EX-2.1
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v189632_ex2-1.htm
SHARE
EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
BY
AND BETWEEN
LIAONING
CREATIVE BELLOWS CO., LTD.
and
CLEANTECH
INNOVATIONS, INC.
Dated
as of July 2, 2010
SHARE EXCHANGE AGREEMENT AND
PLAN OF REORGANIZATION
This
SHARE EXCHANGE AGREEMENT AND PLAN OF
REORGANIZATION (this “Agreement”) is entered into as
of July 2, 2010, by and among LIAONING CREATIVE BELLOWS CO.,
LTD., a company organized under the laws of The People’s Republic of
China (“Creative
Bellows”), and CLEANTECH INNOVATIONS, INC., a
Nevada corporation (“Purchaser”), and each of the
shareholders of Creative Bellows listed on Schedule 2.1 hereto
(the “Creative Bellows Shareholders”).
RECITALS
WHEREAS, Creative Bellows
is a PRC company that designs and manufactures high performance clean technology
products that promote renewable energy production, pollution reduction and
energy conservation;
WHEREAS, Purchaser and
Creative Bellows have agreed to the acquisition by Purchaser of all of the
issued and outstanding capital stock of Creative Bellows pursuant to a voluntary
share exchange transaction (the “Share Exchange”) between
Purchaser and Creative Bellows upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance
thereof, the Board of Directors of Purchaser has approved the Share Exchange in
accordance with the applicable provisions of the NRS and upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance
thereof, the Board of Directors and shareholders of Creative Bellows have each
approved the Share Exchange in accordance with the applicable provisions of the
laws of the PRC and upon the terms and
subject to the conditions set forth herein; and
WHEREAS, for United States
federal income tax purposes, the parties intend that the Share Exchange shall
constitute a tax-free reorganization within the meaning of Sections 368 and 1032
of the Code.
NOW, THEREFORE, in
consideration of the premises, and the mutual covenants and agreements contained
herein, the parties do hereby agree as follows:
ARTICLE
I. DEFINITIONS
(a) “Affiliate” shall mean, as to
any Person, any other Person controlled by, under the control of, or under
common control with, such Person. As used in this definition, “control” shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns or holds directly or indirectly five
per cent (5%) or more of the voting securities or five per cent (5%) or more of
the partnership or other equity interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such other
Person.
(b) “Agreement” means this
Share
Exchange Agreement and Plan of Reorganization.
(c) “Applicable Law” or “Applicable Laws” means any and
all laws, ordinances, constitutions, regulations, statutes, treaties, rules,
codes, licenses, certificates, franchises, permits, principles of common law,
requirements and Orders adopted, enacted, implemented, promulgated, issued,
entered or deemed applicable by or under the authority of any Governmental Body
having jurisdiction over a specified Person or any of such Person’s properties
or assets.
(d) “Best Efforts” means the
efforts that a prudent Person desirous of achieving a result would use in
similar circumstances to achieve that result as expeditiously as possible,
provided, however, that a Person required to use Best Efforts under this
Agreement will not be thereby required to take actions that would result in a
Material Adverse Effect in the benefits to such Person of this Agreement and the
Share Exchange.
(e) “Breach” means any breach of,
or any inaccuracy in, any representation or warranty or any breach of, or
failure to perform or comply with, any covenant or obligation, in or of this
Agreement or any other Contract.
(f) “Business” means the design and
manufacture of high performing clean technology products that promote renewable
energy production, pollution reduction and energy conservation as presently
conducted by Creative Bellows.
(g) “Business Day” means any day
other than (a) Saturday or Sunday or (b) any other day on which major money
center banks in
New York,
New York are permitted or
required to be closed.
(h) “Closing” shall mean the
completion of the Share Exchange and the consummation of the transactions set
forth herein.
(i) “Closing Date” shall mean the
date on which the Closing is completed.
(j)
“Code” shall mean the Internal
Revenue Code of 1986, as amended.
(k) “Confidential Information”
means any information pertaining to the business, operations, marketing,
customers, financing, forecasts and plans of any Party provided to or learned by
any other Party during the course of negotiation of the Share Exchange.
Information shall be treated as Confidential Information whether such
information has been marked “confidential” or in a similar manner.
(l) “Consent” means any approval,
consent, license, permits, ratification, waiver or other
authorization.
(m) “Contract” means any agreement,
contract, lease, license, consensual obligation, promise, undertaking,
understanding, commitment, arrangement, instrument or document (whether written
or oral and whether express or implied), whether or not legally
binding.
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(n) “Creative Bellows” has the
meaning set forth in the preamble to this Agreement.
(o) “Creative Bellows Balance Sheet” has the
meaning set forth in Section 4.6(a).
(p) “Creative Bellows Board” has the meaning set
forth in Section 4.4.
(q) “Creative Bellows Employee Plans” has the
meaning set forth in Section 4.16(a).
(r) “Creative Bellows Financial Information” has
the meaning set forth in Section 4.6.
(s) “Creative Bellows Intellectual Property” has
the meaning set forth in Section 4.12(a).
(t) “Creative Bellows Shareholders” has the meaning
set forth in the preamble to this Agreement.
(u) “Creative Bellows Tax Affiliate” shall mean any
Affiliate of Creative Bellows to which Creative Bellows would be required to
consolidate and report in returns under the Code.
(v) “Distribution Compliance
Period” shall have the meaning set forth in Section 3.1(e).
(w) “Employee Benefit Plan” has the
meaning set forth in ERISA Section 3(3).
(x) “Encumbrance” means and
includes:
(i) with
respect to any personal property, any security or other property interest or
right, claim, lien, pledge, option, charge, security interest, contingent or
conditional sale, or other title claim or retention agreement or lease or use
agreement in the nature thereof, interest or other right or claim of third
parties, whether voluntarily incurred or arising by operation of law, and
including any agreement to grant or submit to any of the foregoing in the
future; and
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(ii) with
respect to any Real Property (whether and including owned real estate or Real
Estate subject to a Real Property Lease), any mortgage, lien, easement,
interest, right-of-way, condemnation or eminent domain proceeding, encroachment,
any building, use or other form of restriction, encumbrance or other claim
(including adverse or prescriptive) or right of Third Parties (including
Governmental Bodies), any lease or sublease, boundary dispute, and agreements
with respect to any real property including: purchase, sale, right of first
refusal, option, construction, building or property service, maintenance,
property management, conditional or contingent sale, use or occupancy, franchise
or concession, whether voluntarily incurred or arising by operation of law, and
including any agreement to grant or submit to any of the foregoing in the
future.
(y) “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations issued by the Department of Labor pursuant to ERISA or any successor
law.
(z) “Exchange Act” means the
Securities Exchange Act of 1934, as amended.
(aa) “GAAP” means at any particular
time generally accepted accounting principles in the United States, consistently
applied on a going concern basis, using consistent audit scope and materiality
standards.
(bb) “Governing Documents” means
with respect to any particular entity, the articles or certificate of
incorporation and the bylaws (or equivalent documents for entities of foreign
jurisdictions); all equity holders’ agreements, voting agreements, voting trust
agreements, joint venture agreements, registration rights agreements or other
agreements or documents relating to the organization, management or operation of
any Person or relating to the rights, duties and obligations of the equity
holders of any Person; and any amendment or supplement to any of the
foregoing.
(cc) “Governmental Authorization”
means any Consent, license, registration or permit issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Applicable Law.
(dd) “Governmental Body” means: (i)
nation, state, county, city, town, borough, village, district, tribe or other
jurisdiction; (ii) federal, state, local, municipal, foreign, tribal or other
government; (iii) governmental or quasi-governmental authority of any nature
(including any agency, branch, department, board, commission, court, tribunal or
other entity exercising governmental or quasi-governmental powers); (iv)
multinational organization or body; (v) body exercising, or entitled or
purporting to exercise, any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power; or (vi) official of any of the
foregoing.
(ee) “Improvements” means all
buildings, structures, fixtures and improvements located on Land, including
those under construction.
(ff) “IRS” means the United States
Internal Revenue Service and, to the extent relevant, the United States
Department of the Treasury.
(gg) “Knowledge” means actual
knowledge without independent investigation.
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(hh) “Land” means all parcels and
tracts of land in which any Person has an ownership or leasehold
interest.
(ii) “Material Adverse Effect” or
“Material Adverse
Change” means, in connection with any Person, any event, change or effect
that is materially adverse, individually or in the aggregate, to the condition
(financial or otherwise), properties, assets, liabilities, revenues, income,
business, operations, results of operations or prospects of such Person, taken
as a whole.
(jj) “NRS” shall mean the Nevada
Revised Statutes, as amended.
(kk) “Order” means any writ,
directive, order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.
(ll)
“Ordinary Course of
Business” means an action taken by a Person will be deemed to have been
taken in the Ordinary Course of Business only if that action: (i) is consistent
in nature, scope and magnitude with the past practices of such Person and is
taken in the ordinary course of the normal, day-to-day operations of such
Person; (ii) does not require authorization by the board of directors or
shareholders of such Person (or by any Person or group of Persons exercising
similar authority) and does not require any other separate or special
authorization of any nature; and (iii) is similar in nature, scope and magnitude
to actions customarily taken, without any separate or special authorization, in
the ordinary course of the normal, day-to-day operations of other Persons that
are in the same line of business as such Person.
(mm) “Party” or “Parties” means Creative
Bellows and/or Purchaser.
(nn) “Person” shall mean an
individual, company, partnership, limited liability company, limited liability
partnership, joint venture, trust or unincorporated organization, joint stock
company or other similar organization, government or any political subdivision
thereof, or any other legal entity.
(oo) “PRC” shall mean the People’s
Republic of China.
(pp) “Proceeding” means any action,
arbitration, audit, hearing, investigation, litigation or suit (whether civil,
criminal, administrative, judicial or investigative, whether formal or informal,
whether public or private) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
(qq) “Purchaser” has the meaning set
forth in the Preamble.
(rr)
“Purchaser Balance
Sheet” has the meaning set forth in Section 5.1(f)(ii).
(ss) “Purchaser Business” means
Purchaser’s business in the exploration of mineral properties.
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(tt) “Purchaser Common Stock” means
the common stock, par value $.00001 per share, of Purchaser.
(uu) “Purchaser Preferred Stock”
means the preferred stock, par value $.00001 per share, of
Purchaser.
(vv) “Purchaser Contracts” has the
meaning set forth in Section 5.1(o).
(ww) “Purchaser’s Counsel” means
Xxxxx Xxxxx, Esq.
(xx) “Purchaser Employee Plans” has
the meaning set forth in Section 5.1(r)(i).
(yy) “Purchaser Financial
Information” has the meaning set forth in
Section 5.1(f).
(aaa) “Purchaser Intellectual
Property” has the meaning set forth in Section 5.1(m).
(bbb) “Purchaser SEC Reports” has the
meaning set forth in Section 5.1(n).
(ccc) “Real Property” means any Land
and Improvements and all privileges, rights, easements, and appurtenances
belonging to or for the benefit of any Land, including all easements appurtenant
to and for the benefit of any Land (a “Dominant Parcel”) for, and as
the primary means of access between, the Dominant Parcel and a public way, or
for any other use upon which lawful use of the Dominant Parcel for the purposes
for which it is presently being used is dependent, and all rights existing in
and to any streets, alleys, passages and other rights-of-way included thereon or
adjacent thereto (before or after vacation thereof) and vaults beneath any such
streets.
(ddd) “Related Agreements” means the
Return to Treasury Agreement.
(eee) “Real Property Lease” means any
lease, rental agreement or rights to use land pertaining to the occupancy of any
improved space on any Land.
(fff) “Representative” means with
respect to a particular Person, any director, officer, manager, employee, agent,
consultant, advisor, accountant, financial advisor, legal counsel or other
Representative of that Person.
(ggg) “Return to Treasury Agreement”
has the meaning set forth in Section 2.5.
(hhh) “SEC” means the United States
Securities and Exchange Commission.
(iii) “Securities Act” means the
Securities Act of 1933, as amended.
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(jjj) “Security Interest” means any
mortgage, pledge, security interest, Encumbrance, charge, claim, or other lien,
other than: (a) mechanic’s, materialmen’s and similar liens; (b) liens for Taxes
not yet due and payable or for Taxes that the taxpayer is contesting in good
faith through appropriate Proceedings; (c) liens arising under worker’s
compensation, unemployment insurance, social security, retirement and similar
legislation; (d) liens arising in connection with sales of foreign receivables;
(e) liens on goods in transit incurred pursuant to documentary letters of
credit; (f) purchase money liens and liens securing rental payments under
capital lease arrangements; and (g) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of
money.
(kkk) “Share Exchange” has the
meaning set forth in the preamble to this Agreement.
(lll) “Shares” has the meaning set
forth in Section 2.1.
(mmm)
“Subsidiary” means with
respect to any Person (the “Owner”), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation’s or other Person’s board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred), are held by the Owner or one or more of its
Subsidiaries.
(nnn) “Tangible Personal Property”
means all machinery, equipment, tools, furniture, office equipment, computer
hardware, supplies, materials, vehicles and other items of tangible personal
property of every kind owned or leased by a Party (wherever located and whether
or not carried on a Party’s books), together with any express or implied
warranty by the manufacturers or sellers or lessors of any item or component
part thereof and all maintenance records and other documents relating
thereto.
(ooo) “Tax” or “Taxes” means, with respect to
any Person, (i) all income taxes (including any tax on or based upon net income,
gross income, gross receipts, income as specially defined, earnings, profits or
selected items of income, earnings or profits) and all gross receipts, sales,
use, ad valorem, transfer, franchise, license, withholding, payroll, employment,
excise, severance, stamp, occupation, commercial rent, premium, property or
windfall profit taxes, alternative or add-on minimum taxes, customs duties and
other taxes, fees, assessments or charges of any kind whatsoever, together with
all interest and penalties, additions to tax and other additional amounts
imposed by any taxing authority (domestic or foreign) on such person (if any),
(ii) all value added taxes and (iii) any liability for the payment of any amount
of the type described in clauses (i) or (ii) above as a result of (A) being a
“transferee” (within the meaning of Section 6901 of the Code or any Applicable
Law) of another person, (B) being a member of an affiliated, combined or
consolidated group or (C) a contractual arrangement or otherwise.
(ppp) “Tax Return” means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
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(qqq) “Third Party” means a Person
that is not a Party to this Agreement.
ARTICLE
II. THE SHARE EXCHANGE
2.1 The Share
Exchange. Upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the NRS, at the Closing, the parties shall
cause the Share Exchange to be consummated by taking all appropriate actions to
ensure that all of the issued and outstanding shares of capital stock of
Creative Bellows are delivered to Purchaser duly executed and endorsed in blank
(or accompanied by duly executed stock powers duly endorsed in blank), in proper
form for transfer, in exchange for the issuance of an aggregate of 15,122,000
shares of Purchaser Common Stock (the “Shares”) to the shareholders
of Creative Bellows listed on Schedule
2.1.
2.2 Tax Free
Reorganization. The Parties each hereby agree to use their Best
Efforts and to cooperate with each other to cause the Share Exchange to be a
tax-free reorganization within the meaning of Sections 368 and 1032 of the
Code.
2.3 Closing. The
Closing will occur via e-mail and facsimile on July 2, 2010 at 10:00 a.m. EDT or
such later date and time to be agreed upon by the parties (the “Closing Date”), following
satisfaction or waiver of the conditions set forth in
Article VIII.
2.4 Reorganization.
(a) As
of the Closing, Xxxxxxxx Xxx shall resign from the board of directors of the
Purchaser and Bei Lu and Dianfu Lu shall be appointed as the directors of
the Purchaser until their respective successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with Purchaser’s Articles of Incorporation and Bylaws.
(b) The
nominees of Creative Bellows shall, as of the Closing, be appointed as the
officers of the Purchaser until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Purchaser’s Articles of Incorporation and Bylaws. As of the
Closing, Xxxxxxxx Xxx shall resign from all positions he holds as an officer of
Purchaser.
(c) If
at any time after the Closing, any party shall consider that any further deeds,
assignments, conveyances, agreements, documents, instruments or assurances in
law or any other things are necessary or desirable to vest, perfect, confirm or
record in the Purchaser the title to any property, rights, privileges, powers
and franchises of Creative Bellows by reason of, or as a result of, the Share
Exchange, or otherwise to carry out the provisions of this Agreement, the
remaining parties, as applicable, shall execute and deliver, upon request, any
instruments or assurances, and do all other things necessary or proper to vest,
perfect, confirm or record title to such property, rights, privileges, powers
and franchises in the Purchaser, and otherwise to carry out the provisions of
this Agreement.
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2.5 Cancellation
of Purchaser Common Stock. At the Closing, immediately after consummation
of the Share Exchange, Purchaser shall, pursuant to the terms and conditions of
that certain Return to Treasury Agreement dated of even date herewith entered
into by and between Purchaser and Xxxxxxxx Xxx (the “Return to Treasury Agreement”)
which shall be substantially in the form attached hereto as Attachment 2.5, cause
40,000,000 shares of the Purchaser’s Common Stock held by Xxxxxxxx Xxx to be
cancelled and extinguished.
ARTICLE
III. COMPLIANCE WITH APPLICABLE SECURITIES LAWS
3.1 Covenants,
Representations and Warranties of the Creative
Bellows
Shareholders.
(a) The
Creative Bellows Shareholders acknowledge and agree that they are acquiring the
Shares for investment purposes and will not offer, sell or otherwise transfer,
pledge or hypothecate any of the Shares issued to them (other than pursuant to
an effective Registration Statement under the Securities Act) directly or
indirectly unless:
(i) the
sale is to Purchaser;
(ii) the
sale is made pursuant to the exemption from registration under the Securities
Act, provided by Regulation S thereunder; or
(iii) the
Shares are sold in a transaction that does not require registration under the
Securities Act, or any applicable United States state laws and regulations
governing the offer and sale of securities, and the vendor has furnished to
Purchaser an opinion of counsel to that effect or such other written opinion as
may be reasonably required by Purchaser.
(b) The
Creative Bellows Shareholders acknowledge and agree that the certificates
representing the Shares shall bear a restrictive legend, substantially in the
following form:
“THESE
SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S.
PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATIONS UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE
SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE 1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE
OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS
(AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AN IN EACH CASE ONLY IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933
ACT.”
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(c) The
Creative Bellows Shareholders represent and warrant that:
(i) the
Creative Bellows Shareholders are located outside the United
States;
(ii) the
Creative Bellows Shareholders are not aware of any advertisement of any of the
shares being issued hereunder; and
(iii) the
Creative Bellows Shareholders will not acquire the shares as a result of, and
will not itself engage in, any “directed selling efforts” (as defined in
Regulation S under the Securities Act) in the United States in respect of the
shares, which would include any activities undertaken for the purpose of, or
that could reasonably be expected to have the effect of, conditioning the market
in the United States for the resale of the shares; provided, however, that the
Creative Bellows Shareholders may sell or otherwise dispose of the shares
pursuant to registration of the shares pursuant to the Securities Act and any
applicable state and provincial securities laws or under an exemption from such
registration requirements and as otherwise provided herein.
(d) The
Creative Bellows Shareholders acknowledge and agree that Purchaser will refuse
to register any transfer of the shares not made in accordance with the
provisions of Regulation S, pursuant to an effective registration statement
under the Securities Act or pursuant to an available exemption from the
registration requirements of the Securities Act and in accordance with
applicable state and provincial securities laws.
(e) The
Creative Bellows Shareholders acknowledge and agree that offers and sales of any
of the Shares, prior to the expiration of a period of one year after the date of
transfer of the shares (the “Distribution Compliance
Period”), shall only be made in compliance with the safe harbor
provisions set forth in Regulation S, pursuant to the registration provisions of
the Securities Act or an exemption therefrom, and that all offers and sales
after the Distribution Compliance Period shall be made only in compliance with
the registration provisions of the Securities Act or an exemption therefrom and
in each case only in accordance with all applicable securities
laws.
(f) The
Creative Bellows Shareholders acknowledge and agree not to engage in any hedging
transactions involving the Shares prior to the end of the Distribution
Compliance Period unless such transactions are in compliance with the provisions
of the Securities Act.
(g) The
Creative Bellows Shareholders hereby acknowledge and agree to Purchaser making a
notation on its records or giving instructions to the registrar and transfer
agent of Purchaser in order to implement the restrictions on transfer set forth
and described herein.
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ARTICLE
IV. REPRESENTATIONS AND WARRANTIES
OF
CREATIVE BELLOWS
As a
material inducement for Purchaser to enter into this Agreement and to consummate
the transactions contemplated hereby, Creative Bellows makes the following
representations and warranties as of the date hereof and as of the Closing Date,
each of which is relied upon by Purchaser regardless of any investigation made
or information obtained by Purchaser (unless and to the extent specifically and
expressly waived in writing by Purchaser on or before the Closing
Date):
4.1 Organization
and Good Standing.
(a) Creative
Bellows is a corporation duly organized, validly existing and in good standing
under the laws of the PRC. Creative Bellows is in good standing under the laws
of each jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires
such qualification and the failure to be so qualified would have a Material
Adverse Effect on Creative Bellows.
(b) Creative
Bellows does not presently own or control, directly or indirectly, any interest
in any other corporation, partnership, trust, joint venture, association, or
other entity other than its wholly owned subsidiary, Liaoning Creative Wind
Power Equipment Co., Ltd., a company organized under the laws of the
PRC.
4.2 Corporate
Documents. Schedule 4.2 consists of a
true and correct copy of a shareholder list setting forth all owners of the
capital stock of Creative Bellows.
4.3 Capitalization
of Creative
Bellows. The entire authorized capital of Creative Bellows consists
of 22,736,800 Yuan, all of which has been duly authorized, fully paid in
and is nonassessable, and are held of record by the stockholders listed on the
shareholder list attached as Schedule
4.2.
4.4 Authorization
of Transaction. Creative Bellows has full power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. This
Agreement has been duly and validly authorized by all necessary action on the
part of Creative Bellows in accordance with Applicable Laws and Creative
Bellows’ Governing Documents. This Agreement constitutes the valid and legally
binding obligation of Creative Bellows, enforceable in accordance with its terms
and conditions. The Board of Directors of Creative Bellows (the “Creative Bellows Board”) has duly and validly
authorized the execution and delivery of this Agreement and approved the
consummation of the transactions contemplated hereby, and has taken all
corporate actions required to be taken by the Creative Bellows Board for the
consummation of the Share Exchange.
4.5 Noncontravention.
Neither the execution and delivery of this Agreement, nor consummation of the
Share Exchange, by Creative Bellows will:
(a) violate
any Applicable Law, Order, stipulation, charge or other restriction of any
Governmental Body to which Creative Bellows is subject or any provision of its
Governing Documents; or
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(b) conflict
with, result in a Breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate, modify
or cancel, or require any notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which Creative Bellows is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets), except where the violation, conflict, Breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a Material Adverse Effect on the financial
condition of Creative Bellows or on the ability of the Parties to consummate the
Share Exchange.
4.6 Creative
Bellows
Financial Information. Schedule 4.6 shall include the
following financial information (collectively, the “Creative Bellows Financial
Information”):
(a) audited
combined balance sheets and statements of income, stockholders’ equity and cash
flow as of and for the years ended December 31, 2008 and December 31, 2009, for
Creative Bellows.
4.7 Events
Subsequent to Creative
Bellows Balance
Sheet. Since the date of the Creative Bellows 2009 Balance Sheet,
there has not been, occurred or arisen, with respect to Creative
Bellows:
(a) any
change or amendment in its Governing Documents;
(b) any
reclassification, split up or other change in, or amendment of or modification
to, the rights of the holders of any of its capital stock;
(c) any
direct or indirect redemption, purchase or acquisition by any Person of any of
its capital stock or of any interest in or right to acquire any such
stock;
(d) any
issuance, sale, or other disposition of any capital stock, or any grant of any
options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any capital stock;
(e) any
declaration, set aside, or payment of any dividend or any distribution with
respect to its capital stock (whether in cash or in kind) or any redemption,
purchase, or other acquisition of any of its capital stock;
(f) the
organization of any Subsidiary or the acquisition of any shares of capital stock
by any Person or any equity or ownership interest in any business;
(g) any
damage, destruction or loss of any of the its properties or assets whether or
not covered by insurance;
12
(h) any
material sale, lease, transfer, or assignment of any of its assets, tangible or
intangible, other than for a fair consideration in the Ordinary Course of
Business;
(i) the
execution of, or any other commitment to any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
outside the Ordinary Course of Business;
(j) any
acceleration, termination, modification, or cancellation of any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) involving more than $10,000 to which it is a party or by which it
is bound;
(k) any
Security Interest or Encumbrance imposed upon any of its assets, tangible or
intangible;
(l) any
grant of any license or sublicense of any rights under or with respect to any
material Creative Bellows Intellectual Property;
(m) any
sale, assignment or transfer (including transfers to any employees, Affiliates
or shareholders) of any material Creative Bellows Intellectual
Property;
(n) any
capital expenditure (or series of related capital expenditures) involving more
than $25,000 and outside the Ordinary Course of Business;
(o) any
capital investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments, loans,
and acquisitions) involving more than $25,000 and outside the Ordinary Course of
Business;
(p) any
issuance of any note, bond, or other debt security or created, incurred,
assumed, or guaranteed any indebtedness for borrowed money or capitalized lease
obligation involving more than $25,000;
(q) any
delay or postponement of the payment of accounts payable or other liabilities,
other than those being contested in good faith;
(r) any
cancellation, compromise, waiver, or release of any right or claim (or series of
related rights and claims) involving more than $25,000 and outside the Ordinary
Course of Business;
(s) any
loan to, or any entrance into any other transaction with, any of its directors,
officers, and employees either involving more than $1,000 individually or $5,000
in the aggregate;
(t) the
adoption, amendment, modification, or termination of any bonus, profit-sharing,
incentive, severance, or other plan, contract, or commitment for the benefit of
any of its directors, officers, and employees (or taken away any such action
with respect to any other Employee Benefit Plan);
13
(u) any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(v) any
increase in the base compensation of any of its directors, officers, and
employees that is greater than Twenty-Five Thousand Dollars ($25,000) per
annum;
(w) any
charitable or other capital contribution in excess of $2,500;
(x) any
taking of other action or entrance into any other transaction other than in the
Ordinary Course of Business, or entrance into any transaction with any insider
of Creative Bellows, except as disclosed in this Agreement and the Disclosure
Schedules;
(y) any
other event or occurrence that may have or could reasonably be expected to have
a Material Adverse Effect on Creative Bellows; or
(z) any
agreement or commitment, whether in writing or otherwise, to do any of the
foregoing.
4.8 Tax
Matters.
(a) Creative
Bellows:
(i) has timely paid or
caused to be paid all material Taxes required to be paid by it though the date
hereof and as of the Closing Date (including any Taxes shown due on any Tax
Return);
(ii) has filed or caused to be
filed in a timely and proper manner (within any applicable extension periods)
all Tax Returns required to be filed by it with the appropriate Governmental
Body in all jurisdictions in which such Tax Returns are required to be filed;
and all tax returns filed on behalf of Creative Bellows were complete and
correct in all material respects; and
(iii) has not requested or caused
to be requested any extension of time within which to file any Tax Return, which
Tax Return has not since been filed.
(b)
(i) Since
January 1, 2008, Creative Bellows has not been notified by any Governmental
Body that any material issues have been raised (and no such issues are currently
pending) by any Governmental Body in connection with any Tax Return filed by or
on behalf of Creative Bellows; there are no pending Tax audits and no waivers of
statutes of limitations have been given or requested with respect to Creative
Bellows; no Tax liens have been filed against Creative Bellows or unresolved
deficiencies or additions to Taxes have been proposed, asserted or assessed
against Creative Bellows.
14
(ii) Full
and adequate accrual has been made (A) on the Creative Bellows Balance Sheet,
and the books and records of Creative Bellows for all income taxes currently due
and all accrued Taxes not yet due and payable by Creative Bellows for all
periods ending on or prior to the Creative Bellows Balance Sheet Date, and (B)
on the books and records of Creative Bellows for all Taxes payable by Creative
Bellows for all periods beginning after the Creative Bellows Balance Sheet
Date.
(iii) Creative
Bellows has not incurred any liability for Taxes from and after the Creative
Bellows Balance Sheet Date other than Taxes incurred in the Ordinary Course of
Business and consistent with past practices.
(iv) Creative
Bellows has complied in all material respects with all Applicable Laws relating
to the collection or withholding of Taxes (such as Taxes or withholding of Taxes
from the wages of employees).
(v)
Creative Bellows does not have any liability in respect of any Tax sharing
agreement with any Person.
(vi) Creative
Bellows has not incurred any liability to make any payments either alone or in
conjunction with any other payments that would constitute a “parachute payment”
within the meaning of Section 280G of the Code (or any corresponding
provision of state local or foreign Applicable Law related to
Taxes).
(vii) No
claim has been made within the last three years by any taxing authority in a
jurisdiction in which Creative Bellows does not file Tax Returns that Creative
Bellows is or may be subject to taxation by that jurisdiction.
(viii) The
consummation of the Share Exchange will not trigger the realization or
recognition of intercompany gain or income to Creative Bellows or any Creative
Bellows Tax Affiliate under the Federal consolidated return regulations with
respect to Federal, state or local taxes.
(ix)
Creative Bellows is not currently, nor has it been at any time during the
previous five years, a “U.S. real property holding corporation” and, therefore,
the Shares are not “U.S. real property interests,” as such terms are defined in
Section 897 of the Code.
4.9 Title to
Assets. Creative Bellows has good and marketable title to, or a valid
leasehold interest in, the properties and assets owned or leased and used by it
to operate the Business in the manner presently operated by it, as reflected in
the Creative Bellows Financial Information.
4.10 Leased
Real Property. Except as disclosed on Schedule 4.10,
Creative Bellows does not own or hold any leasehold interest in or right to use
any Real Property.
15
4.11 Condition
of Facilities.
(a) Use
of the Real Property of Creative Bellows for the various purposes for which it
is presently being used is permitted as of right under all Applicable Laws
related to zoning and is not subject to “permitted nonconforming” use or
structure classifications. All Improvements are in compliance with all
Applicable Laws, including those pertaining to zoning, building and the
disabled, are in good repair and in good condition, ordinary wear and tear
excepted, and are free from latent and patent defects. No part of any
Improvement encroaches on any real property not included in the Real Property of
Creative Bellows, and there are no buildings, structures, fixtures or other
Improvements primarily situated on adjoining property which encroach on any part
of the Land.
(b) Each
item of Tangible Personal Property is in good repair and good operating
condition, ordinary wear and tear excepted, is suitable for immediate use in the
Ordinary Course of Business and is free from latent and patent defects. No item
of Tangible Personal Property is in need of repair or replacement other than as
part of routine maintenance in the Ordinary Course of Business. All Tangible
Personal Property used in the Business is in the possession of Creative
Bellows.
4.12 Creative
Bellows
Intellectual Property.
(a) Creative
Bellows owns, or is licensed or otherwise possesses legal enforceable rights to
use all: (i) trademarks and service marks (registered or unregistered), trade
dress, trade names and other names and slogans embodying business goodwill or
indications of origin, all applications or registrations in any jurisdiction
pertaining to the foregoing and all goodwill associated therewith; (ii) material
patentable inventions, technology, computer programs and software (including
password unprotected interpretive code or source code, object code, development
documentation, programming tools, drawings, specifications and data) and all
applications and patents in any jurisdiction pertaining to the foregoing,
including re-issues, continuations, divisions, continuations-in-part, renewals
or extensions; (iii) trade secrets, including confidential and other non-public
information (iv) copyrights in writings, designs, software programs, mask works
or other works, applications or registrations in any jurisdiction for the
foregoing and all moral rights related thereto; (v) databases and all database
rights; and (vi) Internet web sites, domain names and applications and
registrations pertaining thereto (collectively, “Creative Bellows Intellectual Property”) that
are used in the Business except for any such failures to own, be licensed or
possess that would not be reasonably likely to have a Material Adverse
Effect.
(b) Except
as may be evidenced by patents issued after the date hereof, there are no
conflicts with or infringements of any material Creative Bellows Intellectual
Property by any third party and the conduct of the Business as currently
conducted does not conflict with or infringe any proprietary right of a third
party.
(c) Creative
Bellows owns or has the right to use all software currently used in and material
to the Business.
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4.13 Affiliate
Transactions. No officer, director or employee of Creative Bellows or any
member of the immediate family of any such officer, director or employee, or any
entity in which any of such persons owns any beneficial interest (other than any
publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than one percent of the
stock of which is beneficially owned by any of such persons), has any agreement
with Creative Bellows or any interest in any of their property of any nature,
used in or pertaining to the Business (other than the ownership of capital stock
of the corporation as disclosed in Section 4.3). None of the foregoing
Persons has any direct or indirect interest in any competitor, supplier or
customer of Creative Bellows or in any Person from whom or to whom Creative
Bellows leases any property or transacts business of any nature.
4.14 Powers of
Attorney. There are no outstanding powers of attorney executed on
behalf of Creative Bellows.
4.15 Litigation.
(a) There
is no pending or, to the Knowledge of Creative Bellows, threatened
Proceeding:
(i) by
or against Creative Bellows or that otherwise relates to or may affect the
Business that, if adversely determined, would have a Material Adverse Effect;
or
(ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Share Exchange.
To the
Knowledge of Creative Bellows, no event has occurred or circumstance exists that
is reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding. Creative Bellows has delivered to Purchaser copies, if any,
of all pleadings, correspondence and other documents relating to each
Proceeding.
(b) To
the Knowledge of Creative Bellows:
(i) there
is no material Order to which Creative Bellows or the Business is subject;
and
(ii) no
officer, director, agent or employee of Creative Bellows is subject to any Order
that prohibits such officer, director, agent or employee from engaging in or
continuing any conduct, activity or practice relating to the
Business.
(c) Creative
Bellows has been and is in compliance with all of the terms and requirements of
each Order to which it or the Business is or has been subject;
(d) No
event has occurred or circumstance exists that is reasonably likely to
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which Creative
Bellows or the Business is subject; and
17
(e) Creative
Bellows has not received any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding any actual,
alleged, possible or potential violation of, or failure to comply with, any term
or requirement of any Order to which Creative Bellows or the Business is
subject.
4.16 Employee
Benefits.
(a) Schedule 4.18 lists
all material (i) Employee Benefit Plans of Creative Bellows, (ii) bonus,
stock option, stock purchase, stock appreciation right, incentive, deferred
compensation, supplemental retirement, severance, and fringe benefit plans,
programs, policies or arrangements, and (iii) employment or consulting
agreements, for the benefit of, or relating to, any current or former employee
(or any beneficiary thereof) of Creative Bellows, in the case of a plan
described in (i) or (ii) above, that is currently maintained by Creative Bellows
or with respect to which Creative Bellows has an obligation to contribute, and
in the case of an agreement described in (iii) above, that is currently in
effect (the “Creative
Bellows Employee
Plans”).
(b) There
is no Proceeding pending or, to Creative Bellows’ Knowledge, threatened
against the assets of any Creative Bellows Employee Plan or, with respect to any
Creative Bellows Employee Plan, against Creative Bellows, other than Proceedings
that would not reasonably be expected to result in a Material Adverse Effect,
and to Creative Bellows’ Knowledge there is no Proceeding pending or threatened
in writing against any fiduciary of any Creative Bellows Employee Plan other
than Proceedings that would not reasonably be expected to result in a Material
Adverse Effect.
(c) Each
of the Creative Bellows Employee Plans has been operated and administered in all
material respects in accordance with its terms and applicable law.
(d) No
director, officer, or employee of Creative Bellows will become entitled to
retirement, severance or similar benefits or to enhanced or accelerated benefits
(including any acceleration of vesting or lapsing of restrictions with respect
to equity-based awards) under any Creative Bellows Employee Plan solely as a
result of consummation of the Share Exchange.
4.17 Insurance. Schedule 4.20 is an
accurate and complete description of all policies of insurance of any kind or
nature, including, but not limited to, fire, liability, workmen’s compensation
and other forms of insurance owned or held by or covering Creative Bellows or
all or any portion of its property and assets.
4.18 Employees. To
the Knowledge of Creative Bellows, no officer, director, agent, employee,
consultant or contractor of Creative Bellows is bound by any Contract that
purports to limit the ability of such officer, director, agent, employee,
consultant or contractor (i) to engage in or continue or perform any conduct,
activity, duties or practice relating to the Business or (ii) to assign to
Creative Bellows or to any other Person any rights to any invention,
improvement, or discovery. No former or current employee of Creative Bellows is
a party to, or is otherwise bound by, any Contract that in any way adversely
affected, affects, or will affect the ability of Creative Bellows or Purchaser
to conduct the Business as heretofore carried on by Creative
Bellows.
18
4.19 Labor
Relations. Creative Bellows is not a party to any collective bargaining
or similar agreement. To the Knowledge of Creative Bellows, there are no
strikes, work stoppages, unfair labor practice charges or grievances pending or
threatened against Creative Bellows by any employee of Creative Bellows or any
other Person or entity.
4.20 Legal
Compliance. To the Knowledge of Creative Bellows, Creative Bellows is in
material compliance with all Applicable Laws (including rules and regulations
thereunder) of any Governmental Bodies having jurisdiction over Creative
Bellows, including any requirements relating to antitrust, consumer protection,
currency exchange, equal opportunity, health, occupational safety, pension and
securities matters.
4.21 Brokers’
Fees. Creative Bellows has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the Share Exchange
for which Creative Bellows could become liable or obligated.
4.22 Undisclosed
Liabilities. To the Knowledge of Creative Bellows, Creative Bellows
does not have any liability (and to the Knowledge of Creative Bellows, there is
no basis for any present or future Proceeding, charge, complaint, claim, or
demand against any of them giving rise to any liability), except
for
(a) liabilities
reflected or reserved against in the Creative Bellows Balance Sheet;
or
(b) liabilities
which have arisen in the Ordinary Course of Business since the date of the
Creative Bellows Balance Sheet.
4.23 Disclosure. The
representations and warranties of Creative Bellows contained in this Agreement
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained herein not misleading.
4.24 Subsidiaries.
Creative Bellows owns 100% of the issued and outstanding capital stock of its
subsidiary, Liaoning Creative Wind Power Equipment Co., Ltd., a company
organized under the laws of the PRC.
ARTICLE
V. REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a
material inducement for Creative Bellows to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser hereby makes the
following representations and warranties as of the date hereof and as of the
Closing Date, each of which is relied upon by Creative Bellows regardless of any
investigation made or information obtained by Creative Bellows (unless and to
the extent specifically and expressly waived in writing by Creative Bellows on
or before the Closing Date):
19
5.1 Representations
of Purchaser Concerning the Transaction.
(a) Organization and Good
Standing.
(i) Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of State of Nevada. Purchaser is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification and the failure to be so qualified would have a Material Adverse
Effect on Purchaser.
(ii) Purchaser
has no Subsidiary and does not own any shares of capital stock or other
securities of any other Person.
(b) Authorization of
Transaction. Purchaser has the corporate power to execute, deliver and
perform this Agreement, the Related Agreements, and, subject to the satisfaction
of the conditions precedent set forth herein, has taken all action required by
law, its Governing Documents or otherwise, to authorize the execution and
delivery of this Agreement and such related documents. The execution and
delivery of this Agreement has been approved by the Board of Directors of
Purchaser. This Agreement is a valid obligation of Purchaser and is legally
binding on each in accordance with its terms.
(c) Capitalization of
Purchaser. The entire authorized capital stock of Purchaser consists of
100,000,000 shares of common stock having a par value of $.00001 per share, of
which 44,008,000 shares are issued and outstanding, and 100,000,000 shares of
preferred stock having a par value of $.00001 per share, of which no shares are
issued and outstanding. All issued and outstanding shares of Purchaser Common
Stock have been duly authorized, are validly issued, fully paid and
nonassessable. There are no outstanding or authorized options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights or other
agreements or commitments to which Purchaser is a party or which are binding
upon Purchaser providing for the issuance, disposition or acquisition of any of
its capital stock, nor any outstanding or authorized stock appreciation, phantom
stock or similar rights with respect to Purchaser.
(d) Noncontravention.
Neither the execution and delivery of this Agreement, nor consummation of the
Share Exchange, will:
(i) violate
any Applicable Law, Order, stipulation, charge or other restriction of any
Governmental Body to which Purchaser is subject or any provision of its
Governing Documents; or
20
(ii) conflict
with, result in a Breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate, modify
or cancel, or require any notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest, or other arrangement to
which Purchaser is a party or by which it is bound or to which any of its assets
is subject (or result in the imposition of any Security Interest upon any of its
assets), except where the violation, conflict, Breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a Material Adverse Effect on the financial condition of
Purchaser or on the ability of the Parties to consummate the Share
Exchange.
(e) Affiliate
Transactions. No officer, director or employee of Purchaser or any member
of the immediate family of any such officer, director or employee, or any entity
in which any of such persons owns any beneficial interest (other than any
publicly-held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than one percent of the
stock of which is beneficially owned by any of such Persons), has any agreement
with Purchaser or any interest in any of their property of any nature, used in
or pertaining to the Purchaser Business. None of the foregoing Persons has any
direct or indirect interest in any competitor, supplier or customer of Purchaser
or in any Person from whom or to whom Purchaser leases any property or transacts
business of any nature.
(f) Purchaser Financial
Information. Schedule 5.1(f) shall include
the following financial information (collectively, the “Purchaser Financial
Information”):
(i) audited
balance sheet and statements of income, changes in stockholders’ equity and cash
flow as of and for the fiscal years ended August 31, 2008 and August 31, 2009,
for Purchaser; and
(ii) the
names and locations of all banks, trust companies, savings and loan associations
and other financial institutions at which Purchaser maintains safe deposit boxes
or accounts of any nature and the names of all persons authorized to have access
thereto, draw thereon or make withdrawals therefrom, as listed on Schedule
5.1(f).
The
audited balance sheet dated as of August 31, 2009, of Purchaser shall be
referred to as the “Purchaser
Balance Sheet.” Purchaser Financial Information presents fairly the
financial condition of Purchaser as of such dates and the results of operations
of Purchaser for such periods, in accordance with GAAP and are consistent with
the books and records of Purchaser (which books and records are correct and
complete).
(g) Events Subsequent to
Purchaser Balance Sheet. Since the date of the Purchaser Balance Sheet,
there has not been, occurred or arisen, with respect to Purchaser:
(i) any
change or amendment in its Governing Documents, other than an amendment to its
Articles of Incorporation upon the filing of Articles of Merger with the Nevada
Secretary of State on June 18, 2010, to give effect to a change in the
Purchaser’s corporate name;
(ii) any
reclassification, split-up or other change in, or amendment of or modification
to, the rights of the holders of any of its capital stock, other than an 8-for-1
forward split of its common stock, effective July 1, 2010, as authorized by its
Board of Directors on June 17, 2010;
21
(iii) any
direct or indirect redemption, purchase or acquisition by any Person of any of
its capital stock or of any interest in or right to acquire any such
stock;
(iv) any
issuance, sale, or other disposition of any capital stock, or any grant of any
options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any capital stock;
(v) any
declaration, set aside, or payment of any dividend or any distribution with
respect to its capital stock (whether in cash or in kind) or any redemption,
purchase, or other acquisition of any of its capital stock;
(vi) the
organization of any Subsidiary or the acquisition of any shares of capital stock
by any Person or any equity or ownership interest in any business, other than
the organization of a wholly owned Subsidiary for the express purpose of
effecting the name change of the Purchaser through a parent-Subsidiary merger
under the NRS;
(vii) any
damage, destruction or loss of any of its properties or assets whether or not
covered by insurance;
(viii) any
sale, lease, transfer or assignment of any of its assets, tangible or
intangible, other than for a fair consideration in the Ordinary Course of
Business;
(ix) the
execution of, or any other commitment to any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
outside the Ordinary Course of Business;
(x) any
acceleration, termination, modification, or cancellation of any agreement,
contract, lease or license (or series of related agreements, contracts, leases,
and licenses) involving more than $10,000 to which it is a party or by which it
is bound;
(xi) any
Security Interest or Encumbrance imposed upon any of its assets, tangible or
intangible;
(xii) any
grant of any license or sublicense of any rights under or with respect to any
Purchaser Intellectual Property;
(xiii) any
sale, assignment or transfer (including transfers to any employees, affiliates
or shareholders) of any Purchaser Intellectual Property;
(xiv) any
capital expenditure (or series of related capital expenditures) involving more
than $10,000 and outside the Ordinary Course of Business;
(xv) any
capital investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments, loans and
acquisitions) involving more than $10,000 and outside the Ordinary Course of
Business;
22
(xvi) any
issuance of any note, bond or other debt security, or created, incurred,
assumed, or guaranteed any indebtedness for borrowed money or capitalized lease
obligation involving more than $25,000;
(xvii) any
delay or postponement of the payment of accounts payable or other
liabilities;
(xviii) any
cancellation, compromise, waiver or release of any right or claim (or series of
related rights and claims) involving more than $25,000 and outside the Ordinary
Course of Business;
(xix) any
loan to, or any entrance into any other transaction with, any of its directors,
officers and employees either involving more than $500 individually or $2,500 in
the aggregate;
(xx) the
adoption, amendment, modification or termination of any bonus, profit-sharing,
incentive, severance, or other plan, contract or commitment for the benefit of
any of its directors, officers and employees (or taken away any such action with
respect to any other Employee Benefit Plan);
(xxi) any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xxii) any
increase in the base compensation of any of its directors, officers and
employees;
(xxiii) any
charitable or other capital contribution in excess of $2,500;
(xxiv) any
taking of other action or entrance into any other transaction other than in the
Ordinary Course of Business, or entrance into any transaction with any insider
of Purchaser, except as disclosed in this Agreement and the Disclosure
Schedules;
(xxv) any
other event or occurrence that may have or could reasonably be expected to have
an Material Adverse Effect on Purchaser (whether or not similar to any of the
foregoing); or
(xxvi) any
agreement or commitment, whether in writing or otherwise, to do any of the
foregoing.
(h) Tax
Matters.
(i)
Purchaser:
(A) has timely paid or caused to be paid all Taxes required to be paid by
it though the date hereof and as of the Closing Date (including any Taxes shown
due on any Tax Return);
23
(B) has
filed or caused to be filed in a timely and proper manner (within any applicable
extension periods) all Tax Returns required to be filed by it with the
appropriate Governmental Body in all jurisdictions in which such Tax Returns are
required to be filed; and all tax returns filed on behalf of Purchaser and each
Purchaser Tax Affiliate were completed and correct in all material respects;
and
(C) has
not requested or caused to be requested any extension of time within which to
file any Tax Return, which Tax Return has not since been filed.
(ii) Purchaser
has previously delivered true, correct and complete copies of all Federal Tax
Returns filed by or on behalf of Purchaser through the date hereof for the
periods ending after December 31, 2007.
(iii)
(A) Since
January 1, 2007, Purchaser has not been notified by the IRS or any other
Governmental Body that any issues have been raised (and no such issues are
currently pending) by the IRS or any other Governmental Body in connection with
any Tax Return filed by or on behalf of Purchaser or any Purchaser Tax
Affiliate; there are no pending Tax audits and no waivers of statutes of
limitations have been given or requested with respect to Purchaser or any
Purchaser Tax Affiliate (for years that it was a Purchaser Tax Affiliate); no
Tax liens have been filed against Purchaser or unresolved deficiencies or
additions to Taxes have been proposed, asserted or assessed against Purchaser or
any Purchaser Tax Affiliate (for the years that it was a Purchaser Tax
Affiliate).
(B) Full
and adequate accrual has been made (i) on the Purchaser Balance Sheet, and the
books and records of Purchaser for all income Taxes currently due and all
accrued Taxes not yet due and payable by Purchaser for all periods ending on or
prior to the Purchaser Balance Sheet Date, and (ii) on the books and records of
Purchaser and for all Taxes payable by Purchaser for all periods beginning after
the Purchaser Balance Sheet Date.
(C) Purchaser
has not incurred any liability for Taxes from and after the Purchaser Balance
Sheet Date other than Taxes incurred in the Ordinary Course of Business and
consistent with past practices.
(D) Purchaser
has not (i) made an election (or had an election made on its behalf by another
person) to be treated as a “consenting corporation” under Section 341(f) of
the Code or (ii) a “personal holding company” within the meaning of Section 542
of the Code.
(E) Purchaser
has complied in all material respects with all Applicable Laws relating to the
collection or withholding of Taxes (such as Taxes or withholding of Taxes from
the wages of employees).
24
(F) Purchaser
has no liability in respect of any Tax sharing agreement with any Person and all
Tax sharing agreements to which Purchaser has been bound have been
terminated.
(G) Purchaser
has not incurred any Liability to make any payments either alone or in
conjunction with any other payments that:
(1) shall
be non-deductible under, or would otherwise constitute a “parachute payment”
within the meaning of Section 280G of the Code (or any corresponding
provision of state local or foreign income Tax Law); or
(2) are
or may be subject to the imposition of an excise Tax under Section 4999 of the
Code.
(H) Purchaser
has not agreed to (nor has any other Person agreed to on its behalf) and is not
required to make any adjustments or changes on, before or after the Closing
Date, to its accounting methods pursuant to Section 481 of the Code, and
the Internal Revenue Service has not proposed any such adjustments or changes in
the accounting methods of Purchaser.
(I) No
claim has been made within the last three years by any taxing authority in a
jurisdiction in which Purchaser does not file Tax Returns that Purchaser is or
may be subject to taxation by that jurisdiction.
(J) The
consummation of the Share Exchange will not trigger the realization or
recognition of intercompany gain or income to Purchaser under the Federal
consolidated return regulations with respect to Federal, state or local
Taxes.
(K) Purchaser
is not currently, nor has it been at any time during the previous five years, a
“U.S. real property holding corporation” and, therefore, the Purchaser Common
Stock is not “U.S. real property interests,” as such terms are defined in
Section 897 of the Code.
(i) Title to Assets.
Purchaser has good and marketable title to, or a valid leasehold interest in,
the properties and assets owned or leased and used by it to operate the
Purchaser Business in the manner presently operated by Purchaser, as reflected
in Purchaser Financial Information.
(j) Real Property. Except
as set forth in Schedule 5.1(j),
Purchaser does not own or hold an ownership interest in any Real
Property.
(k) Leased Real Property.
Except as set forth in Schedule 5.1(k), Purchaser
does not own or a leasehold interest in any Real Property.
(l) Condition of
Facilities.
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(i) Use
of the Real Property of Purchaser for the various purposes for which it is
presently being used is permitted as of right under all Applicable Laws related
to zoning and is not subject to “permitted nonconforming” use or structure
classifications. All Improvements are in compliance with all Applicable Laws,
including those pertaining to zoning, building and the disabled, are in good
repair and in good condition, ordinary wear and tear excepted, and are free from
latent and patent defects. To the Knowledge of Purchaser, no part of any
Improvement encroaches on any real property not included in the Real Property of
Purchaser, and there are no buildings, structures, fixtures or other
Improvements primarily situated on adjoining property which encroach on any part
of the Land.
(ii) Each
item of Tangible Personal Property is in good repair and good operating
condition, ordinary wear and tear excepted, is suitable for immediate use in the
Ordinary Course of Business and is free from latent and patent defects. No item
of Tangible Personal Property is in need of repair or replacement other than as
part of routine maintenance in the Ordinary Course of Business. Except as
disclosed in Schedule 5.1(l)(ii), all
Tangible Personal Property used in the Purchaser Business is in the possession
of Purchaser.
(m) Purchaser Intellectual
Property.
(i) Purchaser
owns, or is licensed or otherwise possesses legal enforceable rights to use all:
(i) trademarks and service marks (registered or unregistered), trade dress,
trade names and other names and slogans embodying business goodwill or
indications of origin, all applications or registrations in any jurisdiction
pertaining to the foregoing and all goodwill associated therewith; (ii)
patentable inventions, technology, computer programs and software (including
password unprotected interpretive code or source code, object code, development
documentation, programming tools, drawings, specifications and data) and all
applications and patents in any jurisdiction pertaining to the foregoing,
including re-issues, continuations, divisions, continuations-in-part, renewals
or extensions; (iii) trade secrets, including confidential and other non-public
information (iv) copyrights in writings, designs, software programs, mask works
or other works, applications or registrations in any jurisdiction for the
foregoing and all moral rights related thereto; (v) databases and all database
rights; and (vi) Internet Web sites, domain names and applications and
registrations pertaining thereto (collectively, “Purchaser Intellectual
Property”) that are used in the Purchaser Business except for any such
failures to own, be licensed or possess that would not be reasonably likely to
have a Material Adverse Effect.
(ii) Purchaser
owns or has the right to use all software currently used in and material to the
Purchaser Business.
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(n) SEC Reports and Financial
Statements. Since December 18, 2007, Purchaser has filed with the SEC all
reports and other filings required to be filed by Purchaser in accordance with
the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder (the “Purchaser SEC Reports”). As of
their respective dates, Purchaser SEC Reports complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and the
respective rules and regulations promulgated thereunder applicable to such
Purchaser SEC Reports and, except to the extent that information contained in
any Purchaser SEC Report has been revised or superseded by a later Purchaser SEC
Report filed and publicly available prior to the date of this Agreement, none of
the Purchaser SEC Reports contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of Purchaser included
in Purchaser SEC Reports were prepared from and are in accordance with the
accounting books and other financial records of Purchaser, were prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by the rules of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and presented fairly
the consolidated financial position of Purchaser and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth
in the Purchaser SEC Reports, Purchaser has no liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) other than
liabilities or obligations incurred in the Ordinary Course of Business. The
Purchaser SEC Reports accurately disclose (i) the terms and provisions of all
stock option plans, (ii) transactions with Affiliates, and (iii) all material
contracts required to be disclosed pursuant to Item 601(b)(10) of Regulation S-K
promulgated by the SEC.
(o) Contracts. Schedule 5.1(o) is a true,
complete and accurate list of all written or oral contracts, understandings,
agreements and other arrangements (including a brief description of all such
oral arrangements) executed by an officer or duly authorized employee of
Purchaser or to which Purchaser is a party either:
(i) involving
more than $10,000, or
(ii) in
the nature of a collective bargaining agreement, employment agreement, or
severance agreement with any of its directors, officers and
employees.
Purchaser
has delivered or will, prior to Closing, deliver to Creative Bellows a correct
and complete copy of each Contract (redacted copies for names are acceptable)
listed in Schedule 5.1(o)
(the “Purchaser
Contracts”). Except as disclosed in Schedule 5.1(o): (i)
Purchaser has fully complied with all material terms of Purchaser Contracts;
(ii) to the Knowledge of Purchaser, other parties to Purchaser Contracts have
fully complied with the terms of Purchaser Contracts; and (iii) there are no
disputes or complaints with respect to nor has Purchaser received any notices
(whether oral or in writing) that any other party to Purchaser Contracts is
terminating, intends to terminate or is considering terminating, any of
Purchaser Contracts listed or required to be listed in Schedule
5.1(o).
(p) Powers of Attorney.
There are no outstanding powers of attorney executed on behalf of
Purchaser.
(q) Litigation.
(i) There
is no pending or, to Purchaser’s Knowledge, threatened
Proceeding:
27
(A) by
or against Purchaser or that otherwise relates to or may affect the Purchaser
Business which, if adversely determined, would have a Material Adverse Effect;
or
(B) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Share Exchange.
To the
Knowledge of Purchaser, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding.
(ii) Except
as set forth in Schedule 5.1(q)(ii):
(A) there
is no material Order to which Purchaser or the Purchaser Business is subject;
and
(B) to
the Knowledge of Purchaser, no officer, director, agent or employee of Purchaser
is subject to any Order that prohibits such officer, director, agent or employee
from engaging in or continuing any conduct, activity or practice relating to the
Purchaser Business.
(iii) Except
as set forth in Schedule 5.1(q)(iii):
(A) Purchaser
has been and is in compliance with all of the terms and requirements of each
Order to which it or the Purchaser Business is or has been subject;
(B) No
event has occurred or circumstance exists that is reasonably likely to
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which
Purchaser or the Purchaser Business is subject; and
(C) Purchaser
has not received any notice, or received but subsequently resolved to the
satisfaction of the Governmental Body or other Person (evidence of such approval
is attached as Schedule 5.1(q)(iii)), or
other communication (whether oral or written) from any Governmental Body or any
other Person regarding any actual, alleged, possible or potential violation of,
or failure to comply with, any term or requirement of any Order to which
Purchaser or the Purchaser Business is subject.
(r) Employee
Benefits.
(i) Purchaser
has no (A) Employee Benefit Plans, (B) bonus, stock option, stock purchase,
stock appreciation right, incentive, deferred compensation, supplemental
retirement, severance, and fringe benefit plans, programs, policies or
arrangements, and (C) employment or consulting agreements, for the benefit of,
or relating to, any current or former employee (or any beneficiary thereof) of
Purchaser, in the case of a plan described in (A) or (B) above, that is
currently maintained by Purchaser or with respect to which Purchaser has an
obligation to contribute, and in the case of an agreement described in
(C) above, that is currently in effect (the “Purchaser Employee
Plans”).
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(ii) No
director, officer, or employee of Purchaser will become entitled to retirement,
severance or similar benefits or to enhanced or accelerated benefits (including
any acceleration of vesting or lapsing of restrictions with respect to
equity-based awards) under any Purchaser Employee Plan solely as a result of
consummation of the Share Exchange.
(s) Insurance. Schedule 5.1(s) is an accurate
and complete description of all policies of insurance of any kind or nature,
including, but not limited to, fire, liability, workmen’s compensation and other
forms of insurance owned or held by or covering Purchaser or all or any portion
of its property and assets.
(t) Employees. Xxxxxxxx
Xxx is the sole employee of Purchaser and he presently does not receive any
compensation for his services. To the Knowledge of Purchaser, no officer,
director, agent, employee, consultant or contractor of Purchaser is bound by any
Contract that purports to limit the ability of such officer, director, agent,
employee, consultant or contractor (i) to engage in or continue or perform any
conduct, activity, duties or practice relating to the Purchaser Business or (ii)
to assign to Purchaser or to any other Person any rights to any invention,
improvement or discovery. No former or current employee of Purchaser is a party
to, or is otherwise bound by, any Contract that in any way adversely affected,
affects, or will affect the ability of Purchaser to conduct the Purchaser
Business.
(u) Labor Relations.
Purchaser is not a party to any collective bargaining or similar agreement. To
the Knowledge of Purchaser, there are no strikes, work stoppages, unfair labor
practice charges or grievances pending or threatened against Purchaser by any
employee of Purchaser or any other person or entity.
(v) Legal Compliance. To
the Knowledge of Purchaser, Purchaser is in material compliance with all
Applicable Laws of any Governmental Bodies having jurisdiction over Purchaser,
including any requirements relating to antitrust, consumer protection, currency
exchange, equal opportunity, health, occupational safety, pension and securities
matters.
(w) Brokers’ Fees.
Purchaser has no liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the Share Exchange for which Purchaser
could become liable or obligated.
(x) Undisclosed
Liabilities. Purchaser has no liability (and to the Knowledge of
Purchaser, there is no basis for any present or future Proceeding, charge,
complaint, claim or demand against any of them giving rise to any liability),
except for:
(i) liabilities
reflected or reserved against in the Purchaser Balance Sheet;
or
29
(ii) liabilities
which have arisen in the Ordinary Course of Business since the date of the
Purchaser Balance Sheet.
(y) Disclosure. The
representations and warranties of Purchaser contained in this Agreement do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained herein
not misleading.
ARTICLE
VI. ACCESS TO INFORMATION AND DOCUMENTS
6.1 Access to
Information. Between the date hereof and the Closing Date, each
Party will give to the other and its counsel, accountants and other
Representatives full access to all the properties, documents, contracts,
personnel files and other records and shall furnish copies of such documents and
with such information with respect to its affairs as may from time to time be
reasonably requested. Each Party will disclose to the other and make available
to such Party and its Representatives all books, contracts, accounts, personnel
records, letters of intent, papers, records, communications with regulatory
authorities and other documents relating to the business and operations of
Creative Bellows or Purchaser, as the case may be. In addition, Creative Bellows
shall make available to Purchaser all such banking, investment and financial
information as shall be necessary to allow for the efficient integration of
Creative Bellows’ banking, investment and financial arrangements with those of
Purchaser at the Closing. Access of Purchaser pursuant to the foregoing shall be
granted at a reasonable time and upon reasonable notice.
6.2 Effect of
Access.
(a) Nothing
contained in this Article VI shall be deemed to create any duty or
responsibility on the part of either Party to investigate or evaluate the value,
validity or enforceability of any Contract or other asset included in the assets
of the other Party.
(b) With
respect to matters as to which any Party has made express representations or
warranties herein, the Parties shall be entitled to rely upon such express
representations and warranties irrespective of any investigations made by such
Parties, except to the extent that such investigations result in actual
knowledge of the inaccuracy or falsehood of particular representations and
warranties.
ARTICLE
VII. COVENANTS
7.1 Preservation
of Business.
(a) Prior
to the Closing or the termination of this Agreement, Creative Bellows will use
its Best Efforts to preserve the Business, to keep available to Purchaser the
services of the present employees of Creative Bellows, and to preserve for
Purchaser the goodwill of the suppliers, customers and others having business
relations with Creative Bellows. Creative Bellows shall conduct its Business
only in the Ordinary Course of Business, including, without limitation, its
policies and practices relating to the collection of accounts receivable and the
payment of accounts payable and other liabilities, and not introduce any new
methods of management, operations or accounting, without Purchaser’s prior
written consent (which shall not be unreasonably withheld); maintain its assets
in as good working order and condition as at present, ordinary wear and tear
excepted; perform all material obligations under material agreements and leases
relating to or affecting it, and keep in full force and effect present insurance
policies.
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(b) Prior
to the Closing or the termination of this Agreement, Purchaser will use its Best
Efforts to preserve the Purchaser Business, to keep available to Purchaser the
services of the present employees of Purchaser, and to preserve for Purchaser
the goodwill of the suppliers, customers and others having business relations
with Purchaser. Purchaser shall conduct the Purchaser Business only in the
Ordinary Course of Business as it has previously been conducted, including,
without limitation, its policies and practices relating to the collection of
accounts receivable and the payment of accounts payable and other liabilities,
and not introduce any new methods of management, operations or accounting,
without the prior written consent of Creative Bellows (which shall not be
unreasonably withheld); maintain its assets in as good working order and
condition as at present, ordinary wear and tear excepted; perform all material
obligations under material agreements and leases relating to or affecting it,
and keep in full force and effect present insurance policies.
7.2 Current
Information.
(a) During
the period from the date of this Agreement to the Closing, each Party hereto
shall promptly notify each other Party of any (i) significant change in its
Ordinary Course of Business, (ii) Proceeding (or communications indicating that
the same may be contemplated), or the institution or threat or settlement of
Proceedings, in each case involving the Parties the outcome of which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect on the Party, taken as a whole or (iii) event which such Party reasonably
believes could be expected to have a Material Adverse Effect on the ability of
any party hereto to consummate the Share Exchange.
(b) During
the period from the date of this Agreement to the Closing, Purchaser shall
promptly notify Creative Bellows of any correspondence received from the SEC and
shall deliver a copy of such correspondence to Creative Bellows within one (1)
Business Day of receipt.
7.3 Material
Transactions. Prior to the Closing, no Party will (other than (i) as
contemplated by the terms of this Agreement and the Related Agreements, (ii)
with respect to transactions for which there is a binding commitment existing
prior to the date hereof disclosed in the Disclosure Schedules, and (iii)
transactions described on Schedule 7.3 which do
not vary materially from the terms set forth on such Schedule 7.3, or in
the Ordinary Course of Business without first obtaining the written consent of
the other Parties):
(a) declare
or pay any dividend or make any other distribution to shareholders, whether in
cash, stock or other property;
31
(b) amend
its Governing Documents or enter into any agreement to merge or consolidate
with, or sell a significant portion of its assets to, any other
Person;
(c) except
pursuant to options, warrants, conversion rights or other contractual rights,
issue any shares of its capital stock or any options, warrants or other rights
to subscribe for or purchase such common or other capital stock or any
securities convertible into or exchangeable for any such common or other capital
stock;
(d) directly
redeem, purchase or otherwise acquire any of its common or other capital
stock;
(e) effect
a reclassification, recapitalization, split-up, exchange of shares, readjustment
or other similar change in or to any capital stock or otherwise reorganize or
recapitalize;
(f) enter
into any employment contract which is not terminable upon notice of ninety (90)
days or less, at will, and without penalty except as provided herein or grant
any increase (other than ordinary and normal increases consistent with past
practices) in the compensation payable or to become payable to officers or
salaried employees, grant any stock options or, except as required by law, adopt
or make any change in any bonus, insurance, pension or other Employee Benefit
Plan, agreement, payment or agreement under, to, for or with any of such
officers or employees;
(g) make
any payment or distribution to the trustee under any bonus, pension, profit
sharing or retirement plan or incur any obligation to make any such payment or
contribution which is not in accordance with such Party’s usual past practice,
or make any payment or contributions or incur any obligation pursuant to or in
respect of any other plan or contract or arrangement providing for bonuses,
options, executive incentive compensation, pensions, deferred compensation,
retirement payments, profit sharing or the like, establish or enter into any
such plan, contract or arrangement, or terminate or modify any
plan;
(h) prepay
any debt in excess of Twenty-Five Thousand Dollars ($25,000), borrow or agree to
borrow any amount of funds except in the Ordinary Course of Business or,
directly or indirectly, guarantee or agree to guarantee obligations of others,
or fail to pay any monetary obligation in a timely manner prior to
delinquency;
(i) enter
into any agreement, contract or commitment having a term in excess of three (3)
months or involving payments or obligations in excess of Twenty-Five Thousand
Dollars ($25,000) in the aggregate, except in the Ordinary Course of
Business;
(j) amend
or modify any material Contract;
(k) agree
to increase the compensation or benefits of any employee (except for normal
annual salary increases in accordance with past practices);
32
(l) place
on any of its assets or properties any pledge, charge or other Encumbrance,
except as otherwise authorized hereunder, or enter into any transaction or make
any contract or commitment relating to its properties, assets and business,
other than in the Ordinary Course of Business or as otherwise disclosed
herein;
(m) guarantee
the obligation of any person, firm or corporation, except in the Ordinary Course
of Business;
(n) make
any loan or advance in excess of Twenty-Five Thousand Dollars ($25,000) or cancel or accelerate
any material indebtedness owing to it or any claims which it may possess or
waive any material rights of substantial value;
(o) sell
or otherwise dispose of any Real Property or any material amount of any tangible
or intangible personal property other than leasehold interests in closed
facilities, except in the Ordinary Course of Business;
(p) commit
any act or fail to do any act which will cause a Breach of any Contract and
which will have a Material Adverse Effect on its business, financial condition
or earnings;
(q) violate
any Applicable Law which violation might have a Material Adverse Effect on such
Party;
(r) purchase
any real or personal property or make any other capital expenditure where the
amount paid or committed is in excess of Twenty-Five Thousand Dollars
($25,000) per
expenditure;
(s) except
in the Ordinary Course of Business, enter into any agreement or transaction with
any of such Party’s Affiliates; or
(t) engage
in any transaction or take any action that would render untrue in any material
respect any of the representations and warranties of such Party contained in
this Agreement, as if such representations and warranties were given as of the
date of such transaction or action.
7.4 Public
Disclosures. Purchaser and Creative Bellows will consult with each
other before issuing any press release or otherwise making any public statement
with respect to the transactions contemplated by this Agreement, and shall not
issue any such press release or make any such public statement prior to such
consultation except as may be required by Applicable Law. The Parties shall
issue a joint press release, mutually acceptable to Creative Bellows and
Purchaser, promptly upon execution and delivery of this Agreement.
7.5 Confidentiality. Purchaser
and Creative Bellows shall hold, and shall use their best efforts to cause their
respective auditors, attorneys, financial advisors, bankers and other
consultants and advisors to hold, in strict confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all Confidential Information, and each Party shall not release or disclose such
Confidential Information to any other Person, except its auditors, attorneys,
financial advisors, bankers and other consultants and advisors in connection
with the transactions contemplated by this Agreement.
33
ARTICLE
VIII. CONDITIONS TO CLOSING
8.1 Mutual
Conditions. The respective obligations of each party to effect the
Share Exchange shall be subject to the satisfaction, at or prior to the Closing
Date, of the following conditions (any of which may be waived in writing by
Purchaser and Creative Bellows:
(a) Neither the
Purchaser nor Creative Bellows shall be subject to any Order by a court of
competent jurisdiction which (i) prevents or materially delays the consummation
of the Share Exchange or (ii) would impose any material limitation on the
ability of Purchaser effectively to exercise full rights of ownership of the
common stock of Creative Bellows or any material portion of the assets or
Business, taken as a whole;
(b) No
statute, rule or regulation, shall have been enacted by any Governmental Body
that makes the consummation of the Share Exchange illegal; and
(c) Purchaser
and Creative Bellows shall have received all Consents of Third Parties that are
required of such Third Parties prior to the consummation of the Share Exchange,
in form and substance acceptable to Purchaser or Creative Bellows, as the case
may be, except where the failure to obtain such consent, approval or
authorization would not have a Material Adverse Effect.
8.2 Conditions
to the Obligations of Purchaser. The obligations of Purchaser under this
Agreement are subject to the satisfaction, at or before the Closing, of each of
the following conditions:
(a) The
representations and warranties of Creative Bellows contained herein that are
qualified as to materiality shall be true in all respects on and as of the
Closing Date with the same force and effect as though made on and as of such
date, and each of the representations and warranties of Creative Bellows that
are not so qualified shall be true in all material respects;
(b) Creative
Bellows shall have performed and complied in all material respects with all
covenants, agreements, obligations and conditions required by this Agreement to
be performed or complied with by Creative Bellows at or prior to the
Closing;
(c) There
shall not be threatened, instituted or pending any Proceeding by or before any
court or Governmental Body requesting or looking toward an Order that (i)
restrains or prohibits the consummation of the Share Exchange, (ii) could have a
Material Adverse Effect on Purchaser’s ability to exercise control over or
manage Creative Bellows after the Closing or (iii) could have a Material Adverse
Effect on Creative Bellows;
(d) On
the Closing Date, there shall be no effective Order issued by a court of
competent jurisdiction restraining or prohibiting the consummation of the Share
Exchange;
34
(e) The
Related Agreements to which Creative Bellows is a party and all other documents
to be delivered by Creative Bellows to Purchaser at the Closing shall be
satisfactory in form and substance to Purchaser;
(f) All
Consents of all Third Parties and Governmental Bodies shall have been obtained
that are necessary, in the opinion of Purchaser Counsel, in connection with (i)
the execution and delivery by Creative Bellows of this Agreement and the Related
Agreements to which it is a Party or (ii) the consummation by Creative Bellows
of the Share Exchange and copies of all such Consents shall have been delivered
to Purchaser; and
(g) Purchaser
and Xxxxxxxx Xxx shall have executed and delivered to Purchaser the Return to
Treasury Agreement and shall simultaneously with the Closing consummate the
transactions contemplated therein.
8.3 Conditions
to the Obligations of Creative
Bellows. The obligations of Creative Bellows under this Agreement are
subject to the satisfaction, at or before the Closing, of each of the following
conditions:
(a) The
representations and warranties of Purchaser contained herein that are qualified
as to materiality shall be true in all respects on and as of the Closing Date
(except for the representations and warranties made as of a specific date which
shall be true in all material respects as of such date) with the same force and
effect as though made on and as of such date, and each of the representations
and warranties of Purchaser that are not so qualified shall be true in all
material respects;
(b) Purchaser
shall have performed and complied in all material respects with all covenants,
agreements, obligations and conditions required by this Agreement to be so
performed or complied with by Purchaser at or prior to the Closing;
(c) There
shall not be threatened, instituted or pending any Proceeding by or before any
court or Governmental Body requesting or looking toward an Order, that (i)
restrains or prohibits the consummation of the Share Exchange or (ii) could have
a Material Adverse Effect on Purchaser;
(d) On
the Closing Date, there shall be no effective Order issued by a court of
competent jurisdiction restraining or prohibiting the consummation of the Share
Exchange;
(e) The
Related Agreements to which Purchaser is a party and all other documents to be
delivered by Purchaser to Creative Bellows at the Closing shall be satisfactory
in form and substance to Creative Bellows;
(f) All
Consents of all Third Parties and Governmental Bodies shall have been obtained
that are necessary, in the opinion of counsel to Creative Bellows, in connection
with (i) the execution and delivery by Purchaser of this Agreement or the
Related Agreements to which either of them is a party, and (ii) the consummation
by Purchaser of the transactions contemplated hereby or thereby, and copies of
all such Consents shall have been delivered to Creative
Bellows;
35
(g) Purchaser
shall have delivered to Creative Bellows the resignations of Xxxxxxxx Xxx from
all positions as an officer and director of Purchaser effective upon
Closing;
(h) Purchaser
shall have delivered to Creative Bellows evidence of the expansion of
Purchaser’s Board of Directors to two (2) members and evidence of the
appointment of two (2) new directors nominated by Creative Bellows;
(i) Purchaser
shall deliver to each stockholder of Creative Bellows a certificate
evidencing ownership of the Shares described in Section 3.2;
(j) Purchaser
shall deliver to Creative Bellows evidence of the cancellation of 40,000,000
shares of Purchaser Common Stock held by Xxxxxxxx Xxx;
(k) The
stockholders of Creative Bellows shall have given all necessary approvals and
consents required under NRS;
(l) The
Share Exchange shall qualify as a tax-free transaction to each of Purchaser,
Creative Bellows and Creative Bellows’ stockholders; and
(m) As
of the Closing Date, Purchaser shall not have any debts or liabilities and shall
not have any liens recorded against its properties or assets.
ARTICLE
IX. SURVIVAL OF REPRESENTATIONS
9.1 Survival
of Representations. All representations and warranties made by any
party to this Agreement or pursuant hereto, as modified by any Disclosure
Schedule, exhibit, certificate or other document executed and delivered pursuant
hereto shall survive the Closing and any investigation made by or on behalf of
any party hereto for a period of one (1) year following the Closing Date. All
statements contained herein or in any schedule, exhibit, certificate or other
document executed and delivered pursuant hereto shall be deemed representations
and warranties for purposes of Sections 9.1, 8.2(a), and 8.3(a). The right to
any remedy based upon such representations and warranties shall not be affected
by any investigation conducted with respect to, or any knowledge acquired at any
time, whether before or after execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of any such
representation or warranty.
ARTICLE
X. TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This
Agreement may be terminated at any time prior to the Closing:
(a) by
mutual written consent of Purchaser and Creative Bellows;
(b) by
Purchaser or Creative Bellows:
36
(i) if
the Share Exchange shall not have been consummated on or before August 15, 2010,
unless the failure to consummate the Share Exchange is the result of a willful
and material Breach of this Agreement by the Party seeking to terminate this
Agreement;
(ii) if
any court of competent jurisdiction or other Governmental Body shall have issued
an Order or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Share Exchange and such order, decree, ruling or other
action shall have become final and non-appealable;
(iii) in
the event of a Breach by the other Party of any material representation,
warranty, covenant or other agreement contained in this Agreement which cannot
be or has not been cured within ten (10) days after the giving of written notice
to the breaching Party of such Breach (provided that the terminating Party is
not then in Breach of any material representation, warranty, covenant or other
agreement contained in this Agreement);
(iv)
in the event that (i) all of the conditions to the obligation of such Party to
effect the Share Exchange set forth in Section 8.1 shall have been satisfied and
(ii) any condition to the obligation of such Party to effect the Share Exchange
set forth in Section 8.2 (in the case of Purchaser) or Section 8.3 (in the case
of Creative Bellows) is not capable of being satisfied prior to the end of the
period referred to in Section 10.1(b)(i); or
(v) if
there shall have occurred prior to the Closing changes in Applicable Law that,
in the aggregate, shall have a Material Adverse Effect on either
Party.
10.2 Effect of
Termination. In the event of termination of this Agreement as
provided in Section 10.1, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of any Party except to
the extent that such termination results from the willful and material Breach by
a Party of any of its representations, warranties, covenants or other agreements
set forth in this Agreement, in which case the terminating Party shall have the
right to pursue any remedies available to it at law or in equity.
10.3 Amendment. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the Parties.
10.4 Extension;
Waiver. At any time prior to the Closing, the Parties may
(i) extend the time for the performance of any of the obligations or other
acts of the other Parties, (ii) waive any inaccuracies in the representations
and warranties contained in this Agreement or in any document delivered pursuant
to this Agreement or (iii) waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a Party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such Party.
10.5 Procedure
for Termination, Amendment Extension or Waiver. A termination of
this Agreement pursuant to Section 10.1, an amendment of this Agreement pursuant
to Section 10.3, or an extension or waiver pursuant to Section 10.4 shall,
in order to be effective, require in the case of Purchaser or Creative Bellows,
action by its Board of Directors or the duly authorized designee of the Board of
Directors.
37
ARTICLE
XI. MISCELLANEOUS
11.1 Notices. Any
communications required or desired to be given hereunder shall be deemed to have
been properly given if sent by hand delivery or by facsimile and overnight
courier or overnight courier to the parties hereto at the following addresses,
or at such other address as either party may advise the other in writing from
time to time:
If to
Purchaser:
CLEANTECH
INNOVATIONS, INC.
603, Unxx
0, XxxxXxxx Xxxxx Xxxx, XxXxxXxXx 04,
XxxxXxxx
Xxxxxxxx, Xxxxxxx, Xxxxx 000016
Attention:
Xxxxxxxx Xxx, Chief Executive Officer
Tel: (00)
000-000-0000
If to Creative
Bellows:
LIAONING
CREATIVE BELLOWS CO., LTD.
C
District, Maoshan Industry Park,
Tieling
Economic Development Zone,
Tieling,
Liaoning Province, China 112616
Attention:
Bei Lu, Chairman and Chief Executive Officer
Tel: (00)
0000-0000000
with a copy to
:
The
Xxxxxx Law Firm, PLLC
44 Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Xttention: Xxxxxx
Xxxxxx, Esq.
Tel:
(000) 000-0000
(which
copy shall not constitute notice)
All such
communications shall be deemed to have been delivered on the date of hand
delivery or on the next Business Day following the deposit of such
communications with the overnight courier. The address for notice may be changed
by delivering a notice of such change of address in the manner proscribed
herein.
11.2 Further
Assurances. Each Party hereby agrees to perform any further acts and
to execute and deliver any documents which may be reasonably necessary to carry
out the provisions of this Agreement.
38
11.3 Governing
Law. This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of
New York, applied without giving effect
to any conflicts-of-law principles.
11.4 Commissions. Each of the Parties
hereto represents and warrants that no broker or finder is entitled to any
brokerage or finder’s fee or other commission in connection with the Share
Exchange. Each of the Parties hereto shall pay or discharge, and shall indemnify
and hold the other harmless from and against, all claims or liabilities for
brokerage commissions or finder’s fees incurred by reason of any action taken by
it.
11.5 Captions. The
captions or headings in this Agreement are made for convenience and general
reference only and shall not be construed to describe, define or limit the scope
or intent of the provisions of this Agreement.
11.6 Integration
of Exhibits and Schedules. All Exhibits and Disclosure Schedules to
this Agreement are integral parts of this Agreement as if fully set forth
herein.
11.7 Entire
Agreement. This Agreement, the Related Agreements, including all
Exhibits and Disclosure Schedules attached hereto and thereto contain the entire
agreement of the parties and supersede any and all prior or contemporaneous
agreements between the parties, written or oral, with respect to the
transactions contemplated hereby. Such agreement may not be changed or
terminated orally, but may only be changed by an agreement in writing signed by
the party or parties against whom enforcement of any waiver, change,
modification, extension, discharge or termination is sought.
11.8 Expenses. Except
as expressly provided otherwise, each party hereto will bear its own costs and
expenses (including fees and expenses of auditors, attorneys, financial
advisors, bankers, brokers and other consultants and advisors) incurred in
connection with this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby.
11.9 Counterparts. This
Agreement may be executed in several counterparts, each of which, when so
executed, shall be deemed to be an original, and such counterparts shall
together constitute and be one and the same instrument.
11.10 Binding
Effect. This Agreement shall be binding on, and shall inure to the
benefit of, the Parties hereto, and their respective successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No Party may assign any right or obligation hereunder without the
prior written consent of the other Parties.
11.11 No Rule
of Construction. The Parties agree that, because all Parties
participated in negotiating and drafting this Agreement, no rule of construction
shall apply to this Agreement which construes ambiguous language in favor of or
against any Party by reason of that Party’s role in drafting this
Agreement.
[Signature
Page Follows]
39
SIGNATURE
PAGE OF PURCHASER AND CREATIVE BELLOWS TO
SHARE EXCHANGE AGREEMENT AND PLAN OF
REORGANIZATION
IN WITNESS
WHEREOF, CleanTech Innovations, Inc. and Liaoning Creative
Bellows Co., Ltd. have caused this
Share Exchange Agreement and Plan of
Reorganization to be executed by their respective duly authorized officers, all
as of the day and year first above written.
By
Purchaser:
CLEANTECH
INNOVATIONS, INC.
|
By:
|
/s/
Xxxxxxxx Xxx
|
|
Name:
|
Xxxxxxxx
Xxx
|
|
Title:
|
Chief
Executive Officer
|
By
Creative Bellows:
LIAONING
CREATIVE BELLOWS CO., LTD.
|
By:
|
/s/
Bei Lu
|
|
Name:
|
Bei
Lu
|
|
Title:
|
Chief
Executive Officer
|
SIGNATURE
PAGE OF LIAONING CREATIVE BELLOWS CO., LTD. SHAREHOLDERS TO
SHARE EXCHANGE AGREEMENT AND PLAN OF
REORGANIZATION
IN
WITNESS WHEREOF, the shareholders of Liaoning Creative Bellows Co., Ltd. have
executed this
Share Exchange Agreement and Plan of Reorganization as of the day
and year first above written.
|
By:
|
/s/
Bei Lu
|
|
|
Bei
Lu
|
|
|
64.66%
of shares
|
|
By:
|
/s/
Dianfu Lu
|
|
|
Dianfu
Lu
|
|
|
13.02%
of shares
|
|
By:
|
/s/
WenGe Chen
|
|
|
WenGe
Chen
|
|
|
13.02%
of shares
|
|
By:
|
/s/
Ping Xxxx
|
|
|
Xxxx
Xxxx
|
|
|
4.65%
of shares
|
|
By:
|
/s/
ShengFen Lin
|
|
|
ShengFen
Lin
|
|
|
4.65%
of shares
|
SCHEDULE OF
EXHIBITS
|
Exhibit
A
|
Disclosure
Schedules
|
SCHEDULE
2.1
Bei
Lu
DianFu
Lu
WenGe
Xxxx
Xxxx
Xxxx
ShengFen
Lin
SCHEDULE
4.2
Bei
Lu
DianFu
Lu
WenGe
Xxxx
Xxxx
Xxxx
ShengFen
Lin
SCHEDULE
4.6
(See
Attached)
SCHEDULE
4.10
Creative
Bellows and its subsidiary have signed 50-year land usage rights for the
properties on which their manufacturing facilities and offices are located.
Creative Bellows has been granted land usage rights in Tieling to 94,473 square
meters through 2057. Creative Wind Power has been granted land usage rights to
an additional 43,500 square meters in Tieling through 2059.
SCHEDULE
4.18
None.
SCHEDULE
4.20
None.
SCHEDULE
5.1
(See
Attached)
SCHEDULE
7.3
(See
Attached)
