SHARE EXCHANGE AGREEMENT
Exhibit
2.1
EXECUTION
COPY
This Share Exchange Agreement
(“Agreement”), dated and effective as of April 30, 2010 (the
“Effective Date”), is entered into by and among China Dongfang Healthcare Group
Inc., a Nevada corporation (the “Company”), Elegant Capital Holdings Limited, a
British Virgin Islands business company (“Elegant Capital”), Daily Fortune
Investments Limited, a British Virgin Islands business company (“Daily
Fortune”), Eastern Well Holdings Limited, a British Virgin Islands business
company (“Eastern Well”), Good Praise Holdings Limited, a British Virgin Islands
business company (“Good Praise”), and Winmark Group Limited, a British Virgin
Islands business company (“Winmark”).
BACKGROUND
WHEREAS, Elegant Capital,
Eastern Well, Good Praise and Daily Fortune (each, a “Winmark Shareholder” and,
collectively, the “Winmark Shareholders”) together own all of the issued and
outstanding shares of capital stock of Winmark;
WHEREAS, the Company desires
to acquire from the Winmark Shareholders, and the Winmark Shareholders desire to
sell to the Company, all of the outstanding shares of capital stock of Winmark
through an exchange (the “Share Exchange”) of the Company’s common stock,
$0.0001 par value, for all of the outstanding shares of capital stock of
Winmark. The Company further desires Winmark and each of the Winmark
Shareholders to make certain representations and warranties respecting itself
and the Share Exchange, and Winmark and each of the Winmark Shareholders desires
to make such representations and warranties.
WHEREAS, it is the intention
of the parties that the Share Exchange shall qualify as a transaction in
securities exempt from registration or qualification under the United States
Securities Act of 1933, as amended (“Securities Act”), and under the applicable
securities laws of each jurisdiction where the Company and the Winmark
Shareholders reside.
NOW, THEREFORE, in consideration of
the mutual covenants, agreements, representations and warranties contained in
this Agreement, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE
I
THE
SHARE EXCHANGE
Section
1.1 Share
Exchange
(a) On
the Effective Date, and subject to the terms and conditions set forth in this
Agreement, the Winmark Shareholders shall sell, assign, transfer and exchange
(the “Exchange”) to the Company, free and clear of all liens, rights (including
without limitation rights of first refusal and offer), security interests,
pledges, options, mortgages, easements, covenants, restrictions, reservations,
conditional sales, options, prior assignments, or other encumbrances, claims,
burdens or charges of any nature (collectively, “Encumbrances”), all of the
issued and outstanding shares and share capital of Winmark, and all rights to
receive shares or share capital of Winmark (collectively, the “Winmark
Shares”).
(b) On
the Effective Date, and subject to the terms and conditions set forth in this
Agreement, and as consideration for the Exchange of the Winmark Shares to the
Company, the Company shall issue to each of the Winmark Shareholders, free and
clear of all Encumbrances, the number of authorized but unissued shares of the
Company’s common stock, $0.0001 par value (the “Company Shares”), as set forth
opposite each Winmark Shareholder’s name on Schedule I
hereto.
(c) It
is intended by the parties hereto that for United States income tax purposes,
the Exchange in exchange for Company Shares constitutes a tax-deferred exchange
within the meaning of Section 351 and/or 368(a)(1)(B) of the Internal Revenue
Code, as amended. Each of the parties hereto shall file all tax
informational returns on a basis consistent with such
characterization.
Section
1.2 Exchange of
Certificates. On the
Effective Date, the Winmark Shareholders shall be required to surrender all of
their Winmark Shares to the Company, and the Winmark Shareholders shall be
entitled upon surrender to receive in exchange thereof certificates representing
the proportionate number of Company Shares into which the Winmark Shares shall
have been exchanged pursuant to this Agreement and as set forth on Schedule I
hereto. On the Effective Date, each outstanding certificate which,
prior to the Effective Date, represented Winmark Shares shall be deemed for all
corporate purposes to evidence the ownership of the number of Company Shares for
which such Winmark Shares have been so exchanged. However, no
dividend or other consideration payable to holders of Company Shares of record
as of any date subsequent to the Effective Date shall be paid to the owner of
any certificate which, prior to the Effective Date, represented Winmark Shares,
until such certificate or certificates representing all the relevant Winmark
Shares, together with a stock transfer form, are surrendered to the
Company. All Company Shares for which the Winmark Shares shall have
been exchanged pursuant to this Article I shall be deemed to have been issued in
full satisfaction of all rights pertaining to the Winmark Shares.
Section
1.3 Closing. The
closing of the Share Exchange shall take place on the Effective Date at the
business office of the Company located at Xx. 0, Xxxxx Xxxxx Xxxx, Xxxxxxx Xxxx,
Xxxxxxxxx, Baiyun District, People’s Republic of China, or at such other place
as shall be determined by the parties hereto.
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Section
1.4 Restrictions on
Resale
(a) Neither
the Company Shares issuable to the Winmark Shareholders nor any issuance or
resale of such securities will be registered under the Securities Act, or under
the securities laws of any state or foreign jurisdiction, and neither the
Company Shares nor any interest therein may be transferred, pledged,
hypothecated, granted, sold, assigned or otherwise disposed of (each, a
“Transfer”) until (i) a registration statement with respect to the Transfer of
such securities is declared effective under the Securities Act or an exemption
from the registration requirements of the Securities Act is available with
respect to the Transfer of such securities, and (ii) the applicable securities
laws of any other foreign, state, local or other jurisdiction have been complied
with in respect of such a Transfer. Such exemption or compliance
shall be evidenced by an opinion of counsel selected by the transferor of the
Company Shares, at the transferor’s expense, the form and substance of such
opinion and of such counsel being acceptable to the Company, to the effect that
the Transfer of the Company Shares has been registered or does not require
registration under the Securities Act or the applicable securities laws of any
foreign, state, local or other jurisdiction. The Company may also
require the transferor to provide such additional documents, certificates, or
other instruments as may be necessary and customary to demonstrate compliance
with the Securities Act and the securities laws of the applicable foreign,
state, local or other jurisdiction as to such Transfer. As a
condition of any such Transfer, any such transferee shall agree in writing to be
bound by the terms of this Agreement and any Lock-Up Agreement.
(b) The
certificates representing the Company Shares shall contain legends substantially
as follows:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY FOREIGN, STATE, LOCAL OR OTHER JURISDICTION IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND SUCH OTHER FOREIGN, STATE, LOCAL OR OTHER APPLICABLE
SECURITIES LAWS (COLLECTIVELY, THE “SECURITIES LAWS”). THE
SECURITIES ARE BEING OFFERED AND SOLD ONLY PURSUANT TO OFFERS AND SALES THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT. THE SECURITIES MAY NOT BE RE-OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION UNDER ALL APPLICABLE SECURITIES LAWS. THE HOLDER OF THE
SECURITIES BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL ONLY OFFER, SELL OR
OTHERWISE TRANSFER THESE SECURITIES: (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, AND/OR (E) IN COMPLIANCE WITH THE PROVISIONS OF ANY OTHER
APPLICABLE SECURITIES LAWS, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION REASONABLY
SATISFACTORY TO THE COMPANY, AT THE HOLDER’S EXPENSE.
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“PURSUANT
TO A SHARE EXCHANGE AGREEMENT, DATED AS OF APRIL ___, 2010, BY AND AMONG CHINA
DONGFANG HEALTHCARE GROUP INC., ELEGANT CAPITAL HOLDINGS LIMITED, DAILY FORTUNE
INVESTMENTS LIMITED, EASTERN WELL HOLDINGS LIMITED, GOOD PRAISE HOLDINGS
LIMITED, AND WINMARK GROUP LIMITED, THE SECURITIES WHICH ARE REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED, GRANTED, PLEDGED, HYPOTHECATED, SOLD,
ASSIGNED OR OTHERWISE DISPOSED OF, EXCEPT AS PERMITTED THEREBY AND IN ACCORDANCE
WITH THE TERMS AND CONDITIONS SET FORTH THEREIN.”
(c) The
certificates representing the Winmark Shares and the Company Shares shall
further contain such other legends as required under applicable state, local or
foreign law or any law, rule or regulation (including those of any stock
exchange or other market).
Section
1.5 Delivery of Additional
Documents. In addition to the
delivery of share certificates as set forth in Section 1.2, on the Effective
Date:
(a) The
Company, Winmark and each Winmark Shareholder shall deliver or cause to be
delivered to the other respective parties original versions (unless otherwise
noted) of the following documents:
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(1)
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A
good standing certificate for such party (including, with respect to
Winmark, a good standing certificate for both Winmark and for Shouzhi
Medical Institution Management Co. Ltd., a corporation formed under the
laws of the People’s Republic of China (“Winmark Subsidiary”), dated no
earlier than ten (10) days before the Effective Date, from such party’s
respective jurisdiction of
formation;
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(2)
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A
certificate of the Secretary (or other persons performing similar
functions) of the party as to the incumbency and signatures of the
directors or officers of such party executing this
Agreement;
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(3)
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A
certificate of a duly authorized director or officer of the party that (i)
all representations and warranties made by such party in the Agreement are
true and correct as of the Effective Date; and (ii) all covenants,
agreements and obligations required by the Agreement to be performed or
complied with by the party prior to or as of the Effective Date have been
performed or complied with in all material
respects;
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(4)
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Copies
of resolutions duly adopted by the party’s Board of Directors and, where
applicable, shareholders (or persons performing similar functions),
authorizing the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, certified by a
director or officer of such party as in full force and effect, without
modification or rescission, on and as of the Effective
Date;
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(5)
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All
other documents, instruments and writings reasonably requested by the
Company on or prior to the Effective Date or otherwise required pursuant
to this Agreement.
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(b) In
addition to the foregoing, Winmark shall deliver or cause to be delivered to the
Company original versions (unless otherwise noted) of the following
documents:
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(1)
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The
Memorandum of Association, Articles of Association, Articles of
Incorporation, and Bylaws (or other similar documents) of Winmark and
Winmark Subsidiary, together with all amendments thereto as of the
Effective Date;
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(2)
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The
minute books of Winmark and Winmark Subsidiary, each of which contains the
minutes of all meetings of the Board of Directors and shareholders of
Winmark and Winmark Subsidiary (or other persons performing similar
functions), respectively, and adequately reflects all actions taken by the
Board of Directors and shareholders of Winmark and Winmark Subsidiary,
respectively, on and prior to the Effective Date; provided, however, that
such original minute books may continue to be maintained at a location
other than the Company’s principal place of business, pursuant to
resolutions of the Board of Directors of each such entity or applicable
law;
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(3)
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a
Lock-up Agreement, executed by the Company, Elegant Capital and each of
the other parties thereto, in form and substance satisfactory to the
Company; and
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(4)
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All
other documents, instruments and writings of Winmark and Winmark
Subsidiary reasonably requested by the Company on or prior to the
Effective Date or otherwise required pursuant to this
Agreement.
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(c) In
addition to the foregoing, each Winmark Shareholder shall deliver or cause to be
delivered to the Company original versions (unless otherwise noted) of the
following documents:
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(1)
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Copies
of the minute books of each Winmark Shareholder, each of which contains
the minutes of all meetings of the directors and members of each such
Winmark Shareholder and adequately reflects all actions taken by the
directors and members of each such Winmark Shareholder, on and prior to
the Effective Date; and
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(2)
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All
other documents, instruments and writings of such Winmark Shareholder
reasonably requested by the Company on or prior to the Effective Date or
otherwise required pursuant to this
Agreement.
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(d) In
addition to the foregoing, each Winmark Shareholder shall deliver or cause to be
delivered to the Company, and the Company shall deliver or cause to be delivered
to Winmark and each Winmark Shareholder, original versions (unless
otherwise noted) of the following documents:
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(1)
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Copies
of the Memorandum of Association, Articles of Association, Articles of
Incorporation, and Bylaws (or other similar documents) of the party,
together with all amendments thereto as of the Effective
Date;
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(2)
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All
other documents, instruments and writings of such party reasonably
requested by the other party on or prior to the Effective Date or
otherwise required pursuant to this
Agreement.
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ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Winmark and each of the Winmark
Shareholders as follows:
Section
2.1 Corporate
Organization.
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, and has all requisite corporate power and
authority to own its properties and assets and to conduct its business, and is
duly qualified to do business in good standing in each jurisdiction in which the
nature of the business conducted by the Company or the ownership or leasing of
its properties makes such qualification and being in good standing
necessary.
(b) Copies
of the Articles of Incorporation and Bylaws of the Company, with all amendments
thereto as of the Effective Date, have been furnished to Winmark and the Winmark
Shareholders, and such copies are accurate and complete as of the Effective
Date. The minute book of the Company is current as required by law,
contains the minutes of all meetings of the Board of Directors of the Company,
and adequately reflects all material actions taken by the Board of Directors of
the Company.
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Section
2.2 Capitalization of the
Company. The
authorized capital stock of the Company consists of (a) 220,000,000 shares of
common stock, par value $0.0001 per share as of the Effective Date, of which no
shares, prior to giving effect to the transactions contemplated hereby, are
issued and outstanding; and (b) 20,000,000 shares of preferred stock, par value
$0.0001 per share, of which no shares are issued and outstanding. All
of the Company Shares to be issued pursuant to this Agreement will be duly
authorized and, when issued in the Share Exchange and as contemplated herein,
will be validly issued, fully paid and non-assessable. As of the
Effective Date, there are no outstanding options, warrants, agreements,
commitments, conversion rights, preemptive rights or other rights to subscribe
for, purchase or otherwise acquire any shares of capital stock or any un-issued
or treasury shares of capital stock of the Company.
Section
2.3 Authorization and Validity
of
Agreements. The
Company has all corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. Upon the execution and delivery by
Winmark and the Winmark Shareholders of this Agreement and the performance of
their obligations herein, this Agreement will constitute the legal, valid and
binding obligation of the Company. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate actions
of the Company, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby.
Section
2.4 No Conflict or
Violation. To the
Company’s knowledge, the execution, delivery and performance of this Agreement
by the Company do not and will not violate or conflict with any provision of its
Articles of Incorporation or Bylaws, and do not violate any provision of law, or
any order, judgment or decree of any court or other governmental or regulatory
authority, nor violate or result in a breach of or constitute (with due notice
or lapse of time or both) a default under, or give rise to any other entity any
right of termination, amendment, acceleration or cancellation of, any contract,
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of their respective properties or assets is subject, nor will it
result in the creation or imposition of any lien, charge or encumbrance of any
kind whatsoever upon any of the properties or assets of the Company, nor will it
result in the cancellation, modification, revocation or suspension of any of the
licenses, franchises or permits to which the Company is bound.
Section
2.5 Consents and
Approvals. Other
than as may be required under applicable securities laws, to the Company’s
knowledge, no consent, waiver, authorization or approval of any governmental or
regulatory authority, domestic or foreign, or of any other person, firm or
corporation, is required in connection with the execution and delivery of this
Agreement by the Company or the performance by the Company of its obligations
hereunder.
Section
2.6 Absence of Certain Changes
or Events. As of the Effective Date, the Company does not know
or have reason to know of any event, condition, circumstance or prospective
development which threatens or may threaten to have a material adverse effect on
the assets, properties, operations, prospects, net income or financial condition
of the Company. There has furthermore not been any declaration
setting aside payment of dividends or distribution with respect to the Company
Shares.
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Section
2.7 Disclosure. This
Agreement and any certificate attached hereto or delivered in accordance with
the terms hereby by or on behalf of the Company in connection with the
transactions contemplated by this Agreement, when taken together, do not contain
any untrue statement of a material fact or omit any material fact necessary in
order to make the statements contained herein and/or therein not
misleading.
Section
2.8 No Undisclosed
Liabilities. On or prior to the Effective
Date, the Company has not incurred any liability material to the Company on a
consolidated basis, except in the ordinary course of its business, consistent
with past practices; suffered a change, or any event involving a prospective
change, in the business, assets, financial condition, or results of operations
of the Company which has had, or is reasonably likely to have, individually or
in the aggregate, a material adverse effect on the Company, (other than as a
result of changes or proposed changes in federal or state regulations of general
applicability or interpretations thereof, changes in generally accepted
accounting principles, and changes that could, under the circumstances,
reasonably have been anticipated in light of disclosures made in writing by the
Company to the Winmark Shareholders pursuant hereto); or subsequent to the
Effective Date, conducted its business and operations other than in the ordinary
course of business and consistent with past practices. The Company has no
liability (and the Company is not aware of any basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rising to any liability which individually or
in the aggregate are reasonably likely to have a material adverse effect on the
Company).
Section
2.9 Litigation. To
the Company’s knowledge, there is no action, suit, proceeding or investigation
pending or threatened against the Company or any subsidiary that may affect the
validity of this Agreement or the right of the Company to enter into this
Agreement or to consummate the transactions contemplated hereby.
Section
2.10 Taxes. To
the Company’s knowledge, the Company has paid all taxes due to date, if
any.
Section
2.11 Survival. Each of the
representations and warranties set forth in this Article II shall survive the
Effective Date for a period terminating on the second anniversary of the
Effective Date.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF WINMARK AND
THE
WINMARK SHAREHOLDERS
Winmark and each of the Winmark
Shareholders represent and warrant to the Company, severally and not jointly, as
follows:
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Section
3.1 Corporation Organization and
Capitalization of Winmark.
(a) Winmark
and each of the Winmark Shareholders are duly organized, validly existing and in
good standing under the laws of the British Virgin Islands and each of them has
all requisite power and authority to own its properties and assets and to
conduct its business as now conducted, and each is duly qualified to do
business, is in good standing in each jurisdiction wherein the nature of the
business conducted by the Winmark Shareholders or the ownership or leasing of
its properties makes such qualification and being in good standing
necessary. As of the Effective Date, the Winmark Shareholders own in
the aggregate 100% of the issued and outstanding equity securities of
Winmark. The authorized capital stock of Winmark consists of 50,000
shares of common stock, par value $1.00 per share, of which 50,000 shares are
issued and outstanding, all of which are duly authorized, validly issued and
fully paid. All of the Winmark Shares to be issued pursuant to this
Agreement have been duly authorized and will be validly issued, fully paid and
non-assessable and no personal liability will attach to the ownership thereof,
and in each instance, have been issued in accordance with the registration
requirements of applicable securities laws or an exemption
therefrom. As of the Effective Date, there are no outstanding
options, warrants, agreements, commitments, conversion rights, preemptive rights
or other rights to subscribe for, purchase or otherwise acquire any shares of
capital stock or any un-issued or treasury shares of capital stock of
Winmark. Each of the Winmark Shareholders owns its respective shares
of Winmark free and clear of all Encumbrances.
(b) As
of the Effective Date, Winmark owns 100% of the issued and outstanding equity
securities or voting interests in Winmark Subsidiary. Winmark Subsidiary is duly
organized, validly existing and in good standing under the laws of the People’s
Republic of China and has all requisite power and authority to own its
properties and assets and to conduct its business as now conducted and is duly
qualified to do business, is in good standing in each jurisdiction wherein the
nature of the business conducted by the Winmark Subsidiary or the ownership or
leasing of its properties makes such qualification and being in good standing
necessary.
(c) Copies
of the Memorandum of Association, Articles of Association, and Bylaws (or other
similar documents), with all amendments thereto as of the Effective Date, of
Winmark, each Winmark Shareholder and Winmark Subsidiary, have been furnished to
the Company and such copies are accurate and complete as of the Effective
Date. The minute book of each of Winmark, each Winmark Shareholder
and Winmark Subsidiary is current as required by law, contains the minutes of
all meetings of the Board of Directors and shareholders of such company, and
adequately reflects all material actions taken by the Board of Directors and
shareholders (or other persons performing similar functions) of each such
company. The original minute books of Winmark and Winmark Subsidiary
have been furnished to the Company; provided, however, that
notwithstanding the foregoing the Company acknowledges that such original minute
books may be required to be maintained at a location other than the Company’s
principal place of business, pursuant to resolutions of the Board of Directors
of each such entity or applicable law. Copies of the minute books of
each Winmark Shareholder have been furnished to the Company.
Section
3.2 Authorization and Validity
of Agreements. Each of
Winmark and the Winmark Shareholders has all corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby and upon the execution and
delivery by the Company and the performance of its obligations herein, will
constitute a legal, valid and binding obligation of each of Winmark and the
Winmark Shareholders. The execution and delivery of this Agreement by
each of Winmark and the Winmark Shareholders and the consummation by them of the
transactions contemplated hereby have been duly authorized by all necessary
corporate actions of each of Winmark and the Winmark Shareholders, and no other
corporate proceedings on their part are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby.
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Section
3.3 No Conflict or
Violation. The execution,
delivery and performance of this Agreement by Winmark and each of the Winmark
Shareholders do not and will not violate or conflict with any provision of their
respective Memorandum of Association, Articles of Association, Bylaws or other
similar documents. The execution, delivery and performance of this
Agreement by Winmark and each of the Winmark Shareholders do not violate any
provision of law, or any order, judgment or decree of any court or other
governmental or regulatory authority, nor violate or result in a breach of or
constitute (with due notice or lapse of time or both) a default under, or give
rise to any other entity any right of termination, amendment, acceleration or
cancellation of, any contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which any of
Winmark, the Winmark Subsidiary, or any of the Winmark Shareholders is a party,
or by which any of them is bound, or to which any of their respective properties
or assets is subject, nor will it result in the creation or imposition of any
Encumbrance upon any of the properties or assets of Winmark, the Winmark
Subsidiary, or any Winmark Shareholder, nor will it result in the cancellation,
modification, revocation or suspension of any of the licenses, franchises or
permits to which such entities are bound.
Section
3.4 Consents and
Approvals. No consent, waiver,
authorization or approval of any governmental or regulatory authority, domestic
or foreign, or of any other person, firm or corporation, is required in
connection with the execution and delivery of this Agreement by Winmark or any
of the Winmark Shareholders, the performance by such parties of their
obligations hereunder, and the consummation of the transactions contemplated
hereby.
Section
3.5 Investment
Representation.
(a) Each
of the Winmark Shareholders represents that it (i) has knowledge and experience
in financial and business matters such that the Winmark Shareholder is capable
of evaluating the merits and risks of its prospective investment in the Company
Shares and of protecting its own interests in connection therewith; (ii) is
acquiring the Company Shares as principal for the Winmark Shareholder’s own
account, not on behalf of other persons, and for investment purposes and not
with a view to any resale or distribution of the Company Shares; and (iii)
understands that the offer and sale of the Company Shares have not been
submitted to, reviewed by, nor have the merits of the investment been endorsed
or approved by any state or federal or foreign agency, commission, authority or
self-regulatory organization.
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(b) Each
of the Winmark Shareholders is able to bear the risks associated with its
investment in the Company Shares, including a total loss of such
investment. Each Winmark Shareholder acknowledges that an investment
in the Company involves a high degree of risk, including but not limited to the
following risks: (i) the Company is a newly-formed entity that has only recently
been organized; (ii) the Company requires a significant amount of cash to
conduct its business as is contemplated to be conducted in the future, yet there
can be no assurance that such capital will be available to the Company on
acceptable terms, if at all; (iii) the Company intends on becoming a U.S. public
reporting company, which would thereby subject its officers, directors and
shareholders, including each of the Winmark Shareholders, to the rules and
regulations that may require disclosure of their ownership of Company Shares and
other information; and (iv) the Company is a Nevada corporation and not a
British Virgin Islands business company, and that as a result the protections
afforded the Winmark Shareholders under British Virgin Islands law may be
significantly reduced or may be inapplicable under Nevada law. Each
of the Winmark Shareholders has also reviewed and read a copy of the risk
factors attached as Schedule II
hereto. Each of the Winmark Shareholders has had full access to all
the information such shareholder considers necessary or appropriate to make an
informed investment decision with respect to the Company Shares to be acquired
under the Agreement. Each of the Winmark Shareholders further has had
an opportunity to ask questions and receive answers from the Company regarding
the Company and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to such shareholder or to
which such shareholder had access.
(c) Each
of the Winmark Shareholders is at the time of the offer and execution of this
Agreement, domiciled and resident outside the United States and is not an “U.S.
person” (as such term is defined in Rule 901(k) of Regulation S promulgated by
the Securities and Exchange Commission under the Securities Act, as it may be
amended from time to time (“Regulation S”)). No Winmark Shareholder,
nor any affiliate thereof, nor any person acting on behalf of any Winmark
Shareholder or any such affiliate (collectively, the “Shareholder”), has engaged
or will engage in general solicitation, advertising, or any other activity
undertaken for the purpose of, or that reasonably could be expected to have the
effect of, conditioning the markets in the United States for the Company Shares
(any such activity, including without limitation such activity defined as
“directed selling efforts” in Regulation S, being defined herein as “Directed
Selling Efforts”), including, but not limited to, effecting any sale or short
sale of securities through any Shareholder, prior to the expiration of any
distribution compliance or other restricted period contained in Regulation S
promulgated under the Securities Act. To the best knowledge of each Shareholder,
this Agreement and the transactions contemplated herein are not part of a plan
or scheme to evade the registration provisions of the Securities Act, and the
Company Shares are being acquired for investment purposes by the
Shareholders. Each of the Shareholders agrees that all offers and
sales of Company Shares from the Effective Date and through the expiration of
any distribution compliance period set forth in Rule 903 of Regulation S shall
not be made to “U.S. persons” or for the account or benefit of such U.S. persons
and shall otherwise be made in compliance with the provisions of Regulation S
and/or any other applicable provisions of the Securities Act. Neither any
Shareholder nor its agents or representatives have conducted any Directed
Selling Efforts and no Shareholder will engage in any such Directed Selling
Efforts within the United States through the expiration of any distribution
compliance period described in Rule 903 of Regulation S.
3.6 Brokers’
Fees. With the
exception of Chief Capital Ltd., neither Winmark nor any of the Winmark
Shareholders has engaged any broker, finder or agent with respect to the
transactions contemplated by this Agreement, or has incurred any obligation to
pay any broker, finder or agent with respect thereto.
11
3.7 Disclosure. This
Agreement, the schedules hereto and any certificate attached hereto or delivered
in accordance with the terms hereby by or on behalf of Winmark or the Winmark
Shareholders in connection with the transactions contemplated by this Agreement,
when taken together, do not contain any untrue statement of a material fact or
omit any material fact necessary in order to make the statements contained
herein and/or therein not misleading.
3.8 Survival. Each
of the representations and warranties set forth in this Article III shall
survive the Effective Date for a period terminating on the second anniversary of
the Effective Date.
ARTICLE
IV
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE COMPANY
The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, on or before the Effective Date, of
the following conditions, any one or more of which may be waived by the Company
in its sole discretion:
Section
4.1 Representations and
Warranties of Winmark and the Winmark Shareholders.All representations
and warranties made by Winmark and the Winmark Shareholders in this Agreement
shall be true and correct on and as of the Effective Date.
Section
4.2 Agreements and
Covenants. Each of Winmark and the Winmark Shareholders shall have
performed and complied with in all material respects all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Effective Date.
Section
4.3 Consents and
Approvals. All consents, waivers, authorizations and approvals of any
governmental or regulatory authority, domestic or foreign, and of any other
person, firm or corporation, required in connection with the execution, delivery
and performance of this Agreement, shall have been duly obtained and shall be in
full force and effect on the Effective Date.
Section
4.4 No Violation of
Orders. No preliminary or permanent injunction or other order issued by
any court or other governmental or regulatory authority, domestic or foreign,
nor any statute, rule, regulation, decree or executive order promulgated or
enacted by any government or governmental or regulatory authority, domestic or
foreign, that declares this Agreement invalid or unenforceable in any respect or
which prevents the consummation of the transactions contemplated hereby, or
which materially and adversely affects the assets, properties, operations,
prospects, net income or financial condition of Winmark or the Winmark
Shareholders, shall be in effect; and no action or proceeding before any court
or government or regulatory authority, domestic or foreign, shall have been
instituted or threatened by any government or governmental or regulatory
authority, domestic or foreign, or by any other person, or entity which seeks to
prevent or delay the consummation of the transactions contemplated by this
Agreement or which challenges the validity or enforceability of this
Agreement.
12
Section
4.5 Closing Documents.
The Company shall have received from each of Winmark and the Winmark
Shareholders the certificates, agreements, instruments, documents and other
deliveries referenced in Section 1.5 above (including certificates representing
the Winmark Shares as referenced in Section 1.2).
Section
4.6 Winmark Subsidiary
Agreements. The Company shall have received executed copies of such
agreements and instruments (or proposed final drafts of such agreements and
instruments, if not executed, so long as the executed versions of such
agreements and instruments shall not vary materially from such proposed final
drafts) as may be necessary for Winmark Subsidiary and Guangzhou Dongfang
Hospital (or any affiliate) to create a variable interest entity (“VIE”)
structure that is valid, binding and enforceable under the law of the People’s
Republic of China, which agreements and instruments shall (i) each be in form
and substance acceptable to the Company, (ii) not violate or conflict with any
law, rule or regulation applicable to any of the parties thereto and (iii) shall
not require the consent or approval of any governmental body or authority in
order for the parties to execute and deliver such agreements and instruments and
to perform their respective obligations thereunder.
ARTICLE
V
CONDITIONS
PRECEDENT TO OBLIGATIONS OF WINMARK AND THE
WINMARK
SHAREHOLDERS
The obligations of Winmark and the
Winmark Shareholders to consummate the transactions contemplated by this
Agreement are subject to the fulfillment on or before the Effective Date of the
following conditions, any one or more of which may be waived by either Winmark
or any of the Winmark Shareholders in their sole discretion:
Section
5.1 Representations and
Warranties of the Company. All representations and warranties made by the
Company in this Agreement shall be true and correct on and as of the Effective
Date.
Section
5.2 Agreements and
Covenants. The Company shall have performed and complied with in all
material respects all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Date.
Section
5.3 Consents and
Approvals. All consents, waivers, authorizations and approvals of any
governmental or regulatory authority, domestic or foreign, and of any other
person, firm or corporation, required in connection with the execution, delivery
and performance of this Agreement shall be in full force and effect on the
Effective Date.
Section
5.4 No Violation of
Orders. No preliminary or permanent injunction or other order issued by
any court or governmental or regulatory authority, domestic or foreign, nor any
statute, rule, regulation, decree or executive order promulgated or enacted by
any government or governmental or regulatory authority, which declares this
Agreement invalid in any respect or prevents the consummation of the
transactions contemplated hereby, or which materially and adversely affects the
assets, properties, operations, prospects, net income or financial condition of
the Company shall be in effect; and no action or proceeding before any court or
governmental or regulatory authority, domestic or foreign, shall have been
instituted or threatened by any government or governmental or regulatory
authority, domestic or foreign, or by any other person, or entity which seeks to
prevent or delay the consummation of the transactions contemplated by this
Agreement or which challenges the validity or enforceability of this
Agreement.
13
Section
5.5 Closing Documents.
Each of Winmark and the Winmark Shareholders shall have received from the
Company the certificates, agreements, instruments and documents referenced in
Section 1.5 above (including the certificates representing the Company Shares as
referenced in Section 1.2).
ARTICLE
VI
MISCELLANEOUS
PROVISIONS
Section
6.1 Remedies. In
the event of a breach of any representation, warranty or agreement, the party to
whom such representation, warranty or agreement has been made shall have all
rights and remedies for such breach available to it under the provisions of this
Agreement or otherwise, whether at law or in equity, regardless of any
disclosure to, or investigation made by or on behalf of such party on or before
the Effective Date.
Section
6.2 Publicity. No
party other than the Company shall cause the publication of any press release or
other announcement with respect to this Agreement or the transactions
contemplated hereby. The Company agrees to give the other parties
hereto an opportunity to review the proposed press release or announcement prior
to dissemination thereof.
Section
6.3 Successors and
Assigns. This Agreement shall inure to
the benefit of, and be binding upon, the parties hereto and their respective
successors and assigns, provided however that no party shall assign or delegate
any of its rights or obligations created under this Agreement without the prior
written consent of the other parties.
Section
6.4 Fees and
Expenses. All legal and other fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees, costs or
expenses.
Section
6.5 Notices. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been given or made if in writing and
delivered personally or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties or to such other persons or at such
other addresses as shall be furnished by any party by like notice to the others,
and such notice or communication shall be deemed to have been given or made as
of the date so delivered or mailed.
Section
6.6 Entire
Agreement. This
Agreement, together with the Schedules hereto, represents the entire agreement
and understanding of the parties with reference to the transactions set forth
herein and no representations or warranties have been made in connection with
this Agreement other than those expressly set forth herein or in the Schedules
and other documents delivered in accordance herewith. This Agreement supersedes
all prior negotiations, discussions, correspondence, communications,
understandings and agreements between the parties relating to the subject matter
of this Agreement and all prior drafts of this Agreement, all of which are
merged into this Agreement. No prior drafts of this Agreement and no
words or phrases from any such prior drafts shall be admissible into evidence in
any action or suit involving this Agreement.
14
Section
6.7 Severability. This
Agreement shall be deemed severable, and the invalidity or unenforceability of
any term or provision hereof shall not affect the validity or enforceability of
this Agreement or of any other term or provision hereof. Furthermore,
in lieu of any such invalid or unenforceable term or provision, the parties
hereto intend that there shall be added as a part of this Agreement a provision
as similar in terms to such invalid or unenforceable provision as may be
possible so as to be valid and enforceable.
Section
6.8 Titles and
Headings. The
Article and Section headings contained in this Agreement are solely for
convenience of reference and shall not affect the meaning or interpretation of
this Agreement or of any term or provision hereof.
Section
6.9 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall be considered one and the
same agreement.
Section
6.10 Enforcement of the
Agreement. The
parties hereto agree that irreparable damage would occur if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereto, this being in addition to any other remedy to which they are entitled at
law or in equity.
Section
6.11 Governing
Law. This Agreement shall
be governed by and interpreted and enforced in accordance with the laws of the
State of Nevada without giving effect to the choice of law provisions
thereof.
Section
6.12 Amendments and
Waivers. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the parties hereto. No waiver by any
party of any default, misrepresentation, or breach of warranty hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty hereunder or affect in any way
any rights arising by virtue of any prior or subsequent such
occurrence.
[Signature
page follows]
15
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
CHINA
DONGFANG HEALTHCARE
GROUP
INC.
|
WINMARK
GROUP LIMITED
|
||||
By:
|
/s/ Xx Xxxxxxxx
|
By:
|
/s/ XXX, Xxx Xxxxx
|
||
Xx
Xxxxxxxx
|
XXX,
Xxx Xxxxx, Director
|
||||
President
|
|||||
ELEGANT
CAPITAL HOLDINGS LIMITED
|
DAILY
FORTUNE INVESTMENTS
LIMITED
|
||||
By:
|
/s/ XXX, Xxx Xxxxx
|
By:
|
REGAL
SEA GROUP LIMITED
|
||
XXX,
Xxx Xxxxx, Director
|
|
Director
|
|||
By:
|
/s/ XXXX Xxxxx Xxx
|
||||
XXXX
Xxxxx Xxx
|
|||||
|
Director
|
||||
EASTERN
WELL HOLDINGS LIMITED
|
GOOD
PRAISE HOLDINGS LIMITED
|
||||
By:
|
/s/ DING, Jinhong
|
By:
|
/s/ Fu Yunzhuang
|
||
DING,
Jinhong, Director
|
Fu
Yunzhuang,
Director
|
[Signature
page to the Share Exchange Agreement]
16
EXECUTION
COPY
Schedule
I
Share
Table
Name of Shareholder
|
Number of Winmark
Shares held by Shareholder
|
Number of Company Shares
Issued to Shareholder
|
||||||
Elegant
Capital Holdings Limited
|
27,170 | 11,411,400 | ||||||
Eastern
Well Holdings Limited
|
19,500 | 8,190,000 | ||||||
Good
Praise Holdings Limited
|
2,830 | 1,188,600 | ||||||
Daily
Fortune Investments Limited
|
500 | 210,000 | ||||||
Total
|
50,000 | 21,000,000 |
Schedule
II
Risk
Factors
[To
be provided]