SHARE EXCHANGE AGREEMENT by and among WINNER STATE INVESTMENTS LIMITED FANG CHEN, YANG MIAO AND YING ZHANG FAITH WINNER INVESTMENTS LIMITED and VICTORY DIVIDE MINING COMPANY dated as of October 3, 2007
EXHIBIT
10.1
by
and among
WINNER
STATE INVESTMENTS LIMITED
XXXX
XXXX, XXXX XXXX AND XXXX XXXXX
FAITH
WINNER INVESTMENTS LIMITED
and
dated
as of October 3, 2007
SHARE
EXCHANGE AGREEMENT,
dated
as of October 3, 2007 (this “Agreement”)
by and
among Winner
State Investments Limited, a British Virgin Islands company (“Winner
State”),
Xxxx
Xxxx (“Fang”), an individual, Xxxx Xxxx (“Xxxx”), an individual, Xxxx Xxxxx
(“Ying”), an individual, Faith Winner Investments Limited, a British Virgin
Islands company (“Faith
Winner”),
and
Victory Divide Mining Company, a Nevada corporation (“VICTORY
DIVIDE”).
WHEREAS,
Winner
State and Fang, Yang and Ying (collectively, the “INDIVIDUALS”) own 100% of the
issued and outstanding capital stock of Faith Winner, such capital stock
being
hereinafter referred to as the “Faith
Winner Shares”;
and
WHEREAS,
(i)
Winner State , the INDIVIDUALS and Faith Winner believe it is in their
respective best interests for Winner State and the INDIVIDUALS to exchange
the
Faith Winner Shares for 18,500,000 shares (the “VICTORY
DIVIDE Shares”
or
the
“Purchase
Price”
as
used
in Section 7.1 hereof) of original issue common stock, par value $.001
per
share, of VICTORY
DIVIDE (“Common Stock”),
and
(ii) VICTORY DIVIDE believes it is in VICTORY DIVIDE’s best interest to acquire
the Faith Winner Shares in exchange for the VICTORY DIVIDE Shares, all
upon the
terms and subject to the conditions set forth in this Agreement (the
“Share
Exchange”);
and
WHEREAS,
it is
the intention of the parties that: (i) VICTORY DIVIDE shall acquire 100%
of the
Faith Winner Shares in exchange solely for the amount of VICTORY DIVIDE
Shares
set forth herein; (ii) said exchange of shares shall qualify as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code
of 1986,
as amended (the “Code”);
and
(iii) said exchange shall qualify as a transaction in securities exempt
from
registration or qualification under the Securities Act of 1933, as amended
and
in effect on the date of this Agreement (the “Securities
Act”);
and
WHEREAS,
immediately following the consummation of the Share Exchange, and pursuant
to a
Securities Purchase Agreement to be dated as of the Closing Date (as
hereinafter defined) by and among VICTORY DIVIDE and Vision Opportunity
Master
Fund, Ltd, and certain other investors (collectively, the “Investors”)
substantially in the form set forth as Exhibit
A
hereto
(the “Securities
Purchase Agreement”),
VICTORY DIVIDE intends to enter into a private placement with accredited
investors whereby, in consideration of up to $21,500,000 in gross private
placement proceeds, VICTORY DIVIDE will issue to the Investors up to 10
million
shares of Series A Convertible Preferred Stock of VICTORY DIVIDE and attached
warrants to purchase Common Stock of VICTORY DIVIDE (the “Private
Placement”)
upon
the terms and conditions set forth in the relevant Private Placement transaction
documents; and
WHEREAS,
immediately prior to the Share Exchange, not more than 487,500 shares of
Common
Stock shall be issued and outstanding; and
WHEREAS,
the
parties hereto agree that the capitalization table (the “Cap Table”) upon which
the transactions contemplated by this Agreement and the Private Placement
are
based is set forth as Exhibit
B
hereto;
and
NOW,
THEREFORE,
in
consideration of the mutual terms, conditions and other agreements set
forth
herein, the parties hereto agree as follows:
2
ARTICLE
I
EXCHANGE
OF SHARES FOR COMMON STOCK
Section
1.1 Agreement
to Exchange Faith Winner Shares for VICTORY DIVIDE Shares.
On the
Closing Date (as hereinafter defined) and upon the terms and subject to
the
conditions set forth in this Agreement, Winner State and the INDIVIDUALS
shall
assign, transfer, convey and deliver the Faith Winner Shares to VICTORY
DIVIDE,
and in consideration and exchange therefor VICTORY DIVIDE shall assign,
transfer, convey and deliver the VICTORY DIVIDE Shares to Winner State
and the
INDIVIDUALS as set forth in the Cap Table.
Section
1.2 Capitalization
at the Closing.
On the
Closing Date, immediately before the consummation of the Share Exchange,
VICTORY
DIVIDE shall have as authorized capital stock a total of 10,000,000,000
shares
of Common Stock, par value $.001 per share, of which not more than 487,500
shares of Common Stock shall be issued and outstanding , and 50,000,000
shares
of preferred stock, par value $.001 per share, of which no shares shall
be
issued and outstanding, but 10,000,000 shares shall have been designated
as
Series A Convertible Preferred Stock (“Series
A Stock”)
and
10,000,000shares shall have been designated as Series B Convertible Preferred
Stock (“Series
B Stock”).
Section
1.3 Closing
and Actions at Closing.
a.
The
closing of the Share Exchange (the "Closing")
shall
take place at 5:00 p.m. E.D.T. on the day the conditions to closing set
forth in
Articles V and VI have been satisfied or waived, or at such other time
and date
as the parties hereto shall agree in writing (the "Closing
Date"),
at
the offices of Guzov Ofsink, LLC, 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
b.
At the
Closing: (i) Winner State and the INDIVIDUALS shall deliver to VICTORY
DIVIDE
the stock certificates representing one hundred percent (100%) of the Faith
Winner Shares, duly endorsed in blank for transfer or accompanied by appropriate
stock powers duly executed in blank; and (ii) in full consideration and
exchange
for the Faith Winner Shares, VICTORY DIVIDE shall issue and deliver to
Winner
State and the INDIVIDUALS one or more stock certificates representing all
of the
VICTORY DIVIDE Shares.
3
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF VICTORY DIVIDE
VICTORY
DIVIDE hereby represents, warrants and agrees that the statements in the
following subsections of this Section 2 are all true and complete as of
the date
hereof, and will, except as contemplated by this Agreement, be true and
complete
as of the Closing Date as if first made on such date:
Section
2.1 Corporate
Organization
a. VICTORY
DIVIDE is a corporation duly organized, validly existing and in good standing
under the laws of Nevada, and has all requisite corporate power and authority
to
own its properties and assets and to conduct its business as now conducted
and
is duly qualified to do business and is in good standing in each jurisdiction
in
which the nature of the business conducted by VICTORY DIVIDE or the ownership
or
leasing of its properties makes such qualification and being in good standing
necessary, except where the failure to be so qualified and in good standing
will
not have a material adverse effect on the business, operations, properties,
assets, condition or results of operation of VICTORY DIVIDE (a "VICTORY
DIVIDE Material Adverse Effect");
b. Copies
of
the Articles of Incorporation and By-laws of VICTORY DIVIDE, with all amendments
thereto to the date hereof, have been furnished to Winner State, the INDIVIDUALS
and Faith Winner, and such copies are accurate and complete as of the date
hereof. The minute books of VICTORY DIVIDE are current as required by law,
contain the minutes of all meetings of the Board of Directors and shareholders
of VICTORY DIVIDE from its date of incorporation to the date of this Agreement,
and adequately reflect all material actions taken by the Board of Directors
and
shareholders of VICTORY DIVIDE.
Section
2.2 Capitalization
of VICTORY DIVIDE.
a.
On the
Closing Date, immediately before the consummation of the Share Exchange,
the
entire authorized capital stock of VICTORY DIVIDE shall consist of
10,000,000,000 shares of Common Stock, par value $.001 per share, of which
not
more than 487,500 shares of Common Stock shall be issued and outstanding,
and
50,000,000 shares of “blank check” preferred stock, par value $.001 per share,
of which no shares shall be issued and outstanding.
b. The
200
for 1 reverse stock split of VICTORY DIVIDE’s Common Stock described in the
Schedule 14C Information Statement filed with the Securities and Exchange
Commission (the “SEC”)
on
March 19, 2007 and the 1 for 100 forward stock split of VICTORY DIVIDE’s Common
Stock on September 14, 2007 were validly authorized by VICTORY DIVIDE’s board of
directors and/or shareholders as required under the laws of the State of
Nevada
and complied with all applicable Nevada and federal laws. To the actual
knowledge of VICTORY DIVIDE, there are presently no claims from VICTORY
DIVIDE
shareholders in relation to the said reverse and forward stock
splits.
4
c.
The
issuance of the VICTORY DIVIDE Shares will be in accordance with the provisions
of this Agreement. On the Closing Date all of the issued and outstanding
shares
of Common Stock and all of the VICTORY DIVIDE Shares to be issued pursuant
to
this Agreement will have been duly authorized and, when issued, will be
validly
issued, fully paid and non-assessable, will have been issued in compliance
with
all applicable securities laws, and will have been issued free of preemptive
rights of any security holder. Except as set forth on Schedule
2.2,
as of
the date of this Agreement there are, and as of the Closing Date there
will be,
no outstanding or authorized options, warrants, agreements, commitments,
conversion rights, preemptive rights or other rights to subscribe for,
purchase
or otherwise acquire or to become outstanding any shares of VICTORY DIVIDE’s
capital stock, nor are there or will there be any outstanding or authorized
stock appreciation, phantom stock, profit participation or similar rights
with
respect to VICTORY DIVIDE or any Common Stock, or any voting trusts, proxies
or
other agreements or understandings with respect to the voting of VICTORY
DIVIDE’s capital stock.
Section
2.3 Subsidiaries
and Equity Investments.
Except
as set forth on Schedule 2.3
VICTORY
DIVIDE does not directly or indirectly own any capital stock or other securities
of, or any beneficial ownership interest in, or hold any equity or similar
interest, or have any investment in any corporation, limited liability
company,
partnership, limited partnership, joint venture or other company, person
or
other entity, including without limitation any Subsidiary of VICTORY DIVIDE.
For
purposes of this Agreement, a “Subsidiary”
of a
company means any entity in which, at the date of this Agreement, such
company
or any of its Subsidiaries directly or indirectly owns any of the capital
stock,
equity or similar interests or voting power of such entity. For each entity
listed thereon, Schedule
2.3
sets
forth its jurisdiction of organization and the percentage of the outstanding
capital stock or other equity interests of such entity that is held by
VICTORY
DIVIDE. Each entity listed on Schedule
2.3
is duly
organized and
validly existing and, except as set forth on Schedule
2.3,
is in
good standing under the laws of the jurisdiction of its formation; has
the
requisite power and authority to own its properties and to carry on its
business
as now being conducted; and, if applicable, is duly qualified as a foreign
entity to do business and, to the extent legally applicable, is in good
standing
in every jurisdiction in which its ownership of property or the nature
of the
business conducted by it makes such qualification necessary, except to
the
extent that the failure to be so qualified or be in good standing would
not have
a material adverse effect
Section
2.4 Authorization
and Validity of Agreements.
VICTORY
DIVIDE has all corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement constitutes the valid
and
legally binding obligation of VICTORY DIVIDE, and is enforceable in accordance
with its terms. VICTORY DIVIDE does not need to give any notice to, make
any
filings with, or obtain any authorization, consent or approval of any government
or governmental agency or other person in order for it to consummate the
transactions contemplated by this Agreement, other than filings that may
be
required or permitted under states securities laws, the Securities Act
of 1933,
as amended (the “Securities
Act”)
and/or
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)
resulting from the issuance of the VICTORY DIVIDE Shares. The execution
and
delivery of this Agreement by VICTORY DIVIDE, and the consummation by VICTORY
DIVIDE of the transactions contemplated hereby, have been duly authorized
by all
necessary corporate action of VICTORY DIVIDE, and no other corporate proceedings
on the part of VICTORY DIVIDE are necessary to authorize this Agreement
or to
consummate the transactions contemplated hereby.
5
Section 2.5 No
Conflict or Violation.
Neither
the execution and delivery of this Agreement by VICTORY DIVIDE, nor the
consummation by VICTORY DIVIDE of the transactions contemplated hereby
will: (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, court, administrative panel or other tribunal to which
VICTORY DIVIDE is subject, or any provision of VICTORY DIVIDE’s Articles of
Incorporation, as amended, or By-laws, as amended; (ii) conflict with,
result in
a breach of, constitute a default under, result in the acceleration of,
create
in any party the right to accelerate, terminate, modify or cancel, or require
any notice under any agreement, contract, lease, license, instrument or
other
arrangement to which Faith Winner is a party or by which it is bound, or
to
which any of its assets is subject; or (iii) result in or require the creation
or imposition of any encumbrance of any nature upon or with respect to
any of
VICTORY DIVIDE’s assets, including without limitation the VICTORY DIVIDE Shares.
Section
2.6 Material
Agreements.
VICTORY
DIVIDE is not a party to or bound by any contracts, including, but not
limited
to, any:
a.
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employment,
advisory or consulting contract other than a consulting agreement
with
Xxxxx X. Little dated September __, 2007;
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b.
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plan
providing for employee benefits of any nature;
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c.
|
lease
with respect to any property or equipment;
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d.
|
contract,
agreement, understanding or commitment for any future expenditure
in
excess of $1,000 in the aggregate;
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e.
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contract
or commitment pursuant to which it has assumed, guaranteed, endorsed,
or
otherwise become liable for any obligation of any other person,
entity or
organization;
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f.
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agreement
with any person relating to the dividend, purchase or sale of
securities,
that has not been settled by the delivery or payment of securities
when
due, and which remains unsettled upon the date of this
Agreement.
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Section
2.7 No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or anticipated by
VICTORY
DIVIDE to arise, between VICTORY DIVIDE and any accountants and/or lawyers
formerly or presently employed by VICTORY DIVIDE. VICTORY DIVIDE is current
with
respect to fees owed to its accountants and lawyers.
6
Section
2.8 Disclosure.
This
Agreement and any certificate attached hereto or delivered in accordance
with
the terms hereby by or on behalf of VICTORY DIVIDE 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
2.9 Litigation;
Compliance with Laws.
There
is no action, suit, proceeding or investigation pending or, to the best
knowledge of VICTORY DIVIDE, currently threatened against VICTORY DIVIDE
or any
Subsidiary that may affect the validity of this Agreement or the right
of
VICTORY DIVIDE to enter into this Agreement or to consummate the transactions
contemplated hereby. There is no action, suit, proceeding or investigation
pending or, to the best knowledge of VICTORY DIVIDE, currently threatened
against VICTORY DIVIDE or any Subsidiary, before any court or by or before
any
governmental body or any arbitration board or tribunal, nor is there any
judgment, decree, injunction or order of any court, governmental department,
commission, agency, instrumentality or arbitrator against VICTORY DIVIDE
or any
of its Subsidiaries. Neither VICTORY DIVIDE nor any Subsidiary is a party
or
subject to the provisions of any order, writ, injunction, judgment or decree
of
any court or government agency or instrumentality. There is no action,
suit,
proceeding or investigation by VICTORY DIVIDE or any Subsidiary currently
pending or which VICTORY DIVIDE or any Subsidiary intends to initiate.
VICTORY
DIVIDE has been and is in compliance with, and has not received any notice
of
any violation of any, law, ordinance, regulation or rule of any kind whatsoever,
including without limitation the Securities Act, the Exchange Act, the
rules and
regulations of the SEC, or the securities laws and rules and regulations
of any
state. VICTORY DIVIDE is not an “investment company” as such term is defined by
the Investment Company Act of 1940, as amended. When any reference to the
“knowledge” or “best knowledge” of VICTORY DIVIDE is made in this Agreement,
such terms shall mean the knowledge that would be gained from diligent
and due
inquiry into the matters referenced.
Section
2.10 Financial
Statements; SEC Filings.
a.
VICTORY DIVIDE’s financial statements contained in its periodic reports filed
with the Securities and Exchange Commission, (the “Financial
Statements”)
have
been prepared in accordance with generally accepted accounting principles
applicable in the United States of America (“U.S.
GAAP”)
applied
on a consistent basis throughout the periods indicated and with each other,
except that those of the Financial Statements that are not audited do not
contain all footnotes required by U.S. GAAP. The Financial Statements fairly
present the financial condition and operating results of VICTORY DIVIDE
as of
the dates, and for the periods, indicated therein, subject to normal year-end
audit adjustments. Except as set forth in the Financial Statements, VICTORY
DIVIDE has no material liabilities (contingent or otherwise). VICTORY DIVIDE
is
not a guarantor or indemnitor of any indebtedness of any other person,
firm or
corporation. VICTORY DIVIDE maintains and will continue to maintain until
the
Closing a standard system of accounting established and administered in
accordance with U.S. GAAP.
7
b.
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(i)
VICTORY DIVIDE has made all filings with the SEC that it has
been required
to make under the Securities Act and the Exchange Act (such filings,
inclusive of all reports and VICTORY DIVIDE’s registration statement on
Form 10-SB filed with the SEC on July 12, 2006 (the “Form
10-SB”),
are hereinafter referred to as the “Public
Reports”).
Each of the Public Reports has complied with the Securities Act
and the
Exchange Act, and the Sarbanes/Oxley Act of 2002 (the “Sarbanes/Oxley
Act”)
and/or regulations promulgated thereunder, as the case may be,
in all
material respects. None of the Public Reports, as of their respective
dates, contained any untrue statement of a material fact or omitted
to
state a material fact necessary to make the statements made therein
not
misleading. The Form 10-SB, at the time it became effective,
did not
contain any untrue statement of material fact or omit to state
a material
fact necessary to make the statements made therein not misleading.
The
financial statements, including the notes thereto, included in
the Public
Reports have been prepared in accordance with U.S. GAAP applied
on a
consistent basis throughout the periods covered thereby and present
fairly
the financial condition of VICTORY DIVIDE as of such dates and
the results
of operations of VICTORY DIVIDE for such periods; provided, however,
that
the financial statements for all interim periods are subject
to normal
year-end adjustments and lack certain footnotes and other presentation
items otherwise required by GAAP. To the knowledge of VICTORY
DIVIDE,
there is no event, fact or circumstance that would cause any
certification
signed by any officer of VICTORY DIVIDE in connection with any
Public
Report pursuant to the Sarbanes/Oxley Act to be untrue, inaccurate
or
incorrect in any respect. The Common Stock of VICTORY DIVIDE
covered by
the Form 10-SB is validly, properly and effectively registered
under the
Exchange Act in accordance with all applicable federal securities
laws and
trades on the OTC Bulletin Board. There is no revocation order,
suspension
order, injunction or other proceeding or law affecting the effectiveness
of VICTORY DIVIDE’s Exchange Act registration or the trading of its Common
Stock. The consummation of the transactions contemplated by this
Agreement
do not conflict with and will not result in any violation of
any NASD or
OTC Bulletin Board trading requirement or standard applicable
to VICTORY
DIVIDE or its Common Stock.
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(ii)
Since the date of the filing of its quarterly report on Form 10-QSB for
the
quarter ended June 30, 2007, except as specifically disclosed in the Public
Reports and except as set forth on Schedule
2.10:
(A)
therehas been no event, occurrence or development that has resulted in
or could
result in a Material Adverse Effect (for purposes of this Section 2.10,
a
“Material Adverse Effect” means any event, occurrence, fact, condition, change
or effect that is materially adverse to the business, assets, condition
(financial or otherwise), operating results or prospects of VICTORY DIVIDE);
(B)
VICTORY DIVIDE has not incurred any liabilities, contingent or otherwise,
other
than professional fees, which are accurately disclosed in the Public Reports;
(C) VICTORY DIVIDE has not declared or made any dividend or distribution
of cash
or property to its shareholders, purchased, redeemed or made any agreements
to
purchase or redeem any shares of its capital stock, or issued any equity
securities; or (D) VICTORY DIVIDE has not made any loan, advance or capital
contribution to or investment in any person or entity.
8
Section
2.11 Books
and Financial Records.
All the
accounts, books, registers, ledgers, Board minutes and financial and other
material records of whatsoever kind of each of VICTORY DIVIDE and any Subsidiary
of VICTORY DIVIDE have been fully, properly and accurately kept and completed;
there are no material inaccuracies or discrepancies of any kind contained
or
reflected therein; and they give and reflect a true and fair view of the
financial, contractual and legal position of VICTORY DIVIDE and each such
Subsidiary.
Section
2.12 Employee
Benefit Plans.
VICTORY
DIVIDE does not have any “Employee Benefit Plan” as defined in the U.S. Employee
Retirement Income Security Act of 1974 or similar plans under any applicable
laws.
Section
2.13 Tax
Returns, Payments and Elections.
Each of
VICTORY DIVIDE and its Subsidiaries has timely filed all Tax (as defined
below)
returns, statements, reports, declarations and other forms and documents
(including, without limitation, estimated tax returns and reports and material
information returns and reports) (“Tax
Returns”)
required pursuant to applicable law to be filed with any Tax Authority
(as
defined below). All such Tax Returns are accurate, complete and correct
in all
material respects, and each of VICTORY DIVIDE and its Subsidiaries has
timely
paid all Taxes due. Each of VICTORY DIVIDE and its Subsidiaries has withheld
or
collected from each payment made to each of its employees the amount of
all
Taxes (including, but not limited to, United States income taxes and other
foreign taxes) required to be withheld or collected therefrom, and has
paid the
same to the proper Tax Authority. For purposes of this Agreement, the following
terms have the following meanings: “Tax”
(and,
with correlative meaning, “Taxes” and “Taxable”) means any and all taxes
including, without limitation, (x) any net income, alternative or add-on
minimum
tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, value added, net worth, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental
or
windfall profit tax, custom, duty or other tax, governmental fee or other
like
assessment or charge of any kind whatsoever, together with any interest
or any
penalty, addition to tax or additional amount imposed by any United States,
local or foreign governmental authority or regulatory body responsible
for the
imposition of any such tax (domestic or foreign) (a “Tax
Authority”),
(y)
any liability for the payment of any amounts of the type described in (x)
as a
result of being a member of an affiliated, consolidated, combined or unitary
group for any taxable period or as the result of being a transferee or
successor
thereof, and (z) any liability for the payment of any amounts of the type
described in (x) or (y) as a result of any express or implied obligation
to
indemnify any other person.
Section
2.14 Absence
of Liabilities.
As of
the Closing Date, VICTORY DIVIDE will have no liabilities of any kind
whatsoever. VICTORY DIVIDE is not a guarantor of any indebtedness of any
other
person, entity or corporation.
Section
2.15 No
Broker Fees.
No
brokers, finders or financial advisory fees or commissions will be payable
by
VICTORY DIVIDE with respect to the transactions contemplated by this
Agreement.
Section
2.16 Survival.
Each of
the representations and warranties set forth in this Article II shall be
deemed
represented and made by VICTORY DIVIDE at the Closing as if made at such
time
and shall survive the Closing for a period terminating on the second anniversary
of the date of this Agreement.
9
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF WINNER STATE, THE INDIVIDUALS AND FAITH
WINNER
Unless
otherwise provided below, Winner State, the INDIVIDUALS and Faith Winner
hereby
jointly and severally represent, warrant and agree that the statements
in the
following subsections of this Section 3 are all true and complete as of
the date
hereof, and will, except as contemplated by this Agreement, be true and
complete
as of the Closing Date as if first made on such date:
Section
3.1 Corporate
Organization.
Faith
Winner is organized as a business company under the laws of the British
Virgin
Islands; is duly organized, validly existing and in good standing under
the laws
of the British Virgin Islands; and has the requisite power and authority
to own,
lease and operate its assets and properties and to carry on its business
as it
is now being or currently planned to be conducted. Faith Winner is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals and orders (“Approvals”)
necessary to own, lease and operate the properties it purports to own,
operate
or lease and to carry on its business as it is now being conducted and
will be
conducted through WFOE and Yanglin (as defined and described in Schedule
3.3(a)), and to consummate the transactions contemplated under this Agreement,
except where the failure to have such Approvals could not, individually
or in
the aggregate, reasonably be expected to have a material adverse effect
on the
business, operations, properties, assets, condition or results of operation
of
Faith Winner. Faith Winner has complete and correct copies of its articles
of
organization and bylaws or similar governing, organization or charter documents
(collectively referred to herein as "Charter
Documents").
Faith
Winner is not in violation of any of the provisions of its Charter Documents.
The minute books or the equivalent of Faith Winner contain true, complete
and
accurate records of all meetings and consents in lieu of meetings of its
board
of directors (and any committees thereof), similar governing bodies and
stockholders ("Corporate
Records"),
since
the time of its organization until the date hereof. The stock ledgers and
other
ownership records of the shares of each of Faith Winner’s capital stock
(the “Share
Records”)
are
true, complete and accurate records of the ownership of the shares of such
capital stock as of the date thereof and contain all issuances and transfers
of
such shares since the time of Faith Winner’s organization.
Section
3.2 Capitalization
of Faith Winner; Title to the Faith Winner Shares.
On the
Closing Date, immediately before the transactions to be consummated pursuant
to
this Agreement, Faith Winner shall have authorized capital consisting of
50,000
shares, par value US $1.00 per share, 50,000 shares of which, constituting
all
of the Faith Winner Shares, will be issued and outstanding. All of the
Faith
Winner Shares are owned of record by Winner State and the INDIVIDUALS.
The Faith
Winner Shares are the sole outstanding shares of capital stock of Faith
Winner
and the INDIVIDUALS, and 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 Faith Winner.
10
Section
3.3 Subsidiaries
and Equity Investments.
a. Each
Subsidiary and affiliated company of Faith Winner and Yanglin is set forth
on
Schedule
3. 3(a).
b. Except
as
set forth on Schedule 3.3(a),
Faith
Winner does not, directly or indirectly own any capital stock or other
securities of, or any beneficial ownership interest in, or hold any equity
or
similar interest, or have any investment in any corporation, limited liability
company, partnership, limited partnership, joint venture or other company,
person or other entity. For each entity listed thereon, Schedule
3.3(a)
sets
forth its jurisdiction of organization and the percentage of the outstanding
capital stock or other equity interests of such entity that is held by
Faith
Winner. Each entity listed on Schedule
3.3(a)
is duly
organized and
validly existing and, except as set forth on Schedule
3.3(a),
is in
good standing under the laws of the jurisdiction of its formation; has
the
requisite power and authority to own its properties and to carry on its
business
as now being conducted; and, if applicable, is duly qualified as a foreign
entity to do business and, to the extent legally applicable, is in good
standing
in every jurisdiction in which its ownership of property or the nature
of the
business conducted by it makes such qualification necessary, except to
the
extent that the failure to be so qualified or be in good standing would
not have
a material adverse effect.
c. The
contractual agreements entered into between WFOE and Yanglin (as described
in
Schedule 3.3(a)) which essentially gives WFOE control over Yanglin’s business
and management as if Yanglin were a wholly-owned subsidiary of WFOE were
validly
entered into by the parties and in compliance with relevant PRC laws and
regulations and all necessary approvals in connection with such contractual
agreements have been obtained, except for those that do not or will not
have a
material adverse effect on the business of Yanglin.
Section
3.4 Authorization
and Validity of Agreements.
Faith
Winner has all corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. Winner State and the INDIVIDUALS warrants
and
represents that it has full power and authority to execute and deliver
this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement constitutes the valid
and
legally binding obligation of VICTORY DIVIDE, of Winner State and of the
INDIVIDUALS, and is enforceable in accordance with its terms. Neither Faith
Winner, Winner State nor the INDIVIDUALS need give any notice to, make
any
filings with, or obtain any authorization, consent or approval of any government
or governmental agency or other person in order for it to consummate the
transactions contemplated by this Agreement, other than filings that may
be
required or permitted under states securities laws, the Securities Act
and/or
the Exchange Act resulting from the transfer and exchange of the Faith
Winner
Shares. The execution and delivery of this Agreement by Faith Winner and
by
Winner State and the INDIVIDUALS, and the consummation by Faith Winner
and by
Winner State and the INDIVIDUALS of the transactions contemplated hereby,
have
been duly authorized by all necessary corporate action of Faith Winner,
and no
other corporate proceedings on the part of Faith Winner or other actions
on the
part of Winner State and the INDIVIDUALS are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
11
Section
3.5 No
Conflict or Violation.
Neither
the execution and delivery of this Agreement by Faith Winner, by Winner
State
and by the INDIVIDUALS, nor the consummation by Faith Winner and/or Winner
State
and/or INDIVIDUALS of the transactions contemplated hereby will: (i) violate
any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any government, governmental agency,
court, administrative panel or other tribunal to which Faith Winner and/or
Winner State and/or INDIVIDUALS is subject, or any provision of Faith Winner’s
Charter Documents; (ii) conflict with, result in a breach of, constitute
a
default under, result in the acceleration of, create in any party the right
to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to
which
Faith Winner and/or the INDIVIDUALS is/are a party or by which it/they
is/are
bound, or to which any of its/their/his assets is subject; or (iii) result
in or
require the creation or imposition of any encumbrance of any nature upon or with
respect to any of Faith Winner’s or any of the INVIDUALS’ assets, including
without limitation the Faith Winner Shares.
Section
3.6 Investment
Representations.
(a)
The
VICTORY DIVIDE Shares will be acquired hereunder solely for the account
of
Winner State and the INDIVIDUALS, for investment, and not with a view to
the
resale or distribution thereof. Winner State understands and is able to
bear any
economic risks associated with acquiring the VICTORY DIVIDE Shares. Winner
State
and the INDIVIDUALS have had full access to all the information it considers
necessary or appropriate to make an informed investment decision with respect
to
the VICTORY DIVIDE Shares.
(b)
No
offer to enter into this Agreement has been made by VICTORY DIVIDE to Winner
State and/or the INDIVIDUALS in the United States. None of Winner State
or any
of its affiliates or any person acting on its behalf or on behalf of any
such
affiliate, has engaged or will engage in any 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 VICTORY DIVIDE Shares, including,
but not
limited to, effecting any sale or short sale of securities through Winner
State
or any of its affiliate, prior to the expiration of any restricted period
contained in Regulation S promulgated under the Securities Act (any such
activity being defined herein as a “Directed
Selling Effort”).
To
the best knowledge of Winner State and the INDIVIDUALS 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 VICTORY DIVIDE Shares
are
being acquired for investment purposes by Winner State and the INDIVIDUALS.
Winner State and the INDIVIDUALS agree that all offers and sales of the
VICTORY
DIVIDE Shares from the date hereof and through the expiration of the any
restricted period set forth in Rule 903 of Regulation S (as the same may
be
amended from time to time hereafter) shall not be made to U.S. Persons
(within
the meaning of Regulation S) or for the account or benefit of U.S. Persons
and
shall otherwise be made in compliance with the provisions of Regulation
S and
any other applicable provisions of the Securities Act. Neither Winner State,
its
representative nor the INDIVIDUALS has conducted any Directed Selling Effort
as
that term is used and defined in Rule 902 of Regulation S and neither Winner
State nor any of its representative will engage in any such Directed Selling
Effort within the United States through the expiration of any restricted
period
set forth in Rule 903 of Regulation S.
12
Section
3.7 Brokers’
Fees. Neither
Winner State, the INDIVIDUALS nor Faith Winner has any liability to pay
any fees
or commissions or other consideration to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement, other than
to that
listed under Schedule 3.7.
Section
3.8 Disclosure.
This
Agreement, the schedules hereto and any certificate attached hereto or
delivered
in accordance with the terms hereof by or on behalf of Winner State, the
INDIVIDUALS or Faith Winner 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
3.9 Survival.
Each of
the representations and warranties set forth in this Article III shall
be deemed
represented and made by Winner State, the INDIVIDUALS and/or Faith Winner,
as
the case may be, at the Closing as if made at such time and shall survive
the
Closing for a period terminating on the second anniversary of the date
of this
Agreement.
ARTICLE
IV
COVENANTS
Section
4.1 Certain
Changes and Conduct of Business.
a. From
and
after the date of this Agreement and until the Closing Date, VICTORY DIVIDE
shall conduct its business solely in the ordinary course consistent with
past
practices and, in a manner consistent with all representations, warranties
or
covenants of VICTORY DIVIDE contained herein, and without the prior written
consent of Winner State (which may be withheld for any reason or no reason),
will not, except as required or permitted pursuant to the terms hereof
and the
Private Placement:
i.
|
make
any material change in the conduct of its businesses and/or operations
or
enter into any transaction other than in the ordinary course
of business
consistent with past practices;
|
ii.
|
except
as provided in Section 4.6 hereof, make any change in its Charter
Documents; issue any additional shares of capital stock or equity
securities or grant any option, warrant or right to acquire any
capital
stock or equity securities or issue any security convertible
into or
exchangeable for its capital stock or alter in any material term
of any of
its outstanding securities or make any change in its outstanding
shares of
capital stock or its capitalization, whether by reason of a
reclassification, recapitalization, stock split or combination,
exchange
or readjustment of shares, stock dividend or
otherwise;
|
13
iii |
except
as provided in Section 4.6 hereof:
|
A. |
incur,
assume or guarantee any indebtedness for borrowed money, issue
any notes,
bonds, debentures or other corporate securities or grant any
option,
warrant or right to purchase any thereof, except pursuant to
transactions
in the ordinary course of business consistent with past practices;
or
|
B.
|
issue
any securities convertible or exchangeable for debt or equity
securities
of VICTORY DIVIDE;
|
iv |
make
any sale, assignment, transfer, abandonment or other conveyance
of any of its assets or any part thereof, except pursuant to
transactions in the ordinary course of business consistent with
past
practice;
|
v. |
subject
any of its assets, or any part thereof, to any lien or suffer
such to be
imposed other than such liens as may arise in the ordinary course
of
business consistent with past practices by operation of law which
will not
have an VICTORY DIVIDE Material Adverse
Effect;
|
vi. |
acquire
any assets, raw materials or properties, or enter into any other
transaction, other than in the ordinary course of business consistent
with
past practices;
|
vii. |
enter
into any new (or amend any existing) employee benefit plan, program
or
arrangement or any new (or amend any existing) employment, severance
or
consulting agreement, grant any general increase in the compensation
of
officers or employees (including any such increase pursuant to
any bonus,
pension, profit-sharing or other plan or commitment) or grant
any increase
in the compensation payable or to become payable to any employee,
except
in accordance with pre-existing contractual provisions or consistent
with
past practices;
|
viii. |
make
or commit to make any material capital
expenditures;
|
14
ix. |
pay,
loan or advance any amount to, or sell, transfer or lease any
properties
or assets to, or enter into any agreement or arrangement with,
any of its
affiliates;
|
x. |
guarantee
any indebtedness for borrowed money or any other obligation of
any other
person;
|
xi. |
fail
to keep in full force and effect insurance comparable in amount
and scope
to coverage maintained by it (or on behalf of it) on the date
hereof;
|
xii. |
take
any other action that would cause any of the representations
and
warranties made by it in this Agreement not to remain true and
correct in
all material aspect;
|
xiii. |
make
any material loan, advance or capital contribution to or investment
in any
person;
|
xiv. |
make
any material change in any method of accounting or accounting
principle,
method, estimate or practice;
|
xv. |
settle,
release or forgive any claim or litigation or waive any
right;
|
xvi. |
commit
itself to do any of the foregoing.
|
b.From
and
after the date of this Agreement, Faith Winner will, and Winner State
will cause
Faith Winner to:
i. |
continue
to maintain, in all material respects, its properties in
accordance
with present practices in a condition suitable for its current
use;
|
ii. |
file,
when due or required, federal, state, foreign and other tax returns
and
other reports required to be filed and pay when due all taxes,
assessments, fees and other charges lawfully levied or assessed
against
it, unless the validity thereof is contested in good faith and
by
appropriate proceedings diligently
conducted;
|
iii. |
continue
to conduct its business in the ordinary course consistent with
past
practices;
|
iv. |
keep
its books of account, records and files in the ordinary course
and in
accordance with existing practices;
and
|
15
v. |
continue
to maintain existing business relationships with
suppliers.
|
c.
From
and after the date of this Agreement, Winner State will not sell, transfer,
convey, assign or otherwise dispose of, or contract or otherwise agree
to sell,
transfer, convey, assign or otherwise dispose of any of the Faith Winner
Shares
except as provided by this Agreement.
Section
4.2 Access
to Properties and Records.
Winner
State and Faith Winner shall afford to VICTORY DIVIDE’s accountants, counsel and
authorized representatives, and VICTORY DIVIDE shall afford to Winner State's
and Faith Winner’s accountants, counsel and authorized representatives, full
access during normal business hours throughout the period prior to the
Closing
Date (or the earlier termination of this Agreement) to all of such parties’
properties, books, contracts, commitments and records and, during such
period,
shall furnish promptly to the requesting party all other information concerning
the other party's business, properties and personnel as the requesting
party may
reasonably request, provided that no investigation or receipt of information
pursuant to this Section 5.2 shall affect any representation or warranty
of or
the conditions to the obligations of any party.
Section
4.3 Negotiations.
From
and after the date hereof until the earlier of the Closing or the termination
of
this Agreement, no party to this Agreement, nor any of its officers or
directors
(subject to such director's fiduciary duties), nor anyone acting on behalf
of
any party or other persons shall, directly or indirectly, encourage, solicit,
engage in discussions or negotiations with, or provide any information
to, any
person, firm, or other entity or group concerning any merger, sale of
substantial assets, purchase or sale of shares of capital stock or similar
transaction involving any party except for the Private Placement. A party
shall
promptly communicate to any other party any inquiries or communications
concerning any such transaction which they may receive or of which they
may
become aware.
Section
4.4 Consents
and Approvals.
The
parties shall: (i) use their reasonable commercial efforts to obtain all
necessary consents, waivers, authorizations and approvals of all governmental
and regulatory authorities, domestic and foreign, and of all other persons,
firms or corporations required in connection with the execution, delivery
and
performance by them of this Agreement; and (ii) diligently assist and cooperate
with each party in preparing and filing all documents required to be submitted
by a party to any governmental or regulatory authority, domestic or foreign,
in
connection with such transactions and in obtaining any governmental consents,
waivers, authorizations or approvals which may be required to be obtained
connection in with such transactions.
Section
4.5 Public
Announcement.
Unless
otherwise required by applicable law, the parties hereto shall consult
with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement and shall not issue any such press release
or
make any such public statement prior to such consultation.
Section
4.6 Permitted
Stock Issuances.
From
and after the date of this Agreement until the Closing Date, neither VICTORY
DIVIDE, Winner State, nor Faith Winner shall issue any additional shares
of its
capital stock, except that VICTORY DIVIDE may on the Closing Date issue
the
VICTORY DIVIDE Shares as hereinbefore provided; and in connection with
the
Private Placement issue up to an aggregate of 10,000,000 shares of Series
A
Stock and attached warrants to accredited investors pursuant to the terms
of the
Securities Purchase Agreement.
16
ARTICLE
V
CONDITIONS
TO OBLIGATIONS OF WINNER STATE AND FAITH WINNER
The
obligations of Winner State, the INDIVIDUALS and Faith Winner to consummate
the
transactions contemplated by this Agreement are subject to the fulfillment,
at
or before the Closing Date, of the following conditions, any one or more
of
which may be waived by Winner State, the INDIVIDUALS and Faith Winner in
Winner
State’s sole discretion:
Section
5.1 Representations
and Warranties of VICTORY DIVIDE.
All
representations and warranties made by VICTORY DIVIDE in this Agreement
shall be
true and correct on and as of the Closing Date as if again made by VICTORY
DIVIDE on and as of such date.
Section
5.2 Agreements
and Covenants.
VICTORY
DIVIDE shall have performed and complied in all material respects to all
agreements and covenants required by this Agreement to be performed or
complied
with by it on or prior to the Closing 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 Closing
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
VICTORY DIVIDE 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.
Section
5.5 Other
Closing Documents.
Winner
State and Faith Winner shall have received such certificates, instruments
and
documents in confirmation of the representations and warranties of VICTORY
DIVIDE, VICTORY DIVIDE’s performance of its obligations hereunder, and/or in
furtherance of the transactions contemplated by this Agreement as Winner
State,
Faith
Winner and/or their respective counsel may reasonably request.
17
Section
5.6 Consummation
of Private Placement.
The
Private Placement and the financing contemplated thereby and by the Securities
Purchase Agreement shall have closed.
ARTICLE
VI
CONDITIONS
TO OBLIGATIONS OF VICTORY DIVIDE
The
obligations of VICTORY DIVIDE to consummate the transactions contemplated
by
this Agreement are subject to the fulfillment, at or before the Closing
Date, of
the following conditions, any one or more of which may be waived by VICTORY
DIVIDE in its sole discretion:
Section
6.1 Representations
and Warranties of Winner State and Faith Winner.
All
representations and warranties made by Winner State and Faith Winner in
this
Agreement shall be true and correct on and as of the Closing Date as if
again
made by Winner State and Faith Winner, as applicable, on and as of such
date.
Section
6.2 Agreements
and Covenants.
Each of
Winner State and Faith Winner shall have performed and complied in all
material
respects to all agreements and covenants required by this Agreement to
be
performed or complied with by each of them on or prior to the Closing Date.
Section
6.3 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 Closing Date.
Section
6.4 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 Faith Winner, taken as a whole, 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.
Section
6.5 Other
Closing Documents.
VICTORY
DIVIDE shall have received such certificates, instruments and documents
in
confirmation of the representations and warranties of Winner State and/or
Faith
Winner, as applicable, the performance of Winner State’s and Faith Winner’s
obligations hereunder and/or in furtherance of the transactions contemplated
by
this Agreement as VICTORY DIVIDE or its counsel may reasonably
request.
18
Section
6.6 Consummation
of Private Placement.
The
Private Placement and the financing contemplated thereby and by the Securities
Purchase Agreement shall have closed.
Section
6.7 Yanglin
has entered into the employment contracts, confidentiality, and non-competition
agreements and non-compete undertaking letters with its management as set
forth
in Schedule 6.7 hereto.
ARTICLE
VII
POST-CLOSING
AGREEMENTS
Section
7.1 Purchase
Price Adjustment.
The
parties agree that the total Purchase Price shall be adjusted based on
the
financial performance of VICTORY DIVIDE on a consolidated basis for the
fiscal
year ended December 31, 2008 following the Closing as follows (as used
in this
Agreement, “Net
Income”
means
Net Income as defined in accordance with US GAAP and reported by VICTORY
DIVIDE
in its audited financial statements for the fiscal year ending December
31, 2008
(the “2008
Financial Statements”)
plus
any
amounts that may have been recorded as charges or liabilities on the 2008
Financial Statements due to the application of EITF No. 00-19 that are
associated with (A) any outstanding Warrants of the Company, (B) any issuance
under a performance based stock incentive plan that was in existence on
the
Closing Date or (C) the transactions contemplated under the Securities
Escrow
Agreement dated the date hereof by and among the Company, Winner State,
Vision
Opportunity Master Fund, Ltd. and Loeb & Loeb, as escrow agent and Section
7.1 of this Agreement):
a.
|
If
(i) the 2008 Net Income is equal to or greater than $14,100,000,
(ii)
Earnings Per Share is equal to or greater than $0.47, such “Earnings Per
Share” to be calculated by dividing Net Income, by the aggregate number
of
shares of then outstanding Common Stock plus the number of shares
of
Series A Stock outstanding, (iii) cash from operations reported
by the
Company in
accordance with US GAAP in
the 2008 Financial Statements is greater than $12,100,000 and
(iv) cash
from operations on a per share basis (calculated in the same
manner as
Earnings Per Share) exceeds $0.40; then 4,000,000 shares of Common
Stock
shall be issued to Winner State or its designees by the Company
as an
adjustment to the Purchase Price.
|
b.
|
All
share numbers set forth in clause a above shall be proportionately
adjusted in the event that VICTORY DIVIDE consummates a stock
split or
combination or other recapitalization.
|
c.
|
VICTORY
DIVIDE shall reserve shares of Common Stock to be issued pursuant
to this
Section 7.1 for issuance hereunder.
|
19
Section
7.2 Consistency
in Reporting.
Each
party hereto agrees that if the characterization of any transaction contemplated
in this agreement or any ancillary or collateral transaction is challenged,
each
party hereto will testify, affirm and ratify that the characterization
contemplated in such agreement was the characterization intended by the
party;
provided, however, that nothing herein shall be construed as giving rise
to any
obligation if the reporting position is determined to be incorrect by final
decision of a court of competent jurisdiction.
Section
7.3 Related
Party Transactions. Except as set forth below, VICTORY DIVIDE agrees that
upon
consummation of the transactions contemplated by this Agreement, it shall
not,
and shall not permit its subsidiaries and its affiliates, whether directly
and
indirectly owned, including, without limitation, Faith Winner Investments
Limited, Faith Winner (Jixian) Agriculture Development Company and Heilongjiang
Yanglin Soybean Group Co., Ltd. to enter into any “related party” transaction
unless it has procured the unanimous approval of its board of directors.
For the
purposes of this Section 7.3, a “related party” transaction shall mean a
transaction meeting the disclosure criteria set forth in Item 404 of Regulation
S-K. In the event a related party transaction involves a director or directors
as a party or an affiliate of a party such that the director(s) abstain
from
voting on a transaction, the unanimous approval requirement of this Section
7.3
shall be met by approval of all non-abstaining directors.
ARTICLE
VIII
TERMINATION
AND ABANDONMENT
Section
8.1 Methods
of Termination.
This
Agreement may be terminated and the transactions contemplated hereby may
be
abandoned at any time before the Closing:
a.
By
the
mutual written consent of Winner State, Faith Winner and VICTORY
DIVIDE ;
b. By
VICTORY DIVIDE, upon a material breach on the part of Winner State or Faith
Winner of any representation, warranty, covenant or agreement set forth
in this
Agreement, or if any representation or warranty of Winner State or Faith
Winner
shall become untrue, in either case such that any of the conditions set
forth in
Article VII hereof would not be satisfied (a "Winner
State /Faith Winner Breach"),
and
such breach, if capable of cure, has not been cured within ten (10) days
after
receipt by Winner State and Faith Winner of a written notice from VICTORY
DIVIDE
setting forth in detail the nature of such Winner State/Faith Winner
Breach;
c. By
Winner
State and Faith Winner, upon a material breach on the part of VICTORY DIVIDE
of
any representation, warranty, covenant or agreement set forth in this Agreement,
or, if any representation or warranty of VICTORY DIVIDE shall become untrue,
in
either case such that any of the conditions set forth in Article VI hereof
would
not be satisfied (a "VICTORY
DIVIDE Breach"),
and
such breach, if capable of cure, has not been cured within ten (10) days
after
receipt by VICTORY DIVIDE of a written notice from Winner State and Faith
Winner
setting forth in detail the nature of such VICTORY DIVIDE Breach;
20
d. By
either
VICTORY DIVIDE or Winner State and Faith Winner, if the Closing shall not
have
consummated before ninety (90) days after the date hereof; provided,
however,
that
this Agreement may be extended by written notice of either Winner State
and
Faith Winner or VICTORY DIVIDE if the Closing shall not have been consummated
as
a result of Faith Winner or VICTORY DIVIDE having failed to receive all
required
regulatory approvals or consents with respect to this transaction or as
the
result of the entering of an order as described in this Agreement; and
further
provided, however,
that
the right to terminate this Agreement under this Section 8.1(d) shall not
be
available to any party whose failure to fulfill any obligations under this
Agreement has been the cause of, or resulted in, the failure of the Closing
to
occur on or before this date; or
e. By
either
Winner State and Faith Winner or VICTORY DIVIDE if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other action
(which
order, decree or ruling the parties hereto shall use its best efforts to
lift),
which permanently restrains, enjoins or otherwise prohibits the transactions
contemplated by this Agreement.
Section
8.2 Procedure
Upon Termination.
In the
event of termination and abandonment of this Agreement pursuant to Section
8.1,
written notice thereof shall forthwith be given by the terminating parties
to
the other parties and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action. If this
Agreement is terminated as provided herein, no party to this Agreement
shall
have any liability or further obligation to any other party to this Agreement;
provided,
however,
that no
termination of this Agreement pursuant to this Article VIII shall relieve
any
party of liability for a breach of any provision of this Agreement occurring
before such termination.
ARTICLE
IX
MISCELLANEOUS
PROVISIONS
Section
9.1 Survival
of Provisions.
The
respective representations, warranties, covenants and agreements of each
of the
parties to this Agreement (except covenants and agreements which are expressly
required to be performed and are performed in full on or before the Closing
Date) shall survive the Closing Date and the consummation of the transactions
contemplated by this Agreement, subject to Sections 2.14 and 3.9. In the
event
of a breach of any of such representations, warranties or covenants, the
party
to whom such representations, warranties or covenants have 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 Closing Date.
21
Section
9.2 Publicity.
No
party shall cause the publication of any press release or other announcement
with respect to this Agreement or the transactions contemplated hereby
without
the consent of the other parties, unless a press release or announcement
is
required by law. If any such announcement or other disclosure is required
by
law, the disclosing party agrees to give the non-disclosing parties prior notice
and an opportunity to comment on the proposed disclosure.
Section
9.3 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 the obligations created under this Agreement
without the prior written consent of the other parties.
Section
9.4 Fees
and Expenses.
Except
as otherwise expressly provided in this Agreement, 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
9.5 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 at the following addresses:
If
to
Winner State or Faith Winner, to:
XX
Xxx
000, Xxxxxxxx Incorporations Center,
Road
Town, Tortola, British Virgin Islands
with
copies to:
Guzov
Ofsink, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx Xxxxxx
Tel.
No.:
(000) 000-0000, ext. 127
Fax
No.:
(000) 000-0000
If
to
VICTORY DIVIDE, to:
000
Xxxx
Xxxx Xxxxxx
Xxxxxxx,
Xxxxx 00000
Attention:
Xxxxx X. Little
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000 0000
with
copies to:
22
Xxxxxx
X.
Xxxxxxx, Esq.
000
Xxxxx
Xxxxxx, Xxxxx 000
Xxx
Xxxx,
Xxx Xxxx 00000
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
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. No change
in
any of such addresses shall be effective insofar as notices under this
Section
9.5 are concerned unless such changed address is located in the United
States of
America and notice of such change shall have been given to such other party
hereto as provided in this Section 9.5
Section
9.6 Entire
Agreement.
This
Agreement, together with the exhibits 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 exhibits,
certificates 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.
Section
9.7 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
9.8 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
9.9 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
9.10 Convenience
of Forum; Consent to Jurisdiction.
The
parties to this Agreement, acting for themselves and for their respective
successors and assigns, without regard to domicile, citizenship or residence,
hereby expressly and irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with this Agreement,
and consent and subject themselves to the jurisdiction of, the courts of
the
State of New York located in County of New York, and/or the United States
District Court for the Southern District of New York, in respect of any
matter
arising under this Agreement. Service of process, notices and demands of
such
courts may be made upon any party to this Agreement by personal service
at any
place where it may be found or giving notice to such party as provided
in
Section 9.5.
23
Section
9.11 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
9.12 Governing
Law.
This
Agreement shall be governed by and interpreted and enforced in accordance
with
the laws of the State of New York without giving effect to the choice of
law
provisions thereof.
Section
9.13 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 or covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior
or
subsequent such occurrence.
24
IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above
written.
WINNER
STATE INVESTMENTS LIMITED
By:
|
Xxxxxx
Xxx
|
|
[Name;
Title]
|
||
|
Chief
Executive Officer
|
|
/s/
Xxxx Xxxx
|
||
Xxxx Xxxx | ||
/s/
Xxxx Xxxx
|
||
Xxxx Xxxx | ||
/s/
Xxxx Xxxxx
|
||
Xxxx Xxxxx |
FAITH
WINNER INVESTMENTS LIMITED
By:
|
Xxxxxx
Xxx
|
|
[Name;
Title]
|
||
|
Chief
Executive Officer
|
By:
|
Xxxxx
X. Little
|
|
[Name;
Title]
|
||
|
Chief
Executive Officer
|
25
EXHIBIT
A
Securities
Purchase Agreement
Please
refer to Exhibit 10.2 of the Form 8-K
26
EXHIBIT
B
Capitalization
Table
Yanglin
Capitalization Table
|
|||||||||||||||||||
Post
Deal Shares in Victory Divide Mining Company
|
|||||||||||||||||||
Amount
Invested
|
Common
Stock
|
Series
A Preferred
|
Series
B Preferred potentially issuable if
Series
J
Exercised
|
Series
A Warrants
|
Series
B Warrants
|
||||||||||||||
Winner
State International Limited
|
18,200,000
|
||||||||||||||||||
Beneficial
Ownership
|
|||||||||||||||||||
Xxxxxx
Xxx
|
9,100,000
|
||||||||||||||||||
Huanqin
Ding
|
9,100,000
|
||||||||||||||||||
Investors
|
$
|
21,500,000.00
|
525,000
|
10,000,000
|
7,801,268
|
10,000,000
|
5,000,000
|
||||||||||||
Vision
Opportunity Master Fund, Ltd.
|
$
|
8,000,000.00
|
525,000
|
3,720,930
|
3,382,664
|
3,720,930
|
1,860,465
|
||||||||||||
Sansar
Capital Special Opportunity Master Fund, LP (Cayman
Master)
|
$
|
5,950,000.00
|
2,767,442
|
2,515,856
|
2,767,442
|
1,383,721
|
|||||||||||||
Vicis
Capital Master Fund
|
$
|
4,500,000.00
|
2,093,023
|
1,902,748
|
2,093,023
|
1,046,512
|
|||||||||||||
Precept
Capital Master Fund, GP
|
$
|
500,000.00
|
232,558
|
232,558
|
116,279
|
||||||||||||||
Penn
Footwear
|
$
|
250,000.00
|
116,279
|
116,279
|
58,140
|
||||||||||||||
Crescent
International Ltd.
|
$
|
300,000.00
|
139,535
|
139,535
|
69,767
|
||||||||||||||
Benefit
Grand Investments Limited
|
$
|
500,000.00
|
232,558
|
232,558
|
116,279
|
||||||||||||||
Golden
Bridge Asset Management
|
$
|
1,000,000.00
|
465,116
|
465,116
|
232,558
|
||||||||||||||
Xxxxxx
X Xxxxxxxx
|
$
|
250,000.00
|
116,279
|
116,279
|
58,140
|
||||||||||||||
Xxxxxxx
Road Partners, LP
|
$
|
250,000.00
|
116,279
|
116,279
|
58,140
|
||||||||||||||
Xxxxx
Brothers Securities, Inc.
|
487,500
|
||||||||||||||||||
Public
Shareholders//Xxxxx Xxxxxx
|
487,500
|
||||||||||||||||||
Mass
Harmony Assets
|
300,000
|
||||||||||||||||||
Totals
|
$
|
21,500,000
|
20,000,000
|
10,000,000
|
7,801,268
|
10,000,000
|
5,000,000
|
Yanglin
Capitalization Table
|
|||||||||||||||||||||||||
Post
Deal Shares in Victory Divide Mining Company
|
|||||||||||||||||||||||||
Setries
J Warrants
|
Series
C Warrants
|
Series
D Warrants
|
Series
E Warrants
|
Series
F Warrants
|
%
of
Outstanding Common
|
%
of
Outstanding Assuming Preferred is Converted
|
%
Fully Diluted
|
||||||||||||||||||
Winner
State International Limited
|
91.00
|
%
|
60.67
|
%
|
24.66
|
%
|
|||||||||||||||||||
Beneficial
Ownership
|
|||||||||||||||||||||||||
Xxxxxx
Xxx
|
|||||||||||||||||||||||||
Huanqin
Ding
|
|||||||||||||||||||||||||
Investors
|
7,801,268
|
7,801,268
|
3,900,634
|
0
|
0
|
2.63
|
%
|
35.08
|
%
|
71.58
|
%
|
||||||||||||||
Vision
Opportunity Master Fund, Ltd.
|
3,382,664
|
3,382,664
|
1,691,332
|
2.63
|
%
|
14.15
|
%
|
29.36
|
%
|
||||||||||||||||
Sansar
Capital Special Opportunity Master Fund, LP (Cayman
Master)
|
2,515,856
|
2,515,856
|
1,257,928
|
0.00
|
%
|
9.22
|
%
|
21.31
|
%
|
||||||||||||||||
Vicis
Capital Master Fund
|
1,902,748
|
1,902,748
|
951,374
|
0.00
|
%
|
6.98
|
%
|
16.11
|
%
|
||||||||||||||||
Precept
Capital Master Fund, GP
|
0.00
|
%
|
0.78
|
%
|
0.79
|
%
|
|||||||||||||||||||
Penn
Footwear
|
0.00
|
%
|
0.39
|
%
|
0.39
|
%
|
|||||||||||||||||||
Crescent
International Ltd.
|
0.00
|
%
|
0.47
|
%
|
0.47
|
%
|
|||||||||||||||||||
Benefit
Grand Investments Limited
|
0.00
|
%
|
0.78
|
%
|
0.79
|
%
|
|||||||||||||||||||
Golden
Bridge Asset Management
|
0.00
|
%
|
1.55
|
%
|
1.58
|
%
|
|||||||||||||||||||
Xxxxxx
X Xxxxxxxx
|
0.00
|
%
|
0.39
|
%
|
0.39
|
%
|
|||||||||||||||||||
Xxxxxxx
Road Partners, LP
|
0.00
|
%
|
0.39
|
%
|
0.39
|
%
|
|||||||||||||||||||
Xxxxx
Brothers Securities, Inc.
|
1,000,000
|
2.44
|
%
|
1.63
|
%
|
2.02
|
%
|
||||||||||||||||||
Public
Shareholders//Xxxxx Xxxxxx
|
2.44
|
%
|
1.63
|
%
|
0.66
|
%
|
|||||||||||||||||||
Mass
Harmony Assets
|
500,000
|
1.50
|
%
|
1.00
|
%
|
1.08
|
%
|
||||||||||||||||||
Totals
|
7,801,268
|
7,801,268
|
3,900,634
|
1,000,000
|
500,000
|
100.00
|
%
|
100.00
|
%
|
100.00
|
%
|
Legend
|
||||
Series
A Convertible Preferred Stock - Convertible into common at
the option of
the holder 1:1. Price per share
|
$
|
2.15
|
||
Series
A Warrants - five year term with an exercise price of
|
$
|
2.75
|
||
Series
B Warrants - five year term with an exercise price of
|
$
|
3.50
|
||
Series
J Warrants - 18 month term with an exercise price of
|
$
|
2.37
|
||
Series
C Warrants - five year term with an exercise price of
|
$
|
3.03
|
||
Series
D Warrants - five year term with an exercise price of
|
$
|
3.85
|
||
Series
E Warrants - only for the placement agent - five year term
with an
exercise price of
|
$
|
2.58
|
||
Series
F Warrants - only for Mass Harmony Assets, the financial
cousulting firm -
five year term with an exercise price of
|
$
|
3.01
|
||
Total
Common Outstanding Post-Reverse and Post-Finacing
|
20,000,000
|
|||
Total
Series A Preferred Stock to be sold
|
10,000,000
|
|||
Fully
Diluted Calculation Assumes the Conversion of all preferred
and exercise
of all warrant for outstanding shares of
|
73,804,440
|
27
Schedule
2.2
Outstanding
Options, Warrants, Rights, etc. to Acquire VICTORY DIVIDE Capital Stock
None.
28
Schedule
2.3
Subsidiaries
and Equity Interests of VICTORY DIVIDE
None.
29
Schedule
2.10
VICTORY
DIVIDE Dividends, Distributions, Redemptions, etc.
None.
30
Schedule
3.3(a)
Subsidiaries
and Equity Interests of Faith Winner
Faith
Winner owns all the equity interest of Faith Winner (Jixian) Agriculture
Development Company Limited (“WFOE”), a company incorporated under the laws of
the People’s Republic of China (“PRC”). WFOE has entered into a series of
contractual agreements with Heilongjiang Yanglin Soybean Group Co., Ltd
(“Yanglin”), a company incorporated under the laws of the PRC, which essentially
gives WFOE control over Yanglin’s business and management as if Yanglin were a
wholly-owned subsidiary of WFOE.
Sun
Xx
Xxxx Kai Soybean Processing Co., Ltd, has never been and is not a subsidiary
or
affiliated company of Yanglin.
31
Schedule
3.3(b)
Subsidiaries
and Equity Interests of Faith Winner
Refer
to
Schedule 3.3(a).
32
Schedule
3.7
Yanglin
and Mass Harmony Asset Management Limited (“MHA”) dated November 2, 2006,
Yanglin is to pay MHA an aggregate of RMB300,000 (approximately US$39,891),
half
of which is payable within five business days upon the execution of the
MHA
Agreement, and the balance is due within five business days after the closing
of
a reverse merger.
MHA
is
also to receive 1% of the issued and outstanding common stock of VICTORY
DIVIDE
post-private placement (including the underlying common stock of the Series
A
Preferred Stock) and warrants to purchase Common Stock valued at 5% of
the
dollar amount of private placement at an exercise price of 140% of the
Series A
Preferred Stock price. i.e. 500,000 warrants.
The
services MHA shall render, pursuant to the MHA Agreement includes initial
due
diligence on Yanglin, preparing Yanglin’s business plan and assisting in the
corporate restructuring and financial documentation.
On
December 12, 2006, Yanglin entered into an engagement agreement with Xxxxx
Brothers, Inc. (“Xxxxx Agreement”). Pursuant to the Xxxxx Agreement, Xxxxx
Brothers, Inc. will be providing the following services:
1.
|
Financial
Advisory Services;
|
2.
|
Merger
and Acquisition Services; and
|
3.
|
Strategic
Planning Services.
|
With
respect to the Financial Advisory Services, Xxxxx Brothers, Inc. will be
paid
the following:
a.
|
a
non-refundable signing fee of $50,000,
|
b.
|
a
non-refundable documentation fee of $35,000 payable upon the
delivery of
an executive summary and investor powerpoint
presentation;
|
c.
|
a
shell purchase fee of $120,000 payable upon the successful purchase
of a
public shell; and
|
d.
|
a
financing fee equal to the following percentages of the total
financing
value - (i)10 % of any public equity offering and warrants to
purchase the
amount of common stock (with attached warrants) equal to 10%
if such
public equity offering and (ii) 10% of the value of warrants
or
subscription rights when exercised.
|
With
respect to Merger and Acquisition Services, Xxxxx Brothers, Inc. will be
paid a
fee of not less than 5% the equity of the “clean” shell company. For any other
form of merger and acquisition, a fee equal to the “Xxxxxx Formula” based on $5
million increments will be paid in the form of either cash or equity value
of
the organization being acquired.
With
respect to the Strategic Planning Services, Xxxxx Brothers, Inc. will be
paid a
non-refundable monthly retainer of $10,000 per month, payable in arrears,
prior
to closing of the financing and commencing from the closing of the financing,
a
monthly retainer of $10,000 a month, payable on the first of each month
for 24
months.
The
Xxxxx
Agreement also contemplates paying Xxxxx Brothers, Inc. an amount equal
to 1% of
the total offering amount with respect to the reasonable expenses to be
incurred
by Xxxxx Brothers, Inc. in relation to the financing and an initial retainer
of
$10,000 to Xxxxxxx & Xxxxxxx, Xxxx Brothers, Inc.’s placement
counsel.
33
Section
6.7
Employment
Contracts, Confidentiality, and Non-competition agreements and
Non-compete
Undertaking Letters