INDEBTEDNESS CONVERSION AGREEMENT
Exhibit
10.1
This Indebtedness Conversion Agreement
(this “Agreement”) is entered into and dated as of August
27, 2010 by and between
Long Triumph Investments Limited (“Long Triumph”) and New Oriental Energy & Chemical
Corp., a Delaware corporation, with headquarters located at Xicheng Industrial
Zone of Luoshan, Xinyang Henan Province, The People’s Republic of China (the “Company”), with reference to the
following:
WHEREAS, Long Triumph is a former
shareholder of the Company;
WHEREAS, from time to time until October
2008, Long Triumph paid certain expenses on behalf of the Company (the
“Advances”);
WHEREAS, the aggregate value of such Advances is
$700,000 and has been recorded by the
Company as a related party loan under “Current Liabilities Due to related
parties” on the
Company’s balance sheet;
WHEREAS, the Advances are unsecured,
interest free, and do not have fixed repayment terms;
and
WHEREAS, in lieu of cash payment of the
Advances by the Company to Long Triumph, the Company desires to issue to Long
Triumph and Long Triumph desires to accept 700,000 shares of common stock of the
Company, par value $0.001 (the “Converted Shares”) for the Advances, on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, for and in consideration
of the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived here from, and intending to be legally bound,
it is hereby agreed as follows:
1. Purchase. Subject to the terms and
conditions set forth in this Agreement, the Company hereby agrees to issue and
deliver to Long Triumph at the Closing (as defined in Paragraph 4 below), and Long Triumph hereby agrees
to purchase and accept from the Company the Converted
Shares.
2. Consideration. In full consideration for
the Converted Shares, at Closing, Long Triumph shall cancel in full the
Advances.
3. Representations
And Warranties. The parties represent and
warrant to the other as set forth below. All such representations and
warranties shall survive the Closing.
A. Representations
and Warranties of the Company. The Company represents and
warrants to Long Triumph and indemnifies Long Triumph as
follows:
(i)
Organization. The Company is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware, and has the requisite corporate power and
authorization to own its properties and to carry on its business as now
being conducted.
(ii)
Authorization;
Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to issue the Converted Shares in accordance with the terms
hereof. This Agreement has been duly executed and delivered by the
Company, and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and
remedies.
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(iii) Issuance of
Securities. The
Converted Shares are duly authorized and, upon issuance in accordance with the
terms hereof, shall be validly issued and free from all taxes, liens and charges
and shall be fully paid and nonassessable with the holders being entitled to all rights accorded to a
holder of common stock of the Company. The issuance by the Company of the
Converted Shares is exempt from registration under the 1933
Act.
(iv) Disclosures. No representation or
warranty by the Company contained in this Agreement or any exhibits referenced
herein and no document or certificate furnished or to be furnished to Long
Triumph in connection herewith, or with the transactions contemplated hereby,
contain, or on the Closing Date will contain, an untrue statement of a material fact, or omit, or on
the Closing Date will omit, to state a material fact necessary to make the
statements of fact contained herein or therein not
misleading.
(vii) The execution and delivery of this
Agreement by the Company does not, and the performance of this Agreement by the
Company will not require any consent, approval, authorization or other action
by, or filing with or notification to, any governmental body or any other
person.
B.
Representations,
Warranties and Indemnification of Long
Triumph. Long
Triumph represents and warrants to the Company and indemnifies the Company as
follows:
(i) Long Triumph is duly organized and
validly existing and in good standing under the laws of the jurisdiction of its
formation.
(ii)
Long Triumph has all necessary power and authority to
enter into and perform this Agreement.
(iii) Long Triumph will acquire the Converted
Shares for its own account for investment and not with a view toward any resale
or distribution thereof.
(iv) Long Triumph understands and agrees that the Converted
Shares have not been registered under the Securities Act of 1933, as amended, or
under any applicable state securities laws and may not be offered, sold,
transferred, assigned, or hypothecated unless there is an effective registration statement under such Act
or laws covering such units or the undersigned receives an opinion of counsel,
satisfactory to the Company that such offer, sale, transfer, assignment, or
hypothecation is exempt from the registration under applicable state law.
(v)
In
entering into this Agreement and the transactions contemplated herein, Long
Triumph is relying on their own due diligence investigation and assessment of
the Company and not upon any statements, comments, representations, or remarks
made by the
Company. Long Triumph acknowledges that the Company has made no
statement, comment, representation, or remark concerning the Company or its
business or the advisability of an investment in the
Company.
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(vi) This Agreement constitutes a valid and
binding obligation of Long
Triumph in accordance with the terms hereof, and the same will not violate any
provisions of its organizational documents.
(vii) The execution of this Agreement and the
consummation of the transactions contemplated hereby will not result in the breach of any term or
provision of, or constitute a default under, any contract, agreement,
instrument, understanding, judgment or decree to which Long Triumph is a party
or by which it is bound.
(viii) No representation or warranty by
Long Triumph contained in
this Agreement or any exhibits referenced herein and no document or certificate
furnished or to be furnished to the Company in connection herewith, or with the
transactions contemplated hereby, contain, or on the Closing Date will
contain, an untrue statement of a material
fact, or omit, or on the Closing Date will omit, to state a material fact
necessary to make the statements of fact contained herein or therein not
misleading.
(ix) The execution and delivery of this
Agreement by Long Triumph
does not, and the performance of this Agreement by Long Triumph will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any governmental body or any other person.
4. Closing.
A.
Closing. The Closing shall take place on August
27, 2010 (the “Closing
Date”) at the offices of
the Company, or at such other time and place as the parties may mutually agree
upon.
B.
Deliveries
by the Company. Within five (5) days of the
later of (i) the Closing
Date, or (ii) receipt by the Company of approval of the proposed issuance of the
Converted Shares contemplated in this Agreement from the Nasdaq Stock Market,
the Company shall submit a letter to Corporate Stock Transfer, the
Company’s transfer agent (the “Transfer Agent”), instructing the Transfer Agent to
deliver to Long Triumph the certificates representing the Converted
Shares.
C.
Deliveries
by Long Triumph. At the Closing, Long
Triumph shall deliver to the Company a written certificate evidencing
the irrevocable
cancellation of all indebtedness owed to Long Triumph under the Advances,
including all principal and interest, if any, accrued and owing
thereon.
5. Release of
Liability. Long Triumph
releases the Company, its successors and assigns, and each of their respective officers,
directors, employees and agents, from any and all claims, liability, losses and
damages whatsoever with respect to any and all payment or other obligations,
covenants or commitments of the Company to or in favor of Long Triumph arising under or in relation to
the Advances. Long Triumph HEREBY ACKNOWLEDGES AND AGREES THAT THE
COMPANY’S SUCCESSORS AND ASSIGNS, AND EACH OF
THE COMPANY’S AND ITS SUCCESSORS AND
ASSIGNS’ RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS SHALL BE DEEMED TO BE THIRD PARTY
BENEFICIARIES OF THE RELEASE SET FORTH ABOVE IN THIS
PARAGRAPH.
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6. Miscellaneous.
A.
Further
Assurances. Each of Long
Triumph and the Company hereby acknowledges, agrees and covenants that it shall
promptly execute and deliver to any other party hereto any and all
instruments, agreements or other documents that shall be prepared and reasonably
request to be so executed and delivered by such other party, and to take all
other action reasonably requested by any other party hereto that is consistent with the
cancellation and discharge of the Advances and all other express purposes of
this Agreement.
B.
Governing
Law; Attorneys’
Fees. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without regard to
principles of conflicts of law. If any suit, action, or proceeding is brought to
enforce any term or provision of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys’ fees, costs, and expenses incurred, in addition to any other
relief to which such party may be legally entitled.
C.
Construction. The captions and headings
contained herein are for convenient reference only and shall not in any way
affect the meaning or interpretation of this Agreement. Notwithstanding any
rule or maxim of construction to the contrary, any ambiguity or uncertainty in
this Agreement shall not be construed against either party based upon authorship
of any of the provisions hereof.
D.
Entire
Agreement. This
Agreement constitutes the
only agreement or understanding between the parties with respect to the subject
mater hereof, and supersedes and is controlling over any and all prior existing
agreements or communications between the parties. All negotiations,
commitments, and understandings acceptable to
both parties have been incorporated into this Agreement.
E.
Amendment or
Waiver. This
Agreement may by amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this Agreement may
be waived or the time for performance may be extended by a writing signed by the
party or parties for whose benefit the provision is
intended.
F.
Counterparts. This instrument may be executed in
counterparts, each of which
shall constitute an original but all of which shall constitute but one and the
same instrument. One or more counterparts of this instrument may be delivered
via facsimile, with the intention that they shall have the same effect as an
original counterpart hereof.
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IN WITNESS WHEREOF, the parties to this
Agreement have executed the same as of the date first above
written.
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NEW ORIENTAL ENERGY &
CHEMICAL
CORP.
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By:
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/s/ Chen Si
Qiang
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Name: Chen Si
Qiang
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Title: Chairman and
CEO
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LONG TRIUMPH INVESTMENTS
LIMITED
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By:
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/s/ Xxxxx
Xxxx
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Name: Xxxxx
Xxxx
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Title: Sole Director,
President
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