EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("AGREEMENT") made this 11th day of
March, 2004 by and among TINTIC GOLD MINING COMPANY, a Utah corporation
("PARENT"), TTGM ACQUISITION CORPORATION, a Utah corporation ("SUB"), and KIWA
BIO-TECH PRODUCTS GROUP LTD., an international business company organized under
the laws of the British Virgin Islands (the "COMPANY").
RECITALS:
A. The respective Boards of Directors of Parent, Sub and the Company
have determined that a merger of Sub with and into the Company (the "MERGER"),
upon the terms and subject to the conditions set forth in this Agreement, would
be fair and in the best interests of their company and their respective
shareholders, and such Boards of Directors have approved such Merger, pursuant
to which the shares of the Company ("COMPANY SHARES") issued and outstanding
immediately prior to the Effective Time of the Merger (as defined in SECTION
1.4), other than Dissenting Shares (as defined in SECTION 2.1.4), will be
converted into the right to receive Common Stock of Parent ("PARENT COMMON
STOCK").
B. Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
C. For federal income tax purposes, the parties intend that the Merger
shall qualify as a reorganization under Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "CODE"), by reason of Section 368(a)(2)(E)
of the Code.
AGREEMENT:
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
1. THE MERGER.
1.1 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Utah Revised
Business Corporation Act (the "UTAH STATUTES") and the British Virgin Islands
International Business Companies Act (Cap. 291) (the "BVI STATUTES"), Sub shall
be merged with and into the Company at the Effective Time of the Merger, Sub and
the Company being the constituent companies for the purposes of the BVI
Statutes. At the Effective Time of the Merger, the separate existence of Sub
shall cease, and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and shall continue under the name Kiwa Bio-Tech
Products Group Ltd.
1.2 VOTING. The Company has 5,000,000 voting shares in
issue, which are owned and held by the persons and entities set forth on
Schedule 3.1.3 of the Company Disclosure Schedules (as hereinafter defined), and
Sub has 1,000 voting shares issued and outstanding, which are held by Parent.
The holders of the Company Shares and the stock of Sub are each entitled to vote
on the Merger as a single class.
1.3 CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to SECTION 7.1 and subject to the satisfaction or waiver of the
conditions set forth in SECTION 6, the closing of the Merger (the "CLOSING")
will take place at 10:00 a.m. on the business day after satisfaction of the
conditions set forth in SECTION 6 (or as soon as practicable thereafter
following satisfaction or waiver of the conditions set forth in SECTION 6) (the
"CLOSING DATE"), at the offices of Xxxxxx Xxxxxxxx & Markiles, LLP, unless
another date, time or place is agreed to in writing by the parties hereto.
1.4 EFFECTIVE TIME OF MERGER. As soon as practicable
following the satisfaction or waiver of the conditions set forth in SECTION 6,
the parties shall file articles of merger (the "ARTICLES OF MERGER") executed in
accordance with the relevant provisions of the Utah Statutes and the BVI
Statutes and shall make all other filings or recordings required under the Utah
Statues and BVI Statutes. The Merger shall become effective at such time as the
Articles of Merger are duly filed with the Department of Commerce of the State
of Utah and the Registry of Corporate Affairs of the British Virgin Islands,
respectively, or at such other time as is permissible in accordance with the
Utah Statues and BVI Statutes and as Parent and the Company shall agree should
be specified in the Articles of Merger (the time the Merger becomes effective
being the "EFFECTIVE TIME OF THE MERGER"). The parties shall use reasonable
efforts to have the Closing Date and the Effective Time of the Merger to be the
same day.
1.5 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the applicable provisions of the Utah Statutes and BVI
Statutes.
1.6 MEMORANDUM AND ARTICLES OF ASSOCIATION; PURPOSES.
1.6.1 The Memorandum of Association of the Company
in effect immediately prior to the Effective Time of the Merger shall be the
Memorandum of Association of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
1.6.2 The Articles of Association of the Company
in effect at the Effective Time of the Merger shall be the Articles of
Association of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
1.6.3 The purposes of the Surviving Corporation
and the total number of its authorized capital stock shall be as set forth in
the Memorandum and Articles of Association of the Company in effect immediately
prior to the Effective Time of the Merger until such time as such purposes and
such number may be amended as provided in the Memorandum and Articles of
Association of the Surviving Corporation and by applicable law.
1.7 DIRECTORS. The directors of the Company at the
Effective Time of the Merger shall be the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
1.8 OFFICERS. The officers of the Company at the
Effective Time of the Merger shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
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1.9 MEMBER/SHAREHOLDER APPROVAL. This Agreement and the
Articles of Merger shall be submitted to the members or shareholders, as
applicable, of each of the constituent companies (being the Company and Sub) for
their approval by appropriate resolution of such members or shareholders.
2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS.
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time of
the Merger, by virtue of the Merger and without any action on the part of the
holders of Company Shares or any shares of capital stock of Sub:
2.1.1 COMMON STOCK OF SUB. Each share of common
stock of Sub issued and outstanding immediately prior to the Effective Time of
the Merger shall be converted into one share of the Surviving Corporation and
shall be the only issued and outstanding shares of the Surviving Corporation.
2.1.2 CANCELLATION OF PARENT-OWNED COMPANY SHARES.
Each Company Share that is owned by Parent, Sub or any other subsidiary (as
defined in SECTION 9.2) of Parent shall automatically be cancelled and retired
and shall cease to exist, and no Parent Common Stock or other consideration
shall be delivered or deliverable in exchange therefor.
2.1.3 CONVERSION OF COMPANY SHARES. Except as
otherwise provided herein, each issued and outstanding Company Share shall be
converted into fully paid and nonassessable shares of Parent Common Stock in
accordance with the Exchange Ratio described in SECTION 2.2 (the "MERGER
CONSIDERATION"). The Merger Consideration shall be deposited by Parent with the
Exchange Agent (as described below) further to SECTION 2.4 herein.
2.1.4 DISSENTING SHARES. Notwithstanding anything
in this Agreement to the contrary, Company Shares issued and outstanding
immediately prior to the Effective Time of the Merger held by a holder (if any)
who has the right to dissent from the Merger and demand payment for and an
appraisal of such shares in accordance with the BVI Statutes ("DISSENTING
SHARES") shall not be converted into a right to receive Merger Consideration
unless such holder fails to dissent in accordance with the requirements of the
BVI Statutes. If such holder fails to dissent in accordance with the
requirements of the BVI Statutes, each such share of such holder shall be
treated as a share that had been converted as of the Effective Time of the
Merger into the right to receive Merger Consideration in accordance with this
SECTION 2.1. The Company shall give prompt notice to Parent of any dissention,
and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, except as required by the BVI Statutes or a
court order.
2.1.5 CANCELLATION AND RETIREMENT OF COMPANY
SHARES. As of the Effective Time of the Merger, all Company Shares issued and
outstanding immediately prior to the Effective Time of the Merger, shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any
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such Company Shares shall cease to have any rights with respect thereto, except
the right to receive the applicable Merger Consideration to be issued in
consideration therefor.
2.2 EXCHANGE RATIO. The "EXCHANGE RATIO" is as follows:
Each Company Share shall be converted into 1.5445839 shares of
Parent Common Stock in the Merger, an Exchange Ratio of Company Shares to Parent
Common Stock of 1:1.5445839. The Merger Consideration shall be distributable by
the Exchange Agent effective as of the Effective Time of the Merger in
accordance with the provisions of SECTION 2.4.1 herein. No fractional Parent
Common Stock shall be issued in the Merger. If the product of the number of
shares a Company shareholder holds immediately prior to the Closing multiplied
by the exchange ratio would result in the issuance of a fractional share of
Parent Common Stock, that product will be rounded down to the nearest whole
number of shares of Parent Common Stock if it is equal to or less than the
fraction of one-half (.5) of one Parent Common Stock or round up to the nearest
whole number of shares of Parent Common Stock if the said product is greater
than the fraction of one-half (.5) of one Parent Common Stock.
2.3 STOCK OPTIONS; WARRANTS.
2.3.1 ASSUMPTION. At the Effective Time of the
Merger, all options to purchase Company Shares then outstanding and all warrants
to purchase Company Shares then outstanding, in each case whether vested or
unvested, shall be assumed by Parent in accordance with SECTION 2.3.2 hereof.
2.3.2 STOCK OPTIONS AND WARRANTS. At the Effective
Time of the Merger, each outstanding option to purchase Company Shares (each, a
"COMPANY STOCK OPTION") and all outstanding warrants to purchase Company Shares
(each, a "COMPANY WARRANT") then outstanding, in each case whether or not
vested, shall by virtue of the Merger be assumed by Parent. Each Company Stock
Option and Company Warrant so assumed by Parent under this Agreement will
continue to have, and be subject to, the same terms and conditions of such
options immediately prior to the Effective Time of the Merger (including,
without limitation, any repurchase rights or vesting provisions and provisions
regarding the acceleration of vesting on certain transactions), except that (i)
each Company Stock Option and Company Warrant will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole shares
of Parent Common Stock equal to the product of the number of Company Shares that
were issuable upon exercise of such Company Stock Option or Company Warrant
immediately prior to the Effective Time of the Merger multiplied by the Exchange
Ratio, rounded down to the nearest whole number of shares of Parent Common Stock
if the said product is equal to or less than the fraction of one-half (.5) of
one Parent Common Stock or rounded up to the nearest whole number of shares of
Parent Common Stock if the said product is greater than the fraction of one-half
(.5) of one Parent Common Stock, and (ii) the per share exercise price for the
shares of Parent Common Stock issuable upon exercise of such assumed Company
Stock Option and Company Warrant will be equal to the quotient determined by
dividing the exercise price per Company Share at which such Company Stock Option
and Company Warrant was exercisable immediately prior to the Effective Time of
the Merger by the Exchange Ratio, rounded up to the nearest whole cent. Parent
shall comply with the terms of all such Company Stock Options and Company
Warrants and use its best efforts to ensure, to the extent required by, and
subject to the
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provisions of, the Company's stock incentive plans and permitted under the Code
or other relevant laws and regulations that any Company Stock Option that
qualified for tax treatment under Section 424(b) of the Code prior to the
Effective Time of the Merger continue to so qualify after the Effective Time of
the Merger. Parent shall take all corporate actions necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of all Company Stock Options and Company Warrants on the terms set
forth in this SECTION 2.3.2.
2.4 EXCHANGE OF CERTIFICATES.
2.4.1 EXCHANGE AGENT. As soon as reasonably
practicable as of or after the Effective Time of the Merger, but in no event
later than the second (2nd) business day following the Effective Time of the
Merger, Parent shall deposit the Initial Deposit with Xxxxxxx X. Xxxxxxxxxx,
Esq. (the "EXCHANGE AGENT"), for the benefit of the holders of Company Shares,
for exchange in accordance with this SECTION 2.
2.4.2 EXCHANGE PROCEDURES. As soon as practicable
after the Effective Time of the Merger, each holder of an outstanding
certificate or certificates which prior thereto represented Company Shares
(each, a "SHAREHOLDER") shall, upon surrender to the Exchange Agent of such
certificate or certificates (or a lost stock affidavit and indemnity in form
reasonably satisfactory to the Exchange Agent) and acceptance thereof by the
Exchange Agent, be entitled to a certificate or certificates representing the
number of shares of Parent Common Stock into which the aggregate number of
Company Shares previously represented by such certificate or certificates
surrendered shall have been converted pursuant to this Agreement. The Exchange
Agent shall accept such certificates (or a lost stock affidavit and indemnity in
lieu thereof) upon compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange thereof in accordance
with normal exchange practices. After the Effective Time of the Merger, there
shall be no further transfer on the records of the Company or its transfer agent
of certificates representing Company Shares and if such certificates are
presented to the Company for transfer, they shall be cancelled against delivery
of certificates for Parent Common Stock as hereinabove provided. If any
certificate for such Parent Common Stock is to be issued in a name other than
that in which the certificate for Company Shares surrendered for exchange is
registered, it shall be a condition of such exchange that the certificate so
surrendered shall be properly endorsed, with signature guaranteed, or otherwise
in proper form for transfer and that the person (as defined in SECTION 9.2)
requesting such exchange shall pay to Parent or its transfer agent any transfer
or other taxes or other costs required by reason of the issuance of certificates
for such Parent Common Stock in a name other than that of the registered holder
of the certificate surrendered, or establish to the satisfaction of Parent or
its transfer agent that all taxes have been paid. Until surrendered as
contemplated by this SECTION 2.4.2, each certificate for Company Shares shall be
deemed at any time after the Effective Time of the Merger to represent only the
right to receive upon such surrender the Merger Consideration as contemplated by
SECTION 2.1.
2.4.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED
SHARES. No dividends or other distributions with respect to Parent Common Stock
with a record date after the Effective Time of the Merger shall be paid to the
holder of any unsurrendered certificate for Company
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Shares with respect to the shares of Parent Common Stock represented thereby
until the surrender of such certificate in accordance with this SECTION 2.
2.4.4 NO FURTHER OWNERSHIP RIGHTS IN COMPANY
SHARES. All shares of Parent Common Stock issued upon the surrender for exchange
of certificates representing Company Shares in accordance with the terms of this
SECTION 2 shall be deemed to have been issued (and paid) in full satisfaction of
all rights pertaining to the Company Shares theretofore represented by such
certificates.
2.4.5 NO LIABILITY. None of Parent, Sub, the
Company or the Exchange Agent shall be liable to any person in respect of any
shares of Parent Common Stock (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any certificates representing Company
Shares shall not have been surrendered prior to December 31, 2004, any such
shares, dividends or distributions in respect of such certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled thereto.
3. REPRESENTATIONS AND WARRANTIES.
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except
as set forth in the disclosure schedule delivered by the Company to Parent at
the time of execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), or
a certain schedule comprising the Company Disclosure Schedule, the Company
represents and warrants to Parent and Sub as follows:
3.1.1 ORGANIZATION, STANDING AND CORPORATE POWER.
The Company is duly organized, validly existing and in good standing under the
laws of the British Virgin Islands and has the requisite corporate power and
authority to carry on its business as now being conducted. The Company is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect (as
defined in SECTION 9.2) with respect to the Company.
3.1.2 SUBSIDIARIES. The only direct or indirect
subsidiaries of the Company are listed in the Company Disclosure Schedule (the
"COMPANY SUBSIDIARIES"). All the outstanding shares of capital stock of each
such Company Subsidiary which is a corporation have been validly issued and are
fully paid and nonassessable and, except as set forth in the Company Disclosure
Schedule, are owned (of record and beneficially) by the Company, free and clear
of all liens or encumbrances. Except for the capital stock of its subsidiaries,
which are corporations, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership,
business association, joint venture or other entity.
3.1.3 CAPITAL STRUCTURE. The authorized share
capital of the Company consists of 5,000,000 Company Shares. There are 5,000,000
Company Shares issued and
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outstanding. Except as set forth above, no shares or other equity securities of
the Company are issued, reserved for issuance or outstanding. All outstanding
shares of the Company are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no outstanding
bonds, debentures, notes or other indebtedness or other securities of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of the
Company may vote. The Company Disclosure Schedule sets forth the outstanding
capitalization of the Company. Except as set forth above, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company is a
party or by which it is bound obligating the Company to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares or other equity or
voting securities of the Company or obligating the Company to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Other than the Company Stock
Options and Company Warrants, there are no outstanding contractual obligations,
commitments, understandings or arrangements of the Company to repurchase, redeem
or otherwise acquire or make any payment in respect of any shares of the
Company. There are no agreements or arrangements pursuant to which the Company
is or could be required to register Company Shares or other securities under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or other agreements
or arrangements with or among any security holders of the Company with respect
to securities of the Company.
3.1.4 AUTHORITY; NONCONTRAVENTION. The Company has
the requisite corporate and other power and authority to enter into this
Agreement and to consummate the Merger. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions hereof will
not, conflict with, or result in any breach or violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of or "put" right with respect to any
obligation or to loss of a material benefit under, or result in the creation of
any lien upon any of the properties or assets of the Company under, (i) the
Memorandum of Association or Articles of Association of the Company, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
the Company, its properties or assets, or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to the Company, its properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, breaches, violations, defaults,
rights, losses or liens that individually or in the aggregate could not have a
material adverse effect with respect to the Company or could not prevent, hinder
or materially delay the ability of Company to consummate the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with, or notice to, any federal, state or
local government or any court, administrative agency or commission or other
governmental authority, agency, domestic or foreign (a "GOVERNMENTAL ENTITY"),
is required by or with respect to the Company in connection with the execution
and delivery of this Agreement by the Company or
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the consummation by the Company of the transactions contemplated hereby, except,
with respect to this Agreement, for the filing of the Articles of Merger with
the Department of Commerce of the State of Utah and the Registry of Corporate
Affairs of the British Virgin Islands.
3.1.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since
December 31, 2003, the Company has conducted its business only in the ordinary
course consistent with past practice, and there is not and has not been: (i) any
material adverse change with respect to the Company; (ii) any condition, event
or occurrence which individually or in the aggregate could reasonably be
expected to have a material adverse effect or give rise to a material adverse
change with respect to the Company; (iii) any event which, if it had taken place
following the execution of this Agreement, would not have been permitted by
SECTION 4.1 without prior consent of Parent; or (iv) any condition, event or
occurrence which could reasonably be expected to prevent, hinder or materially
delay the ability of the Company to consummate the transactions contemplated by
this Agreement.
3.1.6 LITIGATION; LABOR MATTERS; COMPLIANCE WITH
LAWS.
(a) There is no suit, action or
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any basis for any such suit,
action, proceeding or investigation that, individually or in the aggregate,
could reasonably be expected to have a material adverse effect with respect to
the Company or prevent, hinder or materially delay the ability of the Company to
consummate the transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company having, or which, insofar as
reasonably could be foreseen by the Company, in the future could have, any such
effect.
(b) The Company is not a party to, or
bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it the subject of
any proceeding asserting that it has committed an unfair labor practice or
seeking to compel it to bargain with any labor organization as to wages or
conditions of employment nor is there any strike, work stoppage or other labor
dispute involving it pending or, to its knowledge, threatened, any of which
could have a material adverse effect with respect to the Company.
(c) The conduct of the business of the
Company complies in all material respects with all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees or arbitration awards applicable
thereto.
3.1.7 BENEFIT PLANS. The Company is not a party to
any collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
phantom stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding (whether or
not legally binding) under which the Company currently has an obligation to
provide benefits to any current or former employee, officer or director of the
Company (collectively, "BENEFIT PLANS").
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3.1.8 CERTAIN EMPLOYEE PAYMENTS. The Company is
not a party to any employment agreement which could result in the payment to any
current, former or future director or employee of the Company of any money or
other property or rights or accelerate or provide any other rights or benefits
to any such employee or director as a result of the transactions contemplated by
this Agreement, whether or not (i) such payment, acceleration or provision would
constitute a "parachute payment" (within the meaning of Section 280G of the
Code), or (ii) some other subsequent action or event would be required to cause
such payment, acceleration or provision to be triggered.
3.1.9 TAX RETURNS AND TAX PAYMENTS. The Company
has timely filed all Tax Returns required to be filed by it, has paid all Taxes
shown thereon to be due and has provided adequate reserves in its financial
statements for any Taxes that have not been paid, whether or not shown as being
due on any returns. No claim for unpaid Taxes has been made or become a lien
against the property of the Company or is being asserted against the Company, no
audit or examination of any Tax Return of the Company is being conducted by a
tax authority, and no extension of the statute of limitations on the assessment
of any Taxes has been granted by the Company and is currently in effect. As used
herein, "TAXES" means all taxes of any kind, including, without limitation,
those on or measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "TAX RETURN" means any federal, state, local or foreign return,
report, information return or other document (including any related or
supporting information) filed or required to be filed with any Governmental
Entity in connection with the determination, assessment or collection of any
Taxes or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
3.1.10 ENVIRONMENTAL MATTERS. The Company is in
compliance in all material respects with all applicable Environmental Laws.
"ENVIRONMENTAL LAWS" means all applicable federal, state, local or foreign
statutes, rules, regulations, ordinances, orders, decrees and common law
relating in any manner to contamination, pollution or protection of human health
or the environment, and similar state laws.
3.1.11 CONTRACTS AND COMMITMENTS. The Company
Disclosure Schedule contains a true, complete and accurate list of each of the
following written, and to the Company's knowledge, oral, contracts, agreements,
understandings or other obligations to which the Company is a party or by which
any of its assets or properties are bound (together the "COMPANY CONTRACTS"):
(a) all rental or use agreements,
contracts, covenants or obligations which may involve the payment by or to the
Company of more than $25,000;
(b) any contract, agreement, commitment
or obligation to make any capital expenditures in excess of $25,000;
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(c) contracts, agreements, commitments
or other obligations with any person containing any provision or covenant
limiting the ability of the Company to engage in any line of business or to
compete with or to obtain products or services from any person or limiting the
ability of any person to compete with or to provide products or services to, or
obtain products or services from, the Company, or covering indemnification of
another person other than in the ordinary course of business;
(d) any profit-sharing or similar
contract, agreement, understanding or obligation with any person;
(e) contracts, agreements, commitments
or other obligations with respect to the purchase or sale by or to the Company
of any product, equipment, facility, or similar item that by their respective
terms do not expire or terminate or are not terminable by the Company, without
penalty, premium or other liability within 30 days or may involve the payment by
or to the Company of more than $25,000;
(f) contracts, agreements, commitments
or other obligations to provide services or facilities by or to the Company or
to or by another person which is not terminable by the Company within 30 days
without penalty, premium or other liability or involving payment by Company or
the other person of more than $25,000;
(g) all other contracts, agreements,
commitments or other obligations whether or not made in the ordinary course of
business which may involve the expenditure by the Company of funds in excess of
$25,000 per commitment (or under a group of similar commitments), or are
otherwise material to the Company; or
(h) all other contracts, agreements,
commitments, or other obligations of any kind that involve or relate to any
shareholder, officer, director, employee or consultant of the Company or any
affiliate (as defined in SECTION 9.2) or relative thereof.
3.1.12 COMPANY CONTRACT DEFAULTS. The Company is
not, or has not, received any notice or has any knowledge that any other party
is, in default in any respect under any Company Contract; and there has not
occurred any event that with the lapse of time or the giving of notice or both
would constitute such a material default.
3.1.13 PROPERTIES. The Company has good, clear and
marketable title to all the tangible properties and tangible assets reflected in
the Company's latest balance sheet as being owned by the Company or acquired
after the date thereof which are, individually or in the aggregate, material to
the Company's business (except properties sold or otherwise disposed of since
the date thereof in the ordinary course of business), free and clear of all
material liens.
3.1.14 INTELLECTUAL PROPERTY RIGHTS.
(a) For purposes of this Agreement,
"INTELLECTUAL PROPERTY" means shall mean any and all United States and foreign:
(i) patent registrations and patent applications (including all reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations)
and all rights therein and all improvements to the inventions disclosed in each
such registration, patent or application, (ii) trademarks, service marks, trade
dress, trade
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names and corporate names, whether or not registered, including but not limited
to all common law rights, and registrations and applications for registration
thereof, (iii) copyrights (including but not limited to copyrights on designs)
(registered or otherwise) and registrations and applications for registration
thereof, (iv) computer software, including, without limitation, source code,
operating systems and specifications, data, data bases, files, documentation and
other materials related thereto, data and documentation, (v) trade secrets and
confidential technical and business information (including but not limited to
formulas, compositions, and inventions reduced to practice, whether or not
patentable), (vi) confidential technology (including know-how and show-how),
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and supplier lists
and information, (vii) any right arising under any law providing protection to
industrial or other designs, (viii) all rights to obtain and rights to apply for
patents, and to register trademarks and copyrights, and (ix) all rights to xxx
or recover and retain damages and costs and attorneys fees for present and past
infringement of any of the foregoing.
(b) The Company owns, or is licensed or
otherwise has the valid rights to use, all Intellectual Property used in the
conduct of its business. The Company Disclosure Schedule contains an accurate
and complete list of all material (i) Intellectual Property owned by the
Company, (ii) Intellectual Property licensed to the Company, including a list of
all agreements related thereto, (iii) licenses granted by the Company to others
to use the Company's Intellectual Property, including a list of all agreements
related thereto (in each case excluding licenses available in consumer retail
stores or subject to "shrink-wrap" license agreements) (collectively, the
"COMPANY INTELLECTUAL PROPERTY"). The Company owns all right, title and interest
in and to the Intellectual Property owned by it, free and clear of any liens or
encumbrances. The Company has the sole and exclusive right to use the Company
Intellectual Property licensed to it, and the consummation of the transaction
contemplated hereby will not alter or impair any such rights. No claims have
been asserted by any person challenging or questioning the validity or
effectiveness of any licenses or agreements related to the Intellectual Property
licensed by, or licensed to, the Company, and to the knowledge of the Company,
there is no valid basis for any such claim. To the knowledge of the Company, the
use by the Company of any Intellectual Property owned or licensed to it does not
violate or infringe the rights of any person. To the knowledge of the Company,
neither the Company nor any other person is in default under any license or
other agreement relating to any Company Intellectual Property, and all such
licenses and agreements are valid, in full force and effect and enforceable. The
Company has taken reasonable steps to safeguard and maintain the secrecy and
confidentiality of, and its proprietary rights in, the Company Intellectual
Property. No present or former employee or consultant of the Company owns or has
any proprietary, financial or other interest, direct or indirect (other than
through ownership of Company Shares), in whole or in part, in any Company
Intellectual Property.
3.1.15 TRANSACTIONS WITH RELATED PARTIES. The
Company is not a party to any contract, lease, license, commitment or
arrangement, written or oral, which, were the Company a "registrant" under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), would be
required to be disclosed pursuant to Item 404(a) or (c) of Regulation S-K as
promulgated by the Securities and Exchange Commission (the "SEC"), and there are
no loans
11
outstanding to or from any person specified in Item 404(a) of Regulation S-K
from or to the Company.
3.1.16 NO GUARANTIES. None of the obligations or
liabilities of the Company incurred in connection with the operation of its
business is guaranteed by or subject to a similar contingent obligation of any
other person. The Company has not guaranteed or become subject to a similar
contingent obligation in respect of the obligations or liabilities of any other
person. There are no outstanding letters of credit, surety bonds or similar
instruments of the Company or any of its affiliates.
3.1.17 INSURANCE. The Company is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company is engaged. The Company does not have any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.
3.1.18 RECORDS. The books of account, corporate
records and minute books of the Company are complete and correct in all material
respects.
3.1.19 NO BROKERS OR FINDERS. Other than its
engagement of WestPark Capital, Inc., the Company has not, and its affiliates,
officers, directors or employees have not, employed any broker or finder or
incurred any liability for any brokerage or finder's fee or commissions or
similar payment in connection with any of the transactions contemplated hereby.
3.1.20 INVESTMENT REPRESENTATIONS.
(a) For the purpose of this SECTION
3.1.20, the term "Parent Common Stock" shall include any securities into which
the Parent Common Stock may be exchanged or converted.
(b) The Company has informed each of
the Shareholders (i) that the shares of Parent Common Stock to be issued to such
Shareholder pursuant to this Agreement have not been registered for sale under
any federal or state securities laws and that such shares of Parent Common Stock
are being offered and sold to such Stockholder pursuant to an exemption from
registration provided under Regulation S and/or Section 4(2) of the Securities
Act, (ii) that such Shareholder is acquiring such shares of Parent Common Stock
for such Shareholder's own account for investment purposes and without a view to
any distribution thereof, and (iii) that such Shareholder must bear the economic
risk of the investment in such shares of Parent Common Stock for an indefinite
period of time as such shares of Parent Common Stock cannot be sold unless
subsequently registered under such laws or unless an exemption from registration
is available.
(c) Each of the Shareholders is either:
(i) is an "accredited
investor" within the meaning of Rule 501 of Regulation D under the Securities
Act; or
12
(ii) (A) is not a "U.S. person"
within the meaning of Rule 901 of Regulation S under the Securities Act, (B) is
not acquiring the Parent Common Stock for the account of or benefit of any U.S.
person, and (C) is not a U.S. person who purchased securities in a transaction
that did not require registration under the Securities Act.
(d) Each Shareholder will resell the
Parent Common Stock acquired pursuant hereto only in accordance with the
provisions of this Regulation S under the Securities Act (if applicable),
pursuant to registration under the Securities Act or pursuant to an available
exemption from registration.
(e) Each Shareholder described in
Section 3.1.20(C)(II) above will refrain from engaging in hedging transactions
with regard to the Parent Common Stock acquired pursuant hereto unless in
compliance with the Securities Act.
(f) The Company agrees that the
certificates evidencing the shares of Parent Common Stock shall bear
substantially the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT IN
ACCORDANCE WITH [REGULATION S UNDER THE ACT,] PURSUANT TO A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
UNDER THE ACT. [HEDGING TRANSACTIONS INVOLVING THESE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
ACT]."
(g) With respect to any shares of
Parent Common Stock issued pursuant hereto in reliance on the exemption from
registration under the Securities Act provided by Regulation S under the
Securities Act, Parent shall refuse to register any transfer of such Parent
Common Stock not made in accordance with the provisions of such Regulation S,
pursuant to registration under the Securities Act, or pursuant to an available
exemption from registration.
3.1.21 TAX REPORTING. Consistent with the intent of
the parties hereto, the Company shall treat, and cause its affiliates to so
treat, the Merger as a reorganization under Section 368(a)(1)(A) by reason of
Section 368(a)(2)(E) with respect to all Tax Returns, to the extent consistent
with law.
3.1.22 BOARD RECOMMENDATION. The Board of Directors
of the Company has unanimously determined that the terms of the Merger are fair
to and in the best interests of the shareholders of the Company and recommended
that the holders of the Company Shares approve the Merger.
3.1.23 REQUIRED COMPANY VOTE. The affirmative vote
of the holders of a majority of the Company Shares is the only vote of the
holders of any class or series of the Company's securities necessary to approve
the Merger (the "COMPANY SHAREHOLDER APPROVAL").
13
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Except as set forth in the disclosure schedule delivered by Parent to the
Company at the time of execution of this Agreement (the "PARENT DISCLOSURE
SCHEDULE"), Parent and Sub represent and warrant to the Company as follows:
3.2.1 ORGANIZATION, STANDING AND CORPORATE POWER.
Each of Parent, Sub and the other Parent Subsidiaries (as defined in SECTION
3.2.2) is (or at Closing will be) duly organized, validly existing and in good
standing under the laws of its State of organization, and has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of Parent, Sub and the other Parent Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not have a material adverse effect with respect to Parent.
3.2.2 SUBSIDIARIES. The only direct or indirect
subsidiaries of Parent are listed in the Parent Disclosure Schedule (together
with Sub, the "PARENT SUBSIDIARIES"). All the outstanding shares of capital
stock of each such Parent Subsidiary which is a corporation have been validly
issued and are fully paid and nonassessable and, except as set forth in the
Parent Disclosure Schedule, are owned (of record and beneficially) by Parent,
free and clear of all lien or encumbrances of any kind. Except for the capital
stock of its subsidiaries, which are corporations, Parent does not own, directly
or indirectly, any capital stock or other ownership interest in any corporation,
partnership, business association, joint venture or other entity.
3.2.3 CAPITAL STRUCTURE. The authorized capital
stock of Parent consists of 50,000,000 shares of Parent Common Stock, $0.001 par
value, of which 1,009,643 shares of Parent Common Stock shall be issued and
outstanding immediately prior to the Effective Time of the Merger and no shares
of Parent Common Stock are issuable upon the exercise of outstanding warrants,
convertible notes, options and otherwise. Except as set forth above, no shares
of capital stock or other equity securities of Parent are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of Parent are,
and all shares which may be issued pursuant to this Agreement will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and, not
subject to preemptive rights, and issued in compliance with all applicable state
and federal laws concerning the issuance of securities. There are no outstanding
bonds, debentures, notes or other indebtedness or other securities of Parent
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of Parent may
vote. Except as set forth above, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which Parent or any of its subsidiaries is a party or by which
any of them is bound obligating Parent or any its subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity securities of Parent or any of its subsidiaries or
obligating Parent or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
equity securities of Parent or any of its subsidiaries or obligating Parent or
any of its subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding contractual obligations, commitments, understandings or
arrangements of Parent or any of its subsidiaries to repurchase, redeem or
14
otherwise acquire or make any payment in respect of any shares of capital stock
of Parent or any of its subsidiaries. There are no agreements or arrangements
pursuant to which Parent is or could be required to register shares of Parent
Common Stock or other securities under the Securities Act or other agreements or
arrangements with or among any securityholders of Parent with respect to
securities of Parent. The authorized capital stock of Sub consists of 1,000
shares of common stock, of which 1,000 shares have been validly issued, are
fully paid and nonassessable, were issued in compliance with all applicable
state and federal laws concerning the issuance of securities, and are owned by
Parent, free and clear of any lien.
3.2.4 AUTHORITY; NONCONTRAVENTION. Parent and Sub
have all requisite corporate authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Sub and the consummation by Parent and
Sub of the transactions contemplated by this Agreement have been (or at Closing
will have been) duly authorized by all necessary corporate action on the part of
Parent and Sub. This Agreement has been duly executed and delivered by and
constitutes a valid and binding obligation of each of Parent and Sub,
enforceable against each such party in accordance with its terms. The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or result in
the creation of any lien upon any of the properties or assets of Parent or any
of its subsidiaries under, (i) the articles of incorporation or bylaws of Parent
or Sub or the comparable charter or organizational documents of any other
subsidiary of Parent, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent, Sub or any other subsidiary of Parent or their
respective properties or assets, or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to Parent, Sub or any other subsidiary of Parent or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, breaches, violations, defaults, rights, losses or liens that
individually or in the aggregate could not have a material adverse effect with
respect to Parent or could not prevent, hinder or materially delay the ability
of Parent to consummate the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, or notice to, any Governmental Entity is required by or with
respect to Parent, Sub or any other subsidiary of Parent in connection with the
execution and delivery of this Agreement by Parent or Sub or the consummation by
Parent or Sub, as the case may be, of any of the transactions contemplated by
this Agreement, except for the filing of the Articles of Merger with the
Department of Commerce of the State of Utah and the Registry of Corporate
Affairs of the British Virgin Islands, as required, and such other consents,
approvals, orders, authorizations, registrations, declarations, filings or
notices as may be required under the "blue sky" laws of various states.
3.2.5 SEC DOCUMENTS; UNDISCLOSED LIABILITIES.
Parent has filed all reports, schedules, forms, statements and other documents
as required by the SEC in a timely basis (or has received a valid extension of
such time of filing and has filed any such reports or other documents prior to
the expiration of any such extension), and Parent has delivered or made
15
available to the Company all reports, schedules, forms, statements and other
documents filed with the SEC (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "PARENT SEC DOCUMENTS"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
documents, and none of the Parent SEC Documents (including any and all
consolidated financial statements included therein) as of such date contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent revised or superseded by a subsequent filing
with the SEC (a copy of which has been provided to the Company prior to the date
of this Agreement), none of the Parent SEC Documents contains any untrue
statement of a material fact or omits to state any material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of Parent included
in such Parent SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") (except, in the
case of unaudited consolidated quarterly statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly and accurately present the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and the consolidated results of operations and changes in
cash flows for the periods then ended (subject, in the case of unaudited
quarterly statements, to normal year-end audit adjustments as determined by
Parent's independent accountants). Except as set forth in the Parent SEC
Documents, at the date of the most recent audited financial statements of Parent
included in the Parent SEC Documents, neither Parent nor any of its subsidiaries
had, and since such date neither Parent nor any of such subsidiaries has
incurred, any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which, individually or in the aggregate,
could reasonably be expected to have a material adverse effect with respect to
Parent.
3.2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
as disclosed in the Parent SEC Documents, since the date of the most recent
financial statements included in the Parent SEC Documents, Parent has conducted
its business only in the ordinary course consistent with past practice in light
of its current business circumstances, and there is not and has not been: (i)
any material adverse change with respect to Parent; (ii) any condition, event or
occurrence which, individually or in the aggregate, could reasonably be expected
to have a material adverse effect or give rise to a material adverse change with
respect to Parent; (iii) any event which, if it had taken place following the
execution of this Agreement, would not have been permitted by SECTION 4.1
without the prior consent of the Company; or (iv) any condition, event or
occurrence which could reasonably be expected to prevent, hinder or materially
delay the ability of Parent to consummate the transactions contemplated by this
Agreement.
3.2.7 INTERIM OPERATIONS OF SUB. Sub was formed in
March 2004 solely for the purpose of engaging in the transactions contemplated
hereby, has (or will have) engaged
16
in no other business activities and has (or will have) conducted its operations
only as contemplated hereby.
3.2.8 LITIGATION; LABOR MATTERS; COMPLIANCE WITH
LAWS.
(a) There is no suit, action or
proceeding or investigation pending or, to the knowledge of Parent, threatened
against or affecting Parent or any basis for any such suit, action, proceeding
or investigation that, individually or in the aggregate, could reasonably be
expected to have a material adverse effect with respect to Parent or prevent,
hinder or materially delay the ability of Parent to consummate the transactions
contemplated by this Agreement, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against
Parent having, or which, insofar as reasonably could be foreseen by Parent, in
the future could have, any such effect.
(b) Parent is not a party to, or bound
by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it the subject of
any proceeding asserting that it has committed an unfair labor practice or
seeking to compel it to bargain with any labor organization as to wages or
conditions of employment nor is there any strike, work stoppage or other labor
dispute involving it pending or, to its knowledge, threatened, any of which
could have a material adverse effect with respect to Parent.
(c) The conduct of the business of
Parent complies in all material respects with all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees or arbitration awards applicable
thereto.
3.2.9 BENEFIT PLANS. Parent is not a party to any
Benefit Plan under which Parent currently has an obligation to provide benefits
to any current or former employee, officer or director of Parent.
3.2.10 CERTAIN EMPLOYEE PAYMENTS. Parent is not a
party to any employment agreement which could result in the payment to any
current, former or future director or employee of Parent of any money or other
property or rights or accelerate or provide any other rights or benefits to any
such employee or director as a result of the transactions contemplated by this
Agreement, whether or not (i) such payment, acceleration or provision would
constitute a "parachute payment" (within the meaning of Section 280G of the
Code), or (ii) some other subsequent action or event would be required to cause
such payment, acceleration or provision to be triggered.
3.2.11 TAX RETURNS AND TAX PAYMENTS. Parent has
timely filed all Tax Returns required to be filed by it, has paid all Taxes
shown thereon to be due and has provided adequate reserves in its financial
statements for any Taxes that have not been paid, whether or not shown as being
due on any returns. No claim for unpaid Taxes has been made or become a lien
against the property of Parent or is being asserted against Parent, no audit or
examination of any Tax Return of Parent is being conducted by a tax authority,
and no extension of the statute of limitations on the assessment of any Taxes
has been granted by Parent and is currently in effect.
17
3.2.12 ENVIRONMENTAL MATTERS. Parent is in
compliance in all material respects with all applicable Environmental Laws. No
material expenditures are or will be required in order for Parent to comply with
any applicable Environmental Law. No Hazardous Materials are used or have been
used, stored, or disposed of by Parent or by any other person on any property
owned, leased or used by Parent. Parent has not received any written or oral
notice, report or other information regarding any actual or alleged violation of
Environmental Laws or any liabilities, including any investigatory, remedial or
corrective liabilities, relating to Parent, its sub-surface mineral rights, or
its facilities arising under Environmental Laws. Neither Parent nor any of its
predecessors or affiliates has, either expressly or by operation of law, assumed
or undertaken any liability, including any obligation for corrective or remedial
action, of any other person relating to Environmental Laws. Without limiting the
foregoing, Parent does not have any liabilities for clean-up, remediation or
other liabilities under Environmental Laws arising out of or in connection with
its exploration, production or other mining activities. For purposes of this
Agreement, "HAZARDOUS MATERIALS" means (a) petroleum and petroleum products,
heavy metals, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain polychlorinated biphenyls, and radon gas, (b) any other
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," "contaminants" or "pollutants", or words
of similar import, under any applicable Environmental Law, and (c) any other
chemical, material or substances exposure to which is regulated by any
Governmental Entity.
3.2.13 CONTRACTS AND COMMITMENTS. The Parent
Disclosure Schedule contains a true, complete and accurate list of each of the
following written, and to Parent's knowledge, oral, contracts, agreements,
understandings or other obligations to which Parent is a party or by which any
of its assets or properties are bound (together the "PARENT CONTRACTS"):
(a) all rental or use agreements,
contracts, covenants or obligations which may involve the payment by or to
Parent of more than $25,000;
(b) any contract, agreement, commitment
or obligation to make any capital expenditures in excess of $25,000;
(c) contracts, agreements, commitments
or other obligations with any person containing any provision or covenant
limiting the ability of Parent to engage in any line of business or to compete
with or to obtain products or services from any person or limiting the ability
of any person to compete with or to provide products or services to, or obtain
products or services from, Parent, or covering indemnification of another person
other than in the ordinary course of business;
(d) any profit-sharing or similar
contract, agreement, understanding or obligation with any person;
(e) contracts, agreements, commitments
or other obligations with respect to the purchase or sale by or to Parent of any
product, equipment, facility, or similar item that by their respective terms do
not expire or terminate or are not terminable by Parent,
18
without penalty, premium or other liability within 30 days or may involve the
payment by or to Parent of more than $25,000;
(f) contracts, agreements, commitments
or other obligations to provide services or facilities by or to Parent or to or
by another person which is not terminable by Parent within 30 days without
penalty, premium or other liability or involving payment by Parent or the other
person of more than $25,000;
(g) all other contracts, agreements,
commitments or other obligations whether or not made in the ordinary course of
business which may involve the expenditure by Parent of funds in excess of
$25,000 per commitment (or under a group of similar commitments), or are
otherwise material to Parent; or
(h) all other contracts, agreements,
commitments, or other obligations of any kind that involve or relate to any
shareholder, officer, director, employee or consultant of Parent or any
affiliate or relative thereof.
3.2.14 PARENT CONTRACT DEFAULTS. Parent is not, or
has not, received any notice or has any knowledge that any other party is, in
default in any respect under any Parent Contract; and there has not occurred any
event that with the lapse of time or the giving of notice or both would
constitute such a material default.
3.2.15 PROPERTIES. Parent has good, clear and
marketable title to all the tangible properties and tangible assets reflected in
the Parent's latest balance sheet included in the Parent SEC Documents (the
"PARENT BALANCE SHEET") as being owned by Parent or acquired after the date
thereof which are, individually or in the aggregate, material to Parent's
business (except properties sold or otherwise disposed of since the date thereof
in the ordinary course of business), free and clear of all liens or encumbrances
of any kind.
3.2.16 INTELLECTUAL PROPERTY RIGHTS. Parent owns,
or is licensed or otherwise has the valid rights to use, all Intellectual
Property used in the conduct of its business. The Parent Disclosure Schedule
contains an accurate and complete list of all material (i) Intellectual Property
owned by the Parent, (ii) Intellectual Property licensed to Parent, including a
list of all agreements related thereto, (iii) licenses granted by Parent to
others to use Parent's Intellectual Property, including a list of all agreements
related thereto (in each case excluding licenses available in consumer retail
stores or subject to "shrink-wrap" license agreements) (collectively, the
"PARENT INTELLECTUAL PROPERTY"). Parent owns all right, title and interest in
and to the Intellectual Property owned by it, free and clear of any liens or
encumbrances. Parent has the sole and exclusive right to use the Parent
Intellectual Property licensed to it, and the consummation of the transaction
contemplated hereby will not alter or impair any such rights. No claims have
been asserted by any person challenging or questioning the validity or
effectiveness of any licenses or agreements related to the Intellectual Property
licensed by, or licensed to, Parent, and to the knowledge of Parent, there is no
valid basis for any such claim. To the knowledge of Parent, the use by Parent of
any Intellectual Property owned or licensed to it does not violate or infringe
the rights of any person. To the knowledge of Parent, neither Parent nor any
other person is in default under any license or other agreement relating to any
Parent Intellectual Property, and all such licenses and agreements are valid, in
full force and
19
effect and enforceable. Parent has taken reasonable steps to safeguard and
maintain the secrecy and confidentiality of, and its proprietary rights in, the
Parent Intellectual Property. No present or former employee or consultant of
Parent owns or has any proprietary, financial or other interest, direct or
indirect (other than through ownership of Parent Common Stock), in whole or in
part, in any Parent Intellectual Property.
3.2.17 TRANSACTIONS WITH RELATED PARTIES. Other
than as described in the Parent SEC Documents, Parent is not a party to any
contract, lease, license, commitment or arrangement, written or oral, which
would be required to be disclosed pursuant to Item 404(a) or (c) of Regulation
S-K as promulgated by the SEC, and there are no loans outstanding to or from any
person specified in Item 404(a) of Regulation S-K from or to the Company.
3.2.18 NO GUARANTIES. None of the obligations or
liabilities of Parent incurred in connection with the operation of its business
is guaranteed by or subject to a similar contingent obligation of any other
person. Parent has not guaranteed or become subject to a similar contingent
obligation in respect of the obligations or liabilities of any other person.
There are no outstanding letters of credit, surety bonds or similar instruments
of Parent or any of its affiliates.
3.2.19 INSURANCE. Parent is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which Parent is
engaged. Parent does not have any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.
3.2.20 RECORDS. The books of account, corporate
records and minute books of Parent are complete and correct in all material
respects. Complete and accurate copies of all such books of account, corporate
records and minute books and of the stock register of Parent have been provided
to the Comapny.
3.2.21 NO BROKERS OR FINDERS. Parent has not, and
its affiliates, officers, directors or employees have not, employed any broker
or finder or incurred any liability for any brokerage or finder's fee or
commissions or similar payment in connection with any of the transactions
contemplated hereby.
3.2.22 TAX REPORTING. Consistent with the intent of
the parties hereto, Parent shall treat, and cause its affiliates to so treat,
the Merger as a reorganization under Section 368(a)(1)(A) by reason of Section
368(a)(2)(E) with respect to all Tax Returns, to the extent consistent with law.
3.2.23 XXXXXXXX-XXXXX; INTERNAL ACCOUNTING
CONTROLS. Parent is in material compliance with all provisions of the
Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it. Parent and the Parent
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset
20
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Parent has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for Parent and designed such
disclosure controls and procedures to ensure that material information relating
to Parent, including its subsidiaries, is made known to the certifying officers
by others within those entities, particularly during the period in which
Parent's most recently filed periodic report under the Exchange Act, as the case
may be, is being prepared. Parent's certifying officers have evaluated the
effectiveness of Parent's controls and procedures as of the date prior to the
filing date of the most recently filed periodic report under the Exchange Act
(such date, the "EVALUATION DATE"). Parent presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in Parent's internal controls (as such term is
defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to Parent's
knowledge, in other factors that could significantly affect Parent's internal
controls.
3.2.24 APPLICATION OF TAKEOVER PROTECTIONS. Parent
and its Board of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under Parent's Articles of Incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could
become applicable to the Company or the Shareholders as a result of the
transaction contemplated by this Agreement, including without limitation
Parent's issuance of the Parent Common Stock pursuant hereto.
3.2.25 PRIVATE PLACEMENT. Assuming the accuracy of
the representations and warranties set forth in SECTION 3.1.20, no registration
under the Securities Act is required for the offer and issuance of the Parent
Common Stock by Parent to the Shareholders of the Company at the Effective Time
of the Merger as contemplated hereby.
3.2.26 NO INTEGRATED OFFERING. Assuming the
accuracy of the representations and warranties set forth in SECTION 3.1.20,
neither Parent, nor any of its affiliates, nor any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
the issuance of the Parent Common Stock pursuant to this Agreement to be
integrated with prior offerings by Parent for purposes of the Securities Act.
3.2.27 REGISTRATION RIGHTS. No person has any right
to cause Parent to effect the registration under the Securities Act of any
securities of Parent.
3.2.28 SPIN-OFF OF MINING INTERESTS. The
contemplated contribution of Parent's mining rights and interests to its Nevada
subsidiary and the distribution of the capital stock of such subsidiary to
Parent's shareholders immediately subsequent to the Effective Time of the Merger
(the "SPIN-OFF") will not result in any Tax obligations or liabilities of Parent
or other adverse Tax consequences with respect to Parent. The Spin-Off will be
concluded by
21
Parent in compliance with the Securities Act and all applicable securities laws
of any Governmental Entity. The Distribution Agreement, dated on or about March
5, 2004, by and among Parent; Tintic Gold Mining Company, a Nevada corporation
and wholly-owned subsidiary of Parent; and Xxxxxx X. Xxxxxxxxxxxx, Xxxx X.
Xxxxxxxx and Xxxx X. Xxxxxx (the "DISTRIBUTION AGREEMENT") has been duly
executed by all persons which are parties thereto and constitutes the valid and
binding obligation of each person a party thereto, enforceable in accordance
with its terms. For avoidance of doubt, the Shareholders of the Company shall
not participate in the Spin-Off and their respective shares of Parent Common
Stock to be issued under the Agreement as Merger Consideration shall not be
entitled to receive any dividend related to the Spin-Off.
3.2.29 BOARD RECOMMENDATION. The Board of Directors
of Parent has unanimously determined that the terms of the Merger are fair to
and in the best interests of the shareholders of Parent.
4. COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER.
4.1 CONDUCT OF COMPANY AND PARENT. Except as expressly
permitted by this Agreement, between the date of this Agreement and the
Effective Time of the Merger, each of Parent and the Company shall conduct its
business only in the ordinary course in substantially the same manner as
heretofore conducted, and use all its reasonable efforts to preserve intact its
present business organization and employees and to preserve the goodwill of
persons with which it has business relations. Without limiting the generality of
the foregoing, except as otherwise expressly provided in this Agreement, between
the date of this Agreement and the Effective Time of the Merger, each of Parent
and the Company shall pay accounts payable and pay and perform other obligations
of its business when they become due and payable in the ordinary course of
business consistent with past practice, or when required to be performed, as the
case may be, and shall (unless otherwise mutually agreed to in writing):
4.1.1 not amend or alter its memorandum or
articles of incorporation, bylaws, or similar charter documents;
4.1.2 not engage in any transaction, except in the
normal and ordinary course of business, or create or suffer to exist any lien or
other encumbrance upon any of its assets or which will not be discharged in full
prior to the Effective Time of the Merger;
4.1.3 not sell, assign or otherwise transfer any
of its assets, or cancel or compromise any debts or claims relating to their
assets, other than for fair value, in the ordinary course of business, and
consistent with past practice;
4.1.4 not fail to use reasonable efforts to
preserve intact its present business organizations, keep available the services
of their employees and preserve its material relationships with customers,
suppliers, licensors, licensees, distributors and others, to the end that its
good will and on-going business not be impaired prior to the Effective Time of
the Merger;
22
4.1.5 except for matters related to complaints by
former employees related to wages, not suffer or permit any material adverse
change to occur with respect to Company and Parent or their business or assets;
4.1.6 not organize any subsidiary or acquire any
capital stock or other equity securities of any person or any equity or
ownership interest in any business, other than in connection with the Spin-Off
and as contemplated by the Distribution Agreement;
4.1.7 not enter into any instrument which would
constitute a Company Contract or Parent Contract, as applicable, or enter into
any material amendment, supplement or waiver in respect of any such Company
Contract or Parent Contract;
4.1.8 not incur any severance pay obligation by
reason of this Agreement or the transactions contemplated hereby;
4.1.9 not grant or extend any power of attorney
other than in the ordinary course of business which does not affect a material
part of its business;
4.1.10 keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by it;
4.1.11 not make any material change with respect to
their business in accounting or bookkeeping methods, principles or practices,
except as required by GAAP.
4.1.12 promptly advise the other party in writing
of any material adverse effect with respect to it; or
4.1.13 agree or otherwise commit, whether in
writing or otherwise, to do, or take any action or omit to take any action that
would result in, any of the foregoing.
5. ADDITIONAL AGREEMENTS.
5.1 SHAREHOLDERS MEETINGS. The Company shall, as promptly
as practicable following the execution of this Agreement, call, give notice of,
convene and hold a meeting of its shareholders for the purpose of approving this
Agreement and the transactions contemplated by this Agreement or obtain the
unanimous written consent of its shareholders (if legally permitted) for the
same aforementioned purpose. Sub shall, as promptly as practicable following the
execution of this Agreement, call, give notice of, convene and hold a meeting of
its shareholders for the purpose of approving this Agreement and the
transactions contemplated by this Agreement or obtain the unanimous written
consent of its shareholders (if legally permitted) for the same aforementioned
purpose.
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
5.2.1 The Company shall, and shall cause its
officers, employees, counsel, financial advisors and other representatives to,
afford to Parent and its representatives reasonable access during normal
business hours during the period prior to the Effective Time of the Merger to
its properties, books, contracts, commitments, personnel and records and, during
23
such period, the Company shall, and shall cause its officers, employees and
representatives to, furnish promptly to Parent all information concerning its
business, properties, financial condition, operations and personnel as such
other party may from time to time reasonably request. For the purposes of
determining the accuracy of the representations and warranties of the Company
set forth herein and compliance by the Company of its obligations hereunder,
during the period prior to the Effective Time of the Merger, Parent shall
provide the Company and its representatives with reasonable access during normal
business hours to its properties, books, contracts, commitments, personnel and
records as may be necessary to enable the Company to confirm the accuracy of the
representations and warranties of Parent set forth herein and compliance by
Parent and Sub of their obligations hereunder, and, during such period, Parent
shall, and shall cause its subsidiaries, officers, employees and representatives
to, furnish promptly to the Company upon its request (i) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws and (ii)
all other information concerning its business, properties, financial condition,
operations and personnel as such other party may from time to time reasonably
request. Except as required by law, each of the Company, Sub, and Parent will
hold, and will cause its respective directors, officers, employees, accountants,
counsel, financial advisors and other representatives and affiliates to hold,
any nonpublic information in confidence.
5.2.2 No investigation pursuant to this SECTION
5.2 shall affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
5.3 BEST EFFORTS. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use its
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement. Parent, Sub and the Company will use their best
efforts and cooperate with one another (i) in promptly determining whether any
filings are required to be made or consents, approvals, waivers, permits or
authorizations are required to be obtained (or, which if not obtained, would
result in an event of default, termination or acceleration of any agreement or
any put right under any agreement) under any applicable law or regulation or
from any Governmental Entities or third parties, including parties to loan
agreements or other debt instruments and including such consents, approvals,
waivers, permits or authorizations as may be required to transfer the assets and
related liabilities of the Company to the Surviving Corporation in the Merger,
in connection with the transactions contemplated by this Agreement, and (ii) in
promptly making any such filings, in furnishing information required in
connection therewith and in timely seeking to obtain any such consents,
approvals, permits or authorizations. Parent and the Company shall mutually
cooperate in order to facilitate the achievement of the benefits reasonably
anticipated from the Merger.
5.4 PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing, and provide each other the reasonable opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement. The parties agree
24
that the initial press release or releases to be issued with respect to the
transactions contemplated by this Agreement shall be mutually agreed upon prior
to the issuance thereof. Notwithstanding the foregoing, Company may disclose the
contemplated Merger in letters to the Company's optionees for purposes of
fulfilling the Company's obligations under any stock option or incentive plan of
the Company.
5.5 AMENDING SCHEDULES. From time to time prior to the
Closing, the Company and Parent shall promptly supplement or amend the Company
Disclosure Schedules or Parent Disclosure Schedules, as applicable, hereto with
respect to any matter arising after the date of this Agreement which, if
existing or occurring at the date of this Agreement, would have been required to
have been set forth in the Company Disclosure Schedules or Parent Disclosure
Schedules, as applicable. Such supplement or amendment shall have the effect of
curing any related misrepresentation or breach of warranty made in connection
with the transactions contemplated by this Agreement; PROVIDED, HOWEVER, each
party shall have a commercially reasonable period of time following receipt of
any supplemented or amended Company Disclosure Schedules or Parent Disclosure
Schedules, as applicable, to elect (i) to terminate this Agreement without any
further liability to any other party hereunder, or (ii) in such non-amending
party's sole discretion, to elect to waive such breach and consummate the
transactions contemplated by this Agreement.
5.6 EXPENSES. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, and Parent shall pay and discharge
all of its costs and expenses on or prior to the Effective Time of the Merger.
5.7 DIRECTORS AND OFFICERS. On or prior to the Effective
Date, Parent shall take each of the following actions:
5.7.1 Parent shall have obtained and provided the
Company with copies of written resignations from each of its directors and
officers, which resignations shall be effective: (i) with respect to all
officers of Parent and one director of Parent, at the Effective Time of the
Merger, and (ii) with respect to the remaining directors, on the date which is
ten (10) days following filing with the Securities and Exchange Commission and
transmission to all shareholders of Parent of an information statement meeting
the requirements of Rule 14f-1 under the Exchange Act (such date is referred to
herein as the "BOARD TRANSITION DATE").
5.7.2 Parent shall have taken all action to cause
Xxx Xx and Da-xxxxx Xx to be elected to its Board of Directors effective as of
the Effective Date of the Merger and for Xxxxx Xxxx Xxxx, Lian-xxx Xxx and
Yun-xxxx Xxxxx to be elected to its Board of Directors effective as of the Board
Transition Date.
5.7.3 Parent shall have appointed each of
following individuals to the office set forth opposite such individual's name,
effective as of the Effective Date of the Merger:
NAME TITLE
Xxx Xx Chairman of the Board & Chief Executive Officer
Lian-xxx Xxx Chief Financial Officer
25
Xxxxx Xxxx Xxxx Secretary
5.8 POST-CLOSING CONDUCT OF BUSINESS. Except as expressly
permitted by this Agreement, between the Closing and the Board Transition Date,
Parent shall conduct the combined business of Parent and the Company only in the
ordinary course in substantially the same manner as heretofore conducted, and
use all its reasonable efforts to preserve intact the combined business
organization and employees and to preserve the goodwill of persons with which it
has business relations. Without limiting the generality of the foregoing, except
as otherwise expressly provided in this Agreement or consented to in writing by
each of the directors appointed to Parent's Board of Directors at the Effective
Time of the Merger pursuant to SECTION 5.7.2, between the Closing and the Board
Transition Date, Parent shall:
5.8.1 not amend or alter its articles of
incorporation or bylaws, except as provided in SECTION 5.9 below;
5.8.2 not engage in any transaction, except in the
normal and ordinary course of business, or create or suffer to exist any lien or
other encumbrance upon any of its assets;
5.8.3 not sell, assign or otherwise transfer any
of its assets, or cancel or compromise any debts or claims relating to their
assets, other than for fair value, in the ordinary course of business;
5.8.4 not fail to use reasonable efforts to
preserve intact its present business organizations, keep available the services
of their employees and preserve its material relationships with customers,
suppliers, licensors, licensees, distributors and others, to the end that its
good will and on-going business not be impaired prior to the Board Transition
Date;
5.8.5 not suffer or permit any material adverse
change to occur with respect to Parent or its business or assets;
5.8.6 not organize any subsidiary or acquire any
capital stock or other equity securities of any person or any equity or
ownership interest in any business, other than in connection with the Spin-Off
and as contemplated by the Distribution Agreement;
5.8.7 not enter into any instrument which would
constitute a Parent Contract, as applicable, or enter into any material
amendment, supplement or waiver in respect of any such Parent Contract;
5.8.8 not grant or extend any power of attorney
other than in the ordinary course of business which does not affect a material
part of its business;
5.8.9 not make any material change with respect to
its business in accounting or bookkeeping methods, principles or practices,
except as required by GAAP;
5.8.10 not issue any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any liability for borrowed
money or capitalized lease contract;
26
5.8.11 not declare, set aside, or paid any dividend
or made any distribution with respect to its equity securities (whether in cash
or in kind) or redeemed, purchased, or otherwise acquired any of its equity
securities, except as provided in SECTION 5.9; or
5.8.12 agree or otherwise commit, whether in
writing or otherwise, to do, or take any action or omit to take any action that
would result in, any of the foregoing.
5.9 STOCK SPLIT; NAME CHANGE. Following the Effective
Date of the Merger, Parent and the Company shall cause the Board of Directors to
approve: (i) a four-for-one forward stock split with respect to the Parent
Common Stock (such that each holder of Parent Common Stock will receive three
(3) additional shares of Parent Common Stock for every share of Parent Common
Stock held on the record date of the stock split), and (ii) a change the
corporate name of Parent to such name as shall be directed by the Company.
5.10 NO SOLICITATION. Except as previously agreed to in
writing by the other party, neither Company nor Parent shall authorize or permit
any of its officers, directors, agents, representatives, or advisors to (a)
solicit, initiate or encourage or take any action to facilitate the submission
of inquiries, proposals or offers from any person relating to any matter
concerning any merger, consolidation, business combination, recapitalization or
similar transaction involving Company or Parent, respectively, other than the
transaction contemplated by this Agreement or any other transaction the
consummation of which would or could reasonably be expected to impede, interfere
with, prevent or delay the Merger or which would or could be expected to dilute
the benefits to the Company of the transactions contemplated hereby. The Company
or Parent will immediately cease and cause to be terminated any existing
activities, discussions and negotiations with any parties conducted heretofore
with respect to any of the foregoing.
6. CONDITIONS PRECEDENT.
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
6.1.1 SHAREHOLDER APPROVAL. Each of the Company
Shareholder Approval and the approval of Sub's shareholders shall have been
obtained.
6.1.2 OTCBB CLEARANCE. The shares of Parent Common
Stock shall have been cleared for quotation on the Over-the-Counter Bulletin
Board.
6.1.3 NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect.
6.1.4 NO DISSENT. Holders of no more than five
percent (5%) of the Company Shares shall have dissented to the Merger.
27
6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
following conditions:
6.2.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects, in each case as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, unless made as of another date, in which case they shall be true
and correct in all material respects as of such date. Parent shall have received
a certificate signed on behalf of the Company by the President or Chief
Executive Officer of the Company to such effect.
6.2.2 PERFORMANCE OF OBLIGATIONS OF THE COMPANY.
The Company shall have performed the obligations required to be performed by it
under this Agreement at or prior to the Closing Date (except for such failures
to perform as have not had or could not reasonably be expected, either
individually or in the aggregate, to have a material adverse effect with respect
to the Company or adversely affect the ability of the Company to consummate the
transactions herein contemplated or perform its obligations hereunder), and
Parent shall have received a certificate signed on behalf of the Company by the
President or Chief Executive Officer of the Company to such effect.
6.2.3 CONSENTS, ETC. Parent shall have received
evidence, in form and substance reasonably satisfactory to it, that such
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and other third parties as necessary in
connection with the transactions contemplated hereby have been obtained.
6.2.4 NO LITIGATION. There shall not be pending or
threatened by any Governmental Entity any suit, action or proceeding (or by any
other person any suit, action or proceeding which has a reasonable likelihood of
success), (i) challenging or seeking to restrain or prohibit the consummation of
the Merger or any of the other transactions contemplated by this Agreement or
seeking to obtain from Parent or any of its subsidiaries any damages that are
material in relation to Parent and its subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company, Parent
or any of its subsidiaries of any material portion of the business or assets of
the Company, Parent or any of its subsidiaries, or to dispose of or hold
separate any material portion of the business or assets of the Company, Parent
or any of its subsidiaries, as a result of the Merger or any of the other
transactions contemplated by this Agreement, (iii) seeking to impose limitations
on the ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any Company Shares or Common Stock of the Surviving Corporation,
including, without limitation, the right to vote the Company Shares or Common
Stock of the Surviving Corporation on all matters properly presented to the
shareholders of the Company or the Surviving Corporation, respectively, or (iv)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the Company.
6.2.5 LEGAL OPINION. Parent shall have received
the legal opinion of counsel to the Company, in substantially the form of
EXHIBIT A hereto.
28
6.2.6 SECRETARY'S CERTIFICATE. Parent shall have
received a certificate of the Secretary or Assistant Secretary of the Company
certifying (i) a true and complete copy of the resolutions duly and validly
adopted by the Board of Directors of the Company evidencing the authorization of
the execution and delivery of this Agreement, (ii) the names and signatures of
the officers of the Company authorized to sign this Agreement and the other
documents to be delivered hereunder and (iii) a true and complete copy of the
Memorandum of Association and Articles of Association of the Company.
6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is further subject to the
following conditions:
6.3.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Parent and Sub set forth in this Agreement
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date, unless made as of another date, in which case they shall be true
and correct in all material respects as of such date. The Company shall have
received a certificate signed on behalf of Parent by the President or Chief
Executive Officer of Parent to such effect.
6.3.2 PERFORMANCE OF OBLIGATIONS OF PARENT AND
SUB. Parent and Sub shall have performed the obligations required to be
performed by them under this Agreement at or prior to the Closing Date (except
for such failures to perform as have not had or could not reasonably be
expected, either individually or in the aggregate, to have a material adverse
effect with respect to Parent or adversely affect the ability of Parent to
consummate the transactions herein contemplated or perform its obligations
hereunder), and the Company shall have received a certificate signed on behalf
of Parent by the President or Chief Executive Officer of Parent to such effect.
6.3.3 NO LITIGATION. There shall not be pending or
threatened any suit, action or proceeding before any court, Governmental Entity
or authority (i) pertaining to the transactions contemplated by this Agreement
or (ii) seeking to prohibit or limit the ownership or operation by the Company,
Parent or any of its subsidiaries, or to dispose of or hold separate any
material portion of the business or assets of the Company, Parent or of its any
subsidiaries.
6.3.4 CONSENTS, ETC. Company shall have received
evidence, in form and substance reasonably satisfactory to it, that such
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and other third parties as necessary in
connection with the transactions contemplated hereby have been obtained.
6.3.5 FILING OF MERGER AGREEMENT. Parent shall
have filed or will promptly file after the Closing Date in the office of the
Department of Commerce of the State of Utah or other office of each jurisdiction
in which such filings are required for the Merger to become effective.
6.3.6 RESIGNATIONS. Parent shall deliver to the
Company written resignations of all of the officers of Parent and evidence of
election of those new directors and
29
officers as further described in SECTION 5.7 herein, subject to compliance with
Rule 14f-1 of the Exchange Act.
6.3.7 LEGAL OPINION. The Company shall have
received the legal opinion of counsel to Parent, in substantially the form of
EXHIBIT B hereto.
6.3.8 GOOD STANDING CERTIFICATES. The Company
shall have received certificates of the Department of Commerce of the State of
Utah with respect to Parent and of each state in which Parent is qualified to do
business as a foreign corporation as of a recent date, showing Parent to be
validly existing and in good standing in the State of Utah and qualified to do
business and in good standing in such other states as a foreign corporation, as
the case may be.
6.3.9 SECRETARY'S CERTIFICATE. The Company shall
have received certificates of the Secretary or Assistant Secretary of Parent and
Sub certifying (i) a true and complete copy of the resolutions duly and validly
adopted by the Board of Directors of Parent or Sub, as applicable, evidencing
the authorization of the execution and delivery of this Agreement, (ii) the
names and signatures of the officers of Parent and Sub, as applicable,
authorized to sign this Agreement and the other documents to be delivered
hereunder and (iii) a true and complete copy of the articles of incorporation
and bylaws of each of Parent and Sub.
6.3.10 SPIN-OFF. The Spin-Off shall be completed by
Parent in accordance with the Distribution Agreement and without any adverse Tax
consequences and in full compliance with all applicable securities laws.
6.3.11 INDEBTEDNESS. All indebtedness of Parent
shall have been repaid, otherwise satisfied in full or cancelled.
6.3.12 ACCRUED FEES. All accrued fees of Parent's
professional advisors, including without limitation all legal and accounting
fees incurred by Parent in connection with the preparation, negotiation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and all accounting fees incurred in connection
with the audit of Parent's financial statements for the year ended December 31,
2003 (the "PROFESSIONAL FEES"), shall have been paid and satisfied in full.
6.3.13 8-K. Parent shall file a Form 8-K with the
SEC within fifteen days of the closing of the Merger and a subsequent Form 8-K
within 60 days thereafter containing audited financial statements of the Company
as required by Item 310 of Regulation S-B.
7. TERMINATION, AMENDMENT AND WAIVER.
7.1 TERMINATION. This Agreement may be terminated and
abandoned at any time prior to the Effective Time of the Merger:
7.1.1 by mutual written consent of Parent and the
Company;
7.1.2 by either Parent or the Company if any
Governmental Entity shall have issued an order, decree or ruling or taken any
other action permanently enjoining,
30
restraining or otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and nonappealable;
7.1.3 by either Parent or the Company if the
Merger shall not have been consummated on or before March 26, 2004 (other than
as a result of the failure of the party seeking to terminate this Agreement to
perform its obligations under this Agreement required to be performed at or
prior to the Effective Time of the Merger);
7.1.4 by Parent, if a material adverse change
shall have occurred relative to the Company or if the Company willfully fails to
perform in any material respect any of its material obligations under this
Agreement; or
7.1.5 by the Company, if a material adverse change
shall have occurred relative to Parent or Sub or if Parent or Sub willfully
fails to perform in any material respect any of their respective obligations
under this Agreement.
7.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in SECTION 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of the last sentence of SECTION 5.2.1, SECTION 7.6 and this SECTION
7.2. Nothing contained in this Section shall relieve any party for any breach of
the representations, warranties, covenants or agreements set forth in this
Agreement.
7.3 AMENDMENT. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
7.4 EXTENSION; WAIVER. At any time prior to the Effective
Time of the Merger, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement, or (c) waive compliance
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to SECTION 7.1, an amendment of
this Agreement pursuant to SECTION 7.3 or an extension or waiver of this
Agreement pursuant to SECTION 7.4 shall, in order to be effective, require in
the case of Parent, Sub or the Company, action by its Board of Directors.
7.6 RETURN OF DOCUMENTS. In the event of termination of
this Agreement for any reason, Parent and Company will return to the other party
all of the other party's documents, work papers, and other materials (including
copies) relating to the transactions contemplated in this Agreement, whether
obtained before or after execution of this Agreement. Parent and Company will
not use any information so obtained from the other party for any purpose and
will take all reasonable steps to have such other party's information kept
confidential.
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8. INDEMNIFICATION AND RELATED MATTERS.
8.1 SURVIVAL. All representations, warranties, covenants
and agreements of Parent and Sub contained in this Agreement or in any
certificate delivered pursuant to this Agreement shall survive the Closing for
the time period set forth in SECTION 8.2 notwithstanding any investigation
conducted with respect thereto. The representations and warranties of the
Company contained in this Agreement or in any certificate delivered pursuant to
this Agreement shall not survive the Closing.
8.2 TIME LIMITATIONS. Neither Parent nor Sub, on the one
hand, nor the Company, on the other hand, shall have any liability (for
indemnification or otherwise) with respect to any representation or warranty, or
agreement to be performed and complied with prior to the Effective Time of the
Merger, unless on or before the six-month anniversary of the Effective Time of
the Merger (the "CLAIMS DEADLINE"), the indemnifying party is given notice of a
claim with respect thereto, in accordance with SECTION 8.7, specifying the
factual basis therefor in reasonable detail to the extent then known by the
party claiming indemnification hereunder.
8.3 INDEMNIFICATION.
8.3.1 BY PARENT. Parent shall indemnify and hold
harmless the Company, each of the Shareholders and their respective officers,
directors, agents and representatives (the "COMPANY INDEMNIFIED PARTIES"), and
shall reimburse the Company Indemnified Parties for, any loss, liability, claim,
damage, expense (including, but not limited to, costs of investigation and
defense and reasonable attorneys' fees) or diminution of value (collectively,
"DAMAGES") arising from or in connection with (a) any inaccuracy, in any
material respect, in any of the representations and warranties of Parent or Sub
in this Agreement or in any certificate delivered by Parent or Sub to the
Company pursuant to this Agreement, or any actions, omissions or statements of
fact inconsistent with any such representation or warranty, (b) any failure by
Parent or Sub to perform or comply in any material respect with any agreement in
this Agreement, (c) any claim by any person for brokerage for finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such person with Parent or Sub (or any person
acting on their behalf) in connection with any of the transactions contemplated
by this Agreement, (d) Taxes attributable to any transaction or event occurring
on or prior to the Closing, including without limitation Taxes attributable to
the Spin-Off, to the extent such liabilities exceed the amount of the reserve
for Taxes accrued on the Parent Balance Sheet, (e) any claim by any person
relating to or arising out of any liabilities reflected on the Parent Balance
Sheet or with respect to Professional Fees arising thereafter, or (f) any
litigation, action, claim, proceeding or investigation by any third party
relating to or arising out of the business or operations of Parent, or the
actions of Parent or any holder of Parent capital stock prior to the Effective
Time of the Merger.
8.3.2 BY THE COMPANY. The Company shall indemnify
and hold harmless Parent and its officers, directors, agents and representatives
(the "PARENT INDEMNIFIED PARTIES"), and shall reimburse the Parent Indemnified
Parties for, any Damages arising from or in connection with (a) any inaccuracy,
in any material respect, in any of the representations and warranties of the
Company in this Agreement or in any certificate delivered by the Company to
Parent pursuant to this Agreement, or any actions, omissions or statements of
fact inconsistent
32
with any such representation or warranty, or (b) any failure by the Company to
perform or comply in any material respect with any agreement in this Agreement.
8.4 SOLE REMEDY. Other than claims based on fraud or for
specific performance, injunctive or other equitable relief, the indemnity
provided in this SECTION 8 shall be the sole and exclusive remedy of the parties
hereto at law or equity for any matter covered by SECTION 8.3.
8.5 NOTICE OF CLAIMS.
8.5.1 If, at any time on or prior to the Claims
Deadline, either the Company Indemnified Parties or the Parent Indemnified
Parties, as the case may be (each, an "INDEMNITEE"), shall assert a claim
against the other (the "INDEMNIFYING PARTY") for indemnification pursuant to
SECTION 8, such Indemnitee shall submit to the Indemnifying Party a written
claim in good faith signed by an authorized officer of Parent or the Company or
the requisite number of Shareholders under SECTION 8.7, as applicable, stating:
(i) that an Indemnitee incurred or reasonably believes it may incur Damages and
the reasonable estimate of the amount of any such Damages; (ii) in reasonable
detail, the facts alleged as the basis for such claim and the section or
sections of this Agreement alleged as the basis or bases for the claim; and
(iii) if the Damages have actually been incurred, the number of additional
shares of Parent Common Stock to which the Shareholders or Parent Shareholders
(as defined in SECTION 8.6.2), as applicable, are entitled with respect to such
Damages, which shall be determined as provided in SECTION 8.6 below. If the
claim is for Damages which the Indemnitee reasonably believes may be incurred or
are otherwise unliquidated, the written claim of the applicable Indemnitee shall
state the reasonable estimate of such Damages, in which event a claim shall be
deemed to have been asserted under this SECTION 8 in the amount of such
estimated Damages, but no distribution of additional shares of Parent Common
Stock pursuant to SECTION 8.6 below shall be made until such Damages have
actually been incurred.
8.5.2 In the event that any action, suit or
proceeding is brought against any Indemnitee with respect to which an
Indemnifying Party may have liability under SECTION 8, the Indemnifying Party
shall have the right, at its cost and expense, to defend such action, suit or
proceeding in the name and on behalf of the Indemnitee; PROVIDED, HOWEVER, that
an Indemnitee shall have the right to retain its own counsel, with fees and
expenses paid by the Indemnifying Party, if representation of the Indemnitee by
counsel retained by Indemnifying Party would be inappropriate because of actual
or potential differing interests between Indemnitee and the Indemnifying Party.
In connection with any action, suit or proceeding subject to SECTION 8, the
parties agree to render to each other such assistance as may reasonably be
required in order to ensure proper and adequate defense of such action, suit or
proceeding. No Indemnifying Party shall, without the prior written consent of
the applicable Indemnitee, which consent shall not be unreasonably withheld or
delayed, settle or compromise any claim or demand if such settlement or
compromise does not include an irrevocable and unconditional release of such
Indemnitee for any liability arising out of such claim or demand.
33
8.6 PAYMENT OF DAMAGES.
8.6.1 BY PARENT. In the event that a Company
Indemnified Party shall be entitled to indemnification pursuant to this SECTION
8 for actual Damages incurred by them, Parent shall, within thirty (30) days
after the final determination of the amount of such Damages, issue to the
Shareholders that number of additional shares of Parent Common Stock in an
aggregate amount equal to the quotient obtained by dividing (x) the amount of
such Damages BY (y) the Fair Market Value (as defined below) per share of the
Parent Common Stock as of the date of the submission of the notice of claim to
Parent pursuant to SECTION 8.5. Such shares of Parent Common Stock shall be
issued to the Shareholders PRO RATA, in proportion to the number of share of
Parent Common Stock issued (or issuable) to the Shareholders at the Effective
Time of the Merger.
8.6.2 BY COMPANY. In the event that a Parent
Indemnified Party shall be entitled to indemnification pursuant to this SECTION
8 for actual Damages incurred by them, Parent shall, within thirty (30) days
after the final determination of the amount of such Damages, issue to the
shareholders of Parent immediately prior the Effective Time of the Merger (the
"PARENT SHAREHOLDERS") that number of additional shares of Parent Common Stock
in an aggregate amount equal to the quotient obtained by dividing (x) the amount
of such Damages BY (y) the Fair Market Value (as defined below) per share of the
Parent Common Stock as of the date of the submission of the notice of claim to
the Company pursuant to SECTION 8.5. Such shares of Parent Common Stock shall be
issued to the Parent Shareholders PRO RATA, in proportion to the number of share
of Parent Common Stock held by the Parent Shareholders immediately prior to the
Effective Time of the Merger.
8.6.3 FAIR MARKET VALUE. For purposes of this
Agreement, "FAIR MARKET VALUE" shall mean, with respect to a share of Parent
Common Stock on any date, the average of the daily closing prices for the ten
(10) consecutive trading days prior to such date. The closing price for each day
shall be the last sales price or in case no sale takes place on such day, the
average of the closing high bid and low asked prices, in either case (a) as
officially quoted by the NASD Over-the-Counter Bulletin Board, Nasdaq SmallCap
Market or the Nasdaq National Market or such other market on which the Parent
Common Stock is then principally listed for trading, or (c) if there exists no
principal United States market for the Parent Common Stock, then as reasonably
determined by the Board of Directors of Parent.
8.7 THIRD PARTY BENEFICIARIES. The Parties acknowledge
and agree that each of the Shareholders are direct beneficiaries with respect to
the provisions of this SECTION 8 and may enforce each of its provisions as if
such Shareholders were a party to this Agreement, provided, HOWEVER, that no
action, claim, notification or other writing of the Shareholders pursuant to
this SECTION 8 shall be valid and binding upon Parent or have any force or
effect unless such action, claim, notification or writing is executed by
Shareholders, or their duly appointed proxies, holding a majority of the
outstanding Company Shares immediately prior to the Effective Time of the
Merger.
34
9. GENERAL PROVISIONS.
9.1 NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by facsimile, electronic mail, or
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to Parent, to:
Tintic Gold Mining Company
0000 Xxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxxxxx
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxxx X. Xxxxxxxxxx, Esq.
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Fax: 000-000-0000
if to the Company, to:
Kiwa Bio-Tech Products Group Ltd.
00000 Xxxxxxxxx Xx., Xxxxx #000
Xxxx xx Xxxxxxxx, XX 00000
Attn: Xxx Xx
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxx Xxxxxxxx & Markiles, LLP
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx, XX 00000
Attn: V. Xxxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
9.2 DEFINITIONS. For purposes of this Agreement:
9.2.1 an "AFFILIATE" of any person means another
person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such first person;
9.2.2 "MATERIAL ADVERSE CHANGE" or "MATERIAL
ADVERSE EFFECT" means, when used in connection with the Company or Parent, any
change or effect that either individually or in the aggregate with all other
such changes or effects is materially adverse to the
35
business, assets, properties, condition (financial or otherwise) or results of
operations of such party and its subsidiaries taken as a whole;
9.2.3 "PERSON" means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity; and
9.2.4 a "SUBSIDIARY" of any person means another
person, an amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority of its
board of Directors or other governing body (or, if there are no such voting
interests, fifty percent (50%) or more of the equity interests of which) is
owned directly or indirectly by such first person.
9.3 INTERPRETATION. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
9.4 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the other agreements referred to herein constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement. This Agreement is not intended to confer upon any person other than
the parties any rights or remedies.
9.5 GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
9.6 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
9.7 ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of California or the State of Utah, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any court sitting in Los Angeles County, California
or Salt Lake County, Utah in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement to the extent such
courts would have subject matter
36
jurisdiction with respect to such dispute and (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction or venue by motion or other
request for leave from any such court.
9.8 SEVERABILITY. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
9.9 COUNTERPARTS. This Agreement may be executed in one
or more identical counterparts, all of which shall be considered one and the
same instrument and shall become effective when one or more such counterparts
shall have been executed by each of the parties and delivered to the other
parties.
[SIGNATURE PAGES FOLLOW.]
37
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
officers to execute this Agreement as of the date first above written.
TINTIC GOLD MINING COMPANY
By: /s/ Xxxxxx Xxxxxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
TTGM ACQUISITION CORPORATION
By: /s/ Xxxxxx Xxxxxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
KIWA BIO-TECH PRODUCTS GROUP LTD.
By: /s/ Xxx Xx
----------------------------------------
Name: Xxx Xx
Title: Chief Executive Officer
38
EXHIBIT A
FORM OF LEGAL OPINION OF COMPANY COUNSEL
[To be put in standard form of Company's counsel]
The following opinions to be rendered by BVI counsel:
1. The Company is validly existing as an international business company in
good standing under the laws of the British Virgin Islands. The Company
has corporate power to enter into the Merger Agreement.
2. The execution and delivery of the Merger Agreement by the Company and
the performance of its obligations thereunder have been duly authorized
by all necessary corporate action on the part of the Company.
The following opinions to be rendered by Xxxxxx Xxxxxxxx & Markiles, LLP:
3. The Merger Agreement has been duly and validly executed and delivered
by the Company. The Merger Agreement constitutes the valid and binding
obligation of the Company, enforceable against it in accordance with
its terms.
4. The execution and delivery of the Merger Agreement by the Company do
not, and the performance of its obligations thereunder will not, (a)
result in any violation of any law, rule or regulation; (b) result in
any violation of any order, writ, judgment or decree known to us; or
(c) result in a violation of the Articles of Association of the
Company.
5. No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body (each, a
"FILING") is required under any applicable law for the due execution
and delivery of the Merger Agreement by the Company and performance of
its obligations thereunder except for (a) such Filings as have been
obtained or made; (b) the filing of a certificate of merger with the
British Virgin Islands [and other applicable agencies]; and (c) Filings
required under Federal and state securities laws as contemplated by the
Merger Agreement.
6. The Company is not a party to any adversarial action, suit, or
proceeding pending or threatened overtly by a written communication, at
law or in equity, or before any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, which action, suit or proceeding seeks either to
enjoin the transactions contemplated by the Agreement.
7. The authorized capital stock of the Company consists of ________ shares
of common stock, par value $_____ per share, and ________ shares of
preferred stock, par value $______ per share. Immediately prior to the
Closing, there were 5,000,000 shares of common stock of the Company and
no shares of preferred stock of the Company, issued and outstanding.
39
EXHIBIT B
FORM OF OPINION OF PARENT COUNSEL
[To be put in standard form of Parent's counsel]
1. Each of Parent and Sub is validly existing as a corporation in good
standing under the laws of its state of incorporation. Each of Parent
and Sub has corporate power to enter into the Merger Agreement.
2. The execution and delivery of the Merger Agreement by each of Parent
and Sub and the performance of their respective obligations thereunder
have been duly authorized by all necessary corporate action on the part
of Parent or Sub, as applicable.
3. The Merger Agreement has been duly and validly executed and delivered
by each of Parent and Sub. The Merger Agreement constitutes the valid
and binding obligation of each of Parent and Sub, enforceable against
each of Parent and Sub in accordance with its terms.
4. The execution and delivery of the Merger Agreement by each of Parent
and Sub do not, and the performance of their respective obligations
thereunder will not, (a) result in any violation of any law, rule or
regulation; (b) result in any violation of any order, writ, judgment or
decree; or (c) result in a violation of the Articles of Incorporation
or Bylaws of either Parent or Sub.
5. No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body (each, a
"FILING") is required under any applicable law for the due execution
and delivery of the Merger Agreement by Parent and Sub and performance
of their respective obligations thereunder except for (a) such Filings
as have been obtained or made; (b) the filing of a certificate of
merger with the British Virgin Islands [and other applicable agencies];
and (c) Filings required under Federal and state securities laws as
contemplated by the Merger Agreement.
6. Neither Parent nor Sub is a party to any adversarial action, suit, or
proceeding pending or threatened overtly by a written communication, at
law or in equity, or before any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, which action, suit or proceeding seeks either to
enjoin the transactions contemplated by the Agreement.
7. The issuance of the Parent Common Stock to the shareholders of the
Company in accordance with the Merger Agreement will be exempt from
registration under the Securities Act of 1933, as amended.
8. The authorized capital stock of Parent consists of ________ shares of
common stock, par value $_____ per share, and ________ shares of
preferred stock, par value $______ per share. Immediately prior to the
Closing, there were ______ shares of Parent Common Stock and no shares
of preferred stock of Parent, issued and outstanding. The authorized
capital stock of Sub consists of ________ shares of common stock, par
value $_____ per share. Immediately prior to the Closing, there were
______ shares of
40
common stock of Sub and no shares of preferred stock of Sub, issued and
outstanding.
9. The shares of Parent Common Stock to be issued pursuant to the Merger
Agreement have been duly authorized and, when issued in accordance with
the terms of the Merger Agreement, will be validly issued, fully paid
and non-assessable, and will not be issued in violation of any
preemptive rights granted under Parent's Articles of Incorporation,
Bylaws, under the corporate laws of the State of the Parent's
incorporation, or under any agreement to which Parent is a party.
41
