounts, transactions, statistics or plans that you may gain in the course of discharging your duty. This clause shall continue to apply even after the termination of your contract.
   
7) General
  You are required to obey and comply with all instructions and directions given to you by the Company and faithfully observe all the rules, regulations, procedures, practices, systems and policies of the Company, whether explicit or implied, for the time being in force by the Company in all respects.

 

Yours faithfully

VITAXEL SDN BHD

 

/s/ Bernard Lim

BERNARD LIM

Executive Director

 

I, Leong Yee Ming, Ryan c/o Interasean Focus Agency (Company No. 002345452-W) C-7-11, Oakleaf Park Condo, 68000 Ampang, Selangor hereby accept the offer upon the terms and conditions as stated above.

 

/s/ Leong Yee Ming, Ryan

    1-11-2015
LEONG YEE MING, RYAN   Date
C/O INTERASEAN FOCUS AGENCY    
(Company stamp & sign)    

 

 

 

 

Attachment

 

SCOPE OF WORK

 

(i) Responsible for the success or failure of the Company. To ensure that the operations, and in particular the marketing, is properly designed so that the Company is profitable

 

(ii) Supports motivation of employees in organization products/programs and operations

 

(iii) Ensures staff and Board have sufficient and up-to-date information

 

(iv) Looks to the future of change opportunities

 

(v) Formulates policies and planning recommendations to the Board

 

(vi) Decides or guides courses of action in operations by the staff

 

(vii) Oversees the operations of organization

 

(viii) Implements plans that has been approved

 

(ix) Oversees design, marketing, promotion, delivery and quality of programs, products and services

 

(x) Assures the organization and its mission, program, products and services are consistently presented in strong and positive image

 

 

 

EXHIBIT 10.6

 

Our Ref :  APP/Vitaxel/0315/0013

 

Date : 24 th March 2015

 

PRIVATE &

CONFIDENTIAL

Mr Lee Wei Boon

35, Lorong Kelisa Emas 4

Taman Kelisa Emas

13700 Seberang Jaya

Pulau Pinang

 

Dear Mr Lee,

 

LETTER OF APPOINTMENT: FINANCE MANAGER

 

We are pleased to offer you the above mentioned position with the Company under the following terms and conditions of employment:-

 

  1. Position  : Finance Manager
         
  2. Commencing Salary : RM8,000.00 PER MONTH
         
  3. Commencement Date : 5 th May 2015

  

    Mondays to Fridays: 8:30am to 5:30pm (subject to change)
     
    However, you are expected to and agree to work beyond the said working hours or at odd hours and even on Saturdays to ensure projects are completed on time.
     
  4. Medical Benefits
    You are entitled to free medical benefits from our appointed Company doctors or any recognized Registered Medical Practitioner for normal sickness and not for any specialist treatment or hospitalization.
     
  5. Probationary Period
    The probationary period of the Company shall be six (6) months and the Company reserves the right to extend the probationary period at its sole discretion. During or at the end of the period of probation or any extension thereof, employment may be terminated at any time by either party giving to the other party one (1) month notice without assigning any reasons whatsoever. Confirmation shall depend upon satisfactory review of your performance, conduct and aptitude during the probation period.

  

 

 

  

Our Ref : APP/Vitaxel/0315/0013
Page : 2

 

  6. Termination of Service After Confirmation
    Each party to this agreement may at any time give to the opposite party a written notice of intention of termination.

 

  The length of such notice, which is the same for each party, shall be as follows:-
  (i) Three-Month Notice or three (3) month salary in lieu of notice

 

  7. Confidentiality
    It is understood and accepted that you will at no circumstances divulge or make public, in any way, any of the company’s confidential matters. This clause shall continue to apply after the termination of your service.
     
  8. Duties and Job Functions
    You will be required to carry out such duties and job functions as may be instructed from time to time by the Company and you are subject to transfer from one associate or subsidiary company to another at the sole discretion of the Company

 

  9. Other Terms and Conditions
  (i) You are liable as and when required, to be transferred from your original work office/site to other branches of the Company in Malaysia.
  (ii) You are required at all times faithfully and diligently perform such duties and accept such responsibilities as may from time to time assigned to you by the management of the Company and at all times endeavor to your utmost ability to promote and advance the interest of the Company.  
  (iii) You are required to obey and comply with all instructions and directions given to you by your superior and faithfully observe all the rules, regulations, procedures, practices, systems and policies of the Company, whether expressly or implied, for the time being in force by the Company in all respects.
  (iv) You agree that your salary will be made by cheque / bank.
  (v) You will be required to observe and adhere to the other terms and conditions of employment as prescribed in the HWGB Employee Handbook that these terms and conditions may be varied from time to time by the Management.
  (vi) Your retirement age is 60 and this is in compliance with Section 4 of the Minimum Retirement Age Act 2012 (Act 753). Any extension of employment after the retiring age is at the sole discretion of the Company.

 

  10. General
  It is an expressed condition of your employment with the Company that you engage yourself exclusively in the Company’s business and do not undertake any other terms of employment or business activities which in anyway may conflict with the Company’s business or interest.

  

 

 

 

Our Ref : APP/Vitaxel/0315/0013
Page : 3

 

If the above terms and conditions are acceptable to you, kindly confirm your acceptance of the employment by signing and returning the duplicate copy of this letter where indicated together with;

 

(a) One (1) copy of your recent passport sized photograph
(b) Copies of your certificate/diplomas
(c) Copies of testimonies (if any), and
(d) A photocopy of your identity card

 

We would like to take this opportunity to welcome you as a member of the Company and trust that you will treat this engagement as a chance to grow with the Company.

 

Yours faithfully,

VITAXEL SDN BHD

 

/s/ Datuk William Teo

DATUK WILLIAM TEO

Group Chairman

 

 

 

I hereby accept the offer of employment upon the terms and conditions as stated above.

 

Signature : /s/ Lee Wei Boon NRIC No. :
         
Name : Lee Wei Boon E.P.F. No :
         
Socso No. :   Income Tax :

 

 

 

EXHIBIT 10.7

 

Our Ref : APP/Vitaxel/1214/0039
     
Date : 1 st December 2014

 

PRIVATE &

CONFIDENTIAL

 

Mr Yee Hing Yip, Brandon

No. 47/48, Jalan Jambu Berasa

Jinjang Selatan

52000 Kuala Lumpur

 

Dear Mr Yee,

 

LETTER OF APPOINTMENT : MARKETING DIRECTOR

 

We are pleased to offer you the mentioned above position with the Company under the following terms and conditions of employment:-

 

  11. Position : Marketing Director
         
  12. Commencing Salary : RM 6,000.00 PER MONTH
         
  13. Other Allowance : i) Mobile Phone Allowance RM150.00 per month
        ii) Parking Allowance RM150.00 per month
        iii) Mileage claim on official business only (rate as prescribed in the HWGB Employee Handbook)

 

  14. Commencement Date : 1 st Dec 2014
     
  15. Bonus
    Payment of bonus shall be at the absolute discretion of the Company and depending on the Company and individual performance. Bonus is only payable to confirmed employees who are in the service of the Company as on 31 st December of the respective year.
     
  16. Medical Benefits
    You are entitled to free medical benefits from our appointed Company doctors.

 

 

 

  

Our Ref : APP/Vitaxel/1214/0039
Page : 2

 

17. Probationary Period

The probationary period of the Company shall be six (6) months and the Company reserves the right to extend the probationary period at its sole discretion. During or at the end of the period of probation or any extension thereof, employment may be terminated at anytime by either party giving to the other party one-week (1) notice without assigning any reasons whatsoever. Confirmation shall depend upon satisfactory review of your performance, conduct and aptitude during the probation period.

 

18. Termination of Service

Each party to this agreement may at any time give to the opposite party a written notice of intention of termination.

The length of such notice, which is the same for each party, shall be as follows:-

 

(i) One-month notice or one month salary in lieu of notice

 

19. Annual Increment

Annual increment will be subjected to review by the Management and at the sole discretion of the Company’s Management.

 

20. Confidentiality

It is understood and accepted that you will at no circumstances divulge or make public, in any way, any of the company’s confidential matters. This clause shall continue to apply after the termination of your service.

 

21. Duties and Job Functions

You are required to carry out such duties and responsibilities as given below : -

 

a) Develop annual operating plan and budgets for Marketing/ Brand strategy for the company.

 

b) Provide guidance and set direction for developing marketing plans for corporate.

 

c) To identify and capitalize on opportunities to strengthen the branding positioning, services, and marketing of the group as a whole and as individual entities, and to manage the reputation of the organization through strategic engagement with key internal and external parties.

 

d) Responsible for planning, development and implementation of corporate marketing strategies, marketing communications and public relations activities (internal and external).

 

e) To ensure that all marketing, advertising and PR costs are within the company’s approved budget and guideline on vendor/ supplier program.

 

f) Responsible for events sponsorship, CSR, and trade participation.

 

 

 

 

Our Ref  : APP/Vitaxel/1214/0034
Page  : 3

 

g) Build and maintain rapport with the media, governmental and corporate bodies so as to ensure effective and efficient business relationship.

 

h) To plan, execute and monitor marketing activities to ensure optimum results.

 

i) Key focus area will be to enhance brand value of the company.

 

j) Overall summary reporting to Chief Executive Officer and working with the senior administrative team and Heads of Department.

 

22. Other Terms and Conditions
(i) You will be required to carry out such duties and job functions as may be instructed from time to time by the Company and you are subject to transfer from one associated or subsidiary company to another at the sole discretion of the company.

 

(ii) You are liable as and when required, to be transferred from your original work office/site to other branches of the Company in Malaysia.

 

(iii) You are required at all times to faithfully and diligently perform such duties and accept such responsibilities as may from time to time assigned to you by the management of the Company and at all times endeavour to your utmost ability to promote and advance the interest of the Company.

 

(iv) You are required to obey and comply with all instructions and directions given to you by your superior and faithfully observe all the rules, regulations, procedures, practices, systems and policies of the Company, whether expressly or implied, for the time being in force by the Company in all respects.

 

(iv) You agree that your salary will be made by cheque or paid direct into your bank account.

 

(v) You will be required to observe and adhere to the other terms and conditions of employment as prescribed in the HWGB Employee Handbook which we have adopted and that these terms and conditions may be varied from time to time by the Management.

 

(vi) Your retirement age is 60 and this is in compliance with Section 4 of the Minimum Retirement Age Act 2012 (Act 753). Any extension of employment after the retiring age is at the sole discretion of the Company.

 

 

 

 

Our Ref  : APP/Vitaxel/1214/0034
Page  : 4

 

23. General

It is an express condition of your employment with the Company that you engage yourself exclusively in the Company’s business and do not undertake any other terms of employment which in anyway may conflict with the Company’s business or interest.

 

We would like to take this opportunity to welcome you as a member of the Company and trust that you will treat this engagement as a chance to grow with the Company.

 

If the above terms and conditions are acceptable to you, kindly confirm your acceptance of the employment by signing and returning the duplicate copy of this letter.

 

Yours faithfully,

VITAXEL SDN BHD

 

/s/ Bernard Lim

BERNARD LIM

CEO

 

 

 

I hereby accept the offer of employment upon the terms and conditions as stated above.

 

Signature : /s/ Yee Hing Yip NRIC No. :
         
Name : Yee Hing Yip E.P.F. No :
         
Socso No. :   Income Tax :

 

 

 

EXHIBIT 10.8

 

VITAXEL SDN BHD

(Company No. 1013530 U)

Wisma Ho Wah Genting, 35 Jalan Maharajalela, 50150 Kuala Lumpur

Tel : 603 – 2143 8811 Fax : 603-2144 6987

 

Our Ref : APP/Vitaxel/0215/0003
     
Date : 6 th February 2015

 

PRIVATE &

CONFIDENTIAL

 

Mr Lim Boon Seng

No. 25, Jalan BS 6

Taman Bukit Segar, Cheras

56100 Kuala Lumpur

 

Dear Mr Lim,

 

LETTER OF APPOINTMENT : GLOBAL BUSINESS DEVELOPMENT MANAGER

 

We are pleased to offer you the mentioned above position with the Company under the following terms and conditions of employment:-

 

  1) Position : Global Business Development Manager
         
  2) Commencing Salary : RM 5,000.00 PER MONTH
         
  3) Commencement Date : 5 th February 2015

 

  4) Bonus

Payment of bonus shall be at the absolute discretion of the Company and depending on the Company and individual performance. Bonus is only payable to confirmed employees who are in the service of the Company as on 31 st December of the respective year.

 

5) Medical Benefits

You are entitled to free medical benefits from our appointed Company doctors.

 

 

 

  

Our Ref : APP/Vitaxel/0215/0003
Page : 2

 

6) Probationary Period

The probationary period of the Company shall be three (3) months and the Company reserves the right to extend the probationary period at its sole discretion. During or at the end of the period of probation or any extension thereof, employment may be terminated at anytime by either party giving to the other party one-week (1) notice without assigning any reasons whatsoever. Confirmation shall depend upon satisfactory review of your performance, conduct and aptitude during the probation period.

 

7) Termination of Service

Each party to this agreement may at any time give to the opposite party a written notice of intention of termination.

The length of such notice, which is the same for each party, shall be as follows:-

 

One-month notice or one month salary in lieu of notice

 

8) Annual Increment

Annual increment will be subjected to review by the Management and at the sole discretion of the Company’s Management.

 

9) Confidentiality

It is understood and accepted that you will at no circumstances divulge or make public, in any way, any of the company’s confidential matters. This clause shall continue to apply after the termination of your service.

 

10) Duties and Job Functions

You are required to carry out such duties and responsibilities as given below : -

 

(i) Develop annual operating plan and budgets for Marketing/ Brand strategy for the company.

 

(ii) Provide guidance and set direction for developing marketing plans for corporate.

 

(iii) To identify and capitalize on opportunities to strengthen the branding positioning, services, and marketing of the group as a whole and as individual entities, and to manage the reputation of the organization through strategic engagement with key internal and external parties.

 

(iv) Responsible for planning, development and implementation of corporate marketing strategies, marketing communications and public relations activities (internal and external).

 

 

 

 

Our Ref  : APP/Vitaxel/0215/0003
Page  : 3

 

(v) To ensure that all marketing, advertising and PR costs are within the company’s approved budget and guideline on vendor/ supplier program.

 

(vi) Responsible for events sponsorship, CSR, and trade participation.

 

(vii) Build and maintain rapport with the media, governmental and corporate bodies so as to ensure effective and efficient business relationship.

 

(viii) To plan, execute and monitor marketing activities to ensure optimum results.

 

(ix) Key focus area will be to enhance brand value of the company.

 

(x) Overall summary reporting to Chief Marketing Officer and working with the senior administrative team and Heads of Department.

 

(11) Other Terms and Conditions

 

(i) You will be required to carry out such duties and job functions as may be instructed from time to time by the Company and you are subject to transfer from one associated or subsidiary company to another at the sole discretion of the company.

 

(ii) You are liable as and when required, to be transferred from your original work office/site to other branches of the Company in Malaysia.

 

(iii) You are required at all times to faithfully and diligently perform such duties and accept such responsibilities as may from time to time assigned to you by the management of the Company and at all times endeavour to your utmost ability to promote and advance the interest of the Company.

 

(iv) You are required to obey and comply with all instructions and directions given to you by your superior and faithfully observe all the rules, regulations, procedures, practices, systems and policies of the Company, whether expressly or implied, for the time being in force by the Company in all respects.

 

(v) Your duties and responsibilities are in collaboration to that of the Chief Marketing Officer. You were told by the Management of the need to function together in order to succeed. Therefore, you have to align yours and his strategies together so that both will be on the same track. The failure of one might affect the other. Cooperation is the key to success.

 

 

 

 

Our Ref  : APP/Vitaxel/0215/0003
Page  : 4

 

(vi) You agree that your salary will be made by cheque or paid direct into your bank account.

 

(vii) You will be required to observe and adhere to the other terms and conditions of employment as prescribed in the HWGB Employee Handbook which we have adopted and that these terms and conditions may be varied from time to time by the Management.

 

(viii) Your retirement age is 60 and this is in compliance with Section 4 of the Minimum Retirement Age Act 2012 (Act 753). Any extension of employment after the retiring age is at the sole discretion of the Company.

 

General

 

It is an express condition of your employment with the Company that you engage yourself exclusively in the Company’s business and do not undertake any other terms of employment which in anyway may conflict with the Company’s business or interest.

 

If the above terms and conditions are acceptable to you, kindly confirm your acceptance of the employment by signing and returning the duplicate copy of this letter.

 

We would like to take this opportunity to welcome you as a member of the Company and trust that you will treat this engagement as a chance to grow with the Company.

 

Yours faithfully,

VITAXEL SDN BHD

 

/s/ Bernard Lim

BERNARD LIM

CEO

 

 

 

I hereby accept the offer of employment upon the terms and conditions as stated above.

 

Signature : /s/ Lim Boon Seng NRIC No. :
         
Name : Lim Boon Seng E.P.F. No :
         
Socso No. :   Income Tax :
         
      13/2/2015

 

 

 

EXHIBIT 10.9

 

Our Ref : vm/emp/1505

Date : 28/10/2015

PRIVATE & CONFIDENTIAL

Wong Chien Nan

26, Jalan Bukit Desa 6, Taman Bukit Desa

58100, Kuala Lumpur, Malaysia

Dear Dr Jeff Wong Chien Nan,

 

Re: LETTER OF APPOINTMENT : CHIEF EXECUTIVE OFFICER

 

We are pleased to offer you the above mentioned position with the Company under the following terms and conditions of employment:-

 

1. Position : Chief Executive Officer

 

2. Commencing Salary : RM8,000.00

 

3. Allowance on Petrol, Travel, Communication.

 

4. Commencement Date : 01/11/2015 Mondays to Fridays 10:00am to 6:00pm (subject to change) However, you are expected to and agree to work beyond the said working hours or at odd hours and even on Saturdays to ensure projects are completed on time.

 

5. Medical Benefits : You are entitled to free medical benefits from our appointed Company doctors or any recognized Registered Medical Practitioner for normal sickness and not for any specialist treatment or hospitalization.

 

6. Probationary Period The probationary period of the Company shall be three (3) months and the Company reserves the right to extend the probationary period at its sole discretion. During or at the end of the period of probation or any extension thereof, employment may be terminated at anytime by either party giving to the other party one (1) month notice without assigning any reasons whatsoever. Confirmation shall depend upon satisfactory review of your performance, conduct and aptitude during the probation period.

 

7. Termination of Service after Confirmation Each party to this agreement may at any time give to the opposite party a written notice of intention of termination. The length of such notice, which is the same for each party, shall be as follows:- (i) Two-Month Notice or two (2) month salary in lieu of notice.

 

8. Confidentiality It is understood and accepted that you will at no circumstances divulge or make public, in any way, any of the company’s confidential matters. This clause shall continue to apply after the termination of your service.

 

9. Duties and Job Functions You will be required to carry out such duties and job functions as may be instructed from time to time by the Company and you are subject to transfer from one associate or subsidiary company to another at the sole discretion of the Company.

 

 

 

 

10. Other Terms and Conditions :
(i) You are liable as and when required, to be transferred from your original work office/site to other branches of the Company in Malaysia.
(ii) You are require all times faithfully and diligently perform such duties and accept such responsibilities as may from time to time assigned to you by the management of the Company and at all times endeavour to your utmost ability to promote and advance the interest of the Company.
(iii) You are required to obey and comply with all instructions and directions given to you by your superior and faithfully observe all the rules, regulations, procedures, practices, systems and policies of the Company, whether expressly or implied, for the time being in force by the Company in all respects.
(iv) You agree that your salary will be made by cheque / bank.
(v) You will be required to observe and adhere to the other terms and conditions of employment as prescribed in the HWGB Employee Handbook that these terms and conditions may be varied from time to time by the Management.
(vi) Your retirement age is 60 and this is in compliance with Section 4 of the Minimum Retirement Age Act 2012 (Act 753). Any extension of employment after the retiring age is at the sole discretion of the Company.

 

11. General It is an expressed condition of your employment with the Company that you engage yourself exclusively in the Company’s business and do not undertake any other terms of employment or business activities which in anyway may conflict with the Company’s business or interest. If the above terms and conditions are acceptable to you, kindly confirm your acceptance of the employment by signing and returning the duplicate copy of this letter where indicated together with; (a) One (1) copy of your recent passport sized photograph (b) Copies of your certificate/diplomas (c) Copies of testimonies (if any), and (d) A photocopy of your identity card. We would like to take this opportunity to welcome you as a member of the Company and trust that you will treat this engagement as a chance to grow with the Company.

 

Yours faithfully,

 

/s/ Lim Boon Seng  
Director: Lim Boon Seng  

 

I hereby accept the offer of employment upon the terms and conditions as stated above.

 

Signature : /s/ Wong Chien Nan  

Name : Wong Chien Nan

NRIC No. : 720123-01-5081

E.P.F. No :

Socso No. :

Income Tax No :

 

 

 

EXHIBIT 10.10

 

On this day of 1 st of November 2015

 

TRAVEL AGENCY SERVICE CONTRACT

 

Of the part of HO WAH GENTING HOLIDAY SDN BHD with registered address at No. 35 Jalan Maharajalela, 50150 Kuala Lumpur, MALAYSIA represented in this proceeding by Mr . Lim Chun Hoo ( Executive Director)

 

Of the one part, VITAXEL SDN BHD with registered address at No. 35 Jalan Maharajalela, 50150 Kuala Lumpur, MALAYSIA represented in this proceeding by Mr. Leong Yee Ming ( Chief Executive Officer)

 

Whereby both Parties jointly agree on the following mutual business understanding.

 

RECITALS

I . Whereas HO WAH GENTING HOLIDAY SON BHD is a tour agency specializes in providing tour packages, hotel booking, transportation arrangement and event ticketing service.

 

II. Whereas VITAXEL SDN BHD is a company registered in Malaysia operating in business of network marketing.

 

Ill. Whereas VITAXEL SDN BHD is interested in contracting above stated services from HO WAH GENTING HOLIDAY SON BHD as a part of their membership program benefits, and HO WAH GENTING HOLIDAY SDN BHD is interested in rendering such services to VITAXEL SDN BHD.

 

Whereas the parties are interested in collaborating to mutually render one another with the indicated services, they have agreed to execute this Travel Agency Service Contract in accordance with the following.

 

CLAUSES

 

1. PURPOSE

By means of this contract and in exchange for the financial consideration to be later indicated, it is agreed that the HO WAH GENTING HOLIDAY SDN BHD will provide the above stated services for members in favour ofVITAXEL SDN BHD.

 

2. DURATION OF THE CONTRACT

The parties, by mutual contract, establish the date of the execution of this contract as the date for the start of commercial activities, and 1 st of November 2015 as the date for the start of operations.

 

The duration of the contract shall be for a minimum of two years with successive annual extensions until either of the parties provides certified notice of its desire not to continue with the contract, which should in all cases be done by means of an advanced notice of 2 months with the understanding that this should not take place during any winter or summer season, in other words, one complete season shall be undertaken at minimum.

 

 

 

 

3. OBLIGATIONS OF HO WAH GENTING HOLIDAY SDN BHD

 

3.1 Sufficient structure to render the SERVICES:

 

HO WAH GENTING HOLIDAY SDN BHD will have all means necessary to render the SERVICES to VITAXEL SDN BHD included, with these understood to be:

 

Providing Tour Packages
Accommodation Booking
Event Ticketing
Event Management
Transportation Arrangements

 

4. PRICE

 

HO WAH GENTING HOLIDAY SDN BHD will bill VITAXEL SDN BHD at net price PLUS applicable taxes .

 

5. BOOKING PROCESS , FORM OF PAYMENT AND INVOICING

•           On receiving booking of services from VITAXEL SDN BHD , HO WAH GENTING HOLIDAY SDN BHD will acknowledge within 24 Hours and try to provide formal package details, confirmations, conditions and costs in 48- 72 Hours.

 

•           Deposit conditions for any tours, accommodation, transportation, event and ticketing services will be advised on the time of proposal depending on the requirements of our suppliers .

 

•           A detailed invoice will be sent immediately afte r confirmation.

 

•           Full payment have to be made within 14 days (Credit Term) after the services has been rendered.

 

6 . CONDITIONS FOR CANCELLATION AND APPLICABLE EXPENSES

Cancelation clause will be advised for each individual booking as appropriate at the time of Booking of FIT I GROUP. This depends upon the date I per i od of tour operating and booking received by HO WAH GENTING HOLIDAY SDN BHD

 

7. LIABILITY AND INSURANCE

 

HO WAH GENTING HOLIDAY SDN BHD strongly recommends:

** All Guests travelling and availing services of HO WAH GENTING HOLIDAY SDN BHD should carry their own Personal International Travel Insurance for any uncertainty .

 

8 . INDEPENDENCE OF THE PARTIES

 

This contract does not presume any legal confusion between the signatory parties whereby, each one of them, as the independent organization it is, shall assume the risk of its activities and be liable for its obligations before third parties, mutually undertaking to hold the other harmless for any consequences that could be demanded from either of them deriving from responsibilities of the other, and any action by one party in the name and on behalf of the other without its prior consent is hereby prohibited.

 

 

 

 

9. CONFIDENTIALITY .

 

This contract is confidential for both parties. Both parties should treat all activities and internal information of each of them and their employees with the utmost confidentiality. Both parties and their employees and/or providers shall be obligated not to disclose any information relative to this contract, the company or the transactions conducted during the execution of this contract to any other party without the express, written permission of the parties .

 

11. FORCE MAJEURE

In the event of a strike of the providers, the HO WAH GENTING HOLIDAY SON BHD shall not be deemed liable but will undertake its best efforts to mitigate any hardships caused to the clients.

 

Neither of the parties shall be liable before the other for any failure due to force majeure, war, strike, lockout, fire, flood, drought, storm, hurricane or any other event beyond the reasonable control of either of the parties.

 

If either of the parties is affected by force majeure, it should immediately notify this to the other party in writing with the details of the force majeure, and maintain it informed of any relevant change in the circumstances for as long as the force majeure persists . The party affected by the force majeure shall adopt all reasonable measures available to it to reduce the effects thereof in the fulfilment of its obligations by virtue of this contract.

 

12 . AMENDMENT OF THE CONTRACT AND ADDRESS FOR NOTICES.

Any amendment or annex to this contract should be made in writing and signed by the authorized representatives of both parties. Any implied tolerance by one party to the other with respect to reciprocal obligations may not be interpreted as a waiver of the aforementioned obligations.

 

Both parties indicate the address appearing for each one in the heading of the contract as the address for the purpose of notices .

 

14 . JURISDICTION

For the resolution of any interpretation , controversy , claim and litigation that may arise with regard to the application of this contract, the parties submit to the expressly waiving any other jurisdiction that may be available to them .

 

In acceptance of the contents of this contract, the parties ratify this and in witness whereof, sign it at the bottom of each and every one of the pages of this document, in duplicate originals and for

one sole purpose , in the place and on the date appearing in the heading.

 

/s/ Lim Chun Hoo

Lim Chun Hoo WITNESS

 

Executive Director

On behalf of Ho Wah Genting Holiday Sdn Bhd

 

/s/ Leong Vee Ming

Leong Vee Ming WITNESS

Chief Executive Officer

On behalf of Vitaxel Sdn Bhd