THIS AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION
TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE 1933
ACT) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"). NONE OF THE SECURITIES TO WHICH THIS AGREEMENT RELATES
HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND,
UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN
THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT.
CHINA HEALTH HOLDING, INC.
(NASDAQ OTCBB; CHHH)
ACQUISITION DEFINITIVE AGREEMENT
THIS AGREEMENT is made as of the 3rd day of September, 2006
AMONG:
CHINA HEALTH HOLDINGS, INC., a corporation formed pursuant to the laws
of the State of Nevada and having a business address located at101
Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000-0000 XXX and
mailing address at Suite 000-000 Xxxxxxx Xx. Xxxx Xxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0.
("China Health")
AND:
Shaanxi Meichen Pharmaceuticals Co. Ltd., a company formed pursuant to
the laws of the People's Republic of China , having an office for
business located at D Chuangye Building, West District, Xian High and
New Technology Development Zone, Xian City Shaanxi Province, P.R.
China
("Shaanxi Meichen Pharmaceuticals ")
AND: Chen Meiyinggg
The President/CEO of Shaanxi Meichen Pharmaceuticals Co. Ltd.,
And as controlled holding Shareholder and And as authorized total 100%
holding shareholders of Shaanxi Meichen Pharmaceuticals, each of whom
are set forth on the signa ture page of this Agreement
(the "Shaanxi Meichen Pharmaceuticals Shareholders")
WHEREAS:
A. The Shaanxi Meichen Pharmaceuticals Shareholders own 100 % registered
shares of Shaanxi Meichen Pharmaceuticals, constituting 100% of the presently
issued and outstanding Shaanxi Meichen Pharmaceuticals Shares;
B. China Health is a USA public trading and reporting company whose common
stock is quoted on the OTCBB NASDAQ As trading symbol: CHHH; and
C. The respective Boards of Directors of China Health, and Shaanxi Meichen
Pharmaceuticals deem it advisable and in the best interests of China Health and
Shaanxi Meichen Pharmaceuticals that China Health acquire 100% of the authorized
and outstanding shares of Shaanxi Meichen Pharmaceuticals (the "Acquisition")
pursuant to this Agreement. Shaanxi Meichen Pharmaceuticals and Shareholders
also legally offer to China Health with exclusive right and 1st refusal right
for further closing and completion for this acquisitions transaction.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement the following terms will have the following meanings:
(a) "Acquisition" means the Acquisition, at the Closing, of Shaanxi
Meichen Pharmaceuticals by China Health pursuant to this Agreement;
(b) "Acquisition Shares" means the China Health Common Shares to be issued
to the Shaanxi Meichen Pharmaceuticals Shareholders at Closing
pursuant to the terms of the Acquisition.
(c) "Agreement" means this share purchase agreement among China Health,
Shaanxi Meichen Pharmaceuticals, and the Shaanxi Meichen
Pharmaceuticals Shareholders;
(d) "Closing" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 10 hereof;
(e) "Closing Date" means the day on which all conditions precedent to the
completion of the transaction as contemplated hereby have been
satisfied or waived;
(f) "China Health Business" means all aspects of any business conducted by
China Health;
(g) "China Health Common Shares" means the shares of common stock in the
capital of China Health;
(h) "China Health Financial Statements" means, collectively, the audited
consolidated financial statements of China Health for the two fiscal
years ended 2Q, 2006 (Ending Jun30 2006), together with the
unqualified auditors' report thereon, true copies of which are
attached as Schedule "A" hereto;
(i) "China Health Goodwill" means the goodwill of the China Health
Business including the right to all corporate, operating and trade
names associated with the China Health Business, or any variations of
such names as part of or in connection with the China Health Business,
all books and records and other information relating to the China
Health Business, all necessary licenses and authorizations and any
other rights used in connection with the China Health Business;
(k) "Place of Closing" means the offices of Shaanxi Meichen
Pharmaceuticals at D Chuangye Building, West District, Xian High and
New Technology Development Zone, Xian City Shaanxi Province, P.R.
China or such other place as China Health and Shaanxi Meichen
Pharmaceuticals may mutually agree upon;
(j) "Shaanxi Meichen Pharmaceuticals Accounts Payable and Liabilities"
means all accounts payable and liabilities of Shaanxi Meichen
Pharmaceuticals, due and owing or otherwise constituting a binding
obligation of Shaanxi Meichen Pharmaceuticals (other than a Shaanxi
Meichen Pharmaceuticals Material Contract) as of 2Q, 2006 (Ending
Jun30 2006 as set forth in Schedule "K" hereto;
(k) "Shaanxi Meichen Pharmaceuticals Accounts Receivable" means all
accounts receivable and other debts owing to Shaanxi Meichen
Pharmaceuticals , as of 2Q, 2006 (Ending Jun30 2006 as set forth in
Schedule "L" hereto;
(l) "Shaanxi Meichen Pharmaceuticals Assets" means the undertaking and all
the property and assets of the Shaanxi Meichen Pharmaceuticals
Business of every kind and description wheresoever situated including,
without limitation, Shaanxi Meichen Pharmaceuticals Equipment, Shaanxi
Meichen Pharmaceuticals Inventory, Shaanxi Meichen Pharmaceuticals
Material Contracts, Shaanxi Meichen Pharmaceuticals Accounts
Receivable, Shaanxi Meichen Pharmaceuticals Cash, Shaanxi Meichen
Pharmaceuticals Tangible and Intangible Assets and Shaanxi Meichen
Pharmaceuticals Goodwill, and all credit cards, charge cards and
banking cards issued to Shaanxi Meichen Pharmaceuticals;
(m) "Shaanxi Meichen Pharmaceuticals Bank Accounts" means all of the bank
accounts, lock boxes and safety deposit boxes of Shaanxi Meichen
Pharmaceuticals or relating to the Shaanxi Meichen Pharmaceuticals
Business as set forth in Schedule "M" hereto;
(n) "Shaanxi Meichen Pharmaceuticals Business" means all aspects of the
business conducted by Shaanxi Meichen Pharmaceuticals;
(o) "Shaanxi Meichen Pharmaceuticals Cash" means all cash on hand or on
deposit to the credit of Shaanxi Meichen Pharmaceuticals on the
Closing Date;
(p) "Shaanxi Meichen Pharmaceuticals Debt to Related Parties" means the
debts owed by Shaanxi Meichen Pharmaceuticals and its subsidiaries to
the Shaanxi Meichen Pharmaceuticals Shareholders or to any family
member thereof, or to any affiliate, director or officer of Shaanxi
Meichen Pharmaceuticals or the Shaanxi Meichen Pharmaceuticals
Shareholders as described in Schedule "N";
(q) "Shaanxi Meichen Pharmaceuticals Equipment" means all machinery,
equipment, furniture, and furnishings used in the Shaanxi Meichen
Pharmaceuticals Business, including, without limitation, the items
more particularly described in Schedule "O" hereto;
(r) "Shaanxi Meichen Pharmaceuticals Financial Statements" means
collectively, the audited consolidated financial statements of Shaanxi
Meichen Pharmaceuticals for two year period ended 2Q 2006 (ending
Jun30 2006) , true copies of which are attached as Schedule "J"
hereto;
(s) "Shaanxi Meichen Pharmaceuticals Goodwill" means the goodwill of the
Shaanxi Meichen Pharmaceuticals Business together with the exclusive
right of China Health to represent itself as carrying on the Shaanxi
Meichen Pharmaceuticals Business in succession of Shaanxi Meichen
Pharmaceuticals subject to the terms hereof, and the right to use any
words indicating that the Shaanxi Meichen Pharmaceuticals Business is
so carried on including the right to use the name " Shaanxi Meichen
Pharmaceuticals" or "Shaanxi Meichen Pharmaceuticals International" or
any variation thereof as part of the name of or in connection with the
Shaanxi Meichen Pharmaceuticals Business or any part thereof carried
on or to be carried on by Shaanxi Meichen Pharmaceuticals, the right
to all corporate, operating and trade names associated with the
Shaanxi Meichen Pharmaceuticals Business, or any variations of such
names as part of or in connection with the Shaanxi Meichen
Pharmaceuticals Business, all telephone listings and telephone
advertising contracts, all lists of customers, books and records and
other information relating to the Shaanxi Meichen Pharmaceuticals
Business, all necessary licenses and authorizations and any other
rights used in connection with the Shaanxi Meichen Pharmaceuticals
Business;
(t) "Shaanxi Meichen Pharmaceuticals Insurance Policies" means the public
liability insurance and insurance against loss or damage to Shaanxi
Meichen Pharmaceuticals Assets and the Shaanxi Meichen Pharmaceuticals
Business as described in Schedule "P" hereto;
(u) "Shaanxi Meichen Pharmaceuticals Intangible Assets" means all of the
intangible assets of Shaanxi Meichen Pharmaceuticals, including,
without limitation, Shaanxi Meichen Pharmaceuticals Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual and
industrial property of Shaanxi Meichen Pharmaceuticals and its
subsidiaries;
(v) "Shaanxi Meichen Pharmaceuticals Inventory" means all inventory and
supplies of the Shaanxi Meichen Pharmaceuticals Business as of 2 Q
2006 (ending Jun 30 2006) as set forth in Schedule "Q" hereto;
(w) "Shaanxi Meichen Pharmaceuticals Material Contracts" means the burden
and benefit of and the right, title and interest of Shaanxi Meichen
Pharmaceuticals in, to and under all trade and non-trade contracts,
engagements or commitments, whether written or oral, to which Shaanxi
Meichen Pharmaceuticals is entitled in connection with the Shaanxi
Meichen Pharmaceuticals Business whereunder Shaanxi Meichen
Pharmaceuticals is obligated to pay or entitled to receive the sum of
$10,000 or more including, without limitation, any pension plans,
profit sharing plans, bonus plans, loan agreements, security
agreements, indemnities and guarantees, any agreements with employees,
lessees, licensees, managers, accountants, suppliers, agents,
distributors, officers, directors, attorneys or others which cannot be
terminated without liability on not more than one month's notice, and
those contracts listed in Schedule "R" hereto;
(x) "Shaanxi Meichen Pharmaceuticals Related Party Debts" means the debts
owed by the Shaanxi Meichen Pharmaceuticals Shareholders or by any
family member thereof, or by any affiliate, director or officer of
Shaanxi Meichen Pharmaceuticals or the Shaanxi Meichen Pharmaceuticals
Shareholders, to Shaanxi Meichen Pharmaceuticals as described in
Schedule "S"; and
(y) "Shaanxi Meichen Pharmaceuticals Shares" means all of the issued and
outstanding shares of Shaanxi Meichen Pharmaceuticals 's equity stock.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
Captions and Section Numbers
1.2 The headings and section references in this Agreement are for
convenience of reference only and do not form a part of this Agreement and are
not intended to interpret, define or limit the scope, extent or intent of this
Agreement or any provision thereof.
Section References and Schedules
1.3 Any reference to a particular "Article", "section", "paragraph",
"clause" or other subdivision is to the particular Article, section, clause or
other subdivision of this Agreement and any reference to a Schedule by letter
will mean the appropriate Schedule attached to this Agreement and by such
reference the appropriate Schedule is incorporated into and made part of this
Agreement. The Schedules to this Agreement are as follows:
Information concerning China Health
Schedule "A" China Health Financial Statements 2Q 2006 (Ending Jun30 2006)
Information concerning Shaanxi Meichen Pharmaceuticals
Schedule "J" Shaanxi Meichen Pharmaceuticals Audited Financial Statements
(2004, 2005 and 2Q 2006 (Ending Jun30 2006)
Schedule "K" Shaanxi Meichen Pharmaceuticals Accounts Payable and Liabilities
Schedule "L" Shaanxi Meichen Pharmaceuticals Accounts Receivable
Schedule "M" Shaanxi Meichen Pharmaceuticals Bank Accounts and Total Assets
Schedule "N" Shaanxi Meichen Pharmaceuticals Debts to Related Parties
Schedule "O" Shaanxi Meichen Pharmaceuticals Total Assets and List of Equipment
Schedule "P" Shaanxi Meichen Pharmaceuticals Insurance Policies
Schedule "Q" Shaanxi Meichen Pharmaceuticals Inventory
Schedule "R" Shaanxi Meichen Pharmaceuticals Material Contracts
Schedule "S" Shaanxi Meichen Pharmaceuticals Related Party Debts
Severability of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE ACQUISITION
Sale of Shares and Total Purchasing Prices
The Shaanxi Meichen Pharmaceuticals and Shaanxi Meichen Pharmaceuticals
Shareholders hereby agree to sell to China Health, the 100% total authorized and
outstanding shares and interest of Shaanxi Meichen Pharmaceuticals, with a total
assets 31, 618, 000 XXX and a total of 35 MU ( 15 mu to a hecter) lands, a
China-FDA Licensed GMP Pharmaceutical Drug Manufacturing Facility, a total of 27
China-FDA Licensed Pharmaceutical Drugs Pipeline, and with a total bank loan
7,500,000 RMB approxiamately (according to financial valuation completed and
approved by Shaanxi ZhengYuan Certified Public Accountants Ltd. On Sep12 2005)
in exchange for a total purchasing price as 24,800,000.RMB. China Health and
Shaanxi Meichen Pharmaceuticals and Shaanxi Meichen Pharmaceuticals Shareholders
agreed that THE TOTAL ACQUISITIONS PAYMENTS will be a combination as following:
0.xx part: 80% of total purchasing prices ( equal to a total of 19,840,000. RMB)
will be paid as the CHHH (OTCBB NASDAQ)'s Acquisition Shares as CHHH OTCBB
NASDAQ's common stocks, at a price of per share which represents the average
closing price of China Health's common stock as reported on the OTCBB for the
five (5) day period commencing/prior to the " Acquisition Transaction" Closing
and Completion Date to be paid on the transaction Closing day; 2nd part: 20% of
total purchasing prices as the "Cash Payment" as 4,960,000. RMB to be paid to
Shaanxi Meichen Pharmaceuticals Shareholders in approximately 30 business days
after the ACQUISITION TRANSACTION CLOSING AND COMPLETION DAY.
Allocation and Schedules of Payments Consideration
2.2 The Acquisition Shares and the Cash Payment shall be allocated to the
Shaanxi Meichen Pharmaceuticals Shareholders, as set forth on Schedule 2.2
attached hereto and made a part hereof.
2.2.1. After signing and agreeing and consenting this Acquisitions Definitive
Agreement legally mutually, immediately China Health's specialist team will
conduct a full legal and financial Due Diligence Processing on Shaanxi Meichen
Pharmaceutical Co. Ltd. as the terms set in this agreement.
2.2.2. Upon China Health's further completion and satisfactions of full legal
financial DUE DILLIGENCE on Shaanxi Meichen Pharmaceuticals Pharmaceutical,
prior to final transaction CLOSING DATE, both China Health and Shaanxi Meichen
Pharmaceutical and Shareholders legally agree to setup a LEGAL TRUST(ESCROW)
accounts with both China Health and Shaanxi Meichen Pharmaceutical's attorneys
law firms, according to both USA Laws and PR China Laws for further legal
acquisitions transactions. China Health Agree to transfer for " ACQUISITION
SHARES CERTIFICATES/ CHHH OTCBB NASDAQ'S COMMON STOCKS CERTIFICATES" AS FOR THE
TOTAL OF 80% of the total acquisitions purchase prices as defined and agreed
mutually as above (AS 80% OF Acquisitions Purchasing Prices) for further legal
completion for exchange and transactions IN EXCHANGE ON THE SAME DAY FOR the
TOTAL OF 100% UNDIVIDED SHARES AND INTERESTS AND assets and titles from Shaanxi
Meichen Pharmaceuticals Pharmaceutical and Shareholders legally, free from all
liens, mortgages, charges, pledges, encumbrances or other burdens with all
rights now or thereafter attached thereto.
2.2.3. Shaanxi Meichen Pharmaceuticals and Shaanxi Meichen Pharmaceuticals
Shareholders agreed that China Health will pay for 20% "Cash Payment" which
equal to a total of a total of 4,960,000. RMB to Shaanxi Meichen Pharmaceuticals
Shareholders in approximately 30 business days after the ACQUISITION TRANSACTION
CLOSING AND COMPLETION DAY.
2.2.4. Any further details and concerns, both China Health and Shaanxi Meichen
Pharmaceutical and Shareholders agree to set up AMENDMENTS PRIOR TO THE
TRANSACTION CLOSING DATE.
Adherence with Applicable Securities Laws
2.3 The Shaanxi Meichen Pharmaceuticals Shareholders agree that they are
acquiring the Acquisition Shares for investment purposes and will not offer,
sell or otherwise transfer, pledge or hypothecate any of the Acquisition Shares
issued to them (other than pursuant to an effective Registration Statement under
the Securities Act of 1933, as amended) directly or indirectly unless:
(a) the sale is to China Health;
(b) the sale is made pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Rule 144 thereunder;
or
(c) the Acquisition Shares are sold in a transaction that does not require
registration under the Securities Act of 1933, as amended, or any
applicable United States state laws and regulations governing the
offer and sale of securities, and the vendor has furnished to China
Health an opinion of counsel to that effect or such other written
opinion as may be reasonably required by China Health.
The Shaanxi Meichen Pharmaceuticals Shareholders acknowledge that the
certificates representing the Acquisition Shares shall bear the following
legend:
"THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO
PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO
REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"). ACCORDINGLY, NONE OF THE SECURITIES TO
WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE
1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR,
DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN)
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH
CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN
ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT
BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT."
The Shaanxi Meichen Pharmaceuticals Shareholders further represent and
acknowledge that:
(a) The Shaanxi Meichen Pharmaceuticals Shareholders are located outside
the United States;
(b) The Shaanxi Meichen Pharmaceuticals Shareholders are not aware of any
advertisement of any of the shares be issued hereunder;
(c) The Shaanxi Meichen Pharmaceuticals Shareholders will not acquire the
shares as a result of, and will not itself engage in, any "directed selling
efforts" (as defined in Regulation S under the 0000 Xxx) in the United States in
respect of the shares which would include any activities undertaken for the
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the resale of the shares;
provided, however, that the Shaanxi Meichen Pharmaceuticals Shareholders may
sell or otherwise dispose of the shares pursuant to registration of the shares
pursuant to the 1933 Act and any applicable state and provincial securities laws
or under an exemption from such registration requirements and as otherwise
provided herein;
(d) The Shaanxi Meichen Pharmaceuticals Shareholders agree that China
Health will refuse to register any transfer of the shares not made in accordance
with the provisions of Regulation S, pursuant to an effective registration
statement under the 1933 Act or pursuant to an available exemption from the
registration requirements of the 1933 Act and in accordance with applicable
state and provincial securities laws; and
(e) The Shaanxi Meichen Pharmaceuticals Shareholders understand and agree
that offers and sales of any of the shares, prior to the expiration of a period
of one year after the date of transfer of the shares (the "Distribution
Compliance Period"), shall only be made in compliance with the safe harbor
provisions set forth in Regulation S, pursuant to the registration provisions of
the 1933 Act or an exemption therefrom, and that all offers and sales after the
Distribution Compliance Period shall be made only in compliance with the
registration provisions of the 1933 Act or an exemption therefrom and in each
case only in accordance with all applicable securities laws;
(f) The Shaanxi Meichen Pharmaceuticals Shareholders understand and agree
not to engage in any hedging transactions involving the Acquisition Shares prior
to the end of the Distribution Compliance Period unless such transactions are in
compliance with the provisions of the 1933 Act;
(g) The Shaanxi Meichen Pharmaceuticals Shareholders hereby acknowledge and
agree to China Health making a notation on its records or giving instructions to
the registrar and transfer agent of China Health in order to implement the
restrictions on transfer set forth and described herein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF CHINA HEALTH
Representations and Warranties
3.1 China Health hereby represents and warrants in all material respects to
Shaanxi Meichen Pharmaceuticals and the Shaanxi Meichen Pharmaceuticals
Shareholders, with the intent that Shaanxi Meichen Pharmaceuticals and the
Shaanxi Meichen Pharmaceuticals Shareholders will rely thereon in entering into
this Agreement and in approving and completing the transactions contemplated
hereby, that:
China Health - Corporate Status and Capacity
(a) Incorporation. China Health is a corporation duly incorporated and
validly subsisting under the laws of the State of Nevada, and is in
good standing with the office of the Secretary of State for the State
of Nevada;
(b) Carrying on Business. China Health conducts the business described in
its filings with the Securities and Exchange Commission and does not
conduct any other business. China Health is duly authorized to carry
on such business in British Columbia, Canada. The nature of the China
Health Business does not require China Health to register or otherwise
be qualified to carry on business in any other jurisdictions;
(c) Corporate Capacity. China Health has the corporate power, capacity and
authority to own the China Health Assets and to enter into and
complete this Agreement;
(d) Reporting Status; Listing. China Health is a reporting issuer under
Section 15(d) of the Securities Exchange Act of 1934, the China Health
Common Shares are quoted on the NASD "Bulletin Board", and all reports
required to be filed by China Health with the Securities and Exchange
Commission or NASD have been timely filed;
China Health - Capitalization
Authorized Capital. The authorized capital of China Health consists of
320,000,000 of capital stock of which 300,000,000 are common shares, $0.001 par
value, of which As of August 11, 2006, there were 62,414,551 shares of issuer's
common stock issued and outstanding China Health Common Shares are presently
issued and outstanding and 20,000,000 are preferred stock par value $.001 and
and 1,250,000 Series A Preferred Shares issued and
(e) No Option, Warrant or Other Right. Except as disclosed in China
Health's filings with the Securities and Exchange Commission (the
"China Health SEC Filings"), no person, firm or corporation has any
agreement, option, warrant, preemptive right or any other right
capable of becoming an agreement, option, warrant or right for the
acquisition of China Health Common Shares or for the purchase,
subscription or issuance of any of the unissued shares in the capital
of China Health;
China Health - Records and Financial Statements
(f) Charter Documents. The charter documents of China Health have not been
altered since its incorporation, except as filed in the record books
of China Health;
(g) Corporate Minute Books. The corporate records of China Health are
complete and each of the minutes accurately reflect the actions that
were taken at a duly called and held meeting or by consent without a
meeting. All actions by China Health which required director or
shareholder approval are reflected in the corporate records of China
Health. China Health is not in violation or breach of, or in default
with respect to, any term of their respective Certificates of
Incorporation (or other charter documents) or by-laws.
(h) China Health Financial Statements. The China Health Financial
Statements present fairly, in all material respects, the assets and
liabilities (whether accrued, absolute, contingent or otherwise) of
China Health, on a consolidated basis, as of the respective dates
thereof, and the sales and earnings of the China Health Business
during the periods covered thereby, in all material respects and have
been prepared in substantial accordance with generally accepted
accounting principles consistently applied;
(i) No Debt to Related Parties. Except as disclosed in Schedule "E"
hereto, China Health is not, and on Closing will not be, indebted to
any affiliate, director or officer of China Health except accounts
payable on account of bona fide business transactions of China Health
incurred in normal course of the China Health Business, including
employment agreements, none of which are more than 30 days in arrears;
(j) No Related Party Debt to China Health. No director or officer or
affiliate of China Health is now indebted to or under any financial
obligation to China Health on any account whatsoever, except for
advances on account of travel and other expenses not exceeding $1,000
in total;
(k) Dividends. Except as disclosed in China Health SEC Filings, no
dividends or other distributions on any shares in the capital of China
Health have been made, declared or authorized since the date of China
Health Financial Statements;
(l) No Payments. No payments of any kind have been made or authorized
since the date of the China Health Financial Statements to or on
behalf of officers, directors, shareholders or employees of China
Health or under any management agreements with China Health, except
payments made in the ordinary course of business and at the regular
rates of salary or other remuneration payable to them;
(m) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting China Health;
(n) No Adverse Events. Since the date of the China Health Financial
Statements
(i) there has not been any material adverse change in the
consolidated financial position or condition of China Health,
its liabilities or the China Health Assets or any damage, loss
or other change in circumstances materially affecting China
Health, the China Health Business or the China Health Assets or
China Health' right to carry on the China Health Business, other
than changes in the ordinary course of business,
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and adversely
affecting China Health, the China Health Business or the China
Health Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by China Health to any of China
Health' officers, employees or agents or any bonus, payment or
arrangement made to or with any of them,
(iv) the China Health Business has been and continues to be carried
on in the ordinary course,
(v) China Health has not waived or surrendered any right of material
value,
(vi) China Health has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made.
China Health - Income Tax Matters
(o) Tax Returns. All tax returns and reports of China Health required by
law to be filed have been filed and are true, complete and correct,
and any taxes payable in accordance with any return filed by China
Health or in accordance with any notice of assessment or reassessment
issued by any taxing authority have been so paid;
(p) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by China Health. China Health is not aware of any
contingent tax liabilities or any grounds which would prompt a
reassessment including aggressive treatment of income and expenses in
filing earlier tax returns;
China Health - Applicable Laws and Legal Matters
(q) Licenses. China Health does not require any licenses for carrying on
the China Health Business in the manner in which it has heretofore
been carried on;
(r) Applicable Laws. China Health has not been charged with or received
notice of breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which they are subject or which apply to
them the violation of which would have a material adverse effect on
the China Health Business, and to China Health' knowledge, China
Health is not in breach of any laws, ordinances, statutes,
regulations, bylaws, orders or decrees the contravention of which
would result in a material adverse impact on the China Health
Business;
(s) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened
against or relating to China Health, the China Health Business, or any
of the China Health Assets nor does China Health have any knowledge of
any deliberate act or omission of China Health that would form any
material basis for any such action or proceeding;
(t) No Bankruptcy. China Health has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against China
Health and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of China Health;
(u) Labor Matters. China Health is not party to any collective agreement
relating to the China Health Business with any labor union or other
association of employees and no part of the China Health Business has
been certified as a unit appropriate for collective bargaining or, to
the knowledge of China Health, has made any attempt in that regard;
(v) Finder's Fees. China Health is not party to any agreement which
provides for the payment of finder's fees, brokerage fees, commissions
or other fees or amounts which are or may become payable to any third
party in connection with the execution and delivery of this Agreement
and the transactions contemplated herein;
Execution and Performance of Agreement
(w) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate
action on the part of China Health;
(x) No Violation or Breach. The execution and performance of this
Agreement will not:
(i) violate the charter documents of China Health or result in any
breach of, or default under, any loan agreement, mortgage, deed
of trust, or any other agreement to which China Health is party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the China Health Material
Contracts, or any right or rights enjoyed by China Health,
(iii) result in any alteration of China Health's obligations under any
agreement to which China Health is party including, without
limitation, the China Health Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favor of a third party
upon or against the China Health Assets,
(v) result in the imposition of any tax liability to China Health
relating to the China Health Assets, or
(vi) violate any court order or decree to which China Health is
subject;
The China Health Assets - Ownership and Condition
(y) Business Assets. The China Health Assets comprise all of the property
and assets of the China Health Business, and no other person, firm or
corporation owns any assets used by China Health in operating the
China Health Business, whether under a lease, rental agreement or
other arrangement, other than as disclosed in Schedules "F" or "I"
hereto;
(z) Title. China Health is the legal and beneficial owner of the China
Health Assets, free and clear of all mortgages, liens, charges,
pledges, security interests, encumbrances or other claims whatsoever,
save and except as disclosed in Schedules "F" or "I" hereto;
(aa) No Option. No person, firm or corporation has any agreement or option
or a right capable of becoming an agreement for the purchase of any of
the China Health Assets;
(bb) China Health Insurance Policies. China Health maintains the public
liability insurance and insurance against loss or damage to the China
Health Assets and the China Health Business as described in Schedule
"G" hereto;
(cc) China Health Material Contracts. The China Health Material Contracts
listed in Schedule "I" constitute all of the material contracts of
China Health;
(dd) No Default. There has not been any default in any material obligation
of China Health or any other party to be performed under any of the
China Health Material Contracts, each of which is in good standing and
in full force and effect and unamended (except as disclosed in
Schedule "I" hereto), and China Health is not aware of any default in
the obligations of any other party to any of the China Health Material
Contracts;
(ee) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of China Health. China
Health is not obliged to pay benefits or share profits with any
employee after termination of employment except as required by law;
China Health Assets - China Health Equipment
(ff) China Health Equipment. The China Health Equipment has been maintained
in a manner consistent with that of a reasonably prudent owner and
such equipment is in good working condition;
China Health Assets - China Health Goodwill and Other Assets
(gg) China Health Goodwill. China Health does not carry on the China Health
Business under any other business or trade names. China Health does
not have any knowledge of any infringement by China Health of any
patent, trademarks, copyright or trade secret;
The China Health Business
(hh) Maintenance of Business. Since the date of the China Health Financial
Statements, China Health has not entered into any material agreement
or commitment except in the ordinary course and except as disclosed
herein;
(ii) Subsidiaries. China Health currently has two subsidiaries, China
Health World Trade Corporation and China Health World Pharmaceutical
Corporation and does not otherwise own, directly or indirectly, any
shares or interest in any other corporation, partnership, joint
venture or firm; and
China Health - Acquisition Shares
(jj) Acquisition Shares. The Acquisition Shares when delivered to the
Shaanxi Meichen Pharmaceuticals Shareholders pursuant to the
Acquisition shall be validly issued and outstanding as fully paid and
non-assessable shares and the Acquisition Shares shall be transferable
upon the books of China Health, in all cases subject to the provisions
and restrictions of all applicable securities laws.
Non-Merger and Survival
3.2 The representations and warranties of China Health contained herein
will be true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding the
completion of the transactions contemplated hereby, the waiver of any condition
contained herein (unless such waiver expressly releases a party from any such
representation or warranty) or any investigation made by Shaanxi Meichen
Pharmaceuticals or the Shaanxi Meichen Pharmaceuticals Shareholders, the
representations and warranties of China Health shall survive the Closing.
Indemnity
3.3 China Health agrees to indemnify and save harmless Shaanxi Meichen
Pharmaceuticals and the Shaanxi Meichen Pharmaceuticals Shareholders from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment made in
good faith in settlement of any claim (subject to the right of China Health to
defend any such claim), resulting from the breach by it of any representation or
warranty made under this Agreement or from any misrepresentation in or omission
from any certificate or other instrument furnished or to be furnished by China
Health to Shaanxi Meichen Pharmaceuticals or the Shaanxi Meichen Pharmaceuticals
Shareholders hereunder.
ARTICLE 4
COVENANTS OF CHINA HEALTH
Covenants
4.1 China Health covenants and agrees with Shaanxi Meichen Pharmaceuticals
and the Shaanxi Meichen Pharmaceuticals Shareholders that it will:
(a) Conduct of Business. Until the Closing, conduct the China Health
Business diligently and in the ordinary course consistent with the
manner in which the China Health Business generally has been operated
up to the date of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use its best efforts to
preserve the China Health Business and the China Health Assets and,
without limitation, preserve for Shaanxi Meichen Pharmaceuticals China
Health's relationships with any third party having business relations
with them;
(c) Access. Until the Closing, give Shaanxi Meichen Pharmaceuticals , the
Shaanxi Meichen Pharmaceuticals Shareholders, and their
representatives full access to all of the properties, books,
contracts, commitments and records of China Health, and furnish to
Shaanxi Meichen Pharmaceuticals , the Shaanxi Meichen Pharmaceuticals
Shareholders and their representatives all such information as they
may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party consents
required to permit the Acquisition and to preserve and maintain the
China Health Assets notwithstanding the change in control of Shaanxi
Meichen Pharmaceuticals arising from the Acquisition;
4.2 Except as otherwise expressly contemplated by this Agreement or with
the prior written consent of Shaanxi Meichen Pharmaceuticals , China Health
shall not:
(a) Dividend; Changes in Stock. Declare, set aside, make or pay any
dividend or other distribution in respect of the capital stock of
China Health or repurchase,
redeem or otherwise acquire any outstanding shares of the capital
stock or other securities of, or other ownership interests in China
Health;
(b) Issuance of Securities. Transfer, issue, sell or dispose of any shares
of capital stock or other securities of China Health or grant options,
warrants, calls or other rights to purchase or otherwise acquire
shares of the capital stock or other securities of China Health;
(c) Governing Documents. Amend the certificate of incorporation or by-laws
of the Company.
(d) Changes in Securities. Effect any recapitalization, reclassification,
stock split or like change in the capitalization of China Health;
(e) Compensation. (A) materially increase the annual level of compensation
of any employee of China Health, (B) increase the annual level of
compensation payable or to become payable by China Health to any of
its executive officers, (C) grant any unusual or extraordinary bonus,
benefit or other direct or indirect compensation to any employee,
director or consultant, (D) increase the coverage or benefits
available under any (or create any new) severance pay, termination
pay, vacation pay, company awards, salary continuation for disability,
sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan or
arrangement made to, for, or with any of the directors, officers,
employees, agents or representatives of China Health or otherwise
modify or amend or terminate any such plan or arrangement or (E) enter
into any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to
which China Health is a party or involving a director, officer or
employee of China Health in his or her capacity as a director, officer
or employee of China Health;
(f) Liens. Subject to any lien (except for leases that do not materially
impair the use of the property subject thereto in their respective
businesses as presently conducted), any of the properties or assets
(whether tangible or intangible) of China Health;
(g) Indebtedness. Incur any indebtedness for borrowed money or guarantee
any such indebtedness.
(h) Other Actions. Agree to do anything prohibited by this Section 6.2 or
anything which would make any of the representations and warranties of
China Health in this Agreement untrue or incorrect in any material
respect as of any time through and including the Closing.
Authorization
4.2 China Health hereby agrees to authorize and direct any and all federal,
state, municipal, foreign and international governments and regulatory
authorities having jurisdiction respecting China Health to release any and all
information in their possession respecting China Health to the Shaanxi Meichen
Pharmaceuticals Shareholders. China Health shall promptly execute and deliver to
the Shaanxi Meichen Pharmaceuticals Shareholders any and all consents to the
release of information and specific authorizations which the Shaanxi Meichen
Pharmaceuticals Shareholders reasonably requires to gain access to any and all
such information.
Survival
4.3 The covenants set forth in this Article shall survive the Closing for
the benefit of Shaanxi Meichen Pharmaceuticals and the Shaanxi Meichen
Pharmaceuticals Shareholders.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
THE SHAANXI MEICHEN PHARMACEUTICALS SHAREHOLDERS
Representations and Warranties
5.1 The Shaanxi Meichen Pharmaceuticals Shareholders hereby jointly and
severally represent and warrant in all material respects to China Health, with
the intent that it will rely thereon in entering into this Agreement and in
approving and completing the transactions contemplated hereby, that:
Shaanxi Meichen Pharmaceuticals - Company Status and Capacity
(a) Formation. Shaanxi Meichen Pharmaceuticals is a company duly formed
and validly subsisting under the laws of the People's Republic of
China;
(b) Carrying on Business. Shaanxi Meichen Pharmaceuticals carries on the
Shaanxi Meichen Pharmaceuticals Business primarily in the People's
Republic of China and does not carry on any material business activity
in any other jurisdiction. Shaanxi Meichen Pharmaceuticals is duly
authorized to carry on the Shaanxi Meichen Pharmaceuticals Business in
the People's Republic of China. The nature of the Shaanxi Meichen
Pharmaceuticals Business does not require Shaanxi Meichen
Pharmaceuticals to register or otherwise be qualified to carry on
business in any other jurisdiction;
(c) Legal Capacity. Shaanxi Meichen Pharmaceuticals has the legal power,
capacity and authority to own Shaanxi Meichen Pharmaceuticals Assets,
to carry on the Business of Shaanxi Meichen Pharmaceuticals and to
enter into and complete this Agreement;
Shaanxi Meichen Pharmaceuticals - Capitalization
(d) Authorized Capital. The authorized capital of Shaanxi Meichen
Pharmaceuticals consists of _____________ shares of capital stock;
(e) Ownership of Shaanxi Meichen Pharmaceuticals Shares. The registered,
issued and outstanding share capital of Shaanxi Meichen
Pharmaceuticals will on Closing consist of _______ capital shares
(being the Shaanxi Meichen Pharmaceuticals Shares), which shares on
Closing shall be validly issued and outstanding as fully paid and
non-assessable shares. The Shaanxi Meichen Pharmaceuticals
Shareholders will be at Closing the registered and beneficial owners
of the ____________ Shaanxi Meichen Pharmaceuticals Shares. The
Shaanxi Meichen Pharmaceuticals Shares owned by the Shaanxi Meichen
Pharmaceuticals Shareholders are free and clear of any and all liens,
charges, pledges, encumbrances, restrictions on transfer and adverse
claims whatsoever;
(f) No Option, Warrant or Other Right. No person, firm or corporation has
any agreement, option, warrant, preemptive right or any other right
capable of becoming an agreement, option, warrant or right for the
acquisition of Shaanxi Meichen Pharmaceuticals Shares held by the
Shaanxi Meichen Pharmaceuticals Shareholders or for the purchase,
subscription or issuance of any of the unissued shares in the capital
of Shaanxi Meichen Pharmaceuticals ;
(g) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of Shaanxi Meichen Pharmaceuticals Shares contained
in the charter documents of Shaanxi Meichen Pharmaceuticals or under
any agreement;
Shaanxi Meichen Pharmaceuticals - Records and Financial Statements
(h) Charter Documents. The charter documents of Shaanxi Meichen
Pharmaceuticals have not been altered since its formation date, except
as filed in the record books of Shaanxi Meichen Pharmaceuticals ;
(i) Minute Books. The minute books of Shaanxi Meichen Pharmaceuticals are
complete and each of the minutes contained therein accurately reflect
the actions that were taken at a duly called and held meeting or by
consent without a meeting. All actions by Shaanxi Meichen
Pharmaceuticals which required director or shareholder approval are
reflected on the corporate minute books of Shaanxi Meichen
Pharmaceuticals . Shaanxi Meichen Pharmaceuticals is not in violation
or breach of, or in default with respect to, any term of its
Certificate of Incorporation (or other charter documents) or by-laws.
(j) Shaanxi Meichen Pharmaceuticals Financial Statements. The Shaanxi
Meichen Pharmaceuticals Financial Statements present fairly, in all
material respects, the assets and liabilities (whether accrued,
absolute, contingent or otherwise) of Shaanxi Meichen Pharmaceuticals
as of the date thereof, and the sales and earnings of the Shaanxi
Meichen Pharmaceuticals Business during the periods covered thereby,
in all material respects, and have been prepared in substantial
accordance with generally accepted accounting principles consistently
applied;
(k) Shaanxi Meichen Pharmaceuticals Accounts Payable and Liabilities.
There are no material liabilities, contingent or otherwise, of Shaanxi
Meichen Pharmaceuticals which are not disclosed in Schedule "K" hereto
or reflected in the Shaanxi Meichen Pharmaceuticals Financial
Statements except those incurred in the ordinary course of business
since the date of the said schedule and the Shaanxi Meichen
Pharmaceuticals Financial Statements, and Shaanxi Meichen
Pharmaceuticals has not guaranteed or agreed to guarantee any debt,
liability or other obligation of any person, firm or corporation.
Without limiting the generality of the foregoing, all accounts payable
and liabilities of Shaanxi Meichen Pharmaceuticals as of June30 2006
are described in Schedule "K" hereto;
(l) Shaanxi Meichen Pharmaceuticals Accounts Receivable. All the Shaanxi
Meichen Pharmaceuticals Accounts Receivable result from bona fide
business transactions and services actually rendered without, to the
knowledge and belief of the Shaanxi Meichen Pharmaceuticals
Shareholders, any claim by the obligor for set-off or counterclaim.
Without limiting the generality of the foregoing, all accounts
receivable of Shaanxi Meichen Pharmaceuticals as of June30 2006 are
described in Schedule "L" hereto;
(m) Shaanxi Meichen Pharmaceuticals Bank Accounts. All of the Shaanxi
Meichen Pharmaceuticals Bank Accounts, their location, numbers and the
authorized signatories thereto are as set forth in Schedule "M"
hereto;
(n) No Debt to Related Parties. Except as disclosed in Schedule "N"
hereto, Shaanxi Meichen Pharmaceuticals is not and on Closing will not
be, indebted to the Shaanxi Meichen Pharmaceuticals Shareholders nor
to any family member thereof, nor to any affiliate, director or
officer of Shaanxi Meichen Pharmaceuticals or the Shaanxi Meichen
Pharmaceuticals Shareholders except accounts payable on account of
bona fide business transactions of Shaanxi Meichen Pharmaceuticals
incurred in normal course of Shaanxi Meichen Pharmaceuticals Business,
including employment agreements with the Shaanxi Meichen
Pharmaceuticals Shareholders, none of which are more than 30 days in
arrears;
(o) No Related Party Debt to Shaanxi Meichen Pharmaceuticals . Except as
set forth on Schedule "S" hereto, no Shaanxi Meichen Pharmaceuticals
Shareholder nor any director, officer or affiliate of Shaanxi Meichen
Pharmaceuticals is now indebted to or under any financial obligation
to Shaanxi Meichen Pharmaceuticals on any account whatsoever, except
for advances on account of travel and other expenses not exceeding
$5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in the
capital of Shaanxi Meichen Pharmaceuticals have been made, declared or
authorized since the date of the Shaanxi Meichen Pharmaceuticals
Financial Statements;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the Shaanxi Meichen Pharmaceuticals Financial
Statements to or on behalf of the Shaanxi Meichen Pharmaceuticals
Shareholders or to or on behalf of officers, directors, shareholders
or employees of Shaanxi Meichen Pharmaceuticals or under any
management agreements with Shaanxi Meichen Pharmaceuticals , except
payments made in the ordinary course of business and at the regular
rates of salary or other remuneration payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting Shaanxi Meichen Pharmaceuticals , except as set forth in the
Shaanxi Meichen Pharmaceuticals Financial Statements;
(s) No Adverse Events. Since the date of the Shaanxi Meichen
Pharmaceuticals Financial Statements:
(i) there has not been any material adverse change in the
consolidated financial position or condition of Shaanxi Meichen
Pharmaceuticals , its liabilities or the Shaanxi Meichen
Pharmaceuticals Assets or any damage, loss or other change in
circumstances materially affecting Shaanxi Meichen
Pharmaceuticals , the Shaanxi Meichen Pharmaceuticals Business
or the Shaanxi Meichen Pharmaceuticals Assets or Shaanxi Meichen
Pharmaceuticals 's right to carry on the Shaanxi Meichen
Pharmaceuticals Business, other than changes in the ordinary
course of business,
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and adversely
affecting Shaanxi Meichen Pharmaceuticals , the Shaanxi Meichen
Pharmaceuticals Business or the Shaanxi Meichen Pharmaceuticals
Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by Shaanxi Meichen Pharmaceuticals
to the Shaanxi Meichen Pharmaceuticals Shareholders or to any of
Shaanxi Meichen Pharmaceuticals 's officers, employees or agents
or any bonus, payment or arrangement made to or with any of
them,
(iv) the Shaanxi Meichen Pharmaceuticals Business has been and
continues to be carried on in the ordinary course,
(v) Shaanxi Meichen Pharmaceuticals has not waived or surrendered
any right of material value,
(vi) Shaanxi Meichen Pharmaceuticals has not discharged or satisfied
or paid any lien or encumbrance or obligation or liability other
than current liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
Shaanxi Meichen Pharmaceuticals - Income Tax Matters
(t) Tax Returns. All tax returns and reports of Shaanxi Meichen
Pharmaceuticals required by law to be filed have been filed and are
true, complete and correct, and any taxes payable in accordance with
any return filed by Shaanxi Meichen Pharmaceuticals or in accordance
with any notice of assessment or reassessment issued by any taxing
authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by Shaanxi Meichen Pharmaceuticals . Shaanxi Meichen
Pharmaceuticals is not aware of any contingent tax liabilities or any
grounds which would prompt a reassessment including aggressive
treatment of income and expenses in filing earlier tax returns;
Shaanxi Meichen Pharmaceuticals - Applicable Laws and Legal Matters
(v) Licenses. Shaanxi Meichen Pharmaceuticals holds all licenses and
permits as may be requisite for carrying on the Shaanxi Meichen
Pharmaceuticals Business in the manner in which it has heretofore been
carried on, which licenses and permits have been maintained and
continue to be in good standing except where the failure to obtain or
maintain such licenses or permits would not have a material adverse
effect on the Shaanxi Meichen Pharmaceuticals Business;
(w) Applicable Laws. Shaanxi Meichen Pharmaceuticals has not been charged
with or received notice of breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which they are subject or
which applies to them the violation of which would have a material
adverse effect on the Shaanxi Meichen Pharmaceuticals Business, and,
to the knowledge of the Shaanxi Meichen Pharmaceuticals Shareholders,
Shaanxi Meichen Pharmaceuticals is not in breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees the
contravention of which would result in a material adverse impact on
the Shaanxi Meichen Pharmaceuticals Business;
(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened
against or relating to Shaanxi Meichen Pharmaceuticals , the Shaanxi
Meichen Pharmaceuticals Business, or any of the Shaanxi Meichen
Pharmaceuticals Assets, nor do the Shaanxi Meichen Pharmaceuticals
Shareholders have any knowledge of any deliberate act or omission of
Shaanxi Meichen Pharmaceuticals that would form any material basis for
any such action or proceeding;
(y) No Bankruptcy. Shaanxi Meichen Pharmaceuticals has not made any
voluntary assignment or proposal under applicable laws relating to
insolvency and bankruptcy and no bankruptcy petition has been filed or
presented against Shaanxi Meichen Pharmaceuticals and no order has
been made or a resolution passed for the winding-up, dissolution or
liquidation of Shaanxi Meichen Pharmaceuticals ;
(z) Labor Matters. Shaanxi Meichen Pharmaceuticals is not party to any
collective agreement relating to the Shaanxi Meichen Pharmaceuticals
Business with any labor union or other association of employees and no
part of the Shaanxi Meichen Pharmaceuticals Business has been
certified as a unit appropriate for collective bargaining or, to the
knowledge of the Shaanxi Meichen Pharmaceuticals Shareholders, has
made any attempt in that regard;
(aa) Finder's Fees. Shaanxi Meichen Pharmaceuticals is not a party to any
agreement which provides for the payment of finder's fees, brokerage
fees, commissions or other fees or amounts which are or may become
payable to any third party in connection with the execution and
delivery of this Agreement and the transactions contemplated herein;
Execution and Performance of Agreement
(bb) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate
action on the part of Shaanxi Meichen Pharmaceuticals and the Shaanxi
Meichen Pharmaceuticals Shareholders. Each of the Shaanxi Meichen
Pharmaceuticals Shareholders has the unqualified right to sell, assign
and deliver the Shaanxi Meichen Pharmaceuticals Shares
(cc) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of Shaanxi Meichen Pharmaceuticals
or result in any breach of, or default under, any loan
agreement, mortgage, deed of trust, or any other agreement to
which Shaanxi Meichen Pharmaceuticals or each of the Shaanxi
Meichen Pharmaceuticals is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, Shaanxi Meichen Pharmaceuticals
Material Contracts, or any right or rights enjoyed by Shaanxi
Meichen Pharmaceuticals,
(iii) result in any alteration of Shaanxi Meichen Pharmaceuticals 's
obligations under any agreement to which Shaanxi Meichen
Pharmaceuticals is a party including, without limitation, the
Shaanxi Meichen Pharmaceuticals Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favor of a third party
upon or against the Shaanxi Meichen Pharmaceuticals Assets,
(v) result in the imposition of any tax liability to Shaanxi Meichen
Pharmaceuticals relating to Shaanxi Meichen Pharmaceuticals
Assets or the Shaanxi Meichen Pharmaceuticals Shares, or
(vi) violate any court order or decree to which either Shaanxi
Meichen Pharmaceuticals is subject;
Shaanxi Meichen Pharmaceuticals Assets - Ownership and Condition
(dd) Business Assets. The Shaanxi Meichen Pharmaceuticals Assets, comprise
all of the property and assets of the Shaanxi Meichen Pharmaceuticals
Business, and neither the Shaanxi Meichen Pharmaceuticals Shareholders
nor any other person, firm or corporation owns any assets used by
Shaanxi Meichen Pharmaceuticals in operating the Shaanxi Meichen
Pharmaceuticals Business, whether under a lease, rental agreement or
other arrangement, other than as disclosed in Schedules "O" or "R"
hereto;
(ee) Title. Shaanxi Meichen Pharmaceuticals is the legal and beneficial
owner of the Shaanxi Meichen Pharmaceuticals Assets, free and clear of
all mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever, save and except as disclosed
in Schedules "O" or "R" hereto;
(ff) No Option. No person, firm or corporation has any agreement or option
or a right capable of becoming an agreement for the purchase of any of
the Shaanxi Meichen Pharmaceuticals Assets;
(gg) Shaanxi Meichen Pharmaceuticals Insurance Policies. Shaanxi Meichen
Pharmaceuticals maintains the public liability insurance and insurance
against loss or damage to the Shaanxi Meichen Pharmaceuticals Assets
and the Shaanxi Meichen Pharmaceuticals Business as described in
Schedule "P" hereto;
(hh) Shaanxi Meichen Pharmaceuticals Material Contracts. The Shaanxi
Meichen Pharmaceuticals Material Contracts listed in Schedule "R"
constitute all of the material contracts of Shaanxi Meichen
Pharmaceuticals ;
(ii) No Default. There has not been any default in any material obligation
of Shaanxi Meichen Pharmaceuticals or any other party to be performed
under any of Shaanxi Meichen Pharmaceuticals Material Contracts, each
of which is in good standing and in full force and effect and
unamended (except as disclosed in Schedule "R"), and Shaanxi Meichen
Pharmaceuticals is not aware of any default in the obligations of any
other party to any of the Shaanxi Meichen Pharmaceuticals Material
Contracts;
(jj) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of Shaanxi Meichen
Pharmaceuticals . Shaanxi Meichen Pharmaceuticals is not obliged to
pay benefits or share profits with any employee after termination of
employment except as required by law;
Shaanxi Meichen Pharmaceuticals Assets - Shaanxi Meichen Pharmaceuticals
Equipment
(kk) Shaanxi Meichen Pharmaceuticals Equipment. The Shaanxi Meichen
Pharmaceuticals Equipment has been maintained in a manner consistent
with that of a reasonably prudent owner and such equipment is in good
working condition;
Shaanxi Meichen Pharmaceuticals Assets - Shaanxi Meichen Pharmaceuticals
Goodwill and Other Assets
(ll) Shaanxi Meichen Pharmaceuticals Goodwill. Shaanxi Meichen
Pharmaceuticals carries on the Shaanxi Meichen Pharmaceuticals
Business only under the name "Xi'an Shaanxi Meichen Pharmaceuticals
Co., Ltd." and variations thereof and under no other business or trade
names. The Shaanxi Meichen Pharmaceuticals Shareholders do not have
any knowledge of any infringement by Shaanxi Meichen Pharmaceuticals
of any patent, trademark, copyright or trade secret;
The Business of Shaanxi Meichen Pharmaceuticals
(mm) Maintenance of Business. Since the date of the Shaanxi Meichen
Pharmaceuticals Financial Statements, the Shaanxi Meichen
Pharmaceuticals Business has been carried on in the ordinary course
and Shaanxi Meichen Pharmaceuticals has not entered into any material
agreement or commitment except in the ordinary course; and
(nn) Subsidiaries. Shaanxi Meichen Pharmaceuticals does not own any
subsidiaries and does not otherwise own, directly or indirectly, any
shares or interest in any other corporation, partnership, joint
venture or firm.
Non-Merger and Survival
5.2 The representations and warranties of Shaanxi Meichen Pharmaceuticals
contained herein will be true at and as of Closing in all material respects as
though such representations and warranties were made as of such time.
Notwithstanding the completion of the transactions contemplated hereby, the
waiver of any condition contained herein (unless such waiver expressly releases
a party from any such representation or warranty) or any investigation made by
China Health, the representations and warranties of Shaanxi Meichen
Pharmaceuticals shall survive the Closing.
Indemnity
5.3 The Shaanxi Meichen Pharmaceuticals Shareholders agree to indemnify and
save harmless China Health from and against any and all claims, demands,
actions, suits, proceedings, assessments, judgments, damages, costs, losses and
expenses, including any payment made in good faith in settlement of any claim
(subject to the right of the Shaanxi Meichen Pharmaceuticals Shareholders to
defend any such claim), resulting from the breach by any of them of any
representation or warranty of such party made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by Shaanxi Meichen Pharmaceuticals or the Shaanxi
Meichen Pharmaceuticals Shareholders to China Health hereunder.
ARTICLE 6
COVENANTS OF SHAANXI MEICHEN PHARMACEUTICALS AND
THE SHAANXI MEICHEN PHARMACEUTICALS SHAREHOLDERS
Covenants
6.1 Shaanxi Meichen Pharmaceuticals and the Shaanxi Meichen Pharmaceuticals
Shareholders covenant and agree with China Health that they will:
(a) Conduct of Business. Until the Closing, conduct the Shaanxi Meichen
Pharmaceuticals Business diligently and in the ordinary course
consistent with the manner in which the Shaanxi Meichen
Pharmaceuticals Business generally has been operated up to the date of
execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best efforts to
preserve the Shaanxi Meichen Pharmaceuticals Business and the Shaanxi
Meichen Pharmaceuticals Assets and, without limitation, preserve for
China Health Shaanxi Meichen Pharmaceuticals 's relationships with
their suppliers, customers and others having business relations with
them;
(c) Access. Until the Closing, give China Health and its representatives
full access to all of the properties, books, contracts, commitments
and records of Shaanxi Meichen Pharmaceuticals relating to Shaanxi
Meichen Pharmaceuticals , the Shaanxi Meichen Pharmaceuticals Business
and the Shaanxi Meichen Pharmaceuticals Assets, and furnish to China
Health and its representatives all such information as they may
reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party consents
required to permit the Acquisition and to preserve and maintain the
Shaanxi Meichen Pharmaceuticals Assets, including the Shaanxi Meichen
Pharmaceuticals Material Contracts, notwithstanding the change in
control of Shaanxi Meichen Pharmaceuticals arising from the
Acquisition;
(e) Reporting and Internal Controls. From and after the Closing, the
Shaanxi Meichen Pharmaceuticals Shareholders shall forthwith take all
required actions to implement internal controls on the business of
Shaanxi Meichen Pharmaceuticals to ensure that Shaanxi Meichen
Pharmaceuticals and China Health comply with Section 13(b)(2) of the
Securities and Exchange Act of 1934;
(f) 1934 Act Reports. From and after the Closing Date, take all such steps
as are necessary to discharge all reporting obligations imposed upon
them by the Securities Exchange Act of 1934.
6.2 Except as otherwise expressly contemplated by this Agreement or with
the prior written consent of China Health, Shaanxi Meichen Pharmaceuticals and
the Shaanxi Meichen Pharmaceuticals Shareholders shall not, and shall cause
Shaanxi Meichen Pharmaceuticals not to:
(a) Board of Directors. Appoint new directors to Shaanxi Meichen
Pharmaceuticals 's Board of Directors or make any changes to Shaanxi
Meichen Pharmaceuticals 's Board of Directors;
(b) Dividend; Changes in Stock. Declare, set aside, make or pay any
dividend or other distribution in respect of the capital stock of
Shaanxi Meichen Pharmaceuticals or repurchase, redeem or otherwise
acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in Shaanxi Meichen
Pharmaceuticals ;
(c) Issuance of Securities. Transfer, issue, sell or dispose of any shares
of capital stock or other securities of Shaanxi Meichen
Pharmaceuticals or grant options, warrants, calls or other rights to
purchase or otherwise acquire shares of the capital stock or other
securities of Shaanxi Meichen Pharmaceuticals ;
(d) Governing Documents. Amend the certificate of incorporation or by-laws
of the Company.
(e) Changes in Securities. Effect any recapitalization, reclassification,
stock split or like change in the capitalization of Shaanxi Meichen
Pharmaceuticals ;
(f) Compensation. (A) materially increase the annual level of compensation
of any employee of Shaanxi Meichen Pharmaceuticals , (B) increase the
annual level of compensation payable or to become payable by Shaanxi
Meichen Pharmaceuticals to any of its executive officers, (C) grant
any unusual or extraordinary bonus, benefit or other direct or
indirect compensation to any employee, director or consultant, (D)
increase the coverage or benefits available under any (or create any
new) severance pay, termination pay, vacation pay, company awards,
salary continuation for disability, sick leave, deferred compensation,
bonus or other incentive compensation, insurance, pension or other
employee benefit plan or arrangement made to, for, or with any of the
directors, officers, employees, agents or representatives of Shaanxi
Meichen Pharmaceuticals or otherwise modify or amend or terminate any
such plan or arrangement or (E) enter into any employment, deferred
compensation, severance, consulting, non-competition or similar
agreement (or amend any such agreement) to which Shaanxi Meichen
Pharmaceuticals is a party or involving a director, officer or
employee of Shaanxi Meichen Pharmaceuticals in his or her capacity as
a director, officer or employee of Shaanxi Meichen Pharmaceuticals ;
(g) Liens. Subject to any lien (except for leases that do not materially
impair the use of the property subject thereto in their respective
businesses as presently conducted), any of the properties or assets
(whether tangible or intangible) of Shaanxi Meichen Pharmaceuticals ;
(h) Indebtedness. Incur any indebtedness for borrowed money or guarantee
any such indebtedness.
(i) Other Actions. Agree to do anything prohibited by this Section 6.2 or
anything which would make any of the representations and warranties of
Shaanxi Meichen Pharmaceuticals and the Shaanxi Meichen
Pharmaceuticals Shareholders in this Agreement untrue or incorrect in
any material respect as of any time through and including the Closing.
Authorization
6.3 Shaanxi Meichen Pharmaceuticals hereby agrees to authorize and direct
any and all federal, state, municipal, foreign and international governments and
regulatory authorities having jurisdiction respecting Shaanxi Meichen
Pharmaceuticals to release any and all information in their possession
respecting Shaanxi Meichen Pharmaceuticals to China Health. Shaanxi Meichen
Pharmaceuticals shall promptly execute and deliver to China Health any and all
consents to the release of information and specific authorizations which China
Health reasonably require to gain access to any and all such information.
Shaanxi Meichen Pharmaceuticals Shareholders hereby authorize " XXXX
XXXXXXX"/The President/CEO/Major Shareholder to execute all certificates or
other representations required to complete the transactions contemplated by this
Agreement.
Survival
6.4 The covenants set forth in this Article shall survive the Closing for
the benefit of China Health.
ARTICLE 7
CONDITIONS PRECEDENT
Conditions Precedent in favor of China Health
7.1 China Health's obligations to carry out the transactions contemplated
hereby are subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to China Health hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Shaanxi Meichen Pharmaceuticals or the
Shaanxi Meichen Pharmaceuticals Shareholders at or prior to the
Closing will have been complied with or performed;
(c) title to the Shaanxi Meichen Pharmaceuticals Shares held by the
Shaanxi Meichen Pharmaceuticals Shareholders and to the Shaanxi
Meichen Pharmaceuticals Assets will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever, save and except as disclosed herein, and
the Shaanxi Meichen Pharmaceuticals Shares shall be duly transferred
to China Health;
(d) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of Shaanxi Meichen Pharmaceuticals , its liabilities
or the Shaanxi Meichen Pharmaceuticals Assets or any damage,
loss or other change in circumstances materially and adversely
affecting Shaanxi Meichen Pharmaceuticals , the Shaanxi Meichen
Pharmaceuticals Business or the Shaanxi Meichen Pharmaceuticals
Assets or Shaanxi Meichen Pharmaceuticals 's right to carry on
the Shaanxi Meichen Pharmaceuticals Business, other than changes
in the ordinary course of business, none of which has been
materially adverse, or
(ii) any damage, destruction, loss or other event, including changes
to any laws or statutes applicable to Shaanxi Meichen
Pharmaceuticals or the Shaanxi Meichen Pharmaceuticals Business
(whether or not covered by insurance) materially and adversely
affecting Shaanxi Meichen Pharmaceuticals , the Shaanxi Meichen
Pharmaceuticals Business or the Shaanxi Meichen Pharmaceuticals
Assets; and
(e) the transactions contemplated hereby shall have been approved by
all other regulatory authorities having jurisdiction over the
subject matter hereof, if any.
Waiver by China Health
7.2 The conditions precedent set out in the preceding section are inserted
for the exclusive benefit of China Health and any such condition may be waived
in whole or in part by China Health at or prior to the Closing by delivering to
Shaanxi Meichen Pharmaceuticals a written waiver to that effect signed by China
Health. In the event that the conditions precedent set out in the preceding
section are not satisfied on or before the Closing, China Health shall be
released from all obligations under this Agreement.
Conditions Precedent in Favor of Shaanxi Meichen Pharmaceuticals and the Shaanxi
Meichen Pharmaceuticals Shareholders
7.3 The obligations of Shaanxi Meichen Pharmaceuticals and the Shaanxi
Meichen Pharmaceuticals Shareholders to carry out the transactions contemplated
hereby are subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to Shaanxi Meichen Pharmaceuticals hereunder will have been
so executed and delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by China Health at or prior to the Closing
will have been complied with or performed;
(c) China Health will have delivered the Acquisition Shares and the Cash
Payment to be issued pursuant to the terms of the Acquisition to
Shaanxi Meichen Pharmaceuticals at the Closing and the Acquisition
Shares will be registered on the books of China Health in the name of
the Shaanxi Meichen Pharmaceuticals Shareholders at the time of
Closing;
(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of China Health, its liabilities or the China Health
Assets or any damage, loss or other change in circumstances
materially and adversely affecting China Health, the China
Health Business or the China Health Assets or China Health'
right to carry on the China Health Business, other than changes
in the ordinary course of business, none of which has been
materially adverse, or
(ii) any damage, destruction, loss or other event, including changes
to any laws or statutes applicable to China Health or the China
Health Business (whether or not covered by insurance) materially
and adversely affecting China Health, the China Health Business
or the China Health Assets;
(f) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any;
Waiver by Shaanxi Meichen Pharmaceuticals and the Shaanxi Meichen
Pharmaceuticals Shareholders
7.4 The conditions precedent set out in the preceding section are inserted
for the exclusive benefit of Shaanxi Meichen Pharmaceuticals and the Shaanxi
Meichen Pharmaceuticals Shareholders and any such condition may be waived in
whole or in part by Shaanxi Meichen Pharmaceuticals or the Shaanxi Meichen
Pharmaceuticals Shareholders at or prior to the Closing by delivering to China
Health a written waiver to that effect signed by Shaanxi Meichen Pharmaceuticals
and the Shaanxi Meichen Pharmaceuticals Shareholders. In the event that the
conditions precedent set out in the preceding section are not satisfied on or
before the Closing, Shaanxi Meichen Pharmaceuticals and the Shaanxi Meichen
Pharmaceuticals Shareholders shall be released from all obligations under this
Agreement.
Nature of Conditions Precedent
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in this
Article.
Confidentiality
7.6 Notwithstanding any provision herein to the contrary, the parties
hereto agree that the existence and terms of this Agreement are confidential and
that if this Agreement is terminated pursuant to Article 8, the parties agree to
return to one another any and all financial, technical and business documents
delivered to the other party or parties in connection with the negotiation and
execution of this Agreement and shall keep the terms of this Agreement and all
information and documents received from Shaanxi Meichen Pharmaceuticals and
China Health and the contents thereof confidential and not utilize nor reveal or
release same, provided, however, that China Health will be required to issue a
news release regarding the execution and consummation of this Agreement and file
a Current Report on Form 8-K with the Securities and Exchange Commission
respecting the proposed Acquisition contemplated hereby together with such other
documents as are required to maintain the currency of China Health's filings
with the Securities and Exchange Commission.
ARTICLE 8
TERMINATION
8.1 This Agreement may be terminated at any time prior to the Closing Date:
(a) by mutual consent of China Health and Shaanxi Meichen Pharmaceuticals
;
(b) by either China Health or Shaanxi Meichen Pharmaceuticals if there has
been a material breach of any representation, warranty, covenant or
agreement on the part of the other set forth in this Agreement which
breach has not been cured within five (5) business days following
receipt by the breaching party of notice of such breach, or if any
permanent injunction or other order of a court or other competent
authority preventing the consummation of the Acquisition shall have
become final and non-appealable; or
8.2 Effect of Termination. In the event of termination of this Agreement by
either Shaanxi Meichen Pharmaceuticals or China Health as provided in Section
6.1, this Agreement shall forthwith become void and there shall be no liability
or obligation on the part of any party hereto. In such event, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
8.3 Amendment. This Agreement may be amended by mutual agreement of China
Health, Shaanxi Meichen Pharmaceuticals and the Shaanxi Meichen Pharmaceuticals
Shareholders, provided that in the case of China Health and Shaanxi Meichen
Pharmaceuticals , any such amendment must authorized by their respective Boards
of Directors, and to the extent required by law, approved by their respective
shareholders. Any such amendment must be by an instrument in writing signed on
behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Closing Date, the parties
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed
on behalf of such party.
ARTICLE 9
RISK
Material Change in the Business of Shaanxi Meichen Pharmaceuticals
9.1 If any material loss or damage to the Shaanxi Meichen Pharmaceuticals
Business occurs prior to Closing and such loss or damage, in China Health'
reasonable opinion, cannot be substantially repaired or replaced within sixty
(60) days, China Health shall, within two (2) days following any such loss or
damage, by notice in writing to Shaanxi Meichen Pharmaceuticals , at its option,
either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to China Health' obligations to carry
out the transactions contemplated hereby, be vested in Shaanxi Meichen
Pharmaceuticals or otherwise adequately secured to the satisfaction of
China Health on or before the Closing Date.
Material Change in the China Health Business
9.2 If any material loss or damage to the China Health Business occurs
prior to Closing and such loss or damage, in Shaanxi Meichen Pharmaceuticals 's
reasonable opinion, cannot be substantially repaired or replaced within sixty
(60) days, Shaanxi Meichen Pharmaceuticals shall, within two (2) days following
any such loss or damage, by notice in writing to China Health, at its option,
either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to Shaanxi Meichen Pharmaceuticals 's
obligations to carry out the transactions contemplated hereby, be
vested in China Health or otherwise adequately secured to the
satisfaction of Shaanxi Meichen Pharmaceuticals on or before the
Closing Date.
ARTICLE 10
CLOSING
Closing
10.1 The Acquisition and the other transactions contemplated by this
Agreement will be closed at the Place of Closing in accordance with the closing
procedure set out in this Article.
Documents to be Delivered by Shaanxi Meichen Pharmaceuticals
10.2 On or before the Closing, Shaanxi Meichen Pharmaceuticals and the
Shaanxi Meichen Pharmaceuticals Shareholders will deliver or cause to be
delivered to China Health:
(a) the original or certified copies of the charter documents of Shaanxi
Meichen Pharmaceuticals and all corporate records documents and
instruments of Shaanxi Meichen Pharmaceuticals , the corporate seal of
Shaanxi Meichen Pharmaceuticals and all books and accounts of Shaanxi
Meichen Pharmaceuticals ;
(b) all reasonable consents or approvals required to be obtained by
Shaanxi Meichen Pharmaceuticals for the purposes of completing the
Acquisition and preserving and maintaining the interests of Shaanxi
Meichen Pharmaceuticals under any and all Shaanxi Meichen
Pharmaceuticals Material Contracts and in relation to Shaanxi Meichen
Pharmaceuticals Assets;
(c) certified copies of such resolutions of the shareholders and directors
of Shaanxi Meichen Pharmaceuticals as are required to be passed to
authorize the execution, delivery and implementation of this
Agreement;
(d) an acknowledgement from Shaanxi Meichen Pharmaceuticals and the
Shaanxi Meichen Pharmaceuticals Shareholders of the satisfaction of
the conditions precedent set forth in section 7.3 hereof;
(e) the certificates or other evidence of ownership of the Shaanxi Meichen
Pharmaceuticals Shares, together with such other documents or
instruments required to effect transfer of ownership of the Shaanxi
Meichen Pharmaceuticals Shares to China Health; and
(f) such other documents as China Health may reasonably require to give
effect to the terms and intention of this Agreement.
Documents to be Delivered by China Health
10.3 On or before the Closing, China Health shall deliver or cause to be
delivered to Shaanxi Meichen Pharmaceuticals and the Shaanxi Meichen
Pharmaceuticals Shareholders:
(a) share certificates representing the Acquisition Shares duly registered
in the names of the holders of shares of Shaanxi Meichen
Pharmaceuticals Common Stock;
(b) certified copies of such resolutions of the directors of China Health
as are required to be passed to authorize the execution, delivery and
implementation of this Agreement;
(c) a certified copy of a resolution of the directors of China Health
dated as of the Closing Date appointing the nominees of Shaanxi
Meichen Pharmaceuticals as officers of Shaanxi Meichen Pharmaceuticals
and appointing the nominee of the Shaanxi Meichen Pharmaceuticals
Shareholders to the board of directors of China Health;
(d) an acknowledgement from China Health of the satisfaction of the
conditions precedent set forth in section 7.1 hereof;
(e) such other documents as Shaanxi Meichen Pharmaceuticals may reasonably
require to give effect to the terms and intention of this Agreement.
ARTICLE 11
POST-CLOSING MATTERS
Forthwith after the Closing, China Health, Shaanxi Meichen Pharmaceuticals
and the Shaanxi Meichen Pharmaceuticals Shareholders, as the case may be, agree
to use all their best efforts to:
(a) issue a news release reporting the Closing;
(b) file a Form 8-K with the Securities and Exchange Commission disclosing
the terms of this Agreement within 4 business days of the Closing of
this Acquisition Shares Purchase Agreement which includes full Form 10
disclosure and the audited financial statements of Shaanxi Meichen
Pharmaceuticals , as well as pro formal financial information of
Shaanxi Meichen Pharmaceuticals and China Health as required by Item
310 of Regulation SB as promulgated by the Securities and Exchange
Commission;
(c) file reports on Forms 13D and 3 with the Securities and Exchange
Commission disclosing the acquisition of the Acquisition Shares by the
Shaanxi Meichen Pharmaceuticals Shareholders;
ARTICLE 12
NONCOMPETION; NONSOLICITATION
Noncompetition
12.1 For a period of three (3) years after the Closing Date, Shaanxi
Meichen Pharmaceuticals and the China Shareholders shall not, anywhere in PR
China and USA, directly or indirectly invest in, own, manage, operate, finance,
control, advise, render services to or guarantee the obligations of any person
or entity engaged in or planning to become engaged in the pharmaceutical
business ("Competing Business"), provided, however, that Shaanxi Meichen
Pharmaceuticals and the Shaanxi Meichen Pharmaceuticals Shareholders may
purchase or otherwise acquire up to (but not more than) five percent (5%) of any
class of the securities of any entity (but may not otherwise participate in the
activities of such entity) if such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of the
Exchange Act.
Nonsolicitation
12.2 For a period of three (3) years after the Closing Date, Shaanxi
Meichen Pharmaceuticals and the Shaanxi Meichen Pharmaceuticals Shareholders
shall not, directly or indirectly:
(a) solicit the business of any person or entity that is a customer of
China Health;
(b) cause, induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee, employee, consultant or other business
relation of China Health to cease doing business with China Health, to
deal with any competitor of China Health or in any way interfere with
its relationship with China Health;
(c) cause, induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee, employee, consultant or other business
relation of Shaanxi Meichen Pharmaceuticals and/or the Shaanxi Meichen
Pharmaceuticals Shareholders on the Closing Date or within the year
preceding the Closing Date to cease doing business with China Health,
to deal with any competitor of China Health or in any way interfere
with its relationship with China Health; or
(d) hire, retain or attempt to hire or retain any employee or independent
contractor of China Health or in any way interfere with the
relationship between China Health and any of its employees or
independent contractors.
Modification of Covenant
12.3 If a final judgment of a court or tribunal of competent jurisdiction
determines that any term or provision contained in this Article 12 is invalid or
unenforceable, then the parties agree that the court or tribunal will have the
power to reduce the scope, duration or geographic area of the term or provision,
to delete specific words or phrases or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision. This Article 12 will be enforceable as so modified after the
expiration of the time within which the judgment may be appealed. This Article
12 is reasonable and necessary to protect and preserve China Health's legitimate
business interests and the value of the Assets and to prevent any unfair
advantage conferred on Shaanxi Meichen Pharmaceuticals and the Shaanxi Meichen
Pharmaceuticals Shareholders.
ARTICLE 13
GENERAL PROVISIONS
Arbitration
13.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of Las Vegas, Nevada USA and
Beijing, PR China.
Notice
13.2 Any notice required or permitted to be given by any party will be
deemed to be given when in writing and delivered to the address for notice of
the intended recipient by personal delivery, prepaid single certified or
registered mail, or telecopier. Any notice delivered by mail shall be deemed to
have been received on the fourth business day after and excluding the date of
mailing, except in the event of a disruption in regular postal service in which
event such notice shall be deemed to be delivered on the actual date of receipt.
Any notice delivered personally or by telecopier shall be deemed to have been
received on the actual date of delivery.
Addresses for Service
13.3 The address for service of notice of each of the parties hereto is as
follows:
(a) China Health:
China Health Holdings, Inc.
Business Address:
000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxxxxx Xx, President
Mailing Address :
China Health Holding, Inc.
Park Place Suite 600
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX Xxxxxx X0X 0X0
Tel: 000-000-0000
Fax: 000-000-0000
(b) Shaanxi Meichen Pharmaceuticals or the Shaanxi Meichen Pharmaceuticals
Shareholders:
With a copy to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Change of Address
13.4 Any party may, by notice to the other parties change its address for
notice to some other address in North America and will so change its address for
notice whenever the existing address or notice ceases to be adequate for
delivery by hand. A post office box may not be used as an address for service.
Further Assurances
13.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
Time of the Essence
13.6 Time is expressly declared to be the essence of this Agreement.
Entire Agreement
13.7 The provisions contained herein constitute the entire agreement among
Shaanxi Meichen Pharmaceuticals , the Shaanxi Meichen Pharmaceuticals
Shareholders and China Health respecting the subject matter hereof and supersede
all previous communications, representations and agreements, whether verbal or
written, among Shaanxi Meichen Pharmaceuticals , the Shaanxi Meichen
Pharmaceuticals Shareholders and China Health with respect to the subject matter
hereof.
Enurement
13.8 This Agreement will enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and permitted assigns.
Assignment
13.9 This Agreement is not assignable without the prior written consent of
the parties hereto.
Counterparts
13.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
Applicable Law
13.11 This Agreement is subject to the laws of the State of Nevada, USA and
USA SEC rules and Regulations.
IN WITNESS WHEREOF the parties have executed this Agreement effective as of
the day and year first above written.
CHINA HEALTH HOLDING, INC.
NASDAQ OTCBB; CHHH)
THE COMPANY SEALED
By: /s/Xxxxxxxx Xx
--------------------
Xxxxxxxx Xx, an authorized signature
The President/CEO
Date: Sep.7th, 2006
By:/s/ Xx. Xx, X. X.
------------------------
Vice President/Director
Date: Sep. 3rd, 2006
SHAANXI MEICHEN PHARMACEUTICALS CO. LTD.
THE COMPANY SEALED
By: /s/ Xxxx, Xxxxxxx
XX. XXXX, XXXXXXX, an authorized signatory THE PRESIDENT/CEO
ADDRESS: D Chuangye Building, West District,
Xian High and New Technology Development Zone,
Xian City Shaanxi Province, P.R. China
DATE: SEP. 3rd, 2006
SHAANXI MEICHEN PHARMACEUTICALS SHAREHOLDERS
XX. XXXX , XXXXXXX
As CONTROLLED SHAREHODLERS
ADDRESS: D Chuangye Building, West District,
Xian High and New Technology Development Zone,
Xian City Shaanxi Province, P.R. China
