STOCK PURCHASE AGREEMENT
EXHIBIT 99.1
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CHINA
TEL GROUP, INC.
1.
|
PURCHASE AND SALE OF SERIES A
COMMON STOCK
|
1 | |
1.1 |
Sale
and Issuance of Series A Common Stock
|
1 | |
1.2 |
Purchase
Price
|
1 | |
1.3 |
Closing;
Delivery
|
1 | |
1.4 |
Defined
Terms Used in this Agreement
|
1 | |
2. |
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
|
2 | |
2.1 |
Organization,
Good Standing, Corporate Power and Qualification
|
3 | |
2.2 |
Subsidiaries
|
3 | |
2.3 |
Authorization
|
3 | |
2.4 |
Valid
Issuance of Purchased Shares
|
3 | |
2.5 | Litigation | 3 | |
2.6 |
Intellectual
Property
|
4 | |
2.7 |
Compliance
with Other Instruments
|
4 | |
2.8 |
Agreements;
Actions
|
4 | |
2.9 |
Related
Party Transactions
|
5 | |
2.10 |
Absence
of Liens
|
5 | |
2.11 |
Real
and Personal Property
|
5 | |
2.12 |
Financial
Statements; Liabilities
|
6 | |
2.13 |
Changes
|
6 | |
2.14 |
Employee
Matters
|
7 | |
2.15 |
Tax
Returns and Payments
|
8 | |
2.16 |
Permits
|
8 | |
2.17 |
Corporate
Documents
|
8 | |
2.18 |
Environmental
and Safety Laws
|
8 | |
2.19 |
Disclosure
|
9 | |
2.20 |
Net
Operating Loss Carryforward
|
9 | |
2.21 |
Foreign
Corrupt Practices Act
|
9 | |
2.22 |
Compliance
with Office of Foreign Assets Control
|
9 | |
3. |
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
|
10 | |
3.1 |
Authorization
|
10 | |
3.2 |
Disclosure
of Information; Investment Experience
|
10 | |
3.3 |
Restricted
Securities
|
10 | |
3.4 |
Accredited
Investor
|
11 | |
3.5 |
Foreign
Investors
|
11 | |
3.6 |
No
General Solicitation
|
11 |
TABLE OF
CONTENTS
4. | CONDITIONS TO THE PURCHASER’S OBLIGATIONS AT CLOSING | 11 | |
Representations
and Warranties
|
11 | ||
Performance
|
11 | ||
Compliance
Certificate
|
11 | ||
Qualifications
|
11 | ||
Board
of Directors
|
11 | ||
Proceedings
and Documents
|
11 | ||
5. |
CONDITIONS OF THE COMPANY’S
OBLIGATIONS AT CLOSING
|
12 | |
5.1 |
Representations
and Warranties
|
12 | |
5.2 |
Performance
|
12 | |
5.3 | Qualifications | 12 | |
6. |
MISCELLANEOUS
|
12 | |
6.1 |
Survival
of Warranties
|
12 | |
6.2 |
Successors
and Assigns
|
12 | |
6.3 |
Governing
Law
|
12 | |
6.4 |
Titles
and Subtitles
|
12 | |
6.5 |
Notices
|
12 | |
6.6 |
Finder’s
Fee and Commission
|
13 | |
6.7 |
Default
by the Purchaser
|
13 | |
6.8 |
Dispute
Resolution
|
13 | |
6.9 |
Attorney’s
Fees
|
14 | |
6.10 |
Severability
|
14 | |
6.11 |
Delays
or Omissions
|
14 | |
6.12 |
Entire
Agreement
|
14 | |
6.13 |
Counterparts
|
14 |
|
Exhibit
A
|
DISCLOSURE
SCHEDULE
|
THIS
STOCK PURCHASE AGREEMENT is made as of the 9th day
of February, 2010 (“Agreement”) by and between China Tel Group, Inc., a Nevada
corporation (“Company”), and Excel Era Limited, a Hong Kong corporation
(“Purchaser”). The Company and the Purchaser are each sometimes
referred to individually in this Agreement as a “Party” and together as
“Parties.” Purchaser is investing in the Company to facilitate the Company’s
ability to expand its operations to international markets including Peru, Chile,
Argentina, Brazil, Costa Rica, Honduras, Guatemala, Panama, Ecuador, India,
Eastern Europe, Philippines, Japan and Korea.
The
Parties hereby agree as follows:
1. Purchase and Sale of Series
A Common Stock.
The
securities that are the subject of this Agreement are shares of the Series A
common stock of the Company (“Shares”).
1.1 Sale and Issuance of Series
A Common Stock.
Subject
to the terms and conditions of this Agreement, the Company shall issue, sell and
deliver to the Purchaser at the Closing, and the Purchaser shall purchase from
the Company, One Hundred Fifty-Nine Million Five Hundred Ninety-Nine Thousand
Eight Hundred Three (159,599,803) Shares (“Purchased Shares”), which represents
thirty-six percent (36%) of the total Shares.
1.2 Purchase
Price.
The
purchase price (“Purchase Price”) for the Purchased Shares is Four Hundred
Eighty Million U.S. Dollars ($480,000,000.00). The Purchase Price is
payable as follows: One Million U.S. Dollars ($1,000,000.00) at the Closing
(“First Installment”), Twenty-Nine Million U.S. Dollars (29,000,000) on or
before February 15, 2010 (“Second Installment”), Two Hundred Ten Million U.S.
Dollars ($210,000,000) on or before March 1, 2010 (“Third Installment”) and Two
Hundred Forty Million U.S. Dollars ($240,000,000.00) on or before June 1, 2010
(“Fourth Installment”).
1.3 Closing;
Delivery.
The
Closing shall take place when the Purchaser provides to the Company proof that a
wire transfer payment has been initiated for the account of the Company in the
amount of the First Installment of the Purchase Price and the Company delivers
to the Purchaser the Purchased Shares. The Closing shall take place
remotely via the exchange of funds, documents and signatures, no later than
February 9, 2010, or at such other time and place as the Company and the
Purchaser mutually agree upon in writing. Each Installment of the
Purchase Price shall be paid by wire transfer to a bank account designated by
the Company.
1.4 Defined Terms Used in this
Agreement.
In
addition to the terms defined elsewhere in this Agreement, the following terms
used in this Agreement shall be construed to have the meanings set forth or
referenced below.
“Affiliate”
means, with respect to any specified Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with such
Person, including, without limitation, any general partner, managing member,
officer or director of such Person or any venture capital fund now or hereafter
existing that is controlled by one or more general partners or managing members
of, or shares the same management company with, such Person.
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“Code”
means the Internal Revenue Code of 1986, as amended.
“Company
Intellectual Property” means all patents, patent applications, trademarks,
trademark applications, service marks, tradenames, copyrights, trade secrets,
licenses, domain names, mask works, information and proprietary rights and
processes as are necessary to the conduct of the Company’s business as now
conducted and as presently proposed to be conducted.
“Key
Employee” means any executive-level employee (including division director and
vice president-level positions) as well as any employee or consultant who either
alone or in concert with others develops, invents, programs or designs any
Company Intellectual Property.
“Knowledge,” including the phrase “to
the Company’s knowledge,” shall mean the actual
knowledge after reasonable investigation of the following officers: Xxxxxx
Xxxxxxx, Xxxxx Xxx and Xxxxx Xxxxxxx.
“Material
Adverse Effect” means a material adverse effect on the business, assets
(including intangible assets), liabilities, financial condition, property, or
results of operations of the Company.
“Other
Purchaser” means the Purchaser identified under any Other Stock Purchase
Agreement.
“Other
Stock Purchase Agreement” means one or more agreements with the Company for
purchase of up to 12% of the total Shares for the same price per share as the
Purchase Price (as defined in Section 1.2 above) bears to the Purchased Shares
pursuant to the same material terms as this Agreement, except as to the dates
and amounts for payment of the Purchase Price.
“Person”
means any individual, corporation, partnership, trust, limited liability
company, association or other entity.
“Purchaser”
means Excel Era Limited, a Hong Kong corporation.
“Purchased
Shares” means thirty-six percent (36%) of the Shares that shall have been issued
and are outstanding immediately following the Closing of this Agreement and the
Other Purchase Agreement.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Shares”
means the shares of Series A Common Stock of the Company issued and outstanding
from time to time.
2. Representations and
Warranties of the Company. The Company hereby represents and
warrants to the Purchaser that, except as set forth on the Disclosure Schedule
attached as Exhibit
A to this Agreement, which exceptions shall be deemed to be part of the
representations and warranties made hereunder, the following representations are
true and complete as of the date of the Closing, except as otherwise
indicated. The Disclosure Schedule shall be arranged in sections
corresponding to the numbered and lettered sections and subsections contained in
this Section 2,
and the disclosures in any section or subsection of the Disclosure Schedule
shall qualify other sections and subsections in this Section 2 only to the
extent it is readily apparent from a reading of the disclosure that such
disclosure is applicable to such other sections and subsections.
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2.1 Organization, Good Standing,
Corporate Power and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has all requisite corporate power and
authority to carry on its business as presently conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect.
2.2 Subsidiaries. Each
of the Company’s subsidiaries is duly organized and existing under the laws of
its jurisdiction of organization and is in good standing under such
laws. None of the Company’s subsidiaries owns or leases property or
engages in any activity in any United States jurisdiction that might require its
qualification to do business as a foreign corporation and in which the failure
so to qualify would have a Materially Adverse Effect upon the Company’s
business, properties, or financial condition.
2.3 Authorization. All
corporate actions required to be taken by the Company’s Board of Directors and
stockholders in order to authorize the Company to enter into the Agreement and
to issue the Purchased Shares have been taken or will be taken prior to the
Closing described in Section 1.3
above. All actions on the part of the officers of the Company
necessary for the execution and delivery of the Agreement, the performance of
all obligations of the Company under the Agreement to be performed as of the
Closing, and the issuance and delivery of the Purchased Shares has been taken or
will be taken prior to the Closing. The Agreement, when executed and
delivered by the Company, shall constitute valid and legally binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms except: (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of
general application relating to or affecting the enforcement of creditors’
rights generally; or (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable
remedies.
2.4 Valid Issuance of Purchased
Shares. The Purchased Shares, when issued, sold and delivered
in accordance with the terms and for the consideration set forth in this
Agreement, will be validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions on transfer under this
Agreement, applicable state and federal securities laws and liens or
encumbrances created by or imposed by the Purchaser. Assuming the
accuracy of the representations of the Purchaser in Section 3 of this
Agreement and subject to the restrictions described in Section 3.4 below,
the Purchased Shares will be issued in compliance with all applicable federal
and state securities laws.
2.5 Litigation. Except as
set forth on the Disclosure Schedule, there is no claim, action, suit,
proceeding, arbitration, complaint, or charge pending or to the Company’s
knowledge, currently threatened in writing: (i) against the Company or any
officer, director or Key Employee of the Company arising out of their employment
or Board relationship with the Company; or (ii) to the Company’s knowledge, that
questions the validity of the Agreement or the right of the Company to enter
into or to consummate the transactions contemplated by the
Agreement. Neither the Company nor, to the Company’s knowledge, any
of its officers, directors or Key Employees is a party or is named as subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality (in the case of officers, directors or
Key Employees, such as would affect the Company). There is no action,
suit, proceeding or investigation by the Company pending or which the Company
intends to initiate. The foregoing includes, without limitation,
actions, suits, proceedings or investigations pending or threatened in writing
(or any basis therefore known to the Company) involving the prior employment of
any of the Company’s employees, their services provided in connection with the
Company’s business, or any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers.
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2.6 Intellectual
Property.
(a) The
Company owns or possesses sufficient legal rights to all Company Intellectual
Property without any known conflict with, or infringement of, the rights of
others. To the
Company’s knowledge, no product or service marketed or sold (or proposed to be
marketed or sold) by the Company violates or will violate any license or
infringes or will infringe any intellectual property rights of any other
party.
(b) Other
than with respect to commercially available software products under standard
end-user object code license agreements, there are no outstanding options,
licenses, agreements, claims, encumbrances or shared ownership interests of any
kind relating to the Company Intellectual Property, nor is the Company bound by
or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other
Person.
(c) The
Company has not received any communications alleging that the Company has
violated or, by conducting its business, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets, mask works or
other proprietary rights or processes of any other Person.
(d) The
Company has obtained and possesses valid licenses to use all of the software
programs present on the computers and other software-enabled electronic devices
that it owns or leases or that it has otherwise provided to its employees for
their use in connection with the Company’s business.
(e) To the
Company’s knowledge, it will not be necessary to use any inventions of any of
its employees or consultants (or Persons it currently intends to hire) made
prior to their employment by the Company.
2.7 Compliance with Other
Instruments. The Company is not in violation or default: (i)
of any provisions of its Articles of Incorporation or Bylaws; (ii) of any
instrument, judgment, order, writ or decree; (iii) under any mortgage; or (iv)
under any lease, agreement, contract or purchase order to which it is a party or
by which it is bound that is required to be listed on the Disclosure
Schedule, or, to
its knowledge, of any provision of federal or state statute, rule or regulation
applicable to the Company, the violation of which would have a Material Adverse
Effect. The execution, delivery and performance of the Agreement and
the consummation of the transactions contemplated by the Agreement will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either (i) a default under any
such provision, instrument, judgment, order, writ, decree, contract or agreement
or (ii) an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company or the suspension, revocation,
forfeiture, or nonrenewal of any material permit or license applicable to the
Company.
2.8 Agreements;
Actions.
(a) Except
for the Agreement, there are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by which
it is bound that involve: (i) obligations (contingent or otherwise) of, or
payments to, the Company in excess of One Million U.S. Dollars ($1,000,000.00);
(ii) the license of any patent, copyright, trademark, trade secret or other
proprietary right to or from the Company; (iii) the grant of rights to
manufacture, produce, assemble, license, market, or sell its products to any
other Person that limit the Company’s exclusive right to develop, manufacture,
assemble, distribute, market or sell its products; or (iv) indemnification by
the Company with respect to infringements of proprietary rights.
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(b) Except as
set forth in the Disclosure Schedule, the Company has not: (i) declared or paid
any dividends, or authorized or made any distribution upon or with respect to
any class or series of its capital stock; (ii) incurred any indebtedness
for money borrowed or incurred any other liabilities individually in excess of
Fifty Thousand U.S. Dollars ($50,000.00) or in excess of One Hundred Thousand
U.S. Dollars in the aggregate ($100,000.00); (iii) made any loans or
advances to any Person, other than ordinary advances for travel expenses; or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights,
other than the sale of its inventory in the ordinary course of
business. For the purposes of subsections (b) and (c) of this Section 2.8, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same Person (including Persons the
Company has reason to believe are affiliated with each other) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsection.
(c) The
Company is not a guarantor or indemnitor of any indebtedness of any other
Person.
2.9 Related Party
Transactions.
(a) Other
than: (i) standard employee benefits generally made available to all employees;
(ii) standard director and officer indemnification agreements approved by the
Board of Directors; and (iii) the purchase of shares of the Company’s capital
stock and the issuance of options to purchase shares of the Company’s Common
Stock, in each instance, approved in the written minutes of the Board of
Directors (previously provided to the Purchasers or their counsel), there are no
agreements, understandings or proposed transactions between the Company and any
of its officers, directors, consultants or Key Employees, or any Affiliate
thereof.
(b) Except as
set forth on the Disclosure schedule, the Company is not indebted, directly or
indirectly, to any of its directors, officers or employees or to their
respective spouses or children or to any Affiliate of any of the foregoing,
other than in connection with expenses or advances of expenses incurred in the
ordinary course of business or employee relocation expenses and for other
customary employee benefits made generally available to all
employees. None of the Company’s directors, officers or employees, or
any members of their immediate families, or any Affiliate of the foregoing are,
directly or indirectly, indebted to the Company.
2.10 Absence of
Liens. Except as reflected in the Financial Statements (as
defined below), the property and assets that the Company owns are free and clear
of all mortgages, deeds of trust, liens, loans and encumbrances, except for
statutory liens for the payment of current taxes that are not yet delinquent and
encumbrances and liens that arise in the ordinary course of business and do not
materially impair the Company’s ownership or use of such property or
assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and, to its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances other than those of
the lessors of such property or assets.
2.11 Real and Personal
Property.
(a) Real
Property. The Company does not own any real
property. All of the real property leased by the Company (“Leased
Real Property”) is identified on Section 2.11(a) of
the Disclosure Schedule. This schedule of Leased Real Property is a
complete, accurate, and correct list of the Company's Leased Real
Property. Each of the leases for the Leased Real Property identified
on Section
2.11(a) of the Disclosure Schedule is in full force and effect and has
not been modified, amended, or altered, in writing or
otherwise. Except as set forth in the Disclosure Schedule, neither
the Company nor any other party thereto is in default under any of said leases,
nor has any event occurred which, with the giving of notice or the passage of
time, or both, would give rise to a default.
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(b) Personal
Property. Except as specifically disclosed on Section 2.11(b) of
the Disclosure Schedule, the Company has good and marketable title to all of its
personal property and assets and all such personal property and assets are in
good working condition. None of such personal property or assets is
subject to any mortgage, pledge, lien, conditional sale agreement, security
agreement, encumbrance or other charge. The Financial Statements
reflect all personal property and assets of the Company (other than assets
disposed of in the ordinary course of business subsequent to September 30,
2009), and such properties and assets are sufficient for the Company to conduct
the business of the Company as currently conducted and as proposed to be
conducted.
2.12 Financial Statements;
Liabilities. The Company has delivered to the Purchaser its
audited financial statements as of December 31, 2008 and for the fiscal year
ended December 31, 2008, and its unaudited financial statements (including
balance sheet, income statement and statement of cash flows) as September 30,
2009 and for the nine-month period ended September 30, 2009 (collectively,
“Financial Statements”). The Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated. The Financial
Statements fairly present in all material respects the financial condition and
operating results of the Company as of the dates, and for the periods, indicated
therein, subject in the case of the unaudited Financial Statements to normal
year-end audit adjustments. Except as set forth in the Financial
Statements and/or the Disclosure Schedule, the Company has no material
liabilities or obligations, contingent or otherwise, other than:
(i) liabilities incurred in the ordinary course of business subsequent to
September 30, 2009; (ii) obligations under contracts and commitments
incurred in the ordinary course of business; and (iii) liabilities and
obligations of a type or nature not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in all such
cases, individually and in the aggregate would not have a Material Adverse
Effect. The Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
generally accepted accounting principles.
2.13 Changes. Except
as set forth in the Disclosure Schedule, since date of most recent financial
statements, there
has not been:
(a) any
change in the assets, liabilities, financial condition or operating results of
the Company from that reflected in the Financial Statements, except changes in
the ordinary course of business that have not caused, in the aggregate, a
Material Adverse Effect;
(b) any
damage, destruction or loss that would have a Material Adverse
Effect;
(c) any
waiver or compromise by the Company of a valuable right or of a material debt
owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of any
obligation by the Company, except in the ordinary course of business and the
satisfaction or discharge of which would not have a Material Adverse
Effect;
(e) any
material change to a material contract or agreement by which the Company or any
of its assets is bound or subject;
(f) any
resignation or termination of employment of any officer or Key Employee of the
Company;
(g) any
mortgage, pledge, transfer of a security interest in, or lien, created by the
Company, with respect to any of its material properties or assets, except liens
for taxes not yet due or payable and liens that arise in the ordinary course of
business and do not materially impair the Company’s ownership or use of such
property or assets;
6
(h) any loans
or guarantees made by the Company to or for the benefit of its employees,
officers or directors, or any members of their immediate families, other than
travel advances and other advances made in the ordinary course of its
business;
(i) any
declaration, setting aside or payment or other distribution in respect of any of
the Company’s capital stock, or any direct or indirect redemption, purchase, or
other acquisition of any of such stock by the Company;
(j) any sale,
assignment or transfer of any Company Intellectual Property that could
reasonably be expected to result in a Material Adverse Effect;
(k) receipt
of notice that there has been a loss of, or material order cancellation by, any
major customer of the Company;
(l) to the
Company’s knowledge, any other event or condition of any character, other than
events affecting the economy or the Company’s industry generally,
that could reasonably be expected to result in a Material Adverse Effect;
or
(m) any
arrangement or commitment by the Company to do any of the things described in
this Section 2.13.
2.14 Employee
Matters.
(a) As of the
date hereof, the Company employs no full-time employees or part-time employees
and instead only engages consultants or independent contractors, including its
executive officers. Section 2.14 of the
Disclosure Schedule sets forth a detailed description of all compensation,
including salary, bonus, severance obligations and deferred compensation paid or
payable for each officer, employee, consultant and independent contractor of the
Company who received compensation in excess of One Hundred Thousand U.S. Dollars
($100,000.00) for the fiscal year ended December 31, 2008 or is
anticipated to receive compensation in excess of One Hundred Thousand U.S.
Dollars ($100,000.00) for the fiscal year ending December 31, 2009.
(b) To the
Company’s knowledge, none of its officers is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would materially interfere with such officer’s ability to promote
the interest of the Company or that would conflict with the Company’s
business. Neither the execution or delivery of the Agreement, nor the
carrying on of the Company’s business by the employees of the Company, nor the
conduct of the Company’s business as now conducted and as presently proposed to
be conducted, will, to the Company’s knowledge, conflict with or result in a
breach of the terms, conditions, or provisions of, or constitute a default
under, any contract, covenant or instrument under which any such officer is now
obligated.
(c) The
Company is not delinquent in payments to any of its consultants, or independent
contractors for any compensation for any service performed for it to the date
hereof or amounts required to be reimbursed to such employees, consultants, or
independent contractors.
(d) To the
Company’s knowledge, no Key Employee intends to terminate his or her
relationship with the Company or is otherwise likely to become unavailable to
continue as a Key Employee, nor does the Company have a present intention to
terminate the services of any of the foregoing.
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(e) The
Company has no employee benefit plans within the meaning of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”).
(f) The
Company is not bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company. There is no
strike or other labor dispute involving the Company pending, or to the Company’s
knowledge, threatened, which could have a Material Adverse Effect its
operations.
2.15 Tax Returns and
Payments. There are no federal, state, county, local or
foreign taxes dues and payable by the Company which have not been timely
paid. There are no accrued and unpaid federal, state, country, local
or foreign taxes of the Company which are due, whether or not assessed or
disputed. There have been no examinations or audits of any tax
returns or reports by any applicable federal, state, local or foreign
governmental agency. The Company has duly and timely filed all
federal, state, county, local and foreign tax returns required to have been
filed by it, and there are in effect no waivers of applicable statutes of
limitations with respect to taxes for any year.
2.16 Permits. The
Company has all the permits, licenses and any similar authority necessary to
conduct its business, the lack of which could reasonably be expected to have a
Material Adverse Effect. The Company is not in default in any
material respect under any of such permits, licenses or other similar
authority.
2.17 Corporate
Documents. The Articles of Incorporation and Bylaws of the
Company are in the form provided to the Purchasers. The copy of the
minute books of the Company provided to the Purchaser contains all actions taken
by written consent without a meeting by the directors and stockholders since the
date of incorporation and accurately reflects in all material respects all
actions by the directors and stockholders with respect to all transactions
referred to in the minute book.
2.18 Environmental and Safety
Laws. Except as could not reasonably be expected to have a
Material Adverse Effect to the best of its knowledge: (i) the Company is
and has been in compliance with all Environmental Laws; (ii) there has been
no release or to the Company’s knowledge threatened release of any pollutant,
contaminant or toxic or hazardous material, substance or waste, or petroleum or
any fraction thereof, (each a “Hazardous Substance”) on, upon, into or from any
site currently or heretofore owned, leased or otherwise used by the Company;
(iii) there have been no Hazardous Substances generated by the Company that
have been disposed of or come to rest at any site that has been included in any
published United States federal, state or local “superfund” site list or any
other similar list of hazardous or toxic waste sites published by any
governmental authority in the United States; and (iv) there are no
underground storage tanks located on, no polychlorinated biphenyls (“PCBs”) or
PCB-containing equipment used or stored on, and no hazardous waste as defined by
the Resource Conservation and Recovery Act, as amended, stored on, any site
owned or operated by the Company, except for the storage of hazardous waste in
compliance with Environmental Laws. For purposes of this Section 2.18,
“Environmental Laws” means any law, regulation, or other applicable requirement
relating to: (a) releases or threatened release of Hazardous Substance; (b)
pollution or protection of employee health or safety, public health or the
environment; or (c) the manufacture, handling, transport, use, treatment,
storage, or disposal of Hazardous Substances.
8
2.19 Disclosure. The
Company has made available to the Purchaser all the information reasonably
available to the Company that the Purchasers have requested for deciding whether
to acquire the Shares, including certain of the Company’s projections describing
its proposed business plan (the “Business Plan”). No representation
or warranty of the Company contained in this Agreement, as qualified by the
Disclosure Schedule, and no certificate furnished or to be furnished to
Purchaser at the Closing contains any untrue statement of a material fact or, to
the Company’s knowledge, omits to state a material fact necessary in order to
make the statements contained herein or therein not misleading in light of the
circumstances under which they were made. The Business Plan was
prepared in good faith; however, the Company does not warrant that it will
achieve any results projected in the Business Plan. It is understood
that this representation is qualified by the fact that the Company has not
delivered to the Purchaser, and has not been requested to deliver, a private
placement or similar memorandum or any written disclosure of the types of
information customarily furnished to purchasers of securities.
2.20 Net Operating Loss
Carryforward. The information contained in the Disclosure
Schedule or otherwise provided to counsel for the Purchaser regarding the
application of Section 382 of the Code to the Company’s federal net operating
loss carryforward is true and correct to the Company’s knowledge.
2.21 Foreign Corrupt Practices
Act. To the Company’s knowledge, neither the Company nor any
of the Company's directors, officers or employees have made, directly or
indirectly, any payment or promise to pay, or gift or promise to give or
authorized such a promise or gift, of any money or anything of value, directly
or indirectly, to: (i) any foreign official (as such term is defined in the
United States Foreign Corrupt Practices Act (“FCPA”) for the purpose of
influencing any official act or decision of such official or inducing him or her
to use his or her influence to affect any act or decision of a governmental
authority; or (ii) any foreign political party or official thereof or candidate
for foreign political office for the purpose of influencing any official act or
decision of such party, official or candidate or inducing such party, official
or candidate to use his, her or its influence to affect any act or decision of a
foreign governmental authority, in the case of both (i) and (ii) above, in order
to assist the Company or any of its affiliates to obtain or retain business for,
or direct business to, the Company or any of its affiliates, as
applicable. Neither the Company nor any of its directors, officers or
employees has made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment of funds or received or retained any funds in violation
of any law, rule or regulation.
2.22 Compliance with Office of
Foreign Assets Control. (a) To the Company’s knowledge,
neither the Company nor any of the Company's directors, officers or employees is
an OFAC Sanctioned Person (as defined below). The Company and the
Company's directors, officers or employees are in compliance with, and have not
previously violated, the USA Patriot Act of 2001, as amended through the date of
this Agreement, to the extent applicable to the Company and all other applicable
anti-money laundering laws and regulations. None of: (i) the purchase
and sale of the Shares; (ii) the use of the purchase price for the Shares; (iii)
the execution, delivery and performance of this Agreement or any of the
Ancillary Agreements; or (iv) the consummation of any transaction contemplated
hereby or thereby, or the fulfillment of the terms hereof or thereof, will
result in a violation by anyone, including, without limitation, the Investors,
of any of the OFAC Sanctions (as defined below) or of any anti-money laundering
laws of the United States or any other applicable jurisdiction.
(b) For the
purposes of Section
2.22(a) of this Agreement:
(i) “OFAC
Sanctions” means any sanctions program administered by the Office of Foreign
Assets Control of the United States Department of the Treasury (“OFAC”) under
authority delegated to the Secretary of the Treasury (“Secretary”) by the
President of the United States or provided to the Secretary by statute, and any
order or license issued by, or under authority delegated by, the President or
provided to the Secretary by statute in connection with a sanctions program thus
administered by OFAC. For ease of reference, and not by way of
limitation, OFAC Sanctions programs are described on OFAC's website at xxx.xxxxx.xxx/xxxx;
9
(ii) “OFAC
Sanctioned Person” means any government, country, corporation or other entity,
group or individual with whom or which the OFAC Sanctions prohibit a U.S. Person
from engaging in transactions and includes, without limitation, any individual
or corporation or other entity that appears on the current OFAC list of
Specially Designated Nationals and Blocked Persons (“SDN List”). For
ease of reference, and not by way of limitation, OFAC Sanctioned Persons other
than governments and countries can be found on the SDN List on OFAC's website at
xxx.xxxxx.xxx/xxxxxxx/xxxxxxxxxxx/xxxx/xxx;
and
(iii) “U.S. Person”
means any U.S. citizen, permanent resident alien, entity organized under the
laws of the United States (including foreign branches), or any person
(individual or entity) in the United States and, with respect to the Cuban
Assets Control Regulations, also includes any corporation or other entity that
is owned or controlled by one of the foregoing, without regard to where it is
organized or doing business.
3. Representations and
Warranties of the Purchasers. The Purchaser hereby represents
and warrants to the Company that:
3.1 Authorization. The
Purchaser has full power and authority to enter into the
Agreement. The Agreement to which the Purchaser is a party, when
executed and delivered by the Purchaser, will constitute valid and legally
binding obligations of the Purchaser, enforceable in accordance with their
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and any other laws of general application
affecting enforcement of creditors’ rights generally, and as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
3.2 Purchase Entirely for Own
Account. This Agreement is made with the Purchaser in reliance
upon the Purchaser’s representation to the Company, which by the Purchaser’s
execution of this Agreement, the Purchaser hereby confirms that the Purchased
Shares to be acquired by the Purchaser will be acquired for investment for the
Purchaser’s own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect to any of the
Purchased Shares. The Purchaser has not been formed for the specific purpose of
acquiring the Purchased Shares.
3.3 Disclosure of Information;
Investment Experience. The Purchaser has had an opportunity to
discuss the Company’s business, management, financial affairs and the terms and
conditions of the offering of the Purchased Shares with the Company’s management
and has had an opportunity to review the Company’s facilities. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section
2 of this Agreement or the right of the Purchaser to rely
thereon. The Purchaser represents that the Purchaser is experienced
in evaluating and investing in transactions involving securities of companies in
a similar stage of development and acknowledges that such Purchaser is able to
fend for himself, herself or itself, can bear the economic risk of the
Purchaser’s investment, and has such knowledge and experience in financial and
business matters and is capable of evaluating the merits and risks of the
investment in the Purchased Shares.
10
3.4 Restricted
Securities. The Purchaser understands that the Purchased
Shares are “restricted securities” under applicable United States federal and
state securities laws and that, pursuant to these laws, the Purchaser must hold
the Purchased
Shares indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The
Purchaser acknowledges that the Company has no obligation to register or qualify
the Purchased Shares. The Purchaser further acknowledges that if an
exemption from registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and manner of
sale, the holding period for the Purchased Shares, and on requirements relating
to the Company which are outside of the Purchaser’s control, and which the
Company is under no obligation and may not be able to
satisfy.
3.5 Accredited
Investor. The Purchaser is an accredited investor as defined
in Rule 501(a) of Regulation D promulgated under the Securities
Act.
3.6 Foreign
Investors. If the Purchaser is not a United States person (as
defined by Section 7701(a)(30) of the Code), the Purchaser hereby
represents that it has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with any invitation to subscribe for the
Purchased Shares or any use of this Agreement, including: (i) the legal
requirements within its jurisdiction for the purchase of the Purchased Shares;
(ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained; and
(iv) the income tax and other tax consequences, if any, that may be
relevant to the purchase, holding, redemption, sale, or transfer of the
Purchased Shares. The Purchaser’s subscription and payment for and
continued beneficial ownership of the Purchased Shares will not violate any
applicable securities or other laws of the Purchaser’s
jurisdiction.
3.7 No General
Solicitation. Neither the Purchaser, nor any of its officers,
directors, employees, agents, stockholders or partners, has, either directly or
indirectly, including through a broker or finder, (i) engaged in any
general solicitation; or (ii) published any advertisement in connection
with the proposed purchase and sale of the Purchased Shares.
4. Conditions to the
Purchaser’s Obligations at Closing. The obligations of the
Purchaser to purchase the Purchased Shares at the Closing are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
4.1 Representations and
Warranties. The representations and warranties of the Company
contained in Section 2 shall
be true and correct in all respects as of the Closing.
4.2 Performance. The
Company shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by the Company on or before the Closing.
4.3 Compliance
Certificate. The Chief Executive Officer of the Company shall
deliver to the Purchaser at the Closing a certificate certifying that the
conditions specified in Sections 4.1 and 4.2
have been fulfilled.
4.4 Qualifications. All
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Shares pursuant to this
Agreement shall be obtained and effective as of the Closing.
4.5 Board of
Directors. As of the Closing, the authorized size of the Board
shall be six (6), and the Purchaser shall be entitled to appoint one (1) Board
member. The Secretary of the Company shall deliver to the Purchaser
at the Closing: (i) the Bylaws of the Company; and (ii) resolutions of the Board
of Directors of the Company approving the Agreement and the transactions
contemplated under the Agreement.
11
4.6 Proceedings and
Documents. All corporate and other proceedings in connection
with the transactions contemplated at the Closing and all documents incident
thereto shall be reasonably satisfactory in form and substance to the Purchaser,
and the Purchaser (or its counsel) shall have received all such counterpart
original and certified or other copies of such documents as reasonably
requested. Such documents may include good standing
certificates.
5. Conditions of the Company’s
Obligations at Closing. The obligations of the Company to sell
Purchased Shares to the Purchaser at the Closing are subject to the fulfillment,
on or before the Closing, of each of the following conditions, unless otherwise
waived:
5.1 Representations and
Warranties. The representations and warranties of Purchaser
contained in Section 3 shall
be true and correct in all respects as of the Closing.
5.2 Performance. The
Purchaser shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by the Purchaser on or before the
Closing.
5.3 Qualifications. All
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Share pursuant to this
Agreement shall be obtained and effective as of the Closing.
6. Miscellaneous.
6.1 Survival of
Warranties. Unless otherwise set forth in this Agreement, the
representations and warranties of the Company and the Purchaser contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing, and shall in no way be affected by any investigation
or knowledge of the subject matter thereof made by or on behalf of the Purchaser
or the Company.
6.2 Successors and
Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the Parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
6.3 Governing
Law. This Agreement and any controversy arising out of or
relating to this Agreement shall be governed by and construed in accordance with
the laws of Hong Kong without regard to conflict of law principles that would
result in the application of any law other than the law of Hong
Kong.
6.4 Titles and
Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
12
6.5 Notices. All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given upon the earlier of actual
receipt or: (i) personal delivery to the party to be notified; (ii) when sent,
if sent by electronic mail or facsimile during normal business hours of the
recipient, and if not sent during normal business hours, then on the recipient’s
next business day; (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one (1)
business day after deposit with a nationally recognized overnight courier,
freight prepaid, specifying next business day delivery, with written
verification of receipt. All communications shall be sent to the
respective parties at their address as set forth on the signature page, or to
such e-mail address, facsimile number or address as subsequently modified by
written notice given in accordance with this Section
6.5. If notice is given to the Company, notice shall also be
given to the counsel for the Company delivered in the same manner as to the
Company at the address, facsimile number or e-mail address immediately
below:
Xxxxxxx
X. Xxxxxxxx
12520
Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000 XXX
Xxcsimile:
0 (000) 000-0000
E-mail:
xxxxxxxxx@xxxxxxxxxxxxx.xxx
6.6 Finder’s Fee and
Commission. The Purchaser represents that it neither is nor
will be obligated for any finder’s fee or commission in connection with this
transaction. The Purchaser agrees to indemnify and to hold harmless
the Company from any liability for any commission or compensation in the nature
of a finder’s or broker’s fee arising out of this transaction (and the
costs and expenses of defending against such liability or asserted liability)
for which the Purchaser or any of its officers, employees, or representatives is
responsible. Except as set forth in the Disclosure Schedule, the
Company represents that it neither is nor will be obligated for any finder’s fee
or commission in connection with this transaction. The Company agrees
to indemnify and hold harmless the Purchaser from any liability for said
commission and finder’s fee, including the costs and expenses of defending
against such liability or asserted liability.
6.7 Default by the
Purchaser. The Purchaser shall not sell, transfer, distribute
or otherwise convey more than the following number of the Purchased Shares prior
to the payment to the Company of each of the following
Installments: 0 Shares prior to the Second Installment, 9,974,988
Shares prior to the Third Installment and 79,799,901 Shares prior to the Fourth
Installment. If the Purchaser fails to pay any Installment as
required, the Purchaser shall return to the Company the following number of the
Purchased Shares and the Purchaser shall not be obligated to pay nor the Company
to accept any subsequent Installment: 159,599,803 Shares upon failure to pay the
Second Installment, 149,624,815 Shares upon failure to pay the Third Installment
or 79,799,901 Shares upon failure to pay the Fourth Installment, respectively,
as the case may be. Purchaser also agrees that should the Purchaser
fail to return said Shares to the Company on or before the applicable date
described in this Section 6.7, the
Company may cancel said Shares without further notice to the Purchaser, and the
Purchaser shall thereby forfeit any and all rights it would otherwise have as
the owner of said Shares.
6.8 Dispute
Resolution. Either Party may, at any time, deliver to the
other Party a dispute notice setting forth a brief description of the issues to
be resolved through the dispute resolution mechanism set forth in this Section 6.8. Such
dispute notice shall specify the provision or provisions of this Agreement and
the facts or circumstances that are the subject matter of the
dispute(s). Immediately following the receipt of a dispute notice,
the Parties shall cause their representatives to meet and seek to resolve the
disputed item(s) cordially through informal negotiations. If the
Parties’ representatives are unable to resolve the dispute(s) within ten (10)
business days of the receipt of the dispute notice, the dispute(s) shall be
referred to a representative of senior management from each Party, who, acting
reasonably and in good faith, shall seek to resolve the dispute(s) to the mutual
satisfaction of the Parties. If the representatives of senior
management are unable to resolve the dispute(s) within ten (10) business days of
the referral of the dispute(s) to those representatives, then the dispute(s)
shall be submitted to the Hong Kong International Arbitration Center (“HKIAC”)
for binding arbitration conducted in English by a single
arbitrator. The dispute(s) shall be resolved pursuant to HKIAC’s
procedural rules. The award of the arbitrator shall be final and
binding on the Parties and may be enforced by any court of competent
jurisdiction.
13
6.9 Attorneys’
Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of this
Agreement, the prevailing Party shall be entitled to reasonable attorneys’ fees,
costs and necessary disbursements in addition to any other relief to which such
Party may be entitled.
6.10 Severability. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
6.11 Delays or
Omissions. No delay or omission to exercise any right, power
or remedy accruing to any Party under this Agreement, upon any breach or default
of any other Party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting Party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of either Party of any
breach or default under this Agreement, or any waiver on the part of either
Party of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or
otherwise afforded to either Party, shall be cumulative and not
alternative.
6.12 Entire
Agreement. This Agreement, including the Exhibits hereto,
constitute the full and entire understanding and agreement between the Parties
with respect to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between the Parties is
expressly canceled.
6.13 Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original copy of this Agreement and all of which, when taken
together, shall be deemed to constitute one and the same Agreement.
IN
WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement as of
the date first written above.
14
COMPANY:
CHINATEL
GROUP, INC.
By:
/s/ Xxxxxx
Xxxxxxx
Xxxxxx
Xxxxxxx, Chief Executive Officer
By:
/s/ Colin
YongLee
Xxx
Xxxxx
YongLee Tay, President
Address
of the Company:
8105
Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx,
XX 00000 XXX
Facsimile:
0 (000) 000-0000
E-mail:
xxxxxxxx@xxxxxxxxxxxxx.xxx
E-mail:
xxxx@xxxxxxxxxxxxx.xxx
|
PURCHASER:
EXCEL
ERA LIMITED
By:
/s/
Tsuing-Hsi (Xxxxxxx)
Xxxx
Tsuing-Hsi (Xxxxxxx) Xxxx, President
Address
of the Purchaser:
Office
A, 12/F., Wing Cheong Commxxxxxx Xxxx.
Xx.
00-00 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxx Xxxx
Facsimile: 000
(000) 0000-0000
E-mail:
xxxxxxxx@xxxx-xxxx.xxx
xxxxxxxx@000.xxx
|
15