Exhibit 99.1
SHARE EXCHANGE AGREEMENT
BY AND AMONG
PARK HILL CAPITAL III CORP.,
POLARA GLOBAL LIMITED,
THE POLARA GLOBAL LIMITED SHAREHOLDERS
AND
WUJIANG DEYI FASHIONS CLOTHES COMPANY LIMITED
January 26, 2006
TABLE OF CONTENTS
SHARE EXCHANGE AGREEMENT 1
WITNESSETH: 1
ARTICLE I 1
DEFINITIONS 1
ARTICLE II 5
TRANSACTIONS; TERMS OF SHARE EXCHANGE; MANNER OF EXCHANGE 5
2.1 Exchange of Shares. 5
2.2 Escrow Provisions. 6
2.3 Time and Place of Closing. 6
2.4 Effective Time. 7
2.5 Exchange of Shares. 7
2.6 Legending of Securities. 7
2.7 Fractional Shares. 7
2.8 Lost, Stolen or Destroyed Certificates. 7
ARTICLE III 8
REPRESENTATIONS AND WARRANTIES OF PARK HILL 8
3.1 Organization. 8
3.2 Authorization; Enforceability. 8
3.3 No Violation or Conflict. 8
3.4 Consents of Governmental Authorities and Others. 8
3.5 Conduct of Business. 9
3.6 Litigation. 9
3.7 Brokers. 9
3.8 Compliance. 9
3.9 Charter, Bylaws and Corporate Records. 10
3.10 Subsidiaries. 10
3.11 Capitalization. 10
3.12 Rights, Warrants, Options. 10
3.13 Commission Filings and Financial Statements. 10
3.14 Absence of Undisclosed Liabilities. 10
3.15 Real Property. 11
3.16 Benefit Plans and Agreements. 11
3.17 Taxes. 11
3.18 Environmental Matters. 12
3.19 Material Agreements. 13
3.20 Disclosure. 13
ARTICLE IV 13
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND DEYI 13
4.1 Organization. 13
4.2 Authorization; Enforceability. 14
4.3 No Violation or Conflict. 14
4.4 Consents of Governmental Authorities and Others. 14
4.5 Litigation. 14
4.6 Brokers. 14
4.7 Compliance. 15
4.8 Charter, Bylaws and Corporate Records. 15
4.9 Capitalization. 15
4.10 Subsidiaries. 15
4.11 Rights, Warrants, Options. 15
4.12 Conduct of Business. 16
4.13 Taxes. 16
4.14 Environmental Matters. 18
4.15 Financial Statements. 18
4.16 Absence of Undisclosed Liabilities. 18
4.17 Employment Agreements; Employee Benefit Plans and Employee
Payments. 19
4.18 Intellectual Property. 19
4.19 Properties. 20
4.20 Disclosure. 20
ARTICLE V 20
ADDITIONAL AGREEMENTS 20
5.1 Survival of the Representations and Warranties. 20
5.2 Investigation. 21
5.3 The Company and DeYi Indemnification. 21
5.4 Limitations on the Company and DeYi's Indemnification from Park
Hill. 21
5.5 Park Hill's Indemnification for this Agreement. 21
5.6 Limitations on Park Hill and the Park Hill Controlling
Shareholders Indemnification. 22
5.7 Indemnification of Park Hill, and its Officers, Directors and
the Park Hill Controlling Shareholders for the Financing. 22
5.8 Indemnity Procedure. 22
ARTICLE VI 23
CLOSING; DELIVERIES; CONDITIONS PRECEDENT 23
6.1 Closing; Effective Date. 23
6.2 Deliveries 23
6.3 Conditions Precedent to the Obligations of the Company and DeYi.25
6.4 Conditions Precedent to the Obligations of Park Hill. 26
6.5 Best Efforts. 27
6.6 Termination. 28
6.7 Registration Rights. 28
ARTICLE VII 29
COVENANTS 29
7.1 Financing. 29
7.2 General Confidentiality. 29
7.3 Tax Treatment. 29
7.4 General. 29
ARTICLE VIII 29
MISCELLANEOUS 29
8.1 Notices. 29
8.2 Entire Agreement; Incorporation. 30
8.3 Binding Effect. 30
8.4 Assignment. 31
8.5 Waiver and Amendment. 31
8.6 No Third Party Beneficiary. 31
8.7 Severability. 31
8.8 Expenses. 31
8.9 Headings. 31
8.10 Other Remedies; Injunctive Relief. 32
8.11 Counterparts. 32
8.12 Remedies Exclusive. 32
8.13 Governing Law. 32
8.14 Jurisdiction and Venue. 32
8.15 Participation of Parties. 32
8.16 Further Assurances. 33
8.17 Publicity. 33
8.18 No Solicitation. 33
EXHIBITS
Exhibit A - Escrow Agreement
Exhibit B Financial Statements
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT (the "Agreement"), effective as of January
26, 2006, by and among Park Hill Capital III, Corp., a Nevada corporation
("Park Hill"), Polara Global Limited, a British Virgin Islands international
business company (the "Company"), each of the shareholders of the Company (the
"Company Shareholders") and WuJiang DeYi Fashions Clothes Company Limited, a
People's Republic of China limited liability company ("DeYi").
W I T N E S S E T H:
WHEREAS, the Company Shareholders presently own 100% of the common
stock of the Company (the "Polara Shares"), which in turn owns 100% of the
membership interests in DeYi; and
WHEREAS, Park Hill desires to acquire from the Company Shareholders all
of the Polara Shares in exchange (the "Exchange") for the issuance by Park
Hill of 73,834,000 shares of Park Hill's common stock on the terms and
conditions set forth below; and
WHEREAS, upon the consummation of the Exchange, Park Hill will have
77,720,000 shares of common stock issued and outstanding, and the 73,834,000
shares owned by the Company Shareholders will constitute 95% of the Company's
issued and outstanding common stock after giving effect to the Exchange; and
WHEREAS, the parties desire this to be a tax-free exchange under the
Internal Revenue Code.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements set forth herein, the Parties
hereto agree as follows:
ARTICLE I
Definitions
In addition to terms defined elsewhere in this Agreement, the following
terms when used in this Agreement shall have the meanings indicated below:
"Affiliate" shall mean with respect to a specified Person, any other
Person which, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes, with respect to a
Person (a) any other Person which beneficially owns or holds ten percent (10%)
or more of any class of voting securities or other securities convertible into
voting securities of such Person or beneficially owns or holds ten percent
(10%) or more of any other equity interests in such Person, (b) any other
Person with respect to which such Person beneficially owns or holds ten
percent (10%) or more of any class of voting securities or other securities
convertible into voting securities of such Person, or owns or holds ten
percent (10%) or more of the equity interests of the other Person, and (c) any
director or senior officer of such Person. For purposes of this definition,
the term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Agreement" shall mean this Share Exchange Agreement together with all
exhibits and schedules referred to herein, which exhibits and schedules are
incorporated herein and made a part hereof.
"Certificates" shall have the meaning set forth in Section 2.5.
"Closing" shall have the meaning set forth in Section 2.3.
"Closing Date" shall mean the date that the Closing takes place.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Company/Deyi Loss" shall have the meaning set forth in Section 5.3.
"Company Shareholders" shall have the meaning set forth in the
introductory paragraph.
"Company Controlling Shareholders" shall mean Xxx Xxxxxx, Itochu Textile
Materials (Asia) Limited, Yao Yunzhen, Yao Yunhong, Ren Weirong, and Tang
Shengli.
"Confidential Information" means any information concerning the
businesses and affairs of the Company, DeYi, or Park Hill that is not already
generally available to the public.
"DeYi Membership Interests" shall mean the membership interests of DeYi.
"Effective Time" shall have the meaning set forth in Section 2.4.
"Environmental Laws" shall have the meaning set forth in Section 3.18.
"Exchange" shall have the meaning set forth in the recitals.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Consideration" shall have the meaning set forth in Section
2.1(a).
"Exchange Documents" shall have the meaning set forth in Section 3.2.
"Financial Statements" shall mean : (i) DeYi's audited balance sheets,
statement of operations, changes in stockholders equity and cash flow as of
and for the fiscal year ended December 31, 2004 with an unqualified opinion,
and (ii) the Company and DeYi's unaudited consolidated balance sheets,
statement of operations, changes in stockholders equity and cash flow as of
and for the nine month periods ended September 30, 2005 and September 30,
2004.
"Financing" shall mean that certain offering of securities of Park Hill
(post Exchange) in which Westminster Securities Corporation will act as
placement agent, pursuant to a private placement memorandum, in which Park
Hill shall attempt to raise not less than $5,000,000 on terms and conditions
acceptable to Park Hill (post Exchange) in its sole and absolute discretion.
"GAAP" shall mean United States generally accepted accounting
principles.
"Guaranty" shall mean, as to any Person, all liabilities or obligations
of such Person, with respect to any indebtedness or other obligations of any
other Person, which have been guaranteed, directly or indirectly, in any
manner by such Person, through an agreement, contingent or otherwise, to
purchase such indebtedness or obligation, or to purchase or sell property or
services, primarily for the purpose of enabling the debtor to make payment of
such indebtedness or obligation or to guarantee the payment to the owner of
such indebtedness or obligation against loss, or to supply funds to or in any
manner invest in the debtor.
"Indemnified Party" shall have the meaning set forth in Section 5.8.
"Indemnifying Party" shall have the meaning set forth in Section 5.8.
"Intellectual Property" means patents, copyrights, Trademarks,
applications for any of the foregoing, and Trade Secrets.
"Investments" shall mean, with respect to any Person, all advances,
loans or extensions of credit to any other Person (except for extensions of
credit to customers in the ordinary course of business), all purchases or
commitments to purchase any stock, bonds, notes, debentures or other
securities of any other Person, and any other investment in any other Person,
including partnerships or joint ventures (whether by capital contribution or
otherwise) or other similar arrangement (whether written or oral) with any
Person, including, but not limited to, arrangements in which (i) the first
Person shares profits and losses of the other Person, (ii) any such other
Person has the right to obligate or bind the first Person to any third party,
or (iii) the first Person may be wholly or partially liable for the debts or
obligations of such partnership, joint venture or other entity.
"Knowledge" shall mean, in the case of any Person who is an individual,
knowledge that a reasonable individual under similar circumstances would have
after such reasonable investigation and inquiry as such reasonable individual
would under such similar circumstances make, and in the case of a Person other
than an individual, the knowledge that a senior officer, director or manager
of such Person, or any other Person having responsibility for the particular
subject matter at issue of such Person, would have after such reasonable
investigation and inquiry as such senior officer, director, manager or
responsible Person would under such similar circumstances make.
"Law" and "Laws" shall mean any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, order or other requirement or
rule of law.
"Liabilities" shall mean any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility,
fixed or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise, including, without
limitation, liabilities on account of taxes, other governmental charges or
Litigation, whether or not of a kind required by GAAP to be set forth on a
financial statement.
"Litigation" shall mean any actions, suits, investigations, claims or
proceedings.
"Material Adverse Effect" shall mean any event or condition of any
character which has had or could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), results of
operations, assets, liabilities, properties, or business of Park Hill, the
Company or DeYi, as applicable.
"Park Hill Common Stock" shall mean the shares of Park Hill's $0.001 par
value per share common stock.
"Park Hill Controlling Shareholders" shall mean Xxxx X. X'Xxxx, Xxxxxxx
X. Xxxxxxx and Xxxxx X. Xxxxxx.
"Park Hill Loss" shall have the meaning set forth in Section 5.5.
"Park Hill Shareholders" shall have the meaning set forth in Section
6.7(a).
"Periodic Reports" shall mean the Forms 10-KSB, 10-QSB, 8-K, and other
Commission filings required by the Securities Exchange Act of 1934, as amended
and Securities Act of 1933, as amended which have been filed by Park Hill with
the Commission for the period beginning on January 1, 2004 and ending at the
Closing Date.
"Person" shall mean any natural person, corporation, unincorporated
organization, partnership, association, limited liability company, joint stock
company, joint venture, trust or government, or any agency or political
subdivision of any government or any other entity.
"Polara Common Stock" shall mean the shares of Polara's $1.00 par value
per share common stock.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" of any Person shall mean any Person, whether or not
capitalized, in which such Person owns, directly or indirectly, an equity
interest of more than fifty percent (50%), or which may effectively be
controlled, directly or indirectly, by such Person.
"Tax" and "Taxes" shall mean (i) all income, excise, gross receipts, ad
valorem, sales, use, employment, franchise, profits, gains, property,
transfer, payroll, withholding, severance, occupation, social security,
unemployment compensation, alternative minimum, value added, intangibles or
other taxes, fees, stamp taxes, duties, charges, levies or assessments of any
kind whatsoever (whether payable directly or by withholding), together with
any interest and any penalties, fines, additions to tax or additional amounts
imposed by any governmental or regulatory authority with respect thereto, (ii)
any liability for the payment of any amounts of the type described in (i) as a
result of being a member of a consolidated, combined, unitary or aggregate
group for any Taxable period, and (iii) any liability for the payment of any
amounts of the type described in (i) or (ii) as a result of being a transferee
or successor to any person or as a result of any express or implied obligation
to indemnify any other Person.
"Tax Returns" shall mean returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of any Taxes of
any party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Termination Date" shall have the meaning set forth in Section 6.6.
"Trademarks" means trademarks, service marks, trade names, Internet
domain names, designs, slogans, and general intangibles of like nature.
"Trade Secrets" means technology; trade secrets and other confidential
information, know-how, proprietary processes, formulae, algorithms, models,
and methodologies.
The words "hereof", "herein" and "hereunder" and the words of similar
import shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The terms defined in the singular shall have a
comparable meaning when used in the plural and vice versa.
ARTICLE II
Transactions; Terms of Share Exchange; Manner of Exchange
2.1 Exchange of Shares. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined below):
(a) Park Hill shall issue to each of the Company Shareholders
and/or their designees an aggregate of 73,834,000 newly issued shares of Park
Hill Common Stock (the "Exchange Consideration") in the names and
denominations as set forth on Schedule 2.1 hereto (or 1476.68 shares of Park
Hill Common Stock for each share of Polara Common Stock).
(b) Each Company Shareholder agrees to deliver to Park Hill an
original stock certificate evidencing the number of issued shares of the
Company as set forth opposite such name on Schedule 2.1 hereto along with
appropriately executed transfer documents in favor of Park Hill, in order to
effectively vest in Park Hill all right, title and interest in and to the
Polara Common Stock.
(c) The Exchange shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of Park Hill and the Company, and the managers and members of DeYi.
2.2 Escrow Provisions.
(a) Upon the consummation of the Share Exchange, the Park Hill
Controlling Shareholders and/or other shareholders of Park Hill shall deposit
an aggregate of 2,379,184 shares of Park Hill (the "Escrow Shares"), in escrow
at the law offices of Xxxxxx X. Xxxxxxxxx, P.C., 0000 XXX Xxxxxxx, Xxxxx 000,
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000 (the "Escrow Agent"). The Escrow Agent
agrees to hold these shares pursuant to the terms and conditions of the escrow
agreement, substantially in the form attached hereto as Exhibit A, from the
Closing Date until the earlier of (i) the consummation of the Financing, or
(ii) 120 days after the finalization of the private placement memorandum and
the delivery to Westminster Securities Corporation of the Company and DeYi's
audited financial statements for the fiscal year ended December 31, 2005 (the
"Escrow Term"). The Escrow Term shall be automatically extended until the
termination date of the offering for the Financing (as set forth in the final
private placement memorandum and any amendment thereto that is prepared for
and used in the Financing) in the event that the Financing is delayed or
postponed by the mutual agreement of the Company and Westminster Securities
Corporation for any reason. The Parties hereto acknowledge and agree that the
acceptance by the Company or Deyi of funds after the 120 day period of the
Financing shall be considered to be an extension of the Financing by the
mutual agreement of the Company and Westminster Securities Corporation. If
the Financing, in the amount of not less than $5,000,000, is consummated
during the Escrow Term, the Escrow Agent, at the closing of the Financing,
shall deliver the Escrow Shares to the shareholders of Park Hill who delivered
the Escrow Shares to the Escrow Agent. In the event that the Financing is not
consummated in the amount of not less than $5,000,000 during the Escrow Term,
the Escrow Agent shall deliver the Escrow Shares to the Company and the Escrow
Shares shall be cancelled on the stock transfer records of Park Hill. During
the Escrow Term, the shareholders of Park Hill who delivered the Escrow Shares
to the Escrow Agent shall have a right to vote the Escrow Shares and have a
right to any and all dividends paid to the holders of Park Hill Common Stock.
(b) During the Escrow Term, the Company shall be responsible for any
and all expenses (including attorneys fees, accountant fees, filing fees and
edgarization fees) associated with the filing by Park Hill of any and all
reports (including, but not limited to, current reports on Form 8-K, quarterly
reports on Form 10-QSB and annual reports on Form 10-KSB) with the Commission.
Further, the Company shall be responsible for any and all expenses associated
with the Share Exchange after the date of the execution of this Agreement
(including attorneys fees). The Company shall pay such fees within 20 days of
the receipt of such invoices from Park Hill. Further, the Company has agreed
to pay $3,000 of Park Hill's attorneys fees incurred by Xxxxxxxxx &
Associates, P.C. in connection with the preparation of this Agreement prior to
its execution.
2.3 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at 10:00 A.M. on the date
following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the transactions contemplated hereby as set forth in
Article VI (other than conditions with respect to actions the respective
parties will take at the Closing itself)(the "Closing Date"). The Closing
shall be held at the offices of Xxxxxxxxx & Associates, P.C., 0000 00xx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, or at such other location or time
as may be mutually agreed upon by the parties.
2.4 Effective Time. The Exchange and other transactions contemplated
by this Agreement shall become effective on the Closing Date (the "Effective
Time").
2.5 Exchange of Shares. At the Closing, the stockholders of the
Company shall surrender each certificate or certificates which represented
shares of the Company's Common Stock immediately prior to the Closing Date
(the "Certificates") and shall at the Effective Time receive in exchange
therefore the number of whole Exchange Consideration issuable in respect of
all shares of Park Hill's Common Stock held by such stockholder of the Company
(the number of shares issuable to the respective stockholder shall be rounded
up to the next whole number). Park Hill shall not be obligated to deliver the
Exchange Consideration to which a stockholder of the Company is entitled as a
result of the Exchange until such shareholder surrenders its Certificate or
Certificates for exchange as provided in this Section 2.5. Any other
provision of this Agreement notwithstanding, Park Hill shall not be liable to
a holder of the Company's Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat or similar law.
2.6 Legending of Securities. Each certificate for Park Hill Common
Stock to be issued to the Company Shareholders as part of the Exchange
Consideration shall bear substantially the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT, IN THE
CIRCUMSTANCES, REQUIRED UNDER THE ACT".
2.7 Fractional Shares. Notwithstanding any other provision of this
Agreement, if the Company Shareholders would otherwise have been entitled to
receive a fraction of a share of Park Hill's Common Stock (after taking into
account all certificates delivered by the Company's stockholders), the number
of shares issuable to the respective stockholder shall be rounded up to the
next whole number.
2.8 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by such stockholder of the Company (setting forth the
number of shares of the Company's Common Stock represented by such lost,
stolen or destroyed Certificates), after reasonable investigation by Park Hill
to confirm ownership of such Certificate, which shall be satisfactory to Park
Hill, in Park Hill's sole satisfaction, Park Hill shall pay such stockholder
of the Company the Exchange Consideration to which such stockholder is
entitled. Further, any stockholder representing that there is a lost, stolen
or destroyed Certificate shall agree to indemnify and hold harmless Park Hill
from and against any and all liability, loss, damage and expense in connection
with, or arising out of such lost, stolen or destroyed Certificate.
ARTICLE III
Representations and Warranties of Park Hill
In order to induce the Company and the Company Shareholders to enter
into this Agreement and to consummate the transactions contemplated hereby,
Park Hill makes the representations and warranties set forth below to the
Company and the Company Shareholders.
3.1 Organization. Park Hill is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. Park Hill
is duly qualified to transact business as a foreign corporation in all
jurisdictions where the ownership or leasing of its properties or the conduct
of its business requires such qualification except where the failure to so
qualify would not have a Material Adverse Effect on Park Hill.
3.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by Park Hill and all other agreements to be
executed, delivered and performed by Park Hill pursuant to this Agreement
(collectively, the "Exchange Documents") and the consummation by Park Hill of
the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate or individual action on the part of Park Hill. This
Agreement and the Exchange Documents have been duly executed and delivered by
Park Hill, and constitute the legal, valid and binding obligation of Park
Hill, assuming the due authorization, execution and delivery of this Agreement
by the Company, enforceable in accordance with their respective terms, except
to the extent that their enforcement is limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights generally and by general principles of equity.
3.3 No Violation or Conflict. To the Knowledge of Park Hill, the
execution, delivery and performance of this Agreement and the Exchange
Documents by Park Hill, and the consummation by Park Hill of the transactions
contemplated hereby and thereby: (a) do not violate or conflict with any
provision of law or regulation (whether federal, state or local), or any writ,
order or decree of any court or governmental or regulatory authority, or any
provision of Park Hill's Articles of Incorporation or Bylaws; and (b) do not
and will not, with or without the passage of time or the giving of notice,
result in the breach of, or constitute a default (or an event that with notice
or lapse of time or both would become a default), cause the acceleration of
performance, give to others any right of termination, amendment, acceleration
or cancellation of or require any consent under, or result in the creation of
any lien, charge or encumbrance upon any property or assets of Park Hill
pursuant to any instrument or agreement to which Park Hill is a party or by
which Park Hill or its properties may be bound or affected, other than
instruments or agreements as to which consent shall have been obtained at or
prior to the Closing.
3.4 Consents of Governmental Authorities and Others. To the Knowledge
of Park Hill, other than in connection with the provisions of the Nevada
Revised Statutes, the Exchange Act, and the Securities Act, no consent,
approval, order or authorization of, or registration, declaration,
qualification or filing with any federal, state or local governmental or
regulatory authority, or any other Person, is required to be made by Park Hill
in connection with the execution, delivery or performance of this Agreement by
Park Hill or the consummation by Park Hill of the transactions contemplated
hereby, excluding the execution, delivery and performance of this Agreement by
the Company.
3.5 Conduct of Business. Except as disclosed on Schedule 3.5 hereto,
since September 30, 2005, Park Hill has conducted its business in the ordinary
and usual course consistent with past practices and there has not occurred any
Material Adverse Effect on Park Hill. Except as disclosed on Schedule 3.5
hereto, since September 30, 2005, Park Hill has not (a) amended its Articles
of Incorporation or Bylaws; (b) issued, sold or authorized for issuance or
sale, shares of any class of its securities (including, but not limited to, by
way of stock split or dividend) or any subscriptions, options, warrants,
rights or convertible securities or entered into any agreements or commitments
of any character obligating it to issue or sell any such securities; (c)
redeemed, purchased or otherwise acquired, directly or indirectly, any shares
of its capital stock or any option, warrant or other right to purchase or
acquire any such capital stock; (d) suffered any damage, destruction or loss,
whether or not covered by insurance, which has had or could reasonably be
expected to have a Material Adverse Effect; (e) granted or made any mortgage
or pledge or subjected itself or any of its properties or assets to any lien,
charge or encumbrance of any kind; (f) made or committed to make any capital
expenditures in excess of $10,000; (g) become subject to any Guaranty; (h)
granted any increase in the compensation payable or to become payable to
directors, officers or employees (including, without limitation, any such
increase pursuant to any severance package, bonus, pension, profit-sharing or
other plan or commitment); (i) entered into any agreement which would be a
material agreement, or amended or terminated any existing material agreement;
(j) to the Knowledge of Park Hill, been named as a party in any Litigation ,
or become the focus of any investigation by any government or regulatory
agency or authority; (k) declared or paid any dividend or other distribution
with respect to its capital stock; or (l) to the Knowledge of Park Hill,
experienced any other event or condition of any character which has had, or
could reasonably be expected to have, a Material Adverse Effect on Park Hill.
3.6 Litigation. There is no Litigation pending or, to the Knowledge
of Park Hill threatened, before any court or by or before any governmental or
regulatory authority or arbitrator, (a) affecting Park Hill (as plaintiff or
defendant) or (b) against Park Hill relating to the Park Hill Common Stock or
the transactions contemplated by this Agreement.
3.7 Brokers. Park Hill has not employed any broker or finder, nor has
it nor will it incur directly or indirectly, any broker's, finder's,
investment banking or similar fees, commissions or expenses in connection with
the transactions contemplated by this Agreement or the Exchange Documents.
3.8 Compliance. To the Knowledge of Park Hill, Park Hill is in
compliance with all federal, state, local and foreign laws, ordinances,
regulations, judgments, rulings, orders and other requirements applicable to
Park Hill and its assets and properties. To the Knowledge of Park Hill, Park
Hill is not subject to any judicial, governmental or administrative inquiry,
investigation, order, judgment or decree.
3.9 Charter, Bylaws and Corporate Records. The Company has been
provided with true, correct and complete copies of (a) the Articles of
Incorporation of Park Hill, as amended and in effect on the date hereof, (b)
the Bylaws of Park Hill, as amended and in effect on the date hereof, and (c)
the minute books of Park Hill (containing all corporate proceedings from the
date of incorporation). Such minute books contain accurate records of all
meetings and other corporate actions of the board of directors, committees of
the board of directors, incorporators and shareholders of Park Hill from the
date of their incorporation to the date hereof which were memorialized in
writing.
3.10 Subsidiaries. Park Hill has no Subsidiaries or Investments.
3.11 Capitalization. As of the date of this Agreement, the authorized
capital stock of Park Hill consists of 25,000,000 shares of common stock,
$0.001 par value per share, of which as of the date of this Agreement,
3,886,000 shares are issued and outstanding. All shares of outstanding Park
Hill Common Stock have been duly authorized, are validly issued and
outstanding, and are fully paid and non-assessable.
3.12 Rights, Warrants, Options. There are no outstanding (a)
securities or instruments convertible into or exercisable for any of the
capital stock or other equity interests of Park Hill; (b) options, warrants,
subscriptions, puts, calls, or other rights to acquire capital stock or other
equity interests of Park Hill; or (c) commitments, agreements or
understandings of any kind, including employee benefit arrangements, relating
to the issuance or repurchase by Park Hill of any capital stock or other
equity interests of Park Hill, or any instruments convertible or exercisable
for any such securities or any options, warrants or rights to acquire such
securities.
3.13 Commission Filings and Financial Statements. All of the Periodic
Reports and other filings required to be filed by Park Hill have been filed
with the Commission for the periods indicated in the definition of Periodic
Reports, and as of the date filed, each of the Periodic Reports were true,
accurate and complete in all material respects and did not omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The financial statements included in the
Periodic Reports of Park Hill: (a) have been prepared in accordance with the
books of account and records of Park Hill; (b) fairly present, and are true,
correct and complete statements in all material respects of Park Hill's
financial condition and the results of its operations at the dates and for the
periods specified in those statements; and (c) have been prepared in
accordance with GAAP consistently applied with prior periods.
3.14 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 3.14, other than as disclosed by the Periodic Reports and the
financial statements of Park Hill included in the Periodic Reports, Park Hill
does not have any Liabilities. Except as set forth in Schedule 3.14, Park Hill
has no Knowledge of any circumstances, conditions, events or arrangements
which may hereafter give rise to any Liabilities of Park Hill.
3.15 Real Property. Park Hill does not own any fee simple interest in
real property. Park Hill does not lease, sublease, or have any other
contractual interest in any real property.
3.16 Benefit Plans and Agreements. Park Hill is not a party to any
Benefit Plan or Employment Agreement under which Park Hill currently has an
obligation to provide benefits to any current or former employee, officer,
director, consultant or advisor of Park Hill.
3.17 Taxes.
(a) Park Hill has properly prepared and timely filed its Tax Return
for the fiscal year ended December 31, 2004. Such Tax Return is true, correct
and complete in all material respects and has been completed in accordance
with applicable Laws.
(b) All Taxes payable by Park Hill have been fully and timely paid.
The cash reserves or accruals for Taxes provided in the books and records of
Park Hill with respect to any period for which Tax Returns have not yet been
filed or for which Taxes are not yet due and owing have been established in
accordance with GAAP and are, or prior to the Closing Date, will be,
sufficient for all unpaid Taxes of Park Hill through and including the Closing
Date (including, without limitation, with respect to any Taxes resulting from
the transactions contemplated by this Agreement).
(c) Neither Park Hill nor any Person on behalf of or with respect to
Park Hill have executed or filed any agreements or waivers extending any
statute of limitations on or extending the period for the assessment or
collection of any Tax. No power of attorney on behalf of Park Hill with
respect to any Tax matter is currently in force.
(d) Park Hill is not a party to any Tax-sharing agreement or similar
arrangement with any other party (whether or not written), and Park Hill has
not assumed any Tax obligations of, or with respect to any transaction
relating to, any other Person, or agreed to indemnify any other Person with
respect to any Tax.
(e) No Tax Return concerning or relating to Park Hill or its
operations has ever been audited by a government or taxing authority, nor is
any such audit in process or pending, and Park Hill has not been notified of
any request for such an audit or other examination. To the Knowledge of Park
Hill, no claim has been made by a taxing authority in a jurisdiction where Tax
Returns concerning or relating to Park Hill, or its operations, has not been
filed, that it is or may be subject to taxation by that jurisdiction.
(f) Park Hill has never been included in any consolidated, combined,
or unitary Tax Return.
(g) To the Knowledge of Park Hill, Park Hill has complied in all
material respects with all applicable Laws relating to the payment and
withholding of Taxes, and has duly and timely withheld from employee salaries,
wages and other compensation, and has paid over to the appropriate taxing
authorities, all amounts required to be so withheld and paid over for all
periods under all applicable laws.
(h) Park Hill has not (i) agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Internal Revenue Code of 1986
("Code") or any similar provision of state, local or foreign law by reason of
a change in accounting method initiated by Park Hill, and Park Hill has no
Knowledge that the Internal Revenue Service ("IRS") has proposed any such
adjustment or change in accounting method, or has any application pending with
any taxing authority requesting permission for any changes in accounting
methods that relate to the business or operations of Park Hill, (ii) executed
or entered into a closing agreement pursuant to Section 7121 of the Code or
any predecessor provision thereof or any similar provision of state, local or
foreign law with respect to Park Hill or (iii) requested any extension of time
within which to file any Tax Return concerning or relating to Park Hill or its
operations.
(i) To the Knowledge of Park Hill, no property owned by Park Hill is
(i) property required to be treated as being owned by another Person pursuant
to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended and in effect immediately prior to the enactment of the Tax Reform
Act of 1986, (ii) constitutes "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code or (iii) is "tax-exempt bond financed property"
within the meaning of Section 168(g) of the Code.
(j) Park Hill is not subject to any private letter ruling of the IRS,
or comparable rulings of other taxing authorities.
(k) Park Hill does not own any interest in any entity that is treated
as a partnership for U.S. federal income Tax purposes, or would be treated as
a pass-through or disregarded entity for any Tax purpose.
(l) Park Hill has not constituted either a "distributing corporation"
or a "controlled corporation" within the meaning of Section 355(a)(1)(A) of
the Code in a distribution qualifying for tax-free treatment under Section 355
of the Code (i) in the two years prior to the date of this Agreement or (ii)
in a distribution that could otherwise constitute part of a "plan" or "series
of transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with this Agreement.
(m) Park Hill has no elections in effect for U.S. federal income Tax
purposes under Sections 108, 168, 441, 472, 1017, 1033 or 4977 of the Code.
3.18 Environmental Matters. No real property used by Park Hill
presently or in the past has been used to manufacture, treat, store, or
dispose of any hazardous substance and such property is free of all such
substances such that the condition of the property is in compliance with
applicable Environmental Laws (as defined below). To the Knowledge of Park
Hill, Park Hill is in compliance with all laws, regulations and other federal,
state or local governmental requirements, and all applicable judgments,
orders, writs, notices, decrees, permits, licenses, approvals, consents or
injunctions relating to the generation, management, handling, transportation,
treatment, disposal, storage, delivery, discharge, release or emission of any
waste, pollutant or toxic or hazardous substance (including, without
limitation, asbestos, radioactive material and pesticides) (the "Environmental
Laws") applicable to Park Hill or its business as a result of any hazardous
substance utilized by Park Hill in its businesses or otherwise placed at any
of the facilities owned, leased or operated by Park Hill, or in which Park
Hill has a contractual interest. Park Hill has not received any complaint,
notice, order, or citation of any actual, threatened or alleged noncompliance
by Park Hill with any Environmental Laws, and to the Knowledge of Park Hill,
there is no Litigation pending or threatened against Park Hill with respect to
any violation or alleged violation of the Environmental Laws, and to Park
Hill's Knowledge, there is no reasonable basis for the institution of any such
Litigation.
3.19 Material Agreements. Except as set forth on Schedule 3.19, Park
Hill has no material written and oral contracts or agreements including
without limitation any: (i) contract resulting in a commitment or potential
commitment for expenditure or other obligation or potential obligation, or
which provides for the receipt or potential receipt, involving in excess of
Ten Thousand Dollars ($10,000.00) in any instance, or series of related
contracts that in the aggregate give rise to rights or obligations exceeding
such amount; (ii) indenture, mortgage, promissory note, loan agreement,
guarantee or other agreement or commitment for the borrowing or lending of
money or encumbrance of assets involving more than Ten Thousand Dollars
($10,000.00) in each instance; (iii) agreement which restricts Park Hill from
engaging in any line of business or from competing with any other Person; or
(iv) any other contract, agreement, instrument, arrangement or commitment that
is material to the condition (financial or otherwise), results of operation,
assets, properties, liabilities, or business of Park Hill (collectively, and
together with the employment agreements, Employee Benefit Plans and all other
agreements required to be disclosed on any Schedule to this Agreement, the
"Material Park Hill Agreements").
3.20 Disclosure. No representation or warranty of Park Hill contained
in this Agreement, and no statement, report, or certificate furnished by or on
behalf of Park Hill to the Company pursuant hereto or in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading or omits to state a
material fact necessary in order to provide the Company, DeYi and the Company
Shareholders with full and proper information as to the business, financial
condition, assets, liabilities, and results of operation of Park Hill and the
value of the properties or the ownership of Park Hill.
ARTICLE IV
Representations and Warranties of the Company and DeYi
In order to induce Park Hill and the Park Hill Controlling Shareholders
to enter into this Agreement and to consummate the transactions contemplated
hereby, the Company, the Company Controlling Shareholders and DeYi make the
representations and warranties set forth below to Park Hill and the Park Hill
Controlling Shareholders.
4.1 Organization. The Company is a British Virgin Islands
international business company duly organized, validly existing and in good
standing under the laws of the British Virgin Islands. DeYi is a People's
Republic of China limited liability company, duly organized, validly existing
and in good standing under the laws of the People's Republic of China. The
Company and DeYi are duly qualified to transact business as a foreign
corporation in all jurisdictions where the ownership or leasing of their
properties or the conduct of their respective business requires such
qualification except where the failure to so qualify would not have a Material
Adverse Effect on the Company or DeYi.
4.2 Authorization; Enforceability. The Company and DeYi have the
capacity to execute, deliver and perform this Agreement. This Agreement and
all other documents executed and delivered by the Company and DeYi pursuant to
this Agreement have been duly executed and delivered and constitute the legal,
valid and binding obligations of the Company and DeYi, assuming the due
authorization, execution and delivery of this Agreement by Park Hill,
enforceable in accordance with their respective terms, except to the extent
that their enforcement is limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of creditors' rights
generally and by general principals of equity.
4.3 No Violation or Conflict. To the Knowledge of the Company and
DeYi, the execution, delivery and performance of this Agreement and the other
documents contemplated hereby by the Company and DeYi, and the consummation by
the Company and DeYi of the transactions contemplated hereby: (a) do not
violate or conflict with any provision of law or regulation (whether federal,
state or local), or any writ, order or decree of any court or governmental or
regulatory authority, or any provision of the Company's memorandum and
articles of association or DeYi's operating agreement; and (b) do not and will
not, with or without the passage of time or the giving of notice, result in
the breach of, or constitute a default (or an event that with notice or lapse
of time or both would become a default), cause the acceleration of
performance, give to others any right of termination, amendment, acceleration
or cancellation of or require any consent under, or result in the creation of
any lien, charge or encumbrance upon any property or assets of the Company or
DeYi pursuant to any instrument or agreement to which the Company or DeYi is a
party or by which the Company or DeYi or their respective properties may be
bound or affected, other than instruments or agreements as to which consent
shall have been obtained at or prior to the Closing.
4.4 Consents of Governmental Authorities and Others. The Company and
Deyi have not obtained any consents in connection with the provisions of the
British Virgin Islands International Business Companies Act, or the laws of
the People's Republic of China. No consent, approval or authorization of, or
registration, qualification or filing with any federal, state or local
governmental or regulatory authority, or any other Person, is required to be
made by the Company or DeYi in connection with the execution, delivery or
performance of this Agreement by the Company or DeYi or the consummation by
them of the transactions contemplated hereby, excluding the execution,
delivery and performance of this Agreement by Park Hill.
4.5 Litigation. To the Knowledge of the Company and DeYi, there is no
Litigation pending or threatened before any court or by or before any
governmental or regulatory authority or arbitrator, (a) affecting the Company
or DeYi (as plaintiff or defendant) or (b) against the Company or DeYi
relating to the Company's Common Stock and DeYi's Membership Interests or the
transactions contemplated by this Agreement.
4.6 Brokers. Except for the engagement of Westminster Securities
Corporation to serve as placement agent for the Financing, the Company and
DeYi have not employed any broker or finder, and have not incurred and will
not incur any broker's, finder's, investment banking or similar fees,
commissions or expenses in connection with the transactions contemplated by
this Agreement or the Exchange Documents.
4.7 Compliance. To the Knowledge of the Company and DeYi, the Company
and DeYi are in compliance with all federal, state, local and foreign laws,
ordinances, regulations, judgments, rulings, orders and other requirements
applicable to the Company and DeYi and their assets and properties, except
where such noncompliance would not have a Material Adverse Effect on the
Company or DeYi. To the Knowledge of the Company and DeYi, they are not
subject to any judicial, governmental or administrative inquiry,
investigation, order, judgment or decree.
4.8 Charter, Bylaws and Corporate Records. Park Hill has been
provided with true, correct and complete copies of (a) the memorandum and
articles of association of the Company, as amended and in effect on the date
hereof, (b) the articles of organization and operating agreement of DeYi, as
amended and in effect on the date hereof, and (c) the minute books of the
Company and DeYi (containing all corporate proceedings from the date of
incorporation). Such minute books contain accurate records of all meetings
and other corporate actions of the board of directors, committees of the board
of directors, incorporators and shareholders of the Company and DeYi from
their date of their incorporation to the date hereof which were memorialized
in writing.
4.9 Capitalization.
(a) The Company. As of the date of this Agreement, the authorized
capital stock of the Company consists of 50,000 shares of Polara Common Stock.
The Company has issued and outstanding 50,000 shares of Common Stock. The
outstanding Polara Common Stock constitutes one hundred percent (100%) of the
issued and outstanding capital stock of the Company. The outstanding Polara
Common Stock is owned by its stockholders in the amounts set forth on Schedule
2.1. All of the outstanding Polara Common Stock have been duly authorized,
are validly issued and outstanding, and are fully paid and non-assessable.
There are no dividends which have accrued or been declared but are unpaid on
the capital stock of the Company.
(b) Deyi. As of the date of this Agreement, Deyi has issued and
outstanding $10,000,000 in DeYi Membership Interests. The outstanding DeYi
Membership Interests constitute one hundred percent (100%) of the issued and
outstanding DeYi Membership Interests. All of the outstanding DeYi Membership
Interests have been duly authorized, are validly issued and outstanding, and
are fully paid and non-assessable. There are no dividends which have accrued
or been declared but are unpaid on the DeYi Membership Interests.
4.10 Subsidiaries. Except for DeYi, the Company has no Subsidiaries or
Investments. DeYi has no Subsidiaries or Investments.
4.11 Rights, Warrants, Options. There are no outstanding: (a)
securities or instruments convertible into or exercisable for any of the
capital stock or other equity interests of the Company or DeYi; (b) options,
warrants, subscriptions or other rights to acquire capital stock or other
equity interests of the Company or DeYi; or (c) commitments, agreements or
understandings of any kind, including employee benefit arrangements, relating
to the issuance or repurchase by the Company or DeYi of any capital stock or
other equity interests of the Company or DeYi, or any instruments convertible
or exercisable for any such securities or any options, warrants or rights to
acquire such securities.
4.12 Conduct of Business. Since September 30, 2005, the Company and
DeYi have conducted their businesses in the ordinary and usual course
consistent with past practices and there has not occurred any Material Adverse
Effect in the condition (financial or otherwise), results of operations,
properties, assets, liabilities, or business of DeYi. Since September 30,
2005, neither the Company nor DeYi has (a) amended their memorandum and
articles of association or their operating agreement; (b) issued, sold or
authorized for issuance or sale, shares of any class of their securities
(including, but not limited to, by way of stock split or dividend) or any
subscriptions, options, warrants, rights or convertible securities or entered
into any agreements or commitments of any character obligating it to issue or
sell any such securities; (c) redeemed, purchased or otherwise acquired,
directly or indirectly, any shares of their capital stock or any option,
warrant or other right to purchase or acquire any such capital stock; (d)
suffered any damage, destruction or loss, whether or not covered by insurance,
which has had or could reasonably be expected to have a Material Adverse
Effect on any of their properties, assets, or business; (e) granted or made
any mortgage or pledge or subjected themselves or any of their properties or
assets to any lien, charge or encumbrance of any kind; (f) made or committed
to make any capital expenditures in excess of $100,000; (g) become subject to
any Guaranty; (h) granted any increase in the compensation payable or to
become payable to directors, officers or employees (including, without
limitation, any such increase pursuant to any severance package, bonus,
pension, profit-sharing or other plan or commitment); (i) entered into any
agreement which would be a material agreement, or amended or terminated any
existing material agreement; (j) to the Knowledge of the Company or DeYi, been
named as a party in any Litigation, or become the focus of any investigation
by any government or regulatory agency or authority; (k) declared or paid any
dividend or other distribution with respect to its capital stock; or (l) to
the Knowledge of the Company or DeYi, experienced any other event or condition
of any character which has had, or could reasonably be expected to have, a
Material Adverse Effect on the Company or DeYi.
4.13 Taxes.
(a) The Company and DeYi have properly prepared and timely filed all
Tax Returns relating to any and all Taxes concerning or attributable to it or
its operations for any period ending on or before the Closing Date and such
Tax Returns are true, correct and complete in all material respects and have
been completed in accordance with applicable Laws.
(b) All Taxes (whether or not shown on any Tax Return) payable by the
Company and DeYi have been fully and timely paid. The cash reserves or
accruals for Taxes provided in the books and records of the Company and DeYi
with respect to any period for which Tax Returns have not yet been filed or
for which Taxes are not yet due and owing have been established in accordance
with GAAP and are, or prior to the Closing Date, will be, sufficient for all
unpaid Taxes of the Company and DeYi through and including the Closing Date
(including, without limitation, with respect to any Taxes resulting from the
transactions contemplated by this Agreement).
(c) Neither the Company, DeYi nor any Person on behalf of or with
respect to the Company or DeYi have executed or filed any agreements or
waivers extending any statute of limitations on or extending the period for
the assessment or collection of any Tax. No power of attorney on behalf of
the Company and DeYi with respect to any Tax matter is currently in force.
(d) The Company and DeYi are not parties to any Tax-sharing agreement
or similar arrangement with any other party (whether or not written), and the
Company and DeYi have not assumed any Tax obligations of, or with respect to
any transaction relating to, any other Person, or agreed to indemnify any
other Person with respect to any Tax.
(e) No Tax Return concerning or relating to the Company and DeYi or
their operations has ever been audited by a government or taxing authority,
nor is any such audit in process or pending, and the Company and DeYi have not
been notified of any request for such an audit or other examination. To the
Knowledge of the Company and DeYi, no claim has been made by a taxing
authority in a jurisdiction where Tax Returns concerning or relating to the
Company and DeYi, or their operations, have not been filed, that it is or may
be subject to taxation by that jurisdiction.
(f) The Company and DeYi have never been included in any consolidated,
combined, or unitary Tax Return.
(g) To the Knowledge of the Company and DeYi, the Company and DeYi
have complied in all material respects with all applicable Laws relating to
the payment and withholding of Taxes, and have duly and timely withheld from
employee salaries, wages and other compensation, and have paid over to the
appropriate taxing authorities, all amounts required to be so withheld and
paid over for all periods under all applicable laws.
(h) Neither the Company nor DeYi has (i) agreed to or is required to
make any adjustments pursuant to Section 481(a) of the Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company and DeYi, and the Company and DeYi have no
Knowledge that the IRS has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to the
business or operations of the Company and DeYi, (ii) executed or entered into
a closing agreement pursuant to Section 7121 of the Code or any predecessor
provision thereof or any similar provision of state, local or foreign law with
respect to the Company and DeYi or (iii) requested any extension of time
within which to file any Tax Return concerning or relating to the Company and
DeYi or their operations.
(i) To the Knowledge of the Company and DeYi, no property owned by the
Company and DeYi is (i) property required to be treated as being owned by
another Person pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, (ii) constitutes "tax-exempt use
property" within the meaning of Section 168(h)(1) of the Code or (iii) is
"tax-exempt bond financed property" within the meaning of Section 168(g) of
the Code.
(j) The Company and DeYi are not subject to any private letter ruling
of the IRS, or comparable rulings of other taxing authorities.
(k) The Company and DeYi do not own any interest in any entity that is
treated as a partnership for U.S. federal income Tax purposes, or would be
treated as a pass-through or disregarded entity for any Tax purpose.
(l) The Company and DeYi have not constituted either a "distributing
corporation" or a "controlled corporation" within the meaning of Section
355(a)(1)(A) of the Code in a distribution qualifying for tax-free treatment
under Section 355 of the Code (i) in the two years prior to the date of this
Agreement or (ii) in a distribution that could otherwise constitute part of a
"plan" or "series of transactions" (within the meaning of Section 355(e) of
the Code) in conjunction with this Agreement.
(m) The Company and DeYi have no elections in effect for U.S. federal
income Tax purposes under Sections 108, 168, 441, 472, 1017, 1033 or 4977 of
the Code.
4.14 Environmental Matters. No real property used by the Company or
DeYi presently or in the past has been used to manufacture, treat, store, or
dispose of any hazardous substance and such property is free of all such
substances such that the condition of the property is in compliance with
applicable Environmental Laws. To the Knowledge of the Company and DeYi, the
Company and DeYi are in compliance with all Environmental Laws applicable to
the Company or DeYi or their business as a result of any hazardous substance
utilized by the Company or DeYi in their businesses or otherwise placed at any
of the facilities owned, leased or operated by the Company or DeYi, or in
which the Company or DeYi have a contractual interest. The Company and DeYi
have not received any complaint, notice, order, or citation of any actual,
threatened or alleged noncompliance by the Company or DeYi with any
Environmental Laws, and to the Knowledge of the Company and DeYi, there is no
Litigation pending or threatened against the Company or DeYi with respect to
any violation or alleged violation of the Environmental Laws, and to the
Company and DeYi's Knowledge, there is no reasonable basis for the institution
of any such Litigation.
4.15 Financial Statements. Attached hereto as Exhibit B are the
Financial Statements. The Financial Statements (a) have been prepared in
accordance with the books of account and records of DeYi; (b) fairly present,
and are true, correct and complete statements in all material respects of
DeYi's financial condition and the results of its operations at the dates and
for the periods specified in those statements; and (c) have been prepared in
accordance with GAAP consistently applied with prior periods.
4.16 Absence of Undisclosed Liabilities. Other than as disclosed by
the Financial Statements of the Company and DeYi for the nine months ended
September 30, 0000, Xxxxxx and DeYi do not have any Liabilities. The Company
and DeYi do not have any Knowledge of any circumstances, conditions, events or
arrangements which may hereafter give rise to any Liabilities of the Company
or DeYi.
4.17 Employment Agreements; Employee Benefit Plans and Employee
Payments. The Company and DeYi are not parties to 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 either the Company or DeYi
currently has an obligation to provide benefits to any current or former
employee, officer, director, consultant or advisor of the Company
(collectively, "Benefit Plans"). Schedule 4.17 contains a true and correct
statement of the names, relationship with the Company and DeYi, present rates
of compensation (whether in the form of salary, bonuses, commissions, or other
supplemental compensation now or hereafter payable), and aggregate
compensation for the fiscal year ending December 31, 2005 of each director,
officer and employee of the Company and DeYi who makes in excess of $100,000.
Further, the Company and DeYi are not a party to any employment agreement
which could result in the payment to any current, former, future director,
employee, consultant or advisor of the Company or DeYi of any money or other
property or rights or accelerate or provide any other rights or benefits to
any such employee, director, consultant or advisor 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.
4.18 Intellectual Property.
(a) Schedule 4.18 contains a true and correct statement of all of the
Intellectual Property owned by the Company and DeYi. The Company and DeYi
have taken all necessary and desirable action to maintain the validity of any
patent and trademark registration.
(b) The Company and DeYi have not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any intellectual
property rights of third parties, and have not received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Company or DeYi
must license or refrain from using any intellectual property rights of any
third party). To the Knowledge of the Company and DeYi, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any of the Intellectual Property rights.
(c) Neither the Company nor DeYi has granted any license, agreement,
or other permission to any third party with respect to any of the Intellectual
Property.
(d) With respect to each item of Intellectual Property, the Company
and DeYi possess all right, title, and interest in and to the Intellectual
Property free and clear of any Security Interest, license or other
encumbrance;
(e) The Intellectual Property is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(f) No action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which challenges the
legality, validity, enforceability, use, or ownership of the Intellectual
Property; and
(g) Neither the Company nor DeYi has agreed to indemnify any Person
for or against any interference, infringement, misappropriation, or other
conflict with respect to the Intellectual Property.
4.19 Properties. The Company and Deyi have good, clear and marketable
title to all the tangible properties and tangible assets reflected in the
balance sheet dated September 30, 2005 as being owned by the Company or Deyi
or acquired after the date thereof which are, individually or in the
aggregate, material to Deyi'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.
4.20 Disclosure. No representation or warranty of the Company, the
Company Controlling Shareholders or DeYi contained in this Agreement, and no
statement, report, or certificate furnished by or on behalf of the Company,
the Company Controlling Shareholders or DeYi to Park Hill and the Park Hill
Controlling Shareholders pursuant hereto or in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading or omits to state a
material fact necessary in order to provide Park Hill and the Park Hill
Controlling Shareholders with full and proper information as to the business,
financial condition, assets, liabilities, or results of operation of the
Company and DeYi and the value of the properties or the ownership of the
Company or DeYi.
ARTICLE V
Additional Agreements
5.1 Survival of the Representations and Warranties. The
representations and warranties and covenants set forth in Article III and
Article IV of this Agreement shall survive the Closing until the expiration of
twenty-four (24) months from the Closing Date. No claim for indemnity with
respect to breaches of representations and warranties may be brought by any
party hereto, other than a claim for fraud or intentional misrepresentation,
after expiration of the applicable survival period therefore as set forth in
this Section 5.1.
5.2 Investigation. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. All statements contained herein or in any
schedule, certificate, exhibit, list or other document required to be
delivered pursuant hereto, shall be deemed to be representations and
warranties for purposes of this Agreement; provided, that any knowledge or
materiality qualifications contained herein shall be applicable to such other
documents.
5.3 The Company and DeYi Indemnification. Park Hill and the Park Hill
Controlling Shareholders, jointly and severally, agree to indemnify and hold
harmless the Company and DeYi, and each of the Company and DeYi's directors,
officers, employees, Affiliates and agents from and against any loss, claim,
liability, cost, expense or other damages (including reasonable legal fees and
expenses)(a "Company/Deyi Loss") which are caused by or arise out of: (a) any
breach or default in the performance by Park Hill of any covenant or agreement
made by Park Hill in this Agreement; (b) any breach of any representation or
warranty made by Park Hill in this Agreement; and (c) any and all Litigation
incident to any of the foregoing.
5.4 Limitations on the Company and DeYi's Indemnification from Park
Hill. Notwithstanding anything contained herein to the contrary, the Company
and DeYi shall not be entitled to indemnification from Park Hill or the Park
Hill Controlling Shareholders for a Company/Deyi Loss under the provisions of
Section 5.3 hereof, unless and until the aggregate amount of all Company/DeYi
Losses under Section 5.3 shall have exceeded $10,000, in which event the
Company or DeYi shall be entitled to such indemnification for all of the
Company/Deyi Loss that exceeds $10,000 from Park Hill or the Park Hill
Controlling Shareholders; provided, that, the amount of any Company/Deyi Loss
for which indemnification is provided under Section 5.3 hereof shall be net of
any amounts recovered by the Company and DeYi under insurance policies with
respect to such Company/Deyi Loss from Park Hill or the Park Hill Controlling
Shareholders. The Company and DeYi shall in a timely fashion submit a claim
to its insurance carrier with respect to any Company/DeYi Loss from Park Hill
or the Park Hill Controlling Shareholders for which Park Hill and the Park
Hill Controlling Shareholders are obligated to provide indemnification to the
Company or DeYi hereunder. Indemnification from Park Hill or the Park Hill
Controlling Shareholders shall be limited to $200,000.
5.5 Park Hill's Indemnification for this Agreement. The Company, the
Company Controlling Shareholders and DeYi, jointly and severally, agree to
indemnify and hold harmless Park Hill, and its current and former directors,
officers, employees, Affiliates, agents and the Park Hill Controlling
Shareholders from and against any loss, claim, liability, cost, expense or
other damages (including reasonable legal fees and expenses)(a "Park Hill
Loss") which is caused by or arise out of: (a) any breach or default in the
performance by the Company, the Company Controlling Shareholders or DeYi of
any covenant or agreement made by the Company, the Company Controlling
Shareholders or DeYi in this Agreement; (b) any breach of any representation
or warranty made by the Company, the Company Controlling Shareholders or DeYi
in this Agreement; and (c) any and all Litigation incident to any of the
foregoing.
5.6 Limitations on Park Hill and the Park Hill Controlling
Shareholders Indemnification. Notwithstanding anything contained herein to
the contrary, Park Hill and the Park Hill Controlling Shareholders shall not
be entitled to indemnification for a Park Hill Loss under the provisions of
Section 5.5 hereof, unless and until the aggregate amount of all Park Hill
Losses under Section 5.5 shall have exceeded $10,000, in which event Park Hill
and the Park Hill Controlling Shareholders shall be entitled to such
indemnification for all Park Hill Losses that exceeds $10,000 from the Company
or DeYi; provided, that, the amount of any Park Hill Losses for which
indemnification is provided under Section 5.5 hereof shall be net of any
amounts recovered by Park Hill and the Park Hill Controlling Shareholders
under insurance policies with respect to such Park Hill Loss. Park Hill and
the Park Hill Controlling Shareholders shall in a timely fashion submit a
claim to its insurance carrier with respect to any Park Hill Losses for which
the Company or DeYi is obligated to provide indemnification to Park Hill and
the Park Hill Controlling Shareholders hereunder. Indemnification from the
Company or DeYi shall be limited to $200,000.
5.7 Indemnification of Park Hill, and its Officers, Directors and the
Park Hill Controlling Shareholders for the Financing. The Company, DeYi and
the Company Controlling Shareholders agree to indemnify and hold harmless Park
Hill, and its Officers, Directors and the Park Hill Controlling Shareholders,
and their affiliates, attorneys, and agents from and against any Park Hill
Losses which are caused by or arise out of the Financing, provided that such
Park Hill Loss is not the result of any prior acts of Park Hill's pre Exchange
officers and directors that occurred prior to the consummation of the
Exchange. Indemnification pursuant to this Section 5.7 shall have no
limitation.
5.8 Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement
is referred to herein as the "Indemnifying Party" and the other party or
parties claiming indemnity is referred to as the "Indemnified Party".
(a) An Indemnified Party under this Agreement shall, with respect to
claims asserted against such party by any third party, give written notice to
the Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement within thirty (30) calendar days of the receipt
of any written claim from any such third party, but not later than twenty (20)
days prior to the date any answer or responsive pleading is due, and with
respect to other matters for which the Indemnified Party may seek
indemnification, give prompt written notice to the Indemnifying Party of any
liability which might give rise to a claim for indemnity; provided, however,
that any failure to give such notice will not waive any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party
are materially prejudiced.
(b) The Indemnifying Party shall have the right, at its election, to
take over the defense or settlement of such claim by giving written notice to
the Indemnified Party at least fifteen (15) days prior to the time when an
answer or other responsive pleading or notice with respect thereto is
required. If the Indemnifying Party makes such election, it may conduct the
defense of such claim through counsel of its choosing (subject to the
Indemnified Party's approval of such counsel, which approval shall not be
unreasonably withheld), shall be solely responsible for the expenses of such
defense and shall be bound by the results of its defense or settlement of the
claim. The Indemnifying Party shall not settle any such claim without prior
notice to and consultation with the Indemnified Party, and no such settlement
involving any equitable relief or which might have an adverse effect on the
Indemnified Party may be agreed to without the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld). So long
as the Indemnifying Party is diligently contesting any such claim in good
faith, the Indemnified Party may pay or settle such claim only at its own
expense and the Indemnifying Party will not be responsible for the fees of
separate legal counsel to the Indemnified Party, unless the named parties to
any proceeding include both parties and representation of both parties by the
same counsel would be inappropriate. If the Indemnifying Party does not make
such election, or having made such election does not, in the reasonable
opinion of the Indemnified Party proceed diligently to defend such claim, then
the Indemnified Party may (after written notice to the Indemnifying Party), at
the expense of the Indemnifying Party, elect to take over the defense of and
proceed to handle such claim in its discretion and the Indemnifying Party
shall be bound by any defense or settlement that the Indemnified Party may
make in good faith with respect to such claim. In connection therewith, the
Indemnifying Party will fully cooperate with the Indemnified Party should the
Indemnified Party elect to take over the defense of any such claim.
(c) The parties agree to cooperate in defending such third party
claims and the Indemnified Party shall provide such cooperation and such
access to its books, records and properties as the Indemnifying Party shall
reasonably request with respect to any matter for which indemnification is
sought hereunder; and the parties hereto agree to cooperate with each other in
order to ensure the proper and adequate defense thereof.
With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying
Party upon the earlier to occur of: (i) the entry of a judgment against the
Indemnified Party and the expiration of any applicable appeal period, or if
earlier, five (5) days prior to the date that the judgment creditor has the
right to execute the judgment; (ii) the entry of an unappealable judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement
of the claim. Notwithstanding the foregoing, provided that there is no
dispute as to the applicability of indemnification, the reasonable expenses of
counsel to the Indemnified Party shall be reimbursed on a current basis by the
Indemnifying Party if such expenses are a liability of the Indemnifying Party.
With regard to other claims for which indemnification is payable hereunder,
such indemnification shall be paid promptly by the Indemnifying Party upon
demand by the Indemnified Party.
ARTICLE VI
Closing; Deliveries; Conditions Precedent
6.1 Closing; Effective Date. All proceedings taken and all documents
executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and
executed.
6.2 Deliveries
(a) At Closing, Park Hill shall deliver the following documents to the
Company:
(1) the certificates representing the Exchange Consideration;
(2) consent minutes from the Board of Directors appointing at
least three directors and officers, to be designated by the Company not less
than 20 days prior to the Closing Date, to the Board of Directors of Park Hill
and as officers of Park Hill and the written resignations of Park Hill's
officers and directors from all of their positions as Park Hill's officers
and/or directors, all to be effective upon the Effective Date;
(3) the minute books of Park Hill, including its corporate
seals, unissued stock certificates, stock registers, Articles of
Incorporation, Bylaws and corporate minutes approving the terms and
conditions of this Agreement and the other documents contemplated hereby and
the transactions contemplated hereby and thereby;
(4) certificates issued by the Secretary of State of Nevada, as
of a recent date, as to the good standing of Park Hill in its jurisdiction of
incorporation and certifying its Articles of Incorporation;
(5) certificates dated the Closing Date, of an officer of Park
Hill setting forth that authorizing resolutions were adopted by Park Hill's
Board of Directors, approving the terms and conditions of this Agreement and
the other documents contemplated hereby and the transactions contemplated
hereby and thereby;
(6) the favorable opinion of counsel to Park Hill, dated the
Closing Date, in a form reasonably acceptable to the Company and DeYi, and
(7) the certificates referred to in Section 6.3(d);
(8) such other documents and instruments as the Company and DeYi
may reasonably request; and
(9) the Escrow Shares which shall be delivered to the Escrow
Agent and an executed copy of the Escrow Agreement.
(b) At Closing, the Company, the Company Shareholders and DeYi shall
deliver the following documents to Park Hill:
(1) the Certificates of the Company's Common Stock to be
delivered to Park Hill;
(2) a certificate from the Registrar of the British Virgin
Islands, as of a recent date, as to the good standing of the Company and
certifying its Memorandum and Articles of Association;
(3) certificates dated the Closing Date, of an officer of the
Company and DeYi setting forth that authorizing resolutions were adopted by
each of the Company's and DeYi's Board of Directors, approving the terms and
conditions of this Agreement and the other documents contemplated hereby and
the transactions contemplated hereby and thereby;
(4) the favorable opinions of counsel to the Company and DeYi
(including counsel from both the British Virgin Islands and People's Republic
of China), dated the Closing Date, in a form reasonably acceptable to Park
Hill;
(5) the financial statements set forth in Section 6.4(g);
(6) the certificates referred to in Section 6.4(d);
(7) such other documents and instruments as Park Hill may
reasonably request; and
(8) an executed copy of the Escrow Agreement.
6.3 Conditions Precedent to the Obligations of the Company and DeYi.
Each and every obligation of the Company and DeYi to consummate the
transactions described in this Agreement and any and all liability of the
Company and DeYi to Park Hill shall be subject to the fulfillment on or before
the Closing Date of the following conditions precedent:
(a) Representations and Warranties True. Each of the representations
and warranties of Park Hill contained herein or in any certificate or other
document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as of the Closing Date with the same force and effect as though made
on and as of such date.
(b) Performance. Park Hill shall have performed and complied in all
material respects with all of the agreements, covenants and obligations
required under this Agreement to be performed or complied with by them on or
prior to the Closing Date.
(c) No Material Adverse Change. Except as expressly permitted or
contemplated by this Agreement, no event or condition shall have occurred
which has adversely affected or may adversely affect in any respect the
condition (financial or otherwise) of Park Hill between the date of execution
of this Agreement and the Closing Date.
(d) Park Hill's Certificates. Park Hill shall have delivered to the
Company and DeYi a certificate dated the Closing Date, certifying that the
conditions specified in Section 6.3(a), (b) and (c) above have been fulfilled
and as to such other matters as the Company and DeYi may reasonably request.
(e) Appointment. At least three directors and officers, to be
designated by the Company not less than 20 days prior to the Closing Date,
shall have been appointed to the Board of Directors of Park Hill and as
officers of Park Hill effective at the Closing Date.
(f) Consents. Park Hill shall have obtained all authorizations,
consents, waivers and approvals as may be required to consummate the
transactions contemplated by this Agreement.
(g) Due Diligence Review. Each of the Company and DeYi shall have
completed their due diligence investigation of Park Hill to its satisfaction,
in its sole and absolute discretion.
(h) Increase in Authorized Shares of Common Stock Effective. Prior to
the Closing Date, Park Hill shall have filed with the Secretary of State of
Nevada a Certificate of Amendment to its Articles of Incorporation, and all
other necessary documentation, to effectuate an increase in the authorized
number of shares of Park Hill Common Stock from 25,000,000 to 200,000,000.
(i) Filing of Schedule 14f-1. Park Hill shall, not less than 10 days
prior to the Closing Date, have filed a Schedule 14f-1 with the Commission and
transmit to holders of record of securities of Park Hill who would be entitled
to vote at a meeting for election of directors, information required pursuant
to Rule 14f-1 of the Exchange Act. The Schedule 14f-1 shall have indicated
that the directors to be appointed to the Board of Directors of Park Hill, as
set forth in Section 6.3(e) shall be effective at the Closing Date.
(j) Name Change. Prior to the Closing Date, Park Hill shall have
filed with the Secretary of State of Nevada a Certificate of Amendment to its
Articles of Incorporation to change its name to China Textile Development,
Inc., or such other available name as specified in writing by the Company.
6.4 Conditions Precedent to the Obligations of Park Hill. Each and
every obligation of Park Hill to consummate the transactions described in this
Agreement and any and all liability of Park Hill to the Company and DeYi shall
be subject to the fulfillment on or before the Closing Date of the following
conditions precedent:
(a) Representations and Warranties True. Each of the representations
and warranties of the Company, the Company Controlling Shareholders and DeYi
contained herein or in any certificate or other document delivered pursuant to
this Agreement or in connection with the transactions contemplated hereby
shall be true and correct in all material respects as of the Closing Date with
the same force and effect as though made on and as of such date.
(b) Performance. The Company and DeYi shall have performed and
complied in all material respects with all of the agreements, covenants and
obligations required under this Agreement to be performed or complied with by
it on or prior to the Closing Date.
(c) No Material Adverse Change. Except as expressly permitted or
contemplated by this Agreement, no event or condition shall have occurred
which has adversely affected or may adversely affect in any respect the
condition (financial or otherwise) of the Company and DeYi between the date of
execution of this Agreement and the Closing Date.
(d) The Company, the Company Controlling Shareholders and DeYi's
Certificates. The Company, the Company Controlling Shareholders and DeYi shall
each have delivered a certificate addressed to Park Hill, dated the Closing
Date, certifying that the conditions specified in Sections 6.4(a), (b) and (c)
above have been fulfilled.
(e) Consents. The Company and DeYi shall have obtained all
authorizations, consents, waivers and approvals as may be required to
consummate the transactions contemplated by this Agreement, including but not
limited to, those with respect to any Material Agreement of the Company and
DeYi.
(f) Due Diligence Review. The Park Hill shall have completed its due
diligence investigation of the Company and DeYi to its satisfaction, in its
sole and absolute discretion.
(g) Consolidated Financial Statements. Not less than 10 days prior to
the Closing Date, the Company and Deyi shall have delivered to Park Hill (i)
the Company and Deyi's audited consolidated balance sheets, statement of
operations, changes in stockholders equity and cash flow as of and for the
fiscal years ended December 31, 2005 and 2004 with an unqualified opinion and
(ii) the Company and Deyi's unaudited consolidated balance sheets, statement
of operations, changes in stockholders equity and cash flow as of and for the
nine month periods ended September 30, 2005 and September 30, 2004. The
Company and DeYi shall have their audit firm review its unaudited consolidated
balance sheets, statement of operations, changes in stockholders equity and
cash flow as of and for the nine-month period ended September 30, 2005 and
2004. The financial statements described above in this Section 6.4(g) shall:
(a) have been prepared in accordance with the books of account and records of
the Company and DeYi; (b) fairly present, and are true, correct and complete
statements in all material respects of the Company and DeYi's financial
condition and the results of its operations at the dates and for the periods
specified in those statements; (c) have been prepared in accordance with
United States GAAP consistently applied with prior periods; and (d) each line
item contained in the audited consolidated balance sheets, statement of
operations, changes in stockholders equity and cash flow as of and for the
fiscal year ended December 31, 2004 and the unaudited consolidated balance
sheets, statement of operations, changes in stockholders equity and cash flow
as of and for the nine month periods ended September 30, 2005 and September
30, 2004 that have been reviewed by their audit firm shall contain no material
variances to the Financial Statements attached hereto as Exhibit B.
6.5 Best Efforts. Subject to the terms and conditions provided in
this Agreement, each of the parties shall use their respective best efforts in
good faith to take or cause to be taken as promptly as practicable all
reasonable actions that are within its power to cause to be fulfilled those of
the conditions precedent to its obligations or the obligations of the other
parties to consummate the transactions contemplated by this Agreement that are
dependent upon its actions, including obtaining all necessary consents,
authorizations, orders, approvals and waivers.
6.6 Termination. This Agreement and the transactions contemplated
hereby may be terminated (i) at any time by the mutual consent of the parties
hereto; (ii) by the Company and DeYi or by Park Hill, if the Closing has not
occurred on or prior to April 15, 2006 (such date of termination being
referred to herein as the "Termination Date"), provided the failure of the
Closing to occur by such date is not the result of the failure of the party
seeking to terminate this Agreement to perform or fulfill any of its
obligations hereunder; (iii) by the Company or Deyi at any time at or prior to
Closing in its sole discretion if (1) any of the representations or warranties
of Park Hill in this Agreement are not in all material respects true, accurate
and complete or if Park Hill breaches in any material respect any covenant
contained in this Agreement, provided that such misrepresentation or breach is
not cured within ten (10) business days after notice thereof, but in any event
prior to the Termination Date or (2) any of the conditions precedent to Park
Hill's obligations to conduct the Closing have not been satisfied by the date
required thereof; (iv) by Park Hill at any time at or prior to Closing in its
sole discretion if (1) any of the representations or warranties of the
Company, the Company Controlling Shareholders or DeYi in this Agreement are
not in all material respects true, accurate and complete or if the Company or
DeYi breaches in any material respect any covenant contained in this
Agreement, provided that such misrepresentation or breach is not cured within
ten (10) business days after notice thereof, but in any event prior to the
Termination Date or (2) any of the conditions precedent to the Company or
DeYi's obligations to conduct the Closing have not been satisfied by the date
required thereof. If this Agreement is terminated pursuant to this Section
6.6, written notice thereof shall promptly be given by the party electing such
termination to the other party and, subject to the expiration of the cure
periods provided in clauses (iii) and (iv) above, if any, this Agreement shall
terminate without further actions by the parties and no party shall have any
further obligations under this Agreement. Notwithstanding the preceding
sentence, the respective obligations of the parties under Sections 8.1 shall
survive the termination of this Agreement.
6.7 Registration Rights.
(a) Piggy Back Rights. If, at any time after the Closing Date,
Park Hill shall determine to proceed with the preparation and filing of a
registration statement pursuant to the Securities Act in connection with the
proposed offer and sale or resale of any of its securities by it or any of its
security holders (other than a registration statement on Form X-0, X-0, or
other limited purpose form), the Company will give written notice of its
determination to all of the holders of shares of Common Stock of Park Hill who
were holders as of the business day prior to the Closing Date ("Park Hill
Shareholders"). Upon receipt of a written request from any Park Hill
Shareholder, within thirty (30) days after receipt of any such notice from
Park Hill, Park Hill will cause all such shares of Park Hill Common Stock then
owned by such Park Hill Shareholders and requested by such Park Hill
Shareholders to be included in such registration statement, all to the extent
required to permit the sale or other disposition by such Park Hill Shareholder
of such shares. The obligation of the Company under this Section 6.7(a) shall
be limited as to the first registration statement filed by the Company. In the
event that (i) the Financing, in any amount, is not consummated and there is
no registration statement filed in connection with the Financing, (ii) the
Commission determines that any of Park Hill's Shareholders are not entitled to
registration of some or all of their shares of Park Hill Common Stock in the
first or any subsequent registration statement filed by the Company, or (iii)
if the Company has been advised by counsel or underwriters to the Company that
the registration of any or all such shares of Park Hill Common Stock then
owned by such Park Hill Shareholders and requested by such Park Hill
Shareholders to be included in such registration statement would have a
Material Adverse Effect, or would be improper in view of a proposed financing,
reorganization, recapitalization, merger, consolidation, or similar
transaction involving the Company, the registration rights pursuant to this
Section 6.7 shall continue until all such shares of Park Hill Common Stock
then owned by such Park Hill Shareholders are registered. Park Hill will
notify each Park Hill Shareholder of the date of effectiveness of any
registration statement in which such Park Hill Common Stock is registered.
(b) Expenses. All expenses incurred by the Company in connection with
the registration of such securities pursuant to this Section 6.7 shall be
borne by the Company.
ARTICLE VII
Covenants
7.1 Financing. Immediately after the Closing Date, Park Hill (post
Exchange) shall engage in an offering of its securities pursuant to which
Westminster Securities Corporation shall serve as placement agent. In the
Financing, Park Hill shall attempt to raise not less than $5,000,000 among
private investors on terms and conditions acceptable to Park Hill (post
Exchange) in its sole and absolute discretion.
7.2 General Confidentiality. Each of the Parties will treat and hold
as such all of the Confidential Information of the other Parties, refrain from
using any of the Confidential Information except in connection with this
Agreement, and unless there is a closing on the Exchange and the Financing,
deliver promptly to the owner of such Confidential Information or destroy, at
the request and option of the owner of the Confidential Information, all
tangible embodiments (and all copies) of the Confidential Information which
are in its possession. In the event that any of the Parties is requested or
required (by oral question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, that Party will
notify the affected Party promptly of the request or requirement so that the
affected Party may seek an appropriate protective order or waive compliance
with the provisions of this Section 7.2. If, in the absence of a protective
order or the receipt of a waiver hereunder, any of the Parties is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, that Party may disclose the
Confidential Information to the tribunal; provided, however, that the
disclosing Party shall use its commercially reasonable efforts to obtain, at
the request of the affected Party, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the affected Party shall designate.
The foregoing provisions shall not apply to any Confidential Information which
is generally available to the public immediately prior to the time of
disclosure.
7.3 Tax Treatment. Neither Park Hill, the Company, the Company
Shareholders or DeYi will knowingly take any action, written or otherwise,
which would result in the transactions contemplated by this Agreement not
being accounted for as tax-free exchange under the Internal Revenue Code.
7.4 General. In case at any time after the Closing Date any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Article V).
ARTICLE VIII
Miscellaneous
8.1 Notices. Any notice, demand, claim or other communication under
this Agreement shall be in writing and delivered personally or sent by
certified mail, return receipt requested, postage prepaid, or sent by
facsimile or prepaid overnight courier to the parties at the addresses as
follows (or at such other addresses as shall be specified by the parties by
like notice):
If to Park Hill: Park Hill Capital III, Corp.
X.X. Xxx 000000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
With a copy to: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx & Associates, P.C.
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
If to the Company,
The Company Shareholders or
DeYi: Polara Global Limited
Deyi Fashions Cloths Co., Ltd.
Xx X 00, 0/X, Xxxxxxxx Xxxx
2299 West Yan An Rd.
Shanghai, China
Attn: Xxx Xx Xxxx, Chairman
With a copy to: Xxxxxx X. Xxxxxxxxx, P.C.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Such notice shall be deemed delivered upon receipt against
acknowledgment thereof if delivered personally, on the fifth business day
following mailing if sent by certified mail, upon transmission against
confirmation if sent by facsimile and on the next business day if sent by
overnight courier.
8.2 Entire Agreement; Incorporation. This Agreement and the documents
and instruments and other agreements among the parties hereto as contemplated
by or referred to herein contain every obligation and understanding between
the parties relating to the subject matter hereof and merges all prior
discussions, negotiations, agreements and understandings, both written and
oral, if any, between them, and none of the parties shall be bound by any
conditions, definitions, understandings, warranties or representations other
than as expressly provided or referred to herein. All schedules, exhibits and
other documents and agreements executed and delivered pursuant hereto are
incorporated herein as if set forth in their entirety herein.
8.3 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, heirs,
personal representatives, legal representatives, and permitted assigns.
8.4 Assignment. This Agreement may not be assigned by any party
without the written prior consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
permitted assigns.
8.5 Waiver and Amendment. Any representation, warranty, covenant,
term or condition of this Agreement which may legally be waived, may be
waived, or the time of performance thereof extended, at any time by the party
hereto entitled to the benefit thereof, and any term, condition or covenant
hereof (including, without limitation, the period during which any condition
is to be satisfied or any obligation performed) may be amended by the parties
thereto at any time. Any such waiver, extension or amendment shall be
evidenced by an instrument in writing executed on behalf of the party against
whom such waiver, extension or amendment is sought to be charged. No waiver
by any party hereto, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of such party's rights
under such provisions at any other time or a waiver of such party's rights
under any other provision of this Agreement. No failure by any party thereof
to take any action against any breach of this Agreement or default by another
party shall constitute a waiver of the former party's right to enforce any
provision of this Agreement or to take action against such breach or default
or any subsequent breach or default by such other party.
8.6 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any
Person other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement, except as otherwise
provided herein.
8.7 Severability. In the event that any one or more of the provisions
contained in this Agreement, or the application thereof, shall be declared
invalid, void or unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall remain in full force and effect and the
application of such provision to other Persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto. The
parties further agree to replace such invalid, void or unenforceable provision
with a valid and enforceable provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid, void or
unenforceable provision.
8.8 Expenses. Except as otherwise provided herein, each party agrees
to pay, without right of reimbursement from the other party, the costs
incurred by it incident to the performance of its obligations under this
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, costs incident to the preparation of this
Agreement, and the fees and disbursements of counsel, accountants and
consultants employed by such party in connection herewith.
8.9 Headings. The table of contents and the section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of any provisions of this Agreement.
8.10 Other Remedies; Injunctive Relief. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
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 seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity. In any action at law or suit in equity to
enforce this Agreement or the rights of the parties hereunder, the prevailing
party in any such action or suit shall be entitled to receive a reasonable sum
for its attorneys' fees and all other reasonable costs and expenses incurred
in such action or suit.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be deemed valid and binding.
8.12 Remedies Exclusive. Except in the case of fraud or equitable
remedies expressly provided for herein, the parties acknowledge and agree that
the indemnification provisions set forth in Article V of this Agreement
constitute the parties' sole and exclusive remedy with respect to any and all
claims relating to the transactions contemplated by this Agreement.
8.13 Governing Law. This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of Nevada,
without reference to the choice of law principles thereof.
8.14 Jurisdiction and Venue. This Agreement shall be subject to the
exclusive jurisdiction of the courts of the state of Nevada. The parties to
this Agreement agree that any breach of any term or condition of this
Agreement shall be deemed to be a breach occurring in the State of Nevada by
virtue of a failure to perform an act required to be performed in the State of
Nevada and irrevocably and expressly agree to submit to the jurisdiction of
the courts of the State of Nevada for the purpose of resolving any disputes
among the parties relating to this Agreement or the transactions contemplated
hereby. The parties irrevocably waive, to the fullest extent permitted by
law, any objection which they may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this
Agreement, or any judgment entered by any court in respect hereof brought in
the State of Nevada, and further irrevocably waive any claim that any suit,
action or proceeding brought in the State of Nevada has been brought in an
inconvenient forum.
8.15 Participation of Parties. The parties hereby agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation,
holding, or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
8.16 Further Assurances. The parties hereto shall deliver any and all
other instruments or documents reasonably required to be delivered pursuant
to, or necessary or proper in order to give effect to, all of the terms and
provisions of this Agreement including, without limitation, all necessary
stock powers and such other instruments of transfer as may be necessary or
desirable to transfer ownership of the shares of Polara Common Stock.
8.17 Publicity. No public announcement or other publicity concerning
this Agreement or the transactions contemplated hereby shall be made without
the prior written consent of both Park Hill and the Company as to form,
content, timing and manner of distribution. Nothing contained herein shall
prevent any party from making any filing required by federal or state
securities laws or stock exchange rules.
8.18 No Solicitation. Except as previously agreed to in writing by the
other party, neither the Company, DeYi, or Park Hill shall authorize or permit
any of their officers, directors, agents, representatives, managers, members,
agents, 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, DeYi
or Park Hill, 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
Exchange or which would or could be expected to dilute the benefits to each of
the parties of the transactions contemplated hereby. The Company, DeYi, and
Park Hill 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.
[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.
PARK HILL CAPITAL III, CORP.
By:/S/______________________________________
Xxxxxxx X. Xxxxxxx, President
By:/S/______________________________________
Xxxxx X. Xxxxxx, Secretary
POLARA GLOBAL LIMITED
By:/S/_____________________________________
Xxx XxXxxx, Chairman
WUJIANG DEYI FASHIONS CLOTHES COMPANY LIMITED
By:/S/_____________________________________
Xxx XxXxxx, Chairman
POLARA GLOBAL LIMITED'S SHAREHOLDERS
/S/_____________________________________
Xxx XxXxxx
/S/_____________________________________
Itochu Textile Materials (ASIA) Limited
By:/S/__________________________________
/S/_____________________________________
Yao Yunzhen
/S/_____________________________________
Yao Yunhong
/S/_____________________________________
Ren Weirong
/S/_____________________________________
Tang Shengli
/S/_____________________________________
Realty Century Management Ltd.
By:/S/__________________________________
/S/_____________________________________
Good Result Investment Company Limited
By:/S/__________________________________
/S/_____________________________________
Ye Genzhen
/S/_____________________________________
Gain For Success Enterprises Limited
By:/S/__________________________________
/S/_____________________________________
Xxxxx Xxxxxxx
/S/_____________________________________
Ma Binliang
/S/_____________________________________
Ma Wenying
THE PARK HILL CONTROLLING SHAREHOLDERS
/S/______________________________________
Xxxx X. X'Xxxx
/S/______________________________________
Xxxxxxx X. Xxxxxxx
/S/______________________________________
Xxxxx Xxxxxx
EXHIBIT A
ESCROW AGREEMENT
See exhibit 99.2
EXHIBIT B
FINANCIAL STATEMENTS
SCHEDULE 2.1
POLARA COMMON STOCK SHAREHOLDERS
NAME OF SHAREHOLDER SHARES HELD PARK HILL SHARES
XXX XXXXXX 16,000 23,626,800
ITOCHU TEXTILE MATERIALS
(ASIA) LIMITED 5,000 7,383,400
YAO YUNZHEN 5,000 7,383,400
YAO YUNHONG 5,000 7,383,400
REN WEIRONG 5,000 7,383,400
TANG SHENGLI 5,000 7,383,400
REALTY CENTURY
MANAGEMENT LTD. 1,800 2,658,024
GOOD RESULT INVESTMENT
COMPANY LIMITED 1,800 2,658,024
YE GENZHEN 1,000 1,476,680
GAIN FOR SUCCESS
ENTERPRISES LIMITED 1,000 1,476,680
XXXXX XXXXXXX 1,600 2,362,688
MA BINLIANG 900 1,329,012
MA WENYANG 900 1,329,012
TOTAL 50,000
SCHEDULE 3.5
Park Hill issued 350,000 shares on November 9, 2005.
SCHEDULE 3.14
LIABILITIES OF PARK HILL
Obligations to Xxxxxxxxx & Associates, P.C. in connection with its Engagement
Agreement
SCHEDULE 3.19
MATERIAL AGREEMENTS
Park Hill's Engagement of Xxxxxxxxx & Associates, P.C.
SCHEDULE 4.17
THE COMPANY AND DEYI'S EMPLOYMENT AGREEMENTS, EMPLOYEE BENEFIT PLANS AND
EMPLOYEE PAYMENTS
None.
SCHEDULE 4.18
THE COMPANY AND DEYI'S INTELLLECTUAL PROPERTY
TRADEMARK REGISTRATION No. 1810477
Verified Specialize In (Range: No. 24 )
Lining (Textile); Satin; Textile Fiber Fabric; Plain Stitch fabric
(fiber); light fabric; Artificial Fiber Fabric; Silk (fabric); Velvet;
Printing Cotton; Fabric; (Specialize in above items)
Register: WUJIANG DEYI FASHION CLOTHS CO.,LTD
Register Location: SHENGZE TOWN WUJIANG CITY JIANGSU PROVINCE
Validity: 2002-JUL-21-2012-JUL-20
APPROVED BY:
THE INTELLECTUAL PROPERTY BUREAU OF
THE CUSTOMS DEPARTMENT OF
