SHARE EXCHANGE AGREEMENT
THIS
SHARE EXCHANGE AGREEMENT
(this
“Agreement”)
is
made effective as of the 8th day of September, 2008
AMONG:
ROYALTECH
CORPORATION,
a
publicly held Delaware corporation
(“Royaltech”)
AND:
DENSEN
EQUIPMENT LTD.,
a
privately held British Virgin Islands Corporation
(“Densen”)
AND: THOSE
SHAREHOLDERS OF DENSEN LISTED ON SCHEDULE 7
(“Shareholders”)
WHEREAS:
A. Shareholders
are the holders of all of the issued and outstanding capital stock of
Densen;
X. Xxxxxx
is
the parent company and owns 100% interest of Densen Machinery Investment Limited
(“Xxxxxx
XX”),
a
privately held Hong Kong Corporation;
C. Royaltech
and Densen wish to complete a stock exchange transaction whereby the
Shareholders shall acquire approximately 91.3% ownership of Royaltech after
Closing (as hereinafter defined);
D. Royaltech
agrees to issue shares of its common stock, par value $0.0001 per share to
the
Shareholders in consideration for all of the issued and outstanding capital
stock of Densen;
E. The
board
of directors of each of Royaltech and Densen deem it advisable and in the best
interests of their respective companies and shareholders to complete the RTO;
F. The
boards of directors of each of Royaltech and Densen have approved this Agreement
and the transactions contemplated hereby;
G. The
stockholders of Densen have approved this Agreement and the transactions
contemplated hereby; and
X. Xxxxxx
HK
owns 97% of Changchun Densen Changtuo Agriculture Machinery Manufacturing Co.
(“Changchun
Densen”).
NOW
THEREFORE THIS AGREEMENT WITNESSES that
in
consideration of covenants and agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree each with the other as
follows:
1. DEFINITIONS
1.1 Definitions.
The
following terms have the following meanings, unless the context indicates
otherwise:
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(a)
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“Agreement”
means this Agreement, and all amendments and supplements, if any,
to this
Agreement;
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(b)
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“Applicable
Securities Legislation”
means all applicable securities legislation in all jurisdictions
relevant
to the Transaction and the issuance of the Royaltech
Shares;
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(c)
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“Changchun
Densen” has
the meaning ascribed to it in the preamble to this
Agreement;
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(d)
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“Closing”
means the completion of the Transaction, in accordance with Section
5
hereof, at which time the Closing Documents will be exchanged by
the
parties, except for those documents or other items specifically required
to be exchanged at a later time;
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(e)
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“Closing
Date”
means the date hereof;
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(f)
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“Closing
Documents”
means the papers, instruments and documents required to be executed
and
delivered at the Closing pursuant to this
Agreement;
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(g)
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“Loss”
means any and all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs, and expenses, including
without limitation, interest, penalties, fines and reasonable attorneys,
accountants and other professional fees and expenses, but excluding
any
indirect, consequential or punitive damages suffered by Royaltech,
Densen
or the Shareholders including damages for lost profits or lost business
opportunities;
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(h)
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“Densen”
has the meaning ascribed to it in the preamble to this
Agreement;
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(i)
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“Densen
Common Stock”
has the meaning ascribed to it in Section 3.3;
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(j)
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“Densen
Shares”
means the 50,000 shares of Densen Common Stock held by the Shareholders,
being all of the issued and outstanding common shares of
Densen;
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(k)
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“Liabilities”
includes, any direct or indirect indebtedness, guaranty, endorsement,
claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, asserted xxxxxx
or
inchoate, liquidated or unliquidated, secured or
unsecured;
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(l)
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“Parties”
refers to Royaltech, Densen, and the Shareholders,
collectively;
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(m)
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“Royaltech”
has the meaning ascribed to it in the preamble to this
Agreement;
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(n)
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“Royaltech
Shares”
means up to 16,720,354 fully paid and non-assessable common shares
of
Royaltech to be issued to the Shareholders and such other persons
as
Densen shall designate on the Closing Date; or such other amount,
together
with 400,000 shares of Royaltech Common Stock issued to FirsTrust
Group
Inc. under a concurrent private placement, as equals 93.5% of the
issued
and outstanding Royaltech Common Stock on a fully diluted basis upon
Closing;
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(o)
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“SEC”
means the United States Securities and Exchange
Commission;
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(p)
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“Shareholders”
has the meaning ascribed to it in the preamble to this
Agreement;
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(q)
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“Taxes”
means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Internal
Revenue Code 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability,
real
property, personal property, sales, use, transfer, registration,
value
added, alternative or add-on minimum, estimated, or other tax of
any kind
whatsoever, including any interest, penalty, or addition thereto,
whether
disputed or not and including any obligations to indemnify or otherwise
assume or succeed to the Tax liability of any other
Person;
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(r)
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“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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(s)
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“Transaction”
means the share exchange of the Densen Shares for the Royaltech Shares
to
the Shareholders whereby Densen becomes a wholly owned subsidiary
of
Royaltech;
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(t)
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“1933
Act”
means the United States Securities Act of 1933, as
amended;
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(u)
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“1934
Act”
means the United States Securities Exchange Act of 1934, as
amended;
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(v)
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“SEC
Reports”
means the periodic and current reports filed by Royaltech with the
SEC
pursuant to the 1934 Act;
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(w)
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Schedules.
The following schedules are attached to and form part of this
Agreement:
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Schedule 1
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-
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Directors
and Officers of Densen
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Schedule 2
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-
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Directors
and Officers of Royaltech
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Schedule
3
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Directors
and Officers of Surviving Corporation
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Schedule 4
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-
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Royaltech
Liabilities
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Schedule 5
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-
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Densen
Material Contracts and Liabilities
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Schedule
6
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-
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Royaltech
Stockholder Ledger
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Schedule
7
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-
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List
of Shareholders
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1.2 Currency.
All
dollar amounts referred to in this Agreement are in United States funds, unless
expressly stated otherwise.
2. basic
transaction
2.1 Share
Exchange. On
and
subject to the terms and conditions set forth in this Agreement, at the
Effective Time (as defined below), Royaltech will issue the Royaltech Shares
to
the Shareholders, in exchange for the Densen Shares, which represents all of
the
issued and outstanding capital stock of Densen. The Royaltech Shares will be
issued to the Shareholders or their designees in the amounts as the Shareholders
may dictate.
2.2 Procedure
for Exchange of Shares. Parties
hereby acknowledge that prior to the Closing Date, Royaltech has issued a
treasury order to its transfer agent authorizing and instructing the transfer
agent to prepare share certificates for the Royaltech Shares to the Shareholders
in the amounts as Densen shall designate. Parties further agree and acknowledge
that such share certificates have been placed in escrow pursuant to an escrow
agreement (the “Escrow Agreement”) among Royaltech, Densen and Ellenoff,
Xxxxxxxx & Schole LLP as the escrow agent (the “Escrow Agent”) and that such
share certificates shall not be released from escrow and delivered to the
Shareholders until such time when the Escrow Agent receives a joint written
instruction from Chenxi Shi as a representative of Royaltech and Xxx San as
a
representative of Densen confirming that the Closing has completed. Despite
the
share certificates for the Royaltech Shares having been prepared prior to the
Closing Date, the Royaltech Shares shall not be considered fully paid and
non-assessable until the Closing has completed.
2.3 Exemption
for Share Issuance. The
Royaltech Shares shall be issued pursuant to an exemption or exemptions from
the
prospectus and registration requirements of the 1933 Act. The Shareholders
agree
to abide by all applicable resale restrictions and hold periods imposed by
Applicable Securities Legislation. All certificates representing the Royaltech
Shares issued on Closing, when issued, will be endorsed with restrictive legends
substantially in the same form as the following legend pursuant to the 1933
Act,
in order to reflect the fact that these are restricted securities and will
be
issued to the Shareholders pursuant to an exemption from the registration
requirements of the 1933 Act:
“NONE
OF
THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED WITH THE SECURITIES
AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND WERE ISSUED
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS.”
2.4 Restricted
Shares.
Densen
and the Shareholders acknowledge that the Royaltech Shares issued pursuant
to
the terms and conditions set forth in this Agreement will have such hold periods
as are required under Applicable Securities Legislation and as a result may
not
be sold, transferred or otherwise disposed of, except pursuant to an effective
registration statement under the 1933 Act, or pursuant to an exemption from,
or
in a transaction not subject to, the registration requirements of the 1933
Act
and in each case only in accordance with all Applicable Securities Legislation.
Each Shareholder agrees that he has been given an opportunity to seek and obtain
independent legal advice as to the resale restrictions applicable in their
jurisdiction of residence, and under U.S. or other Applicable Securities
Legislation generally. Royaltech has not undertaken, and will have no
obligation, to register any of the Royaltech Shares under the 1933
Act.
2.5 Shareholders
Acknowledgement.
The
Shareholders acknowledge Royaltech is relying on an exemption from the
prospectus and registration requirements of the Applicable Securities
Legislation and the Shareholders may not receive information that would
otherwise be required to be provided to the Shareholders pursuant to Applicable
Securities Legislation.
3. REPRESENTATIONS
AND WARRANTIES OF DENSEN
Except
as
set forth in the disclosure schedules to be delivered to Royaltech by Densen,
and except as disclosed in the Financial Statements for the periods ended June
30, 2008, and December 31 2007 (“Densen Financial Statements”) Densen represents
and warrants to Royaltech as follows:
3.1 Organization
and Good Standing.
Densen
is a corporation duly organized, validly existing and in good standing under
the
laws of the British Virgin Islands and has the requisite corporate power and
authority to own, lease and to carry on its business as now being conducted.
3.2 Authority.
Densen
has all requisite corporate power and authority to execute and deliver this
Agreement and any other document contemplated by this Agreement (collectively,
the “Densen
Documents”)
to be
signed by Densen and to perform its obligations hereunder and to consummate
the
transactions contemplated hereby. This Agreement has been, and the other Densen
Documents when executed and delivered by Densen will be, duly executed and
delivered by Densen and this Agreement is, and the other Densen Documents when
executed and delivered by Densen as contemplated hereby will be, valid and
binding obligations of Densen enforceable in accordance with their respective
terms except:
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(a)
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as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors’
rights generally;
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(b)
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as
limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies;
and
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(c)
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as
limited by public policy.
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3.3 Capitalization
of Densen. The
authorized capital stock and other equity securities of Densen consists of
50,000 shares
of
common with a par value of US$1.00 per share (the “Densen
Common Stock”).
There
are 50,000 shares of Densen Common Stock issued and outstanding as of the
date of this Agreement. There are no agreements to which Densen is a party
purporting to restrict the transfer of the Densen Common Stock, no voting
agreements, shareholders’ agreements, voting trusts, or other arrangements
restricting or affecting the voting of the Densen Common Stock.
3.4 Shareholders
of Densen Common Stock.
The
Shareholders are the only registered holders of the Densen Shares.
3.5 Directors
and Officers of Densen.
The
duly elected or appointed directors and officers of Densen are as set out in
Schedule 1 to this Agreement.
3.6 Actions
and Proceedings.
To the
knowledge of Densen, there is no action, suit, judgment, claim, demand or
proceeding outstanding or pending, or threatened against or affecting Densen,
which if adversely resolved or determined, would have a material adverse effect
on the business of Densen taken as a whole (a “Densen
Material Adverse Effect”).
3.7 Compliance.
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(a)
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To
Densen’s knowledge, Densen is in compliance with, is not in default or
violation in any material respect under, and has not been charged
with or
received any notice at any time of any material violation of any
statute,
law, ordinance, regulation, rule, decree or other applicable regulation
to
the business or operations of
Densen;
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(b)
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To
Densen’s knowledge, Densen is not subject to any judgment, order or decree
entered in any lawsuit or proceeding applicable to its business and
operations that would constitute a Densen Material Adverse Effect;
and
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(c)
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To
Densen’s knowledge, Densen and Changchun Densen have operated in material
compliance with all laws, rules, statutes, ordinances, orders and
regulations applicable to their respective business. Densen has not
received any notice of any violation thereof, nor are Densen and
Changchun
Densen aware of any valid basis
therefor.
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3.8 Personal
Property.
Densen
possesses and has good and marketable title of all property necessary for the
continued operation of the business of Densen and Changchun Densen, as presently
conducted. All such property is in reasonably good operating condition, ordinary
wear and tear excepted, and is reasonably fit for the purposes for which such
property is presently used. All material equipment, furniture, fixtures and
other tangible personal property and assets owned or leased by Densen are owned
by Densen free and clear of all liens, security interests, charges,
encumbrances, and other adverse claims, except as disclosed in Schedule 5
to this Agreement.
3.9 No
Other Assets or Liabilities.
Densen
owns 100% of issued and outstanding share capital of Xxxxxx XX and does not
own
any assets or have any liabilities other than 100% issued and outstanding share
capital of Xxxxxx XX, which in turn owns 97% of Changchun Densen, which has
a
47.5 % interest in a joint venture called Xxxxx Tuo Agricultural Machinery
Equipment Group Co., Ltd.
3.10 Financial
Condition.
Densen
has delivered audited financial statements to Royaltech regarding its operations
for the year ended December 31, 2007 and unaudited financial statements for
the
six months ended June 30, 2008, which information is accurate and complete
in
all material respects.
4. REPRESENTATIONS
AND WARRANTIES OF ROYALTECH
Royaltech
represents and warrants to Densen and the Shareholders as follows:
4.1 Organization
and Good Standing.
Royaltech is duly incorporated, organized, validly existing and in good standing
under the laws of the state of Delaware, and has all requisite corporate power
and authority to own, lease and to carry on its business as now being conducted.
4.2 Authority.
Royaltech has all requisite corporate power and authority to consummate the
Transaction and to execute and deliver this Agreement, the Closing Documents
and
any other documents contemplated by this Agreement, including, but not limited
to the Lock-Up Agreement, the Escrow Agreement and the Stock Purchase Agreement
(collectively, the “Royaltech
Documents”)
to be
signed by each of Royaltech and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of
each of the Royaltech Documents by Royaltech and the consummation by Royaltech
of the Transaction has been duly authorized by its board of directors and no
other corporate or stockholder proceedings on the part of Royaltech is necessary
to authorize such documents or to consummate the Transaction. This Agreement
has
been, and the other Royaltech Documents when executed and delivered by Royaltech
as contemplated by this Agreement will be, duly executed and delivered by
Royaltech and this Agreement is, and the other Royaltech Documents when executed
and delivered by Royaltech, as contemplated hereby will be, valid and binding
obligations of Royaltech, enforceable in accordance with their respective terms,
except:
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(a)
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as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors’
rights generally;
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(b)
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as
limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies;
and
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(c)
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as
limited by public policy.
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4.3 No
Liabilities. Immediately
prior to Closing, other than the liabilities or obligations as set forth in
Schedule 4, Royaltech has no debts, contracts, guaranty, standby, indemnity
or
hold harmless commitments, liabilities or obligations of any kind, character
or
description, whether accrued, absolute, contingent or otherwise, or due or
to
become due. Prior to closing, Densen shall have obtained waivers from existing
creditors, and Messrs. Chenxi Shi and Xxxx Xx shall, immediately prior to
Closing, pursuant to that certain Assumption Agreement, entered into as of
the
date hereof, assume full responsibility of such liabilities and obligations
incurred prior to Closing. Simultaneous to Closing, the $150,000 payable to
Royaltech in connection with the private placement of 400,000 shares of
Royaltech Common Stock, shall be directed to existing creditors to extinguish
those debts and liabilities of Royaltech incurred prior to Closing.
4.4 Capitalization
of Royaltech.
The
entire authorized capital stock and other equity securities of Royaltech consist
of 50,000,000 authorized shares of common stock with a par value of $0.0001
(the “Royaltech
Common Stock”).
As of
the date of this Agreement, there are 1,190,185 shares of Royaltech Common
Stock
issued and outstanding. Royaltech will have issued and outstanding no more
than
18,310,539 shares
of
Royaltech Common Stock immediately after the issuance of 400,000 shares of
Royaltech Common Stock issued to FirsTrust Group Inc. under a concurrent private
placement and the Royaltech Shares as contemplated by this Agreement. Neither
Royaltech nor any of its representatives have received any formal or informal
notification from FINRA or other official party or representative that that
Royaltech Common Stock is not authorized (with or without the passage of time)
for continued trading on the OTC Bulletin Board. A complete list of all persons
or entities holding Royaltech Common Stock as shown on the stockholder records
of Royaltech as at August 15, 2008 is set forth in Schedule 6.
4.5 Royaltech
Securities.
That
all of the issued and outstanding shares of Royaltech Common Stock has been
duly
authorized, are validly issued, were not issued in violation of any pre-emptive
rights and are fully paid and non-assessable, are not subject to pre-emptive
rights and were issued in full compliance with all federal, state, and local
laws, rules and regulations. Other than the share issuances contemplated by
this
Agreement, there are, and as of the Closing Date there will be no outstanding
options, warrants, subscriptions, phantom shares, conversion rights, or other
rights, agreements, or commitments obligating Royaltech to issue any additional
shares of Royaltech Common Stock, or any other securities convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire from
Royaltech any shares of Royaltech Common Stock as of the date of this Agreement.
There are no agreements purporting to restrict the transfer of the Royaltech
Common Stock, no voting agreements, voting trusts, or other arrangements
restricting or affecting the voting of the Royaltech Common Stock.
4.6 Directors
and Officers.
The duly
elected or appointed directors and the duly appointed officers of Royaltech
are
as listed on Schedule 2 to this Agreement.
4.7 Corporate
Records.
The
corporate records of Royaltech, as required to be maintained by Royaltech
pursuant to the Delaware General Corporation Law, is accurate, complete and
current in all material respects, and the minute book of Royaltech is, correct
and contain all material records required by the laws of the State of Delaware
with regard to all proceedings, consents, actions and meetings of the
stockholders and the board of directors of Royaltech.
4.8 Non-Contravention.
Neither
the execution, delivery and performance of this Agreement, nor the consummation
of this Transaction will:
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(a)
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conflict
with, result in a violation of, cause a default under (with or without
notice, lapse of time or both) or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation contained
in or
the loss of any material benefit under, or result in the creation
of any
lien, security interest, charge or encumbrance upon any of the material
properties or assets of Royaltech under any term, condition or provision
of any loan or credit agreement, note, debenture, bond, mortgage,
indenture, lease or other agreement, instrument, permit, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Royaltech or any of its material property or
assets;
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(b)
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violate
any provision of the applicable incorporation or charter documents
of
Royaltech; or
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(c)
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violate
any order, writ, injunction, decree, statute, rule, or regulation
of any
court or governmental or regulatory authority applicable to Royaltech
or
any of its material property or
assets.
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4.9 Validity
of Royaltech Shares. The
Royaltech Shares to be issued to the Shareholders upon consummation of the
Transaction will, upon issuance and delivery from escrow to the Shareholders,
be
duly and validly authorized and duly and validly issued, fully paid and
non-assessable, were not issued in violation of pre-emptive rights, are not
subject to pre-emptive rights, and were issued in full compliance with all
federal, state and local laws, rules and regulations.
4.10 Actions
and Proceedings. There
is
no claim, charge, arbitration, grievance, action, suit, investigation or
proceeding by or before any court, arbiter, administrative agency or other
governmental authority now pending or threatened against Royaltech which
involves any of the business, or the properties or assets of Royaltech that,
if
adversely resolved or determined, would have a material adverse effect on the
business, operations, assets, properties, prospects or conditions of Royaltech
taken as a whole (a “Royaltech
Material Adverse Effect”).
There
is no reasonable basis for any claim or action that, based upon the likelihood
of its being asserted and its success if asserted, would have such a Royaltech
Material Adverse Effect.
4.11 Compliance.
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(a)
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Royaltech
is in compliance with, is not in default or violation in any material
respect under, and has not been charged with or received any notice
at any
time of any material violation of, any statute, law, ordinance,
regulation, rule, decree or other applicable regulation to the business
or
operations of Royaltech;
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(b)
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Royaltech
is not subject to any judgment, order or decree entered in any lawsuit
or
proceeding applicable to its business or operations that would constitute
a Royaltech Material Adverse
Effect;
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(c)
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Royaltech
has duly filed all reports and returns required to be filed by Royaltech
with governmental authorities and have obtained all governmental
permits
and other governmental consents. All of such permits and consents
are in
full force and effect, and no proceedings for the suspension or
cancellation of any of them, and no investigation relating to any
of them,
is pending or, threatened, and none of them will be affected in a
material
adverse manner by the consummation of the Transaction;
and
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(d)
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Royaltech
has operated in material compliance with all laws, rules, statutes,
ordinances, orders and regulations applicable to its business. Royaltech
has not received any notice of any violation thereof, nor is Royaltech
aware of any valid basis therefor.
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4.12 Filings,
Consents and Approvals.
Royaltech will conduct or obtain any filing, registration, permit or
authorization from any public or governmental body or authority or other person
that is necessary for the consummation by Royaltech of the
Transaction.
4.13 SEC
Filings.
Royaltech has furnished or made available to Densen and the Shareholders a
true
and complete copy of each report, schedule, registration statement and proxy
statement filed by Royaltech with the SEC (collectively, and as such documents
have since the time of their filing been amended, the “Royaltech
SEC Documents”).
Royaltech has filed all SEC Reports required by it to be filed with the SEC
and
such reports filed in the 12-month period prior to the Closing Date have been
filed timely or within any period of extension for filing allowed under
applicable rules. As of their respective dates, the Royaltech SEC Documents
complied in all material respects with the applicable requirements and
regulations of the 1933 Act or the 1934 Act, as applicable, and the rules and
regulations of the SEC thereunder. All filings by Royaltech with the SEC
contained information which is true and correct in all material respects, and
did not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading or which
could have a material adverse effect on Royaltech. Royaltech is in compliance
in
all material respects with applicable requirements of the Xxxxxxxx-Xxxxx Act
of
2002 and the regulations adopted thereunder.
4.14 Absence
of Undisclosed Liabilities.
Immediately prior to Closing, other than the liabilities or obligations as
set
forth in Schedule 4, Royaltech has no debts, contracts, guaranty, standby,
indemnity or hold harmless commitments, liabilities or obligations of any kind,
character or description, whether accrued, absolute, contingent or otherwise,
or
due or to become due.
4.15 Absence
of Certain Changes or Events.
Except
as and to the extent disclosed in the Royaltech SEC Documents, there has not
been:
| (a) |
a
Royaltech Material Adverse Effect;
or
|
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(b)
|
any
material change by Royaltech in its accounting methods, principles
or
practices.
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4.16 No
Subsidiaries.
Royaltech does not have any subsidiaries or agreements of any nature to acquire
any subsidiary or to acquire or lease any other business
operations.
4.17 Personal
Property. There
are
no material equipment, furniture, fixtures and other tangible personal property
and assets owned or leased by Royaltech, except as disclosed in the Royaltech
SEC Documents.
4.18 Employees
and Consultants.
Royaltech does not have any employees or consultants, except as disclosed in
the
Royaltech SEC Documents.
4.19 Material
Contracts and Transactions.
There
are no material contracts, agreements, licenses, permits, arrangements,
commitments, instruments, understandings or contracts, whether written or oral,
express or implied, contingent, fixed or otherwise, to which Royaltech is a
party.
4.20 No
Brokers. Other
than as disclosed in Schedule 4, Royaltech
has not incurred any obligation or liability to any party for any brokerage
fees, agent’s commissions, or finder’s fees in connection with the Transaction
contemplated by this Agreement. In the event any person holds Densen or the
Shareholders liable in connection with any such fees, Royaltech shall indemnify
Densen and the Shareholders with respect to such claims.
4.21 Certain
Transactions.
Royaltech is not a guarantor or indemnitor of any indebtedness of any third
party, including any person, firm or corporation.
4.22 Completeness
of Disclosure.
No
representation or warranty by Royaltech in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be furnished to
Densen pursuant hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make any statement herein or therein
not materially misleading.
4.23 Tax
Matters.
|
(a)
|
Royaltech
has filed all Tax Returns required to be filed under applicable laws
and
regulations. All such Tax Returns are correct and complete in all
material
respects and have been prepared in substantial compliance with all
applicable laws and regulations. All Taxes due and owing by Royaltech
(whether or not shown on any Tax Return) have been paid. No claim
has ever
been made by an authority in a jurisdiction where Royaltech does
not file
Tax Returns that it is or may be subject to taxation by that jurisdiction.
There are not Liens for Taxes (other than Taxes not yet due and payable)
upon any of the assets of Royaltech.
|
|
(b)
|
Royaltech
has withheld and paid all Taxes required to have been withheld and
paid in
connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third
party.
|
4.24 SEC
Comments.
Royaltech does not have any unresolved comments from the SEC with respect to
its
SEC Reports filed with the SEC.
5. CLOSING
CONDITIONS
5.1 Conditions
Precedent to Closing by Royaltech. The
obligation of Royaltech to consummate the Transaction is subject to the
satisfaction or waiver of the conditions set forth below on or before the
Closing Date or such earlier date as hereinafter specified. These conditions
of
closing are for the benefit of Royaltech and may be waived by Royaltech in
its
sole discretion.
|
(a)
|
Representations
and Warranties. The representations and warranties of Densen set
forth in
this Agreement will be true, correct and complete in all respects
as of
the Closing Date, as though made on and as of the Closing Date (except
those of which are specifically made as of an earlier date) and Densen
will have delivered to Royaltech a certificate dated as of the Closing
Date, to the effect that the representations and warranties made
by Densen
in this Agreement are true and
correct.
|
|
(b)
|
No
Legal Prohibition. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any law (whether
temporary, preliminary or permanent) or order that is then in effect
and
has the effect of making the Transactions illegal or otherwise preventing
or prohibiting consummation of the
Transactions.
|
|
(c)
|
Performance.
All of the covenants and obligations that Densen and the Shareholders
are
required to perform or to comply with pursuant to this Agreement
at or
prior to the Closing must have been performed and complied with in
all
material respects.
|
|
(d)
|
Transaction
Documents. This Agreement, the Densen Documents and all other documents
necessary or reasonably required to consummate the Transaction, all
in
form and substance reasonably satisfactory to Royaltech, will have
been
executed and delivered to Royaltech by
Densen.
|
|
(e)
|
Exchange
for Royaltech Shares. Royaltech has received the
certificates representing the Densen Shares, duly endorsed for transfer
to
Royaltech.
|
|
(f)
|
Officer
Certificate. Densen shall have delivered to Royaltech a
certificate, dated the Closing Date, signed by the chief executive
officer
or chief financial officer of the Densen, certifying in such capacity
as
to the satisfaction of the conditions in this Section 5.1(a), (c)
and
(d)
|
|
(g)
|
Secretary’s
Certificate. Densen will have delivered to Royaltech a certificate
from
the Secretary of Densen attaching:
|
|
(i)
|
a
copy of Densen’s Memorandum and Articles of Association and all other
incorporation documents, as amended through the Closing Date;
and
|
|
(ii)
|
copies
of resolutions duly adopted by the board of directors of Densen approving
the execution and delivery of this Agreement and the consummation
of the
transactions contemplated herein.
|
|
(h)
|
Third
Party Consents. Densen will have delivered to Royaltech duly executed
copies of all third party consents and approvals contemplated by
this
Agreement, in form and substance reasonably satisfactory to
Royaltech.
|
|
(i)
|
Regulatory
Approvals and Consents. Densen will have obtained all necessary approvals
and consents to carry out the Transaction, in form and substance
reasonably satisfactory to
Royaltech.
|
|
(j)
|
No
Action. No suit, action, or proceeding will be pending or threatened
which
would prevent the consummation of any of the transactions contemplated
by
this Agreement.
|
|
(k)
|
Due
Diligence. As attested by written notice of satisfactory completion
to
Densen from Royaltech, Royaltech and its solicitors will be reasonably
satisfied with their due diligence investigation of Densen that is
reasonable and customary in a transaction of a similar nature to
that
contemplated by the Transaction,
including:
|
|
(i)
|
materials,
documents and information in the possession and control of Densen
or the
Shareholders that are reasonably germane to the
Transaction,
|
|
(ii)
|
a
physical inspection of the assets of Densen by Royaltech or its
representatives, and,
|
|
(iii)
|
title
to the material assets of Densen.
|
|
(l)
|
Densen
will have delivered its financial statements in US GAAP audited to
December 31, 2007 and reviewed to June 30, 2008.
|
5.2 Conditions
Precedent to Closing by Densen and the Shareholders. The
obligation of Densen and the Shareholders to consummate the Transaction is
subject to the satisfaction or waiver of the conditions set forth below on
or
before the Closing Date or such earlier date as hereinafter specified. These
conditions precedent are for the benefit of Densen and the Shareholders and
may
be waived by Densen and the Shareholders in their sole discretion.
|
(a)
|
Representations
and Warranties. The representations and warranties of Royaltech set
forth
in this Agreement will be true, correct and complete in all respects
as of
the Closing Date as though made on and as of the Closing Date (except
those which are specifically made as of an earlier date) and Royaltech
will have delivered to Densen a certificate dated the Closing Date,
to the
effect that the representations and warranties made by Royaltech
in this
Agreement are true and correct.
|
|
(b)
|
No
Legal Prohibition. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any law (whether
temporary, preliminary or permanent) or order that is then in effect
and
has the effect of making the Transactions illegal or otherwise preventing
or prohibiting consummation of the
Transactions.
|
|
(c)
|
Performance.
All of the covenants and obligations that Royaltech, Chenxi Shi,
and Xxxx
Xx are required to perform or to comply with pursuant to this Agreement
at
or prior to the Closing must have been performed and complied with
in all
material respects. Royaltech Chenxi Shi, and Xxxx Xx must have delivered
each of the documents required to be delivered by it pursuant to
this
Agreement, including without limitation, the Waivers, the Lockup
Agreement, and the Assumption
Agreement.
|
|
(d)
|
Share
Distribution/Cancellation. Prior to the closing of this Agreement,
Royaltech has disposed of 2,971,500 shares of common stock in Ville
Mobile
Technologies Corp., a wholly owned subsidiary of Royaltech.
|
|
(e)
|
Lock-Up
Agreement. Densen and the Shareholders shall have received Lock-Up
Agreements from the 5% or greater Royaltech Stockholders immediately
prior
to the Closing in form and substance reasonably satisfactory to
Densen.
|
|
(f)
|
Private
Placement. Royaltech shall have completed a private placement pursuant
to
a certain Stock Purchase Agreement with FirsTrust Group Inc. for
400,000
shares of common stock in Royaltech for a consideration of $150,000.
|
|
(g)
|
Compliance.
Royaltech is and has been in compliance with its reporting requirements
under the 1934 Act for the 18 month period prior to the Closing
Date.
|
|
(h)
|
Transaction
Documents. This Agreement, the Royaltech Documents and all other
documents
necessary or reasonably required to consummate the Transaction, all
in
form and substance reasonably satisfactory to Densen, will have been
executed and delivered to Densen by Royaltech
.
|
|
(i)
|
Officer
Certificate. Royaltech shall have delivered to Densen a
certificate, dated the Closing Date, signed by the chief executive
officer
or chief financial officer, certifying in such capacity as to the
satisfaction of the conditions in this Xxxxxxx 0.0(x), (x), (x),
(x), (x),
(x) (x), (x), (x), (o), and (p).
|
|
(j)
|
Secretary’s
Certificate. Royaltech shall have delivered to Densen a certificate
from
Royaltech’s Secretary, in form and substance reasonably satisfactory to
Densen, and attaching:
|
|
(i)
|
a
copy of the articles of incorporation, bylaws and all other incorporation
documents, as amended through the Closing Date,
and
|
|
(ii)
|
copies
of resolutions duly adopted by the boards of directors of Royaltech
and
approving the execution and delivery of this Agreement and the
consummation of the transaction contemplated
herein.
|
|
(k)
|
Densen
and the Shareholders shall have received an opinion of Royaltech’s
counsel, in form and substance reasonably satisfactory to Densen
and the
Shareholders, addressed to Densen and the Shareholders, and dated
as of
the Closing Date.
|
|
(l)
|
No
Material Adverse Change. No Royaltech Material Adverse Effect will
have
occurred since the date of this
Agreement.
|
|
(m)
|
No
Action. No suit, action, or proceeding will be pending or threatened
before any governmental or regulatory authority wherein an unfavorable
judgment, order, decree, stipulation, injunction or charge would
prevent
the consummation of Transaction.
|
|
(n)
|
Outstanding
Shares. Royaltech will have issued and outstanding no more than 1,190,185
shares of
Royaltech Common Stock immediately prior to the
Closing.
|
|
(o)
|
Regulatory
Approvals and Consents. Royaltech will have obtained all necessary
approvals and consents to carry out the Transaction, in form and
substance
reasonably satisfactory to Densen.
|
|
(p)
|
Public
Market. On the Closing Date, the shares of Royaltech Common Stock
will be
quoted on the OTC Bulletin Board and no notice of delisting or other
deficiency shall have been received by
Royaltech.
|
|
(q)
|
Due
Diligence. As attested by written notice of satisfactory completion
to
Royaltech from Densen, Densen and its accountants will be reasonably
satisfied with their due diligence investigation and review of the
Royaltech SEC Documents, and the contents thereof, prepared in accordance
with the United States generally accepted accounting principles applied
in
a manner consistent with prior
periods.
|
|
(r)
|
Royaltech
Debts. Other than the debts and obligations as set forth on Schedule
4,
Royaltech will have provided evidence that it has satisfied all debts
on
its books and accounts payable.
|
|
(s)
|
Waivers.
Densen shall have obtained valid and enforceable waivers (the “Waivers”)
against Royaltech executed by each creditor executed with respect
to the
debt and obligations set forth on Schedule
4.
|
|
(t)
|
Bank
Accounts. Royaltech shall have closed all bank accounts held in its
name.
|
5.3 Access
and Investigation.
Between
the date of this Agreement and the Closing Date, Royaltech will provide Densen’s
representative(s):
|
(a)
|
full
and free access to its personnel, properties, assets, contracts,
books and
records, and other documents and
data;
|
|
(b)
|
copies
of all such contracts, books and records, and other existing documents
and
data as required by this Agreement and as the other may otherwise
reasonably request; and,
|
|
(c)
|
such
additional financial, operating, and other data and information as
the
other may reasonably request.
|
All
of
such access, investigation and communication by Densen’s representative(s) will
be conducted during normal business hours and in a manner designed not to
interfere unduly with the normal business operations of the Royaltech. Royaltech
will instruct its auditors to co-operate with the Densen and its representatives
in connection with such investigations.
5.4 Confidentiality.
|
(a)
|
All
information regarding the business of Densen including, without
limitation, financial information of Densen will be kept in strict
confidence by Royaltech and will not be given to any other person
or party
or used (except in connection with due diligence and except as required
to
file a news release and 8-K disclosure regarding the transaction
to the
public after the execution of this Agreement and following the Closing),
dealt with, exploited or commercialized by Royaltech or disclosed
to any
third party (other than Royaltech’s professional accounting and legal
advisors) without the prior written consent of Densen. If the Transaction
does not proceed for any reason, Royaltech will immediately return
to
Densen (or as directed by Densen) any information received regarding
Densen’s business, including copies thereof. Likewise, all information
regarding the business of Royaltech including, without limitation,
financial information that Royaltech provides to Densen during its
due
diligence investigation of Royaltech will be kept in strict confidence
by
Densen and will not be used (except in connection with due diligence),
dealt with, exploited or commercialized by Densen or disclosed to
any
third party (other than Densen’s professional accounting and legal
advisors) without Royaltech’s prior written consent, unless already public
disclosed. If the Transaction does not proceed for any reason, then
upon
receipt of a written request from Royaltech, Densen will immediately
return to Royaltech (or as directed by Royaltech) any information
received
regarding Royaltech’s business. Each party will provide an affidavit to
the other that all documents were
returned.
|
|
(b)
|
Royaltech
and Densen acknowledge and agree, subject to disclosure obligations
under
Applicable Securities Legislation or
other laws or regulations, that neither party will make any public
pronouncements concerning the terms of this Agreement without the
express
written consent of the other party, such consent not to be unreasonably
withheld, delayed or conditioned.
|
|
(c)
|
Densen
acknowledges and agrees to neither trade nor allow any of its employees
or
agents to trade in the securities of Royaltech while in possession
of
material information about Royaltech that has not been publicly disclosed.
|
5.5 Notification.
Between
the date of this Agreement and the Closing Date, each of the parties to this
Agreement will promptly notify the other parties in writing if it becomes aware
of any fact or condition that causes or constitutes a material breach of any
of
its representations and warranties as of the date of this Agreement, if it
becomes aware of the occurrence after the date of this Agreement of any fact
or
condition that would cause or constitute a material breach of any such
representation or warranty had such representation or warranty been made as
of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Schedules relating to such party,
such party will promptly deliver to the other parties a supplement to the
Schedules specifying such change. During the same period, each party will
promptly notify the other parties of the occurrence of any material breach
of
any of its covenants in this Agreement or of the occurrence of any event that
may make the satisfaction of such conditions impossible or
unlikely.
5.6 Exclusivity.
Until
such time, if any, as this Agreement is terminated pursuant to this Agreement,
but in no event later than November 1, 2008, Densen and Royaltech will not,
directly or indirectly solicit, initiate, entertain or accept any inquiries
or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from,
any
person or entity relating to any transaction involving the sale of the business
or assets (other than in the ordinary course of business), or any of the capital
stock of Densen or Royaltech, as applicable, or any merger, consolidation,
business combination, or similar transaction other than as contemplated by
this
Agreement.
5.7 Conduct
of Densen and Royaltech Business Prior to Closing.
Except
as expressly contemplated by this Agreement or for purposes in furtherance
of
this Agreement, from the date of this Agreement to the Closing Date, and except
to the extent Royaltech otherwise consents in writing, Densen will operate
its
business substantially as presently operated and only in the ordinary course
and
in compliance with all applicable laws, and use its best efforts to preserve
its
relationships with persons having business dealings with it. Likewise, from
the
date of this Agreement to the Closing Date, and except to the extent Densen
otherwise consents in writing, Royaltech will operate its business substantially
as presently operated and only in the ordinary course and in compliance with
all
applicable laws, and use its best efforts to preserve its relationships with
persons having business dealings with it.
5.8 Full
Disclosure Requirement. Densen
acknowledges that Royaltech is required to file with the SEC upon Closing a
prospectus level disclosure document which includes discussion of all aspects
of
its business, financial affairs, risks and its management. Densen and the
Shareholders will cooperate fully in providing Royaltech with all information
and documentation reasonably requested.
5.9 Certain
Acts Prohibited - Densen. Except
as
expressly contemplated by this Agreement or for purposes in furtherance of
this
Agreement, between the date of this Agreement and the Closing Date, Densen
will
not, without the prior written consent of Royaltech:
|
(a)
|
amend
its articles, bylaws or other incorporation
documents;
|
|
(b)
|
incur
any liability or obligation other than in the ordinary course of
business
or encumber or permit the encumbrance of any properties or assets
of
Densen except in the ordinary course of
business;
|
|
(c)
|
dispose
of or contract to dispose of any Densen property or assets, except
in the
ordinary course of business consistent with past practice;
or
|
|
(d)
|
materially
increase benefits or compensation expenses of Densen, other than
as
contemplated by the terms of any employment agreement in existence
on the
date of this Agreement, increase the cash compensation of any director,
executive officer or other key employee or pay any benefit or amount
not
required by a plan or arrangement as in effect on the date of this
Agreement to any such person.
|
5.10 Certain
Acts Prohibited - Royaltech.
Between
the date of this Agreement and the Closing Date, Royaltech will not, without
the
prior written consent of Densen:
|
(a)
|
incur
any liability or obligation or encumber or permit the encumbrance
of any
properties or assets of Royaltech except in the ordinary course of
business consistent with past
practice;
|
|
(b)
|
dispose
of or contract to dispose of any Royaltech property or assets except
in
the ordinary course of business consistent with past
practice;
|
|
(c)
|
materially
increase benefits or compensation expenses of Royaltech, increase
the cash
compensation of any director, executive officer or other key employee
or
pay any benefit or amount to any such person;
|
|
(d)
|
issue,
deliver, sell, pledge, dispose of or encumber, or authorize or commit
to
the issuance, sale, pledge, disposition or encumbrance of, any shares
of
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest (including, but not limited
to,
stock appreciation rights or phantom stock), of
Company;
|
|
(e)
|
declare,
set aside or pay any dividends on, or make any other distributions
in
respect of the Royaltech Common Stock;
or
|
|
(f)
|
split,
combine or reclassify any Royaltech Common Stock or issue or authorize
the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of Royaltech Common
Stock.
|
5.11 Public
Announcements. Other than
a
current Report on Form 8-K which Royaltech is required to file upon the
execution of this Agreement, until the Closing Date, Royaltech and Densen each
agree that they will not release or issue any reports or statements or make
any
public announcements relating to this Agreement or the Transaction contemplated
herein without the prior written consent of the other party, except as may
be
required upon written advice of counsel to comply with applicable laws or
regulatory requirements after consulting with the other party hereto and seeking
their reasonable consent to such announcement. Densen acknowledges that
Royaltech must comply with Applicable Securities Legislation requiring full
disclosure of material facts and agreements in which it is involved, and will
co-operate to assist Royaltech in meeting its obligations.
6. CLOSING
6.1 Closing.
The
Closing will take place on the Closing Date at the offices of the lawyers for
Densen or at such other location as agreed to by the parties. Notwithstanding
the location of the Closing, each party agrees that the Closing may be completed
by the exchange of undertakings between the respective legal counsel for Densen
and Royaltech, provided such undertakings are satisfactory to each party’s
respective legal counsel.
6.2 Closing
Deliveries of Densen.
At
Closing, Densen will deliver or cause to be delivered the following, fully
executed and in the form and substance reasonably satisfactory to
Royaltech:
|
(a)
|
copies
of all resolutions and/or consent actions adopted by or on behalf
of the
board of directors of Densen evidencing approval of this Agreement
and the
Transaction;
|
|
(b)
|
all
certificates and other documents required by Section 5.1 of this
Agreement;
|
|
(c)
|
a
certificate of an officer of Densen, dated as of Closing, certifying
that:
|
|
(i)
|
each
respective covenant and obligation of Densen has been complied with,
and
|
|
(ii)
|
each
respective representation, warranty and covenant of Densen is true
and
correct at the Closing as if made on and as of the Closing;
and
|
|
(d)
|
share
certificates of Densen representing all of the issued and outstanding
share capital of Densen, duly endorsed for transfer to
Royaltech;
|
|
(e)
|
a
legal opinion from Densen’s solicitors in a form satisfactory to
Royaltech; and
|
|
(f)
|
the
Densen Documents and any other necessary documents, including the
Certificate of Merger, each duly executed by Densen, as required
to give
effect to the Transaction.
|
6.3 Closing
Deliveries of Royaltech.
At
Closing, Royaltech will deliver or cause to be delivered the following, fully
executed and in the form and substance reasonably satisfactory to
Densen:
|
(a)
|
copies
of all resolutions and/or consent actions adopted by or on behalf
of the
board of directors of Royaltech evidencing approval of this Agreement
and
the Transaction and the requisite stockholder approval of the
Transaction;
|
|
(b)
|
all
certificates and other documents required by Section 5.2 of this
Agreement;
|
|
(c)
|
a
certificate of an officer of Royaltech, dated as of Closing, certifying
that:
|
|
(i)
|
each
covenant and obligation of Royaltech, has been complied with,
and
|
|
(ii)
|
each
representation, warranty and covenant of Royaltech, is true and correct
at
the Closing as if made on and as of the Closing;
and
|
|
(d)
|
a
legal opinion from Royaltech’s solicitors in a form satisfactory to
Densen;
|
|
(e)
|
copies
of resolutions of the board of directors of Royaltech appointing
Xxx San
as Chief Executive Officer and Chairman of the Board of Directors
and Xxx
Xxxxxxxx as President and Chief Financial Officer of
Royaltech;
|
|
(f)
|
executed
Waivers from the creditors of Royaltech listed on Schedule 4;
|
|
(g)
|
the
resignation of the executive officers of Royaltech from their respective
positions;
|
|
(h)
|
Chenxi
Shi and Xxxx Xx immediately prior to the Closing shall have executed
a
lock up agreement to restrain them from selling their shares of Royaltech
common stock for a period of 9 months from the date of Closing; and
|
|
(i)
|
the
Royaltech Documents and any other necessary documents as required
to give
effect to the Transaction.
|
7. POST
CLOSING MATTERS
7.1 Change
of Directors
Immediately after Closing, the officers and directors of Royaltech shall be
the
persons as set forth on Schedule 3.
7.2 Dissenting
Shares. Each
outstanding Densen share, the holder of which has not approved the Transaction
or executed this Agreement and demanded and perfected its demand for payment
of
the fair value of its shares in accordance with the British Virgin Islands
(“Appraisal Rights”) and has not effectively withdrawn or lost its right to such
payment (“Dissenting Shares”) shall not be converted into or represent a right
to receive Royaltech Shares pursuant to Section 2.2(e) hereof, and the holder
thereof shall be entitled only to such rights as are granted by the Appraisal
Rights. Each holder of Dissenting Shares who becomes entitled to payment for
its
Densen Shares pursuant to Appraisal Rights shall receive payment therefor from
the Surviving Corporation (but only after the amount thereof shall have been
agreed upon or finally determined pursuant to the Appraisal Rights).
7.3 No
Dilution. For
a
period of 12 months after the Closing, Royaltech agrees not to issue additional
shares of its common stock to pay for its general administrative
expenses.
7.4 Acceptance
of Legal Opinion for Removal of Legend. After
the
Closing, other than for Chenxi Shi and Xxxx Xx whose shares of Royaltech Common
Stock are subject to the Lockup Agreement, Royaltech agrees that it will not
unreasonably object to the existing Royaltech shareholders submitting legal
opinions from their own legal counsel who are qualified in SEC rules and
regulations to the transfer agent of Royaltech solely for the purposes of
removing restrictive legends on their share certificates.
8. TERMINATION
8.1 Termination.
This
Agreement may be terminated at any time prior to the Closing Date contemplated
hereby by:
|
(a)
|
mutual
agreement of Royaltech and Densen;
|
|
(b)
|
Royaltech,
if there has been a material breach by Densen or any Shareholder
of any
material representation, warranty, covenant or agreement set forth
in this
Agreement on the part of Densen or any Shareholder that is not cured,
to
the reasonable satisfaction of Royaltech, within ten business days
after
notice of such breach is given by Royaltech (except that no cure
period
will be provided for a breach by Densen or any Shareholders that
by its
nature cannot be cured);
|
|
(c)
|
Densen,
if there has been a material breach by Royaltech of any material
representation, warranty, covenant or agreement set forth in this
Agreement on the part of Royaltech that is not cured, to the reasonable
satisfaction of Densen, within ten business days after notice of
such
breach is given by Densen (except that no cure period will be provided
for
a breach by Royaltech that by its nature cannot be
cured);
|
|
(d)
|
Royaltech
or Densen, if the Transaction contemplated by this Agreement has
not been
consummated prior to November 1, 2008 unless Royaltech and Densen
agree to
extend such date in writing; or
|
|
(e)
|
Royaltech
or Densen, if any injunction or other order of a governmental entity
of
competent authority prevents the consummation of the Transaction
contemplated by this Agreement.
|
8.2 Effect
of Termination. In
the
event of the termination of this Agreement as provided in Section 8.1 hereto
this Agreement will be of no further force or effect, provided, however, that
no
termination of this Agreement will relieve any party of liability for any
breaches of this Agreement that are based on a wrongful refusal or failure
to
perform any obligations.
9. INDEMNIFICATION
9.1 Certain
Definitions.
For the
purposes of this Section 9, the terms “Loss”
and
“Losses”
mean
any and all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs, and expenses, including without limitation,
interest, penalties, fines and reasonable attorneys, accountants and other
professional fees and expenses of an amount not less than $5,000, but excluding
any indirect, consequential or punitive damages suffered by Royaltech or Densen
including damages for lost profits or lost business opportunities.
9.2 Densen
Indemnity. Densen
will indemnify, defend, and hold harmless Royaltech and its shareholders from,
against, and in respect of any and all Losses asserted against, relating to,
imposed upon, or incurred by Royaltech and its shareholders by reason of,
resulting from, based upon or arising out of:
|
(a)
|
any
misrepresentation, misstatement or breach of warranty of Densen contained
in or made pursuant to this Agreement, any Densen Document or any
certificate or other instrument delivered pursuant to this Agreement;
and
|
|
(b)
|
the
breach or partial breach by Densen of any covenant or agreement of
Densen
made in or pursuant to this Agreement, any Densen Document or any
certificate or other instrument delivered pursuant to this
Agreement.
|
9.3 Royaltech
Indemnity.
Each of
Royaltech and the 5% or greater Royaltech Stockholders immediately prior to
the
Closing hereby acknowledge that they will gain significant benefits from the
transactions contemplated hereunder and shall jointly and severally indemnify,
defend, and hold harmless Densen, its successors, assigns, officers, directors,
employees and agents and the Shareholders from, against, for, and in respect
of
any and all Losses asserted against, relating to, imposed upon, or incurred
by
Densen and the Shareholders by reason of, resulting from, based upon or arising
out of:
|
(a)
|
any
misrepresentation, misstatement or breach of warranty of Royaltech
contained in or made pursuant to this Agreement, any Royaltech Document
or
any certificate or other instrument delivered pursuant to this Agreement;
or
|
|
(b)
|
the
breach or partial breach by Royaltech of any covenant or agreement
of
Royaltech, made in or pursuant to this Agreement, any Royaltech Document
or any certificate or other instrument delivered pursuant to this
Agreement.
|
The
provisions of this Section 9.3 shall survive the consummation of the
transactions contemplated hereunder, and is intended to benefit the Royaltech,
Densen and the Shareholders.
9.4 Indemnification
Procedures.
A Person
seeking indemnification under this Section 9.4 (the “Indemnitee”)
shall
give timely written notice to the Person from whom indemnification is sought
(the “Indemnitor”)
as
soon as practical after the Indemnitee becomes aware of any condition or event
that gives rise to damages for which indemnification is sought under this
Section 9.4. However, the failure of the Indemnitee to give timely notice shall
not affect the Indemnitee’s rights to indemnification hereunder. In
the
event a claim or demand is made by a party against an Indemnitee, the Indemnitee
shall promptly notify the Indemnitor of such claim or demand, specifying the
nature and the amount (the “Claim
Notice”).
The
Indemnitor shall notify the Indemnitee within fifteen (15) days after receipt
of
the Claim Notice whether the Indemnitor will undertake, conduct, and control,
through counsel of its own choosing (subject to the consent of Indemnitee,
such
consent not to be unreasonably withheld or delayed) and at its expense, the
settlement or defense thereof, and Indemnitee shall cooperate with Indemnitor
in
connection therewith, provided that if Indemnitor undertakes such defense:
(i)
Indemnitor shall not thereby permit to exist any encumbrance or other adverse
charge upon any asset of Indemnitee or settle such action without first
obtaining the consent of Indemnitee, except for settlements solely covering
monetary matters for which Indemnitor has acknowledged responsibility for
payment; (ii) Indemnitor shall permit Indemnitee (at Indemnitee’s sole cost and
expense) to participate in such settlement or defense through counsel chosen
by
Indemnitee; and (iii) Indemnitor shall agree promptly to reimburse Indemnitee
for the full amount of any loss resulting from such claim and all related
expenses incurred by Indemnitee, except for those costs expressly assumed by
the
Indemnitee hereunder. The Indemnitee agrees to preserve and provide access
to
all evidence that may be useful in defending against such claim and to provide
reasonable cooperation in the defense thereof or in the prosecution of any
action against a third party in connection therewith. The Indemnitor’s defense
of any claim or demand shall not constitute an admission or concession of
liability therefor or otherwise operate in derogation of any rights Indemnitor
may have against Indemnitee or any third party. So long as Indemnitor is
reasonably contesting any such claim in good faith, Indemnitee shall not pay
or
settle any such claim. If Indemnitor does not notify Indemnitee within fifteen
(15) days after receipt of Indemnitee’s Claim Notice that it elects to undertake
the defense thereof, Indemnitee shall have the right to contest, settle or
compromise the claim in the exercise of its exclusive discretion at the expense
of the Indemnitor (provided that the Indemnitor shall not be required to pay
Indemnitee's expenses for the defense, settlement or compromise of claims which
are not covered by Indemnitor’s obligations this
Section 9.4).
10. GENERAL
10.1
Effectiveness of Representations; Survival. Each
party is entitled to rely on the representations, warranties, indemnifications
and agreements of each of the other parties and all such representation,
warranties and agreement will be effective regardless of any investigation
that
any party has undertaken or failed to undertake. The representations, warranties
and agreements will survive the Closing Date and continue in full force and
effect until three (3) months after the Closing Date.
10.2 Further
Assurances and Provision of Information. Each
of
the parties hereto will co-operate with the others and execute and deliver
to
the other parties hereto such other instruments and documents and take such
other actions as may be reasonably requested from time to time by any other
party hereto as necessary to carry out, evidence, and confirm the intended
purposes of this Agreement.
10.3 Amendment.
This
Agreement may not be amended except by an instrument in writing signed by each
of the parties.
10.4 Expenses.
Each
party to this Agreement will bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
Transaction contemplated hereby, including all fees and expenses of agents,
representatives, counsel, and accountants.
10.5 Entire
Agreement. This
Agreement, the schedules attached hereto and the other documents in connection
with this transaction contain the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior arrangements and
understandings, both written and oral, expressed or implied, with respect
thereto. Any preceding correspondence or offers are expressly superseded and
terminated by this Agreement.
10.6 Notices.
All
notices and other communications required or permitted under to this Agreement
must be in writing and will be deemed given if sent by personal delivery, faxed
with electronic confirmation of delivery, internationally-recognized express
courier or registered or certified mail (return receipt requested), postage
prepaid, to the parties at the addresses
as set
forth below. All such notices and other communications will be deemed to have
been received:
|
(a)
|
in
the case of personal delivery, on the date of such
delivery;
|
|
(b)
|
in
the case of a fax, when the party sending such fax has received electronic
confirmation of its delivery;
|
|
(c)
|
in
the case of delivery by internationally-recognized express courier,
on the
business day following dispatch;
and
|
|
(d)
|
in
the case of mailing, on the fifth business day following
mailing.
|
If
to
Royaltech:
0000
Xxxxxxxxxx, Xxxxx 000X
Xxxxxxxxxx,
XX X0X 0X0
Xxxxxx
Attention:
Chenxi
Shi, President and Chief Executive Officer
Fax: (000)
000-0000
With
a
copy to:
Xxxxx
Xxxxxx LLP
800
- 000
Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx,
XX X0X 0X0
Xxxxxx
Attention:
L.K.
Xxxxx Xxx
Fax: (000)
000-0000
If
to
Densen:
c/o
Changchun
Densen Changtuo Agriculture Machinery Manufacturing Co.
Donghu
Ecological Economic Development Zone
Changchun
City, Jilin Province. P.R.C.
FAX
With
a
copy to:
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxx
X.
Xxxxxxxx
Fax: (000)
000-0000
If
to the
Shareholders:
c/o
Changchun
Densen Changtuo Agriculture Machinery Manufacturing Co.
Donghu
Ecological Economic Development Zone
Changchun
City, Jilin Province. P.R.C.
FAX
10.7 Headings.
The
headings contained in this Agreement are for convenience purposes only and
will
not affect in any way the meaning or interpretation of this
Agreement.
10.8 Benefits.
This
Agreement is and will only be construed as for the benefit of or enforceable
by
those persons party to this Agreement.
10.9 Assignment.
This
Agreement may not be assigned (except by operation of law) by any party without
the express, written approval of the other parties to this Agreement, such
approval not to be unreasonably withheld by any of the parties to this
Agreement.
10.10 Force
Majeure.
The
obligations of the parties and the timeframes established pursuant to this
Agreement will be suspended to the extent and for the period that performance
hereunder is prevented by factors beyond any of the parties’ reasonable control,
whether foreseeable or unforeseeable, including, without limitation, labour
disputes, acts of god, laws, regulations, orders, proclamations or requests
of
any governmental or regulatory authority, inability to obtain on reasonable
terms required permits, licenses or other authorizations, or any other matter
similar to the above.
10.11 Governing
Law.
This
Agreement shall for all purposes be deemed to be made under and shall be
construed in accordance with the laws of the State of New York. Each of the
parties hereby agrees that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of New York or the United States District Court for
the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. Each of the parties hereby waives any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum.
10.12 Gender.
All
references to any party will be read with such changes in number and gender
as
the context or reference requires.
10.13 Counterparts.
This
Agreement may be executed in one or more counterparts, all of which will be
considered one and the same agreement and will become effective when one or
more
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
10.14 Facsimile
Execution.
This
Agreement may be executed by delivery of executed signature pages by fax or
other electronic transmission and such fax or electronic execution will be
effective for all purposes.
10.15 Independent
Legal Advice.
All
Shareholders confirm that they have been given an opportunity to seek and obtain
independent legal advice prior to execution of this Agreement and cannot and
do
not rely on the representations of Densen, Royaltech, or their respective
advisors respecting the legal effects of this Agreement.
10.16 Schedules
and Exhibits.
The
schedules and exhibits that are attached to this Agreement are incorporated
herein by reference as if set forth directly herein.
IN
WITNESS WHEREOF the
parties hereto have executed this Agreement as of the day and year first above
written.
ROYALTECH
CORPORATION
By:
/s/
Chenxi Shi
Authorized
Signatory
Name:
Chenxi
Shi
Title:
President
and CEO
DENSEN
EQUIPMENT LTD.
|
By:
|
/s/
Xxx
San
|
||
|
|
Authorized
Signatory
|
||
|
|
Name:
Xxx
San
|
||
|
|
Title:
Chairman
& CEO
|
||
SHAREHOLDERS
By:
/s/ Xxx San
Name:
Xxx
San
By:
/s/ Yang Xxxx Xxx
Name:
Yang
Xxxx
Xxx
WITH
RESPECT TO SECTION NINE HEREOF:
By:
/s/ Chenxi Shi
Name:
Chenxi Shi
By:
/s/ Xxxx Xx
Name:
Xxxx Xx
SCHEDULE 1
TO
THE
SHARE
EXCHANGE AGREEMENT DATED SEPTEMBER 8, 2008 AMONG ROYALTECH, DENSEN AND DENSEN
SHAREHOLDERS
Directors
and Officers of
Densen
Name
and Positions Held
Xxx
San,
Chief Executive Officer and Chairman of the Board of Directors
Yang
Xxxx
Xxx, Director
XXX
Xxxxxxxx, General Manager
SCHEDULE 2
TO
THE SHARE EXCHANGE AGREEMENT DATED SEPTEMBER 8, 2008 AMONG ROYALTECH, DENSEN
AND
DENSEN SHAREHOLDERS
Directors
and Officers of
Royaltech
Name
and Positions Held
Chenxi
Shi - President, Chief Executive Officer and Director
Xxxx
Xx -
Vice President and Director
SCHEDULE 3
TO
THE
SHARE
EXCHANGE AGREEMENT DATED SEPTEMBER 8, 2008 AMONG ROYALTECH, DENSEN AND DENSEN
SHAREHOLDERS
Directors
and Officers of
Roayltech after Closing
Name
and Positions Held
Xxx
San,
Chairman of the Board of Directors, President and Chief Executive
Officer
Xxx
Xxxxxxxx, President and Chief Financial Officer
Chenxi
Shi, director
SCHEDULE 4
TO
THE SHARE EXCHANGE AGREEMENT DATED SEPTEMBER 8, 2008 AMONG ROYALTECH, DENSEN
AND
DENSEN SHAREHOLDERS
Outstanding
Liabilities of Royaltech Corp.
|
Name
of Creditor
|
Outstanding
Amount
|
|
Xxxxxxx
Xxxxxxx LLP
|
$3,000
|
|
Xxxxx
Xxxx
|
$3,750
|
|
Shanghai
Huanjie Investment Consulting Firm
|
$90,000
|
|
Xxxxx
Xxxxxx LLP
|
$25,000
|
|
Chenxi
Shi
|
$19,250
|
|
Xxxx
Xx
|
$9,000
|
|
$150,000
|
SCHEDULE 5
TO
THE SHARE EXCHANGE AGREEMENT DATED SEPTEMBER 8, 2008 AMONG ROYALTECH, DENSEN
AND
DENSEN SHAREHOLDERS
Densen
Material Contracts and
Liabilities
Auditor’s
report of Densen Machinery Investments Limited Attached.
SCHEDULE 6
TO
THE SHARE EXCHANGE AGREEMENT DATED SEPTEMBER 8, 2008 AMONG ROYALTECH, DENSEN
AND
DENSEN SHAREHOLDERS
ROYALTECH
STOCKHOLDER LEDGER
Stockholder
ledger attached.
SCHEDULE 7
TO
THE SHARE EXCHANGE AGREEMENT DATED SEPTEMBER 8, 2008 AMONG ROYALTECH, DENSEN
AND
DENSEN SHAREHOLDERS
LIST
OF DENSEN STOCKHOLDERS
| Xxx San | 25,000 Shares |
| Yang Xxxx Xxx | 25,000 Shares |
