EXECUTION VERSION
_________________________________________________________
AMENDED AND RESTATED CONTRACT FOR THE SALE OF ASSETS
_________________________________________________________
By and Between
Stonepath Holdings (Hong Kong) Limited
and
Xxxx Xxxx
November 10, 2003
EXECUTION VERSION
TABLE OF CONTENTS
Article Page
1. Definitions...............................................................1
2. Sale and Purchase of the Business.........................................1
3. Closing...................................................................6
4. Effective Date............................................................7
5. Representations and Warranties............................................8
6. Covenants.................................................................9
7. Conditions Precedent to Obligations of Stonepath ........................12
8. Conditions Precedent to the Obligations of Xxxx Xxxx.....................13
9. Indemnification..........................................................14
10 Effectiveness and Termination............................................14
11 Dispute Resolution.......................................................15
12 Miscellaneous............................................................15
Signatures....................................................................17
Appendices
1 Definitions..............................................................18
2 Representations and Warranties of Xxxx Xxxx..............................21
EXECUTION VERSION
AMENDED AND RESTATED CONTRACT FOR THE SALE OF ASSETS
THIS CONTRACT is concluded as of November 10, 2003, by and between:
(1) Stonepath Holdings (Hong Kong) Limited, a corporation duly organized
under the laws of the Hong Kong Special Administrative Region of the
People's Republic of China, with a registered office at Room 0000, 00X,
Xxxxx 0, Xxxxxxxxxx, 00 Xxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxx, Xxxx Xxxx
("Stonepath"); and
(2) Xxxx Xxxx, a citizen of Taiwan, Republic of China, with Taiwan passport
no. 000000000 and residing at Room 0000, Xx.00, Xxxx 00, Xxxxxxx Xxxx,
Xxxxxxxx, XXX ("Xxxx Xxxx").
PRELIMINARY STATEMENT
WHEREAS, Xxxx Xxxx and his Affiliates (defined below) have established business
operations in the People's Republic of China that are involved in the provision
of customs brokerage, freight forwarding, warehousing, distribution and other
related services through several branch offices that operate under the name of
"Shaanxi Sunshine Express International Co., Ltd.", a PRC registered company
("Shaanxi International") and through Shaanxi Sunshine Express International Co.
Ltd., (the "HK Co.") a company duly organized under the laws of the Hong Kong
Special Administrative Region of the People's Republic of China ("Hong Kong")
and legally and beneficially controlled by Xxxx Xxxx (the "Business");
WHEREAS, Xxxx Xxxx owns the entire beneficial ownership in and controls the
operations of, the Business independent of Shaanxi International;
WHEREAS, Xxxx Xxxx desires to transfer to Stonepath and Stonepath desires to
obtain from Xxxx Xxxx, all of the assets used, necessary for use, held for use
or intended to be used in connection with the Business, upon the terms and
conditions of this Agreement, and Stonepath desires to purchase the Business on
the terms and conditions contained in this Contract.
NOW, THEREFORE, the Parties hereby agree as follows:
ARTICLE 1. DEFINITIONS
The defined terms used in this Contract shall have the meanings set out below or
on Appendix 1 attached hereto.
ARTICLE 2. SALE AND PURCHASE OF THE PURCHASED ASSETS
2.1 In consideration of the Purchase Price (as defined below), Xxxx Xxxx
agrees to and shall cause his Affiliates to, upon the Effective Date
(as defined below), transfer the assets of the Business to Stonepath as
set out in Article 2.2 below.
2.2 Upon the terms and subject to the conditions of this Contract, at or
before the Effective Date, Xxxx Xxxx and his Affiliates (for the
purposes of this Article 2, referred to here as the "Business Sellers")
shall sell and convey to Stonepath, and Stonepath shall purchase and
accept from the Business Sellers, free and clear of all liabilities,
obligations, commitments and encumbrances, except as explicitly assumed
and approved by Stonepath in writing, all of the assets used in the
operation of the Business, from whatever source and of whatever type,
including but not limited to all of the Business Sellers' right, title
and interest in, to, and under all of the business, properties, assets,
goodwill and rights of the Business of whatever kind and nature, real
or personal, tangible or intangible, that are owned, leased or licensed
by the Business Sellers on the Effective Date (hereinafter collectively
referred to as the "Purchased Assets"), including, without limitation,
the following:
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EXECUTION VERSION
equipment and leased equipment;
office furnishings and supplies;
the Intellectual Property;
contracts, agreements and other arrangements;
Business Records;
the Accounts Receivable;
Business Cash (as defined below), all marketable securities,
rights to any funds set aside for employee benefits and other
cash equivalents, wherever located; all claims or rights
against Third Person arising out of, or relating to, the
Business; and goodwill
2.3 The Purchased Assets shall be transferred to Stonepath free and clear
of all liabilities and encumbrances, except for:
(i) the liabilities under leases and other agreements,
arrangements or contracts that have been explicitly agreed to
by Stonepath and Shaanxi Sunshine Cargo Service Co., Ltd.
("the Company") in writing; or
(ii) the accounts payable of the Business, but only to the extent
such accounts payable are (x) due and owing to other than
Related Persons, or (y) either included in the most recent
Interim Financial Statements delivered to Stonepath, or
incurred in the ordinary course of business after the date of
such Interim Financial Statements, (with such items covered by
subsections 2.3(i) and (ii) referred to as the "Assumed
Liabilities".
2.4 [Intentionally Deleted.]
2.5 The purchase price (the "Purchase Price") for the Purchased Assets
shall be an amount of up to Eleven Million United States Dollars
(US$11,000,000). Stonepath shall pay the Purchase Price as follows:
(a) Stonepath shall at the Closing pay to Xxxx Xxxx USD3.5 million
(US$3,500,000) in cash by wire transfer in immediately
available funds to the bank account designated by Xxxx Xxxx in
writing ("Closing Date Cash Payment").
(b) Stonepath shall within ten (10) days after the Closing deliver
to Xxxx Xxxx or Xxxx Xxxx'x designee, certificates for shares
of the Common Stock of Stonepath Group, Inc., with appropriate
restrictive legends, having a value of USD2.0 million
(US$2,000,000) for the number of such shares based upon the
average closing price of the shares on the Principal Exchange
for the ten (10) Trading Days immediately preceding the
Closing Date ("Stonepath Shares"). The Stonepath Shares are
subject to restrictions upon re-sale and adjustment provisions
pursuant to Section 2.5 (c)(v).
(c) Subject to the further provisions of this Section 2.5(c), the
balance of the Purchase Price of USD5.5 million (US$5,500,000)
(the "Base Earn-Out Amount"), shall be paid by Xxxxxxxxx to
Xxxx Xxxx in installments of USD1.1 million (US$1,100,000)
(each a "Base Earn-Out Payment") covering the five-year
earn-out period immediately following the Effective Date (the
"Earn-Out Period").
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EXECUTION VERSION
(i) The Base Earn-Out Payments will be paid based on the
amount of the Net Income Before Taxes of the Company
calculated in accordance with Section 2.5(c)(ii) below,
during each of the five years (including prorated
periods) that fall within the Earn-Out Period
immediately following the Effective Date.. The Base
Earn-Out Payments shall be due as follows (each an
"Earn-Out Payment Date"):
The Earn-Out Periods are as follows:
Earn-Out Period Earn-Out Payment Date
--------------- ---------------------
March 1, 2004 through December 31, 2004 April 1, 2005
January 1, 2005 through December 31, 2005 April 1, 2006
January 1, 2006 through December 31, 2006 April 1, 2007
January 1, 2007 through December 31, 2007 April 1, 2008
January 1, 2008 through December 31, 2008 April 1, 2009
January 1, 2009 through February 28, 2009 May 30, 2009
With the recognition that the Base Earn-Out Payments
will be based upon two payments of less than a full
year (i.e. those periods that fall between the
Effective Date and December 31, 2004 and between
January 1, 2009 through February 28, 2009), the Base
Earn-Out Payment and the corresponding "Targeted
Amount" (as defined below) of Net Income Before Taxes
shall, for those two periods, be prorated on a daily
basis by multiplying each of the Targeted Amount and
Base Earn-Out Payments, as applicable, by the
percentage obtained by dividing the number of days
within the relevant period by 365.
(ii) Payment of each Base Earn-Out Payment shall be
contingent upon, and Xxxx Xxxx shall not be entitled to
the full amount of the Base Earn-Out Payment unless the
Net Income Before Taxes of the Company for the full
year (or portion thereof) preceding the Earn-Out
Payment Date is at least USD4.0 Million (US$4,000,000)
(the "Targeted Amount"). To the extent the Net Income
Before Taxes of the Company for the full year (or
portion thereof) preceding the Earn-Out Payment Date is
less than the Targeted Amount (such shortfall, the
"Shortfall Amount"), the Base Earn-Out Payment shall be
reduced on a dollar-for-dollar basis by the amount
obtained by multiplying the Shortfall Amount by the
Ownership Percentage of Stonepath. In the event that a
Shortfall Amount occurs with respect to any year (or
portion thereof) within the Earn-Out Period, and if
during any subsequent year in the Earn-Out Period the
Net Income Before Taxes of the Company exceeds the
Targeted Amount (such excess, the "Excess Amount"),
that amount obtained by multiplying the Excess Amount
by the Ownership Percentage of Stonepath shall first be
applied to make up any reductions in prior Base
Earn-Out Payments in the earliest order in which any
such reductions occurred and any excess remaining shall
be available to set off any future reductions in Base
Earn-Out Payments on a dollar-for-dollar basis.
(iii) Stonepath and its representatives shall have complete
access to the books, records, personnel and facilities
of the Company for any purposes, but, particularly for
the purpose of determining the Net Income Before Taxes
of the Company.
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EXECUTION VERSION
(iv) On each Earn-Out Payment Date, Stonepath shall prepare
and deliver to Xxxx Xxxx, along with the Earn-Out
Payment, a certificate (the "Annual Earn-Out
Certificate") signed by a senior executive of Stonepath
setting forth the amount and method of calculating Net
Income Before Taxes of the Company for the prior year,
the calculation of the Earn-Out Payment then due, if
any, and the recovery of the Shortfall Amount, if any.
(v) To the extent that the Net Income Before Taxes of the
Company for the first Earn-Out Period ending December
31, 2004 ("First Earn-Out Period"), as annualized to
equate to a full year of earnings (the "Annualized Net
Income Before Taxes of the Company"), is less than the
Targeted Amount, the value of the Stonepath Shares to
be retained by Xxxx Xxxx shall be recomputed (as
recomputed, the "Recomputed Stock Value") in accordance
with the following formula:
Annualized Net Income Before Taxes of the Company for
the First Earn-Out Period X 5 X 55% = Recomputed
Purchase Price
Recomputed Purchase Price X 50% =Recomputed Downpayment
Recomputed Downpayment minus Closing Date Cash Payment
=Recomputed Stock Value
The number of Stonepath Shares to be retained by Xxxx
Xxxx shall be re-determined by dividing the Recomputed
Stock Value by the average closing price of the
Stonepath Shares for the ten (10) Trading Days
immediately preceeding the Closing Date. The number of
Stonepath Shares that exceed the Recomputed Stock Value
shall be returned to Stonepath immediately by Xxxx Xxxx
for surrender and cancellation.
To the extent the Recomputed Stock Value is less than
USD2,000,000, the difference thereof shall be added to
the Base Earn-out Amount and shall be due and payable
as additions to the Base Earn-Out Payments on a
pro-rata basis by spreading the amount due evenly over
the remaining 50 months left on the Earn-Out Period
commencing January 1, 2005.
(vi) All Base Earn-Out Payments shall be made in immediately
available cash funds expressed in U.S. Dollars.
2.6 If Xxxx Xxxx concludes that any matter reported in an Annual Earn-Out
Certificate is not accurate, Xxxx Xxxx shall, within thirty (30) days
after its receipt of such certificate (the "Response Period"), deliver
to Stonepath a written statement (the "Objection Notice"): (i) setting
forth in reasonable detail the nature of the objections to each of any
discrepancies believed to exist, and (ii) requesting all additional
information required by the Xxxx Xxxx to perform calculations relating
to matters contained in such certificate. If no Objection Notice is
given within the Response Period, then the calculations set forth in
the Annual Earn-Out Certificate shall be controlling for all purposes
of this Contract.
2.7 If an Objection Notice is timely given within the Response Period,
Stonepath shall provide Xxxx Xxxx all requested information included in
the Objection Notice within fifteen (15) days; thereafter, Stonepath
and the Xxxx Xxxx shall use good faith efforts to jointly resolve any
properly noticed objections and discrepancies within thirty (30) days
of the receipt by Stonepath of an Objection Notice, which resolution,
if achieved, shall be fully and completely binding upon all Parties to
this Contract and not subject to further review, appeal, or dispute.
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EXECUTION VERSION
2.8 If Xxxxxxxxx and Xxxx Xxxx are unable to resolve the objections and
discrepancies to their mutual satisfaction within such thirty (30) day
period, then the matter shall be submitted to an accounting firm of
international reputation mutually acceptable to Xxxxxxxxx and Xxxx Xxxx
(the "Independent Accountants"). In submitting a dispute to the
Independent Accountants, each Party shall concurrently furnish, at its
own expense, to the Independent Accountants and the other Party such
documents and information as the Independent Accountants may request.
Each Party may also furnish to the Independent Accountants such other
information and documents as it deems relevant, with copies of such
submission and all such documents and information being concurrently
given to the other Party. Neither Party shall have or conduct any
communication, either written or oral, with the Independent Accountants
without the other party either being present or receiving a concurrent
copy of any written communication. The Independent Accountants may
conduct a conference concerning the objections and disagreements
between Xxxxxxxxx and Xxxx Xxxx, at which conference each Party shall
have the right to (i) present its documents, materials and other
evidence (previously provided to the Independent Accountants and the
other Party), and (ii) have present its or their advisors, accountants
and/or counsel. The Independent Accountants shall promptly (but not to
exceed seventy-five (75) days from the date of engagement of the
Independent Accountants) render a decision, acting as an expert and not
an arbitrator, on the issues presented, and such decision shall be
final and binding on all of the Parties to this Contract. In the event
the Independent Accountants require a payment to be made by Xxxxxxxxx
to Xxxx Xxxx, such payment shall be due and payable within thirty (30)
days from the date the decision is rendered. In the event the
Independent Accountants require a reduction to the number of Stonepath
Shares, Xxxx Xxxx shall return to Stonepath for surrender and
cancellation such number of Stonepath Shares as directed by the
Independent Accountants within thirty (30) days from the date the
decision is rendered. Each of the Parties shall agree to indemnify and
hold harmless the Independent Accountants, and to execute whatever
documents or contracts are necessary to effectuate the foregoing.
2.9 Xxxx Xxxx and Xxxxxxxxx shall each pay 50% of all costs, fees and
expenses to engage the Independent Accountants.
2.10 In connection with its review of all the matters arising under any
Annual Earn-Out Certificate, Stonepath shall afford Xxxx Xxxx and its
representatives complete access to the books, records, personnel and
facilities of or pertaining to the Company.
2.11 Within 90 days following the Effective Date, Stonepath shall determine
the amount of the Working Capital of the Company as of the Effective
Date ("Effective Date Working Capital"). Provided that the Effective
Date Working Capital of the Company is more than 1 US dollar (as
determined by Xxxxxxxxx's accountant), Xxxxxxxxx agrees to pay to Xxxx
Xxxx within 180 days after the Effective Date ("Working Capital
Assessment Period"), the following amounts:
(i) fifty five percent (55%) of the Business Cash included within
the Effective Date Working Capital; and
(ii) fifty five percent (55%) of the excess of the Accounts
Receivable as of the Effective Date over the Liabilities as of
the Effective Date (such excess being "Effective Date Net
Accounts Receivable") to the extent such Effective Date Net
Accounts Receivable have been collected in cash during the
Working Capital Assessment Period. After the expiration of the
Working Capital Assessment Period, the Company agrees to pay
to Xxxx Xxxx the balance of the Effective Date Net Accounts
Receivable as and when collected in cash by the Company.
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EXECUTION VERSION
To the extent the Effective Date Working Capital of the Company (as
determined by Xxxxxxxxx's accountant) is less than 1 US dollar, Xxxx
Xxxx agrees to pay fifty five percent (55%) of the difference between
actual Working Capital on the Effective Date and 1 US dollar ("Working
Capital Shortfall") to Stonepath. In this event, Xxxx Xxxx agrees that
the fifty five (55%) of the Working Capital Shortfall can be applied as
a credit against the Base Earn-Out Payments.
ARTICLE 3. CLOSING
3.1 The closing of the purchase and sale of the Purchased Assets (the
"Closing") shall be held at 10:00 a.m. at the Company's offices once
all of the conditions set forth in Articles 7 and 8 have been satisfied
or waived, or such other time and place as is mutually agreed upon by
the Parties. The "Closing Date" shall be the date on which the Closing
occurs.
3.2 At the Closing, Xxxx Xxxx shall deliver to Stonepath the following:
(a) [Deleted intentionally];
(b) A certificate of Xxxx Xxxx to the effect that: (i) all
representations and warranties made by Xxxx Xxxx under this
Contract are true and correct as of the Closing Date, as
though originally given to Stonepath on the Closing Date; (ii)
Xxxx Xxxx has performed all obligations to be performed by him
under this Contract prior the Closing Date; (iii) the
conditions precedent identified in Article 8 have been
satisfied;
(c) A certificate signed by Xxxx Xxxx to the effect that (i) he
understands that the sale of Stonepath Shares to him has not
been registered under the Securities Act of 1933, as amended
("Securities Act") or the securities laws of any other
jurisdiction and that such shares may not be resold without
such registration or an exemption therefrom, (ii) that all
Stonepath Shares delivered pursuant to this Contract shall be
subject to restriction upon resale, transfer, assignment or
pledge or other disposition for a minimum period of one year
from the Effective Date or until the SEC effects the
registration statement for such resale, transfer, assignment,
pledge or other deposition, (iii) he shall not resell such
shares in the absence of such registration or an exemption
therefrom, and (iv) he is acquiring such shares for investment
purposes only and not with the view to the distribution
thereof;
(d) Copies of all resolutions adopted by the Business Sellers
authorizing the transactions contemplated by this Contract;
(e) [Deleted intentionally];
(f) All Third Person or governmental consents required for the
transfer and assignment of the Purchased Assets by the
Business Sellers to Stonepath, if any;
(g) A receipt for the Purchase Price;
(h) Accepted offers of terms of employment with the Company
satisfactory to Stonepath signed by persons material to the
operation of the Business;
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EXECUTION VERSION
(i) An employment agreement covering his employment with the
Company, signed by him; and
(j) [Deleted intentionally.];
(k) All documents, agreements, approvals, licenses, consents to
evidence the record ownership of the Company in the name of
Stonepath, Shaanxi Xiangyu Logistics Company Limited
("Xiangyu") and Xxxx Xxxxxx Industry and Trading Company
Limited;
(l) [Deleted intentionally.]; and
(m) [Deleted intentionally.]
3.3 At the Closing, Stonepath shall deliver and shall cause to be delivered
to Xxxx Xxxx, the following:
(a) the Closing Date Cash Payment in the manner stipulated in
Article 2.5(a);
(b) A certificate of Stonepath indicating the number of Stonepath
Shares to be delivered to Xxxx Xxxx, as stipulated in Article
2.5(b);
(c) A certificate of Stonepath to the effect that: (i) all
representations and warranties made by Stonepath under this
Contract are true and correct as of the Closing Date, as
though originally given to Xxxx Xxxx on the Closing Date; (ii)
Stonepath has performed all obligations to be performed by it
under this Contract prior the Closing Date; and (iii) the
conditions precedent identified in Article 7 have been
satisfied; and
(d) [Deleted intentionally.];
(e) Copies of a secretarial certification confirming all
resolutions adopted by the board of directors of Stonepath
authorizing the transactions contemplated by this Contract.
3.4 Within ten (10) days after the Closing Date, Xxxxxxxxx shall deliver
the Stonepath Shares to Xxxx Xxxx.
ARTICLE 4. EFFECTIVE DATE
4.1 The effective date of the purchase and sale of the Purchased Assets
shall be March 1, 2004 (the "Effective Date").
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EXECUTION VERSION
4.2 On the Effective Date, Xxxx Xxxx shall deliver to Stonepath the
following:
(a) the Purchased Assets;
(b) A certificate of Xxxx Xxxx to the effect that: (i) all
representations and warranties made by Xxxx Xxxx under this
Contract are true and correct as of the Effective Date, as
though originally given to Stonepath on the Effective Date;
and (ii) Xxxx Xxxx has performed all obligations to be
performed by him under this Contract prior to the Effective
Date;
(c) Subject to the provisions of Article 6.1(17)(iv), all Business
Cash, marketable securities, and other cash equivalents, or
such forms which shall provide Stonepath with the right to
have all accounts in which such cash, marketable securities,
or other cash equivalents are held transferred to Stonepath in
accordance with this Contract; and
(d) All documents, agreements, consents, certificates of ownership
to evidence the ownership of the Purchased Assets in the name
of Stonepath.
4.3 On the Effective Date, Stonepath shall contribute the Purchased Assets
to the Company for no additional share ownership of the Company, in
recognition that Stonepath or its Affiliate already received 55% of the
equity of the Company in anticipation of the Closing Date; provided
however that Stonepath may direct that all Business Cash derived from
the HK Co. be contributed directly to a newly formed Hong Kong company
which is owned 55% by Stonepath and 45 % by Xxxx Xxxx.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
5.1 Each Party hereby represents and warrants to the other Parties that as
of the date of this Contract, the Closing Date and the Effective Date:
(1) it is duly organized, validly existing and in good standing
under the laws of the place of its establishment or
incorporation;
(2) it has the authority to enter into and perform this Contract,
it has taken all requisite internal actions to authorize the
signing of this Contract, its obligations under this Contract
are valid and binding, and, assuming due execution and
delivery by the other Parties to this Contract, each of the
other Parties has the right to require it to perform this
Contract in accordance with its terms; and
(3) the signature and performance of this Contract will not
violate any of its outstanding commitments, licenses or
obligations, whether contractual or otherwise, or any
currently effective law, regulation, decree or policy of the
PRC or any other relevant jurisdiction.
5.2 Xxxx Xxxx hereby represents and warrants to Stonepath that as of the
date of this Contract, the Closing Date and Effective Date, all the
representations and warranties set out in Appendix 2 are true and
accurate, except as otherwise set forth in the Disclosure Schedule.
5.3 The representations and warranties contained in this Contract shall
remain valid and binding on the Parties for a period of three (3) years
from the Effective Date except for the representations and warranties
set out in Appendix 2 which shall remain valid and binding on Xxxx Xxxx
indefinitely.
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EXECUTION VERSION
ARTICLE 6. COVENANTS
6.1 Xxxx Xxxx covenants to Stonepath as follows:
(1) On or before the Effective Date, Xxxx Xxxx will and will cause
his Affiliates to, effect the transfer of the Purchased Assets
to Stonepath.
(2) [Deleted intentionally.]
(3) From the date of this Contract until the Effective Date, Xxxx
Xxxx will (i) give to Stonepath and its counsel, financial
advisors, auditors and other authorized representatives
("Representatives") reasonable access during normal business
hours to the books and records of the Business, (ii) provide
such financial and operating data and other information
relating to the Business which may be reasonably requested by
Stonepath or their Representatives, and (iii) instruct his
Affiliates, their employees, counsel and financial advisors to
cooperate with Stonepath and its Representatives in their
review of such information.
(4) From the date of this Contract until the Effective Date, Xxxx
Xxxx will ensure that the Business is carried on in the
ordinary and proper course and substantially in the manner
that the Business had been carried on prior to the Effective
Date, and will ensure that there will be no material changes
in the financial condition, assets, liabilities, or results of
the operations of the Business from June 30, 2003 to the date
hereof and to the Effective Date, except changes in the
ordinary course of business, none of which, either singly or
in the aggregate, has been materially adverse.
(5) From the date of this Contract until the Effective Date, Xxxx
Xxxx will not (i) sell, transfer, lease, dispose of, mortgage,
pledge or otherwise encumber the Purchased Assets or the
Business Cash, or (ii) enter into any contract or undertaking
which would adversely affect the ownership or use of the
Purchased Assets or the Business Cash, nor will Xxxx Xxxx
take any action to cause such matters to occur, or (iii) enter
into any contract, arrangements understandings or undertakings
with a Related Person.
(6) From the date of this Contract until the Effective Date, Xxxx
Xxxx shall use all commercially reasonable efforts to cause
the conditions set forth in Article 6.1 to be satisfied.
(7) For a period of five (5) years after the Effective Date, Xxxx
Xxxx will not and shall cause the Business Sellers or HK Co.
not to, directly or indirectly through any other entity or
company, whether alone or together with any other persons,
engage or invest or otherwise participate in any business
which competes with the Business as it is then operated by the
Company.
(8) For a period of five (5) years after the Effective Date, Xxxx
Xxxx will not, directly or indirectly engage, solicit or hire
any employee of the Company, or solicit the business of any
customer of the Company.
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EXECUTION VERSION
(9) Xxxx Xxxx shall bear and be responsible for, the payment of
all Taxes (excluding Taxes based on or measured by income), if
any, that are imposed by any government or political
subdivision thereof and that are payable or arise as a result
of: (i) the revenue or income of the Business prior to the
Effective Date; (ii) operations of the Company prior to the
Effective Date: (iii) operations of the Business prior to the
Effective Date; or (iv) the transfer of any of the Purchased
Assets.
(10) On and after the Closing Date, Xxxx Xxxx will not and will
cause his Affiliates not to, except as may be required by
Applicable Law or court order, reveal, divulge or make known
to any Person (other than Stonepath and its agents and
Affiliates) any information relating to this Contract, the
Business or the Purchased Assets, or use any such information
for any purpose other than complying with his obligations
under this Contract.
(11) Xxxx Xxxx shall, after the Closing, pay and discharge,
promptly and when due, all of the obligations and liabilities
relating to the Business as operated prior to the Closing,
other than the Assumed Liabilities, which, if unpaid, would
create a liability on the part of the Company or a lien on any
of the Purchased Assets or render void or voidable the
transfer of any of the Purchased Assets to Stonepath and, to
the extent necessary, shall apply the proceeds of the sale of
the Purchased Assets to such payment and discharge. At
Stonepath's request, Xxxx Xxxx shall provide to Stonepath
evidence of such payment and discharge, in form and substance
satisfactory to Stonepath.
(12) During the term of this Contract, and for a period of ninety
(90) days following the termination of this Contract, Xxxx
Xxxx will not, and will not permit his respective
representatives, investment bankers, agents and Affiliates to,
directly or indirectly, (i) solicit or encourage submission of
or any inquiries, proposals or offers by, (ii) participate in
any negotiations with, (iii) afford any access to the
properties, books or records of the Business to, (iv) accept
or approve, or (v) otherwise assist, facilitate or encourage,
or enter into any contracts, agreements, arrangements or
understandings with, any person or group (other than the
Company and its Affiliates, agents and representatives), in
connection with any "Acquisition Proposal" (as hereafter
defined). In addition, Xxxx Xxxx will not, and will not permit
his respective representatives, investment bankers, agents and
Affiliates to, directly or indirectly, make or authorize any
statement, recommendation or solicitation in support of any
Acquisition Proposal made by any Person or group (other than
the Company). In addition, Xxxx Xxxx and his Affiliates will
immediately cease any and all existing activities, discussions
or negotiations with any parties with respect to any of the
foregoing. Xxxx Xxxx will promptly notify the Company and
Stonepath if any offer is made, any discussions or
negotiations are sought to be initiated, any inquiry, proposal
or contact is made or any information is requested with
respect to any Acquisition Proposal. For the purposes hereof,
the term "Acquisition Proposal" shall mean any proposal
relating to the possible acquisition of the Business, whether
by way of merger, purchase of capital stock of the Company
representing fifty percent (50%) or more of the voting power
or equity of the Business Sellers (as defined in Article 2.1
above), or the purchase of all or substantially all of the
assets of the Business.
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EXECUTION VERSION
(13) Xxxx Xxxx acknowledges that the United States securities laws
prohibit any person who has received material non-public
information concerning the matters which are the subject
matter of this Contract from purchasing or selling the
securities of Stonepath Group, Inc., or from communicating
such information to any person under circumstances in which it
is reasonably foreseeable that such person is likely to
purchase or sell securities of Stonepath Group, Inc.
Accordingly, Xxxx Xxxx agrees that he will not purchase or
sell, any securities of Stonepath Group, Inc. or communicate
such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely
to purchase or sell securities of Stonepath Group, Inc. until
no earlier than 72 hours following the filing of a Current
Report on Form 8-K with the Securities and Exchange Commission
announcing the Closing pursuant to this Contract.
(14) On or before the Closing, Xxxx Xxxx shall have obtained and
delivered to Stonepath, the consent of each of the then
shareholders of the Company to the Restructuring (as defined
below) and each such shareholder's waiver of its right of
first refusal to purchase the equity interests in the Company
being transferred in accordance with the Restructuring.
(15) On or before the Closing, Xxxx Xxxx shall have prepared all
necessary documents and obtained and delivered to Stonepath,
all necessary government approvals required by PRC law to
effect the Restructuring. In the event the Restructuring is
registered with the PRC authorities and becomes legally
binding as a matter of PRC law on Stonepath prior to Closing,
Xxxx Xxxx will indemnify and hold harmless Stonepath, its
directors, officers, director appointees to the Board of
Directors of the Company or other Representatives against any
losses, liabilities, damages and claims, including without
limitation any related interest, penalties, expenses and
reasonable attorney's fees, resulting from any actions taken
by the shareholders of the Company or by the Company prior to
the Effective Date, and Stonepath will have no obligations
whatsoever as an investor in the Company prior to the
Effective Date. The Restructuring refers to the reorganization
of the Company such that Xxxxxxxxx will own 55% of the equity
of the Company and Xxxx Xxxx will beneficially own 40% of the
Company and the remaining 5% will be owned by Xxxx Xxxxxx
Industry and Trading Company Limited and the conversion of the
Company to a sino-foreign joint venture enterprise (the
"Restructuring").
(16) Xxxx Xxxx shall undertake to guarantee the obligations of any
of the transferors of equity in the Company relating to the
Restructuring.
(17) Between the Closing Date and the Effective Date, Xxxx Xxxx
will:
(i) cooperate with and lend his assistance to, Stonepath
personnel to develop and implement those financial and
operational systems, controls and protocols necessary
to assure a smooth and efficient transition of the
Business to the Company as of the Effective Date,
including, but not limited to:
11
EXECUTION VERSION
(a) create a new payroll system for the Company;
(b) transition to the Company all employees of the
Business, with appropriate intake documentation
executed by such employees in accordance with
Company policies;
(c) open new bank accounts for the Business;
(d) transfer all cash balances from whatever sources
from the Business Cash;
(e) develop such financial and accounting books and
records and systems sufficient to develop an
opening balance sheet of the Purchased Assets on
the books of the Company;
(f) integrate the financial and accounting systems of
the Company with those of Stonepath, to the best
extent possible;
(g) secure appropriate and necessary insurance
coverages for the operations of the Company; and
(h) create all appropriate shipping and billing
documentation under the name of the Company.
(ii) transition all customers and customer accounts of the
Business to the Company;
(iii) wind down and terminate all operations of the Business
under the name "Shaanxi International"; and
(iv) notwithstanding his obligation to transfer all
Purchased Assets to Stonepath on the Effective Date,
Xxxx Xxxx shall transfer such amount of Business Cash
to the Company to fund the increase in registered
capital of the Company approved on December 24, 2003 on
behalf of Stonepath and the other shareholders to the
Company and shall take all actions to ensure Stonepath
is credited with having made its contribution to such
increase of registered capital.
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF STONEPATH
7.1 The obligations of Stonepath to be performed at the Closing are subject
to the fulfillment at or prior to the Closing of each of the following
conditions:
(1) The representations and warranties of Xxxx Xxxx contained in
this Contract shall be true in all material respects on and as
of the Closing Date.
(2) Since the date of the most recent Interim Financial
Statements, there shall have been no Material Adverse Change
with respect to the Business.
(3) Xxxx Xxxx shall have performed in all material respects all
obligations and agreements and complied in all material
respects with all covenants and conditions contained in this
Contract to be performed or complied with by him at or prior
to Closing.
(4) On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or any order of any nature in
effect issued by a court of competent jurisdiction directing
that the transactions provided for herein, or any of them, not
be consummated as herein provided and no suit, action,
investigation, inquiry or other legal or administrative
proceeding by any governmental body or other Person shall have
been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby or which if
successfully asserted might otherwise have a material adverse
effect on the Purchased Assets or impose any additional
material financial obligation on, or require the surrender of
any material right, by Xxxxxxxxx.
12
EXECUTION VERSION
(5) All corporate actions including the approval of the Board of
Directors of Stonepath, proceedings, instruments and documents
required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal
matters shall be reasonably satisfactory to counsel for
Stonepath and such counsel shall have been furnished with such
certified copies of such corporate actions and proceedings and
such other instruments and documents as it shall have
reasonably requested.
(6) Any Third Person and governmental consents, approvals or
authorizations necessary for the conveyance of the Purchased
Assets or the operation of all or part of the Business by the
Company or the valid consummation of the transactions
contemplated hereby shall have been obtained, including
approval by LaSalle Business Credit, Inc., Xxxxxxxxx's
principal lender, and approval of the issuance of the
Stonepath Shares by the American Stock Exchange.
(7) Any governmental consents, approvals or authorizations
necessary for the Restructuring shall have been obtained, and
all agreements and documents required by PRC law for the
establishment and operation of the Company after the
Restructuring have been agreed to and signed by the relevant
parties and approved by the relevant government authorities,
as applicable.
(8) The Purchased Assets have been properly transferred to
Stonepath and the Company.
(9) The employees of the Business identified by Xxxxxxxxx as
material to the post-Closing operation of the Business have
accepted offers of employment from the Company.
(10) Xxxx Xxxx shall have executed and delivered to Stonepath
and/or the Company at Closing, the documents identified in
Section 3.2 hereof.
(11) Stonepath shall have concluded in its sole discretion, a
satisfactory review of the Purchased Assets, the Business
Cash, personnel of the Business, most recent results of the
operations of the Business (so as to confirm that the earnings
power of the Business is consistent with the Targeted Amount),
and prospects of the Business.
(12) Stonepath shall have secured audited financial statements
relating to the operation of the Business in accordance with
rules and regulations applicable to U.S. public companies.
ARTICLE 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF XXXX XXXX
8.1 The obligations of Xxxx Xxxx to be performed at the Closing are subject
to the fulfillment at or prior to the Closing of each of the following
conditions:
(1) The representations and warranties of Stonepath contained in
this Contract shall be true in all material respects on and as
of the Closing Date.
(2) Stonepath shall have performed in all material respects all
obligations and agreements and complied in all material
respects with all covenants and conditions contained in this
Contract to be performed or complied with by it at or prior to
Closing.
13
EXECUTION VERSION
(3) On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or any order of any nature in
effect issued by a court of competent jurisdiction directing
that the transactions provided for herein, or any of them, not
be consummated as herein provided and no suit, action,
investigation, inquiry or other legal or administrative
proceeding by any governmental body or other Person shall have
been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby or which if
successfully asserted might impose any additional material
financial obligation on, or require the surrender of any
material right, by Xxxxxx.
(4) All corporate actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this
Contract or incidental thereto and all other related legal
matters shall be reasonably satisfactory to counsel for
Shaanxi Silk, and such counsel shall have been furnished with
such certified copies of such corporate actions and
proceedings and such other instruments and documents as it
shall have reasonably requested.
(5) Any Third Person and governmental consents, approvals or
authorizations necessary for the conveyance of the Purchased
Assets or the valid consummation of the transactions
contemplated hereby shall have been obtained.
ARTICLE 9. INDEMNIFICATION
9.1 After the Closing, Xxxx Xxxx shall indemnify Stonepath against all
losses, liabilities, damages and claims, including without limitation
any related interest, penalties, expenses and reasonable attorney's
fees, resulting from (i) any breach of or failure to satisfy, any of
the representations, warranties, covenants or obligations of Xxxx Xxxx
under this Contract.
9.2 After the Closing, Xxxxxxxxx shall indemnify Xxxx Xxxx for all losses,
liabilities, damages and claims, including without limitation any
related interest, penalties, expenses and reasonable attorney's fees,
resulting from any breach of the representations, warranties, covenants
or obligations of Stonepath under this Contract.
ARTICLE 10. EFFECTIVENESS AND TERMINATION
10.1 This Contract shall become effective on the date hereof.
10.2 This Contract and the transactions hereunder may be terminated at any
time after the date hereof this Contract and prior to the Closing Date:
(1) by the written mutual consent of Xxxx Xxxx and Xxxxxxxxx; or
(2) by Xxxxxxxxx, if Xxxx Xxxx materially breaches this Contract
(taken as a whole) and such breach cannot be cured, or if
capable of being cured, is not cured within thirty (30)
business days after written notice to Xxxx Xxxx; or
(3) by Xxxx Xxxx, if Stonepath materially breaches this Contract
(taken as a whole) and such breach cannot be cured or, if
capable of being cured, is not cured within thirty (30)
business days after written notice to the Stonepath.
14
EXECUTION VERSION
10.3 The Parties agree that if the Closing does not occur within five (5)
months of the date of this Contract, or within any extended period the
Parties may agree to in writing, then the Parties shall terminate this
Contract. In such case, none of the Parties shall have any right to
claim damages from the other Parties for any costs or expenses incurred
in relation to any action taken by such Party in preparation for the
Restructuring, the transfer of the Purchased Assets or the transfer or
reorganization of the Shaanxi Sunshine Operations.
10.4 If this Contract is terminated under Articles 10.2 and 10.3 and at the
time of termination, Stonepath is already approved and registered with
relevant authorities in the PRC as an investor in the Company, Xxxx
Xxxx shall immediately take all actions to deregister Stonepath as an
investor and shall remove any persons nominated by Stonepath as
directors of the Company, and from the date of termination of the
Contract, Xxxx Xxxx shall indemnify Stonepath and all such persons who
had been directors of the Company against all losses, liabilities,
damages and claims arising out of the operation of the Business by the
Company after the date of termination.
ARTICLE 11. DISPUTE RESOLUTION
11.1 If a dispute arises as to the interpretation of this Agreement,
including any question regarding its existence, validity or
termination, it shall be decided finally in an arbitration proceeding
in accordance with the UNCITRAL Arbitration Rules then in effect at the
time of the dispute which rules are deemed to be incorporated by
reference to this clause. The arbitration shall take place at the Hong
Kong International Arbitration Centre ("HKIAC"). The arbitration
tribunal shall consist of three arbitrators to be appointed according
to the UNCITRAL Arbitration Rules and the language of the arbitration
shall be English. HKIAC shall be the appointing authority. The decision
of the arbitrators shall be conclusively binding upon the Parties and
final, and such decision shall be enforceable as a judgment in any
court of competent jurisdiction. The parties shall share equally the
costs of the arbitration.
ARTICLE 12. MISCELLANEOUS
12.1 None of the Parties shall make any public announcement or public
disclosure with regard to the sale and transfer of the Business that
includes confidential information without the prior written consent of
the other Parties as to the content and timing of such announcement or
disclosure, provided that none of the Parties shall be prevented from
making such an announcement or disclosure which is required by
Applicable law, regulation or stock exchange rule.
12.2 Each of the Parties shall pay its own costs and disbursements of and
incidental to the assignment of the Purchased Assets including, but not
limited to, the preparation and execution of this Contract.
12.3 This Contract shall be governed by the laws of the Hong Kong Special
Administrative Region of the People's Republic of China.
12.4 Failure or delay on the part of any Party hereto to exercise a right
under this Contract shall not operate as a waiver thereof; nor shall
any single or partial exercise of a right preclude any other future
exercise thereof.
15
EXECUTION VERSION
12.5 Where the invalidity of any provision of this Contract does not affect
the validity of any other provisions of this Contract, those other
provisions remain valid.
12.6 Any notice or written communication provided for in this Contract from
any Party to any other Party shall be made in writing sent by courier
service delivered letter or by facsimile with a confirmation copy sent
by courier service delivered letter. The date of receipt of a notice or
communication hereunder shall be deemed to be five (5) days after the
notice or communication is given to the courier service or one (1) day
after sending in the case of a facsimile, provided it is evidenced by a
confirmation receipt and the confirmation copy is sent. All notices and
communications shall be sent to the appropriate address set forth
below, until the same is changed by notice given in writing to the
other Parties.
Xxxx Xxxx
Room 1201, Xx. 00, Xxxx 00
Xxxxxxx Xxxx
Xxxxxxxx
Xxxxxx'x Xxxxxxxx xx Xxxxx
Facsimile No.: 0000-0000 0000
Stonepath
C/o Stonepath Group, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
XXX
Facsimile No.: 0-000-000-0000
Attention: Xxxxxxx Xxxxx
12.7 This Contract may not be assigned in whole or in part by either Party
without the prior written consent of the other Party.
12.8 This Contract may not be amended orally, and any amendment hereto must
be agreed to in a written instrument signed by the Parties.
12.9 This Amended and Restated Contract constitutes the entire Contract
between the Parties with respect to the subject matter of this Contract
and supersedes all prior discussions, negotiations and Contracts
between them with respect to the subject matter, including but not
limited to the Contract for Sale of Assets signed by Stonepath Holdings
(Hong Kong) Limited. and Xxxx Xxxx dated November 10, 2003, of this
Contract. In the event of any conflict between the terms of this
Contract or other contracts entered into pursuant to this Contract, the
terms and conditions of this Contract shall prevail. The Schedules and
Appendices hereto are an integral part of this Contract and are equally
binding with Articles 1-12 of this Contract.
12.10 The Parties agree that irreparable damage would occur in the event that
any provision of this Contract was not performed in accordance with the
terms hereof and that the Parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law
or equity.
12.11 This Contract is written in the English language and in the Chinese
language. Each of the English and Chinese language versions shall be
equally valid and binding on the Parties hereto.
12.12 This Contract may be executed in one or more counterparts, and by the
different Parties hereto in separate counterparts and delivered via
facsimile, each of which shall be deemed to be an original but all of
which taken together shall constitute one and the same Contract.
16
EXECUTION VERSION
IN WITNESS WHEREOF, the duly authorised representative of each Party has signed
this Contract on the date first set forth above.
Stonepath Holdings (Hong Kong) Limited
By /s/ Xxxxxxx Xxxxx
---------------------------
Name Xxxxxxx Xxxxx
Title Director
Xxxx Xxxx
By /s/ Xxxx Xxxx
---------------------------
Name Xxxx Xxxx
17
EXECUTION VERSION
Appendix 1
Definitions
"Accounts Receivable" means all accounts receivable of the Business, including
all trade and miscellaneous receivable, as of the Effective Date as would appear
as accounts receivable on a balance sheet of the Business as of the Effective
Date prepared in accordance with GAAP.
"Affiliates" means, with respect to any Person, any other Person who, directly
or indirectly, controls or is controlled by, or is under common control with,
such Person. For the purposes of the foregoing, (1) the ownership, directly or
indirectly, of more than fifty percent (50%) of the voting stock or other equity
interest of such Person or (2) the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through ownership of voting securities, by contract or
otherwise, shall be deemed to constitute control. With respect to Xxxx Xxxx,
"Affiliate" shall also include all Business Sellers and any individuals who are
in the direct or indirect employment of Xxxx Xxxx and his Affiliates as of the
date hereof and as of Closing.
"Applicable Law" means or "Applicable Laws" means any and all laws, ordinances,
constitutions, regulations, statutes, treaties, rules, codes, licenses,
certificates, franchises, permits, requirements adopted, enacted, implemented,
promulgated, issued, entered or deemed applicable by or under the authority of
any governmental authority having jurisdiction over a specified Person or any of
such Person's properties or assets.
"Business Cash" means cash generated by the Business operated under the name of
and/or through, Shaanxi International (defined in the Preliminary Statement
above) or HK Co. (defined in the Preliminary Statement), as of the Effective
Date and wherever located.
"Business Records" means all books, records, ledgers, and files or other
similar information used in the conduct of the Business by the Business Sellers,
in written or electronic form, including, without limitation, price lists,
customer lists, vendor lists, mailing lists, warranty information, catalogs,
sales promotion literature, advertising materials, brochures, records of
operations, standard forms of documents, manuals of operations or business
procedures, research materials and product testing reports required by any
federal, foreign, state, provincial, local or other governmental, regulatory or
administrative agency, commission, department, board, governmental subdivision,
court, tribunal, arbitrating body or other authority.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as Schedule
1.
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession, which are applicable to the facts and
circumstances on the date of determination.
"Intellectual Property" means all intellectual property rights of the Business
and of Xxxx Xxxx'x Affiliates relating to the Business, including (a) all
inventions, discoveries and ideas, whether patentable or not in any
jurisdiction, patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; (b)
trademarks, service marks, brand names, certification marks, trade dress,
assumed names, trade names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification of or renewal of any such registration or application;
(c) computer software (including software, data, and related documentation); (d)
non-public information, trade secrets, know-how (including, without limitation,
research and development, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings and specifications)
and confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any Person; (e) writings or other works, whether
copyrightable or not in any jurisdiction, registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; (f) any similar intellectual property rights, and (g) any claims or
causes of action arising our of or related to any infringement or
misappropriation of any of the foregoing.
18
EXECUTION VERSION
"Liabilities" means any and all debts, accounts payable, liabilities and/or
obligations of any type, nature or description (whether known or unknown,
asserted or unasserted, secured or unsecured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and whether due or to become due).
"Material Adverse Change" means a material adverse change (i) in the business,
assets, condition (financial or otherwise), working capital, liabilities,
results of operations or prospects of the Business, (ii) in the ability of Xxxx
Xxxx to perform its obligations under this Contract and the other agreements
contemplated hereby or (iii) in the ability of Xxxx Xxxx to consummate the sale
and purchase of the transfer of the Business and the other transactions
contemplated by this Contract.
"Net Income Before Taxes of the Company" means the net income before foreign,
federal, state and local income taxes generated by the Company after the
Effective Date,. Net Income Before Taxes of the Company shall be derived from
separate financial statements of the Company, which in turn, shall, be derived
from the audited consolidated financial statements of Stonepath and Stonepath
Group, Inc. for each of the years (or portions thereof) in the Earn-Out Period.
It is understood by Xxxx Xxxx that, following the Effective Date, the operations
of the Company may be combined or merged with an Affiliate of Stonepath in a
manner in which the Company may no longer exist as a separate entity. For the
purpose of computing the Net Income Before Taxes of the Company following any
such combination or merger, the following principle shall apply:
Once the Company is merged into or combined with another business, Net
Income Before Taxes of the Company shall continue to be accounted for
separately, and shall be measured thereafter based upon the separate
operations of the Company as it was operated immediately prior to any
such change.
"Ownership Percentage of Stonepath" means the percentage of equity of the
Company held by Stonepath or its assignees or Affiliates at the time such
percentage is to be determined, which on the date of this Contract is fifty five
percent (55%).
"Person" means any person or entity, whether an individual, trustee,
corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental authority or any similar entity.
"Principal Exchange" means (a) the American Stock Exchange or (b) if at any
time in the future the Common Stock of Stonepath Group is not listed on the
American Stock Exchange, then the NASDAQ Small Cap Market, the NASDAQ National
Market, or the New York Stock Exchange (each, a "Subsequent Market") or (c) if
the Common Stock of Stonepath Group, Inc. is not then listed on the American
Stock Exchange or any Subsequent Market, then the OTCBB, as reported by the
National Quotation Bureau Incorporated.
"Related Persons" or "Related Persons" means, with respect to a particular
individual:
(i) each other member of such individual's family (as hereafter defined);
and
(ii) any Affiliate of one or more members of such individual's family.
With respect to a specified Person other than an individual:
(i) any Affiliate of such specified Person; and
(ii) each Person that serves as a director, governor, officer, manager,
general partner, executor or trustee of such specified Person (or in a
similar capacity).
19
EXECUTION VERSION
"SEC" means the United States Securities and Exchange Commission.
"Taxes" or "Taxes" means any and all income, gross income, gross revenue, gross
receipts, net receipts, ad valorem, franchise, profits, transfer, sales, use,
social security, Medicare, employment, unemployment, disability, license,
withholding, payroll, privilege, excise, value-added, severance, stamp,
occupation, property, customs, duties, real estate and/or other taxes,
assessments, levies, fees or charges of any kind whatsoever imposed by any
governmental authority, together with any interest or penalty relating thereto.
"Trading Day" means any day on which the shares of Common Stock of Stonepath
Group, Inc. are traded for a full day on the Principal Exchange.
"Working Capital" means the excess of the Business Cash plus Accounts
Receivable, less Liabilities, as determined under GAAP.
20
EXECUTION VERSION
Appendix 2
Representations and Warranties of Xxxx Xxxx
A. General
1. Xxxx Xxxx has all right and authority to act on behalf of the Business
Sellers and HK Co. and to cause all such entities and persons to
perform all acts and take all actions required of such entities under
this Contract, and to transfer of the Purchased Assets and Shaanxi
Sunshine Operations as contemplated under this Contract.
2. The Business has been operated at all times in all material respects in
compliance with all relevant laws, regulations, decrees or policies of
the PRC and any other applicable jurisdiction. No act or transaction
has been effected by or on behalf of the Business involving the making
or authorizing of any material payments singly or in the aggregate or
the giving of anything of material value, singly or in the aggregate,
to any government official, political party, party official or
candidate for political office for the purpose of influencing the
recipient in his or its official capacity in order to obtain or retain
business for, or direct business to, the Business or any other entity
or person. The Business has been operated at all times under the name
of and/or through, Shaanxi International and HK Co. and is not operated
under the name of and/through any other Person.
3. The Business has no liabilities other than liabilities (i) reflected or
reserved against in the Interim Financial Statements incurred since
June 30, 2003 in the ordinary course of the Business, consistent with
past practices or (iii) of a value in the aggregate not exceeding One
Million Renminbi (RMB1,000,000).
4. There are no liabilities that can be asserted against the Business, the
Business Cash or the Purchased Assets other than those related to the
Business.
5. Since June 30, 2003, the Business has been carried on in the ordinary
and proper course and substantially in the manner that the Business has
been carried on prior to such date.
6. Since June 30, 2003 there has not been any damage, destruction or
casualty loss (whether or not covered by insurance) with respect to any
of the Purchased Assets which have in the aggregate a replacement cost
of more than One Million Renminbi (RMB1,000,000).
7. Section A7 of the Disclosure Schedule describes all branches, liaison
offices, service centers, offices, and other business operations owned,
established or used by the Business.
8. The execution and performance of this Contract will not contravene or
constitute a default under or violation of (i) any provision of
applicable PRC law or regulations, or (ii) the Articles of Association
of the Company or (iii) any material agreement, judgment, injunction,
order, decree or other instrument binding upon Xxxx Xxxx.
9. The Shaanxi Sunshine Operations do not carry on business under any name
other than or "Shaanxi Sunshine Express International Co., Ltd."
10. As of the Closing Date and Effective Date, Xxxx Xxxx has complied in
all material respects with all of its covenants and obligations (which
can be or are to be performed prior to Closing or the Effective Date)
in respect of the Purchased Assets and the Business set forth in this
Contract.
21
EXECUTION VERSION
11. No PRC government authority or any Third Person has commenced or
threatened to commence any proceedings, or issued or threatened to
issue any order, or otherwise has taken or threatened to take any
action, which would restrict or prohibit the transactions contemplated
hereunder or would have a Material Adverse Effect.
12. Except for customer or prospective customer entertainment and gifts
given to customers or prospective customers each of a value of less
than RMB100 yuan occurring in the ordinary course of the Business,
neither Xxxx Xxxx or the Business Sellers or any Person authorized to
act on one of their behalf, has within the past six (6) years given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other Person who is or may be in a position to
help or hinder the Business (or assist Seller in connection with any
actual or proposed transaction) which (i) would subject Seller to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, would have had a material
adverse effect on the Business, or (iii) if not continued in the
future, would adversely affect the financial condition, Business or
operations of the Company, or (iv) might subject Xxxx Xxxx, the Company
or the Business Sellers to suit or penalty in any Proceeding.
13. No creditor, employee, client, customer or other Person having a
material business relationship with the Business has informed Xxxx Xxxx
or the Business Sellers that such Person intends to change such
relationship because of the purchase and sale of the Purchased Assets
or the consummation of any other transaction contemplated hereby.
14. Xxxx Xxxx has not taken any action that would give to any Person a
right to a finder's fee or any type of brokerage commission in relation
to, or in connection with, the transactions contemplated by this
Contract or by any other agreements contemplated herein.
15. All information set forth on any Schedule hereto provided by Xxxx Xxxx
is true, correct, and complete. No representation or warranty of Xxxx
Xxxx contained in this Contract contains or will contain any untrue
statement of a material fact, or omits or will omit to state any
material fact necessary to make the statements made therein not
misleading. All contracts, permits, and other documents and instruments
furnished or made available to Stonepath by Xxxx Xxxx are or will be
true, complete, and accurate copies of the originals and include all
amendments, supplements, waivers, and modifications thereto. There is
no fact, development or threatened development (excluding general
economic factors affecting the Business in general) that Xxxx Xxxx has
not disclosed to Stonepath in writing that materially adversely affects
or, so far as Xxxx Xxxx can foresee, may materially adversely affect,
the Business or the Purchased Assets. Any disclosure made herein or
pursuant to a Schedule attached hereto by Xxxx Xxxx shall be considered
a disclosure for purposes of all representations and warranties made
hereunder by Xxxx Xxxx even if such disclosure does not cross-reference
a particular provision of this Contract.
B. Accounts and Taxes
1. The financial statements of the Business for the year ended December
31, 2002 and for the six months ended June 30, 2003 (collectively the
"Financial Statements") described in Section B1.1 of the Disclosure
Schedule (i) were prepared in accordance with the books of account and
other financial records of the Business, (ii) present fairly the
financial condition and results of operations of the Business of the
date thereof or for the periods covered thereby and (iii) have been
prepared in accordance with generally acceptable accounting standards
applied on a basis consistent with other companies located in the PRC.
The Financial Statements for the six months ended June 30, 2003 shall
separately be referred to as the "Interim Financial Statements".
2. All taxes and duties relating to the Business that are due and payable
have been paid in full. Without prejudice to the generality of the
foregoing, all deductions and withholdings in respect of or on account
of taxes which are required by any applicable legislation to be made
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EXECUTION VERSION
from any payments made including, but not limited to, interest,
annuities or other annual payments, royalties, rent remuneration
payable to employees or sub-contractors, payments to non-residents,
employee benefits including (without limitation) medical benefits and
housing and other subsidies, bonus and welfare funds, pension funds,
retirement funds or labor union funds have been made, and where
appropriate, all information requested by or required by applicable
laws or regulations to be disclosed to, the relevant fiscal authority
have been provided.
3. All returns relating to the Business made for tax purposes including
(without limitation) all income tax, business tax and value added tax
returns, are true and correct in all material respects and all other
information supplied to any governmental tax authority or other fiscal
authority for such purpose is true and correct in all material respects
and on a proper basis and such returns include all returns and
information which ought to have made or given and, are not subject to
any dispute with any governmental tax authority or any other relevant
fiscal authority at the date hereof.
4. All returns and information made or given to any relevant authorities
in connection with the import or export of any products, components or
raw materials are correct in all material respects and all legislation
have been complied with in all material respects relating to the import
and export of products, components or raw materials and to all customs
and excise matters, and all customs and import taxes payable have been
paid in full. There are no written final or proposed assessments from
the customs authority.
5. Since June 30, 2003, there has not been any change in accounting
methods or practices in relation to the accounts of the Business and no
dividends have been declared or paid since June 30, 2003.
6. There are no loans, guarantees, encumbrances (other than purchase money
security interests arising at law), actual or contingent, made, given,
entered into or incurred by or on behalf of the Business.
7. Each and every account maintained at a bank or other financial
institution is listed in the Disclousre Schedule:
8. All amounts received by the Business have been deposited with one or
other of such banks or other institutions listed in Item 7 above and
all amounts received by the Business appear in the appropriate
accounting books.
9. All the Accounts Receivable (a) represent actual indebtedness incurred
by the applicable account debtors and (b) have arisen from bona fide
transactions in the ordinary course of the Business. All the Accounts
Receivable are good and collectible at the aggregate recorded amounts
thereof, net of any applicable reserves for doubtful accounts reflected
on the Interim Financial Statements. Since June 30, 2003, there have
not been any write offs as uncollectible of any receivables, except for
write-offs in the ordinary course of the Business and in amounts
consistent with past practice.
C. Certain Assets
1. The Business Sellers own the Purchased Assets; the Purchased Assets are
free of any lease, lien, mortgage or other encumbrance; upon the sale
of the Purchased Assets in accordance with the terms of this Contract,
the Company will have all title, right and interest thereto free of any
lien, mortgage or other encumbrance.
2. Except as disclosed in Section C.2 of the Disclosure Schedule, the
Business Sellers own, lease or have the legal right to use all the
properties and assets used in the conduct of the Business and, with
respect to contract rights, is a party to and enjoys the right to the
benefits of all contracts, agreements and other arrangements used in
the conduct of the Business.
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EXECUTION VERSION
3. The Purchased Assets and the Business Cash (less amounts repayable
pursuant to Article 2.10 above) constitute all properties, assets and
rights forming a part of, used or held in, and all such properties,
assets and rights as are necessary for the conduct of, the Business.
Following the Effective Date, Xxxxxxxxx will have control over and be
able to operate, the Business after the Effective Date in substantially
the same manner as it was operated prior to the Effective Date.
4. All machinery and equipment used in the Business are in good operating
condition and in conformity with all laws and regulations imposing
standards for construction, use and maintenance and with all safety
codes which are applicable to the Company.
5. The Purchased Assets are not subject to any regulations, notices or
decrees relating to quotas, commodities restrictions or other similar
State planning policies.
6. Xxxx Xxxx has no obligations or liabilities (whether or not known to
either of them and whether due or to become due) with respect to the
sale, transfer or other disposition of the Purchased Assets, with
respect to the use of the cash of the Business or with respect to the
Restructuring other than obligations or liabilities arising out of this
Contract or the transactions contemplated herein.
7. All agreements, documents, licenses, permits, books, records files and
other data (whether in written or electronic form) relating to the
Business which are required by applicable law to be, or which in
accordance with customary practice would be, in the possession or
control of the Company, are in the possession or control of the
Company.
8. Xxxx Xxxx understands that the Stonepath Shares to be issued hereunder
have not been and will not be registered under the Securities Act, and
may not be offered or sold except in accordance with all applicable
federal and state securities laws of the United States of America.
(a) Without in any way limiting the representations set forth
herein, Xxxx Xxxx further agrees not to make any disposition
of all or any portion of the Stonepath Shares unless and
until:
(i) the restrictions referred to in Section 3.2 (c) hereof
have expired;
(ii) (A) Xxxx Xxxx has notified Stonepath of the proposed
disposition and shall have furnished Stonepath with a
detailed statement of the circumstances surrounding the
proposed disposition and (B) if reasonably requested by
Xxxxxxxxx, Xxxx Xxxx shall have furnished Stonepath
with an opinion of counsel, reasonably satisfactory to
Stonepath, that such disposition will not require
registration under the Securities Act; and
(iii) Stonepath shall be satisfied that such proposed
disposition complies in all respects with Rule 144 or
Rule 145 under the Securities Act or any successor rule
providing a safe harbor for such disposition without
registration.
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EXECUTION VERSION
(b) Xxxx Xxxx is not a citizen or resident of the United States of
America, is not a U.S. Person (as that term is defined in
Regulation S of the United States Securities and Exchange
Commission) and is not acquiring the securities for the
account or benefit of Third Person. Xxxx Xxxx is acquiring the
Stonepath Shares for investment for his own account, not as a
nominee or agent, and not with a view to the distribution of
any part thereof; Xxxx Xxxx has no present intention of
selling, granting any participation in or otherwise
distributing any of the Stonepath Shares in a manner contrary
to Section 6.1(5) hereof, the Securities Act, or any
applicable state securities or Blue Sky law, nor does Xxxx
Xxxx have any contract, undertaking, agreement or arrangement
with any Person to sell, transfer or grant a participation to
such Person or to any Third Person with respect to any of the
Stonepath Shares.
(c) Xxxx Xxxx understands that the certificate evidencing the
Stonepath Shares will bear the following or a comparable
legend:
The securities evidenced by this certificate have not been
registered under the U.S. Securities Act of 1933, as amended
(the "Act"), or applicable U.S. state securities laws, and no
interest therein may be sold, distributed, assigned, offered,
pledged or otherwise transferred unless and until (i) the
restrictions imposed by that certain Contract for the Sale of
Assets dated November 10, 2003, by and between, among others,
the holder of the securities and this corporation, (ii) this
corporation receives an opinion of legal counsel for the
holder of the securities reasonably satisfactory to this
corporation stating that such transaction is exempt from
registration, or (iii) this corporation otherwise satisfies
itself that such transaction is exempt from registration.
(e) Xxxx Xxxx acknowledges that Xxxxxxxxx will refuse to register
any transfer of the Stonepath Shares if such transfer is not
made in accordance with the legend set forth above.
(f) Xxxx Xxxx has reviewed such quarterly, annual and periodic
reports of Stonepath Group, Inc. as have been filed with the
United States Securities and Exchange Commission and that it
has such knowledge and experience in financial and business
matters that it is capable of utilizing the information set
forth therein, concerning Stonepath Group, Inc. to evaluate
the risk of investing in the Stonepath Shares. Xxxx Xxxx has
been afforded adequate opportunity to review and is familiar
with said reports and has based its decision to invest in the
Stonepath Shares solely on the information contained therein
and the information contained within this Agreement, and has
not been furnished with any other literature, prospectus or
other information except as included in said reports or this
Agreement.
(g) Xxxx Xxxx has been given adequate opportunity to ask questions
about Stonepath Group, Inc. and is satisfied that any
information about Stonepath Group, Inc. and the Stonepath
Shares have been answered to its satisfaction.
(h) Xxxx Xxxx is able to bear the economic risks of an investment
in the Stonepath Shares; its overall commitment to its
investments which are not readily marketable is not
disproportionate to its net worth.
(i) Xxxx Xxxx understands that no governmental authority has
approved or disapproved the Stonepath Shares, passed upon or
endorsed the merits of the transfer of such shares set forth
within this Contract or made any finding or determination as
to the fairness of such shares for investment.
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EXECUTION VERSION
D. Intellectual Property Rights
1. All of the Intellectual Property are listed in Schedule 2 and
constitute all of the intellectual property used in the Business.
Except as disclosed on Section D.1 of the Disclosure Schedule, the
Business Sellers own, or have enforceable rights to use all
Intellectual Property presently in use and necessary for the operation
of the Business as now being conducted or as proposed to be conducted;
2. Except for pending applications for patents and trademarks, none of the
Intellectual Property is the subject of any claim or opposition as to
title, validity, enforceability, entitlement or otherwise.
3. The Company does not use any intellectual property of a Third Person in
the conduct of the Business, and there are no outstanding licenses or
consents granting Third Person the right to use the Intellectual
Property.
4. The Intellectual Property, comprise all of the Intellectual Property
necessary, created, owned or used, inside and outside the PRC, in the
operation of the Business, such that after the Effective Date, the
Company will be able to operate the Business in substantially the same
manner as it was operated prior to the Effective Date.
5. There is no knowledge that there is or has ever been an infringement or
unauthorized use of any intellectual property rights of Third Person in
the conduct of the Business.
6. Renewal fees payable in respect of each of the registered Intellectual
Property Rights have been paid and all other actions required to
maintain and protect such registrations have been taken.
7. There is no and has never been a material infringement or unauthorized
use of the Intellectual Property, none of Xxxx Xxxx, his Affiliates, or
the Company has been a party to any claim, legal procedure, lawsuit,
arbitration, administrative litigation or proceeding, government
investigation, nor to their knowledge, has any such action been
threatened, in relation to the Intellectual Property.
8. The activities, processes, methods, products, services or any
Intellectual Property used on or before the date of this Contract in
the Business:
(1) except as disclosed in Section D1 of the Disclosure Schedule,
are not at the date of this Contract, or were not at the time
used or dealt in, subject to the license, consent or
permission of, or payment to, a Third Person;
(2) do not at the date of this Contract, or did not at the time
used, dealt in, infringe any intellectual property rights of a
Third Person or embody rights confusingly similar to any
intellectual property rights of a Third Person; and
(3) have not and are not likely to give rise to any claim against
any of Xxxx Xxxx.
E. Leases
1. The Leases set forth in Section E1 of the Disclosure Schedule comprise
all the leases for or rights to use land, buildings and premises used
in connection with the Business (collectively the "Leased Property").
2. Except as disclosed in Section E1 of the Disclosure Schedule, the
existing use of the Leased Property is the lawful and permitted use
under all applicable laws, regulations, decrees and policies.
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EXECUTION VERSION
3. Except as disclosed in Section E1 of the Disclosure Schedule, any
permission, consent or authorization required for the existing use of
the Leased Property, its original construction and any subsequent
alteration has been obtained and is in force and is not subject to any
conditions which have not been complied with.
4. There is no material defect or problem that affects the Leased Property
or which requires correction in the condition of any building or other
structure on or forming part of the Leased Property.
5. Except as disclosed in Section E1 of the Disclosure Schedule, all
buildings or other structures on or forming part of the Leased Property
are in material compliance with all applicable laws, regulations,
policies and decrees relating to construction, safety, maintenance,
fire prevention, urban planning, or otherwise concerning its
construction and use, and all related certificates or similar documents
therefor have been obtained.
6. No building or other structure on or forming part of the Leased
Property contains a substance which is not at the date of this Contract
permitted to be used in the PRC or is not used under generally accepted
international commercial practices.
7. Except as disclosed in Section E1 of the Disclosure Schedule, none of
the Leases may be terminated by any entity (including but not limited
to the landlord) before the expiration of the term of the relevant
Lease or before a reasonable period of notice except for breach by the
relevant lessee.
8. There are no material breaches or events which with notice or lapse of
time would constitute a material breach on the part of any lessee in
relation to any Lease.
9. There are no existing facts or circumstances which could entitle any
Lease to be early terminated by any entity which is a party to a Lease
(other than termination by the relevant lessee) or which would permit
any entity to take possession of or occupy any Leased Property.
10. All taxes and fees (and any interest or charges thereon) and any
expenses due and payable in respect of any Lease or Leased Property
have been paid in full and will be paid in full up to the Closing Date.
F. Insurance
1. Each of the Purchased Assets is insured as required under PRC law and
is at the date of this Contract insured to its net book value (with no
provision for deduction or excess, except customary deductibles)
against each risk that it is normally insured against by an entity
engaged in a business similar to the Business, in accordance with
general commercial practice in the PRC.
2. Section F2 of the Disclosure Schedule lists each current insurance and
indemnity policy in which any of Xxxx Xxxx or the Company have an
interest in connection with the Business and the Purchased Assets
(collectively the "Insurance Policies") and such Insurance Policies
will remain valid vis-a-vis the Company after the Closing Date.)
3. Each of the Insurance Policies is valid and enforceable and is not void
or voidable.
4. None of Xxxx Xxxx or the Company has done anything or omitted to do
anything which would have a Material Adverse Effect with respect to the
Insurance Policies.
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EXECUTION VERSION
5. Except as disclosed in Section F.5 of the Disclosure Schedule, no
claims have been made and no fact or circumstance exists which might
give rise to a material claim under any of the Insurance Policies.
6. Neither of Xxxx Xxxx or the Company has done or omitted to do anything
which is likely to result in an increase in the premium payable under
any of the Insurance Policies.
G. Environment
1. The operation of the Business has at all times complied in all material
respects with all applicable laws, regulations, policies and decrees of
the PRC or any applicable jurisdiction relating to environmental
matters, and has not and does not involve the use of, or the release or
discharge of, a hazardous substance or article, waste, sewage or other
pollutant or contaminant.
2. There is no claim, legal procedure, lawsuit, arbitration procedure,
administrative litigation or proceeding, or government investigation
(or any such threatened action) arising out of or relating to any
environmental laws, regulations, policies or decrees of the PRC or
other applicable jurisdiction resulting from or with respect to any
part of the Business.
H. Employment
1. All applicable laws, regulations, policies and decrees of the PRC and
any other applicable jurisdiction have, in all material respects, been
complied with in relation to the employment of persons in connection
with the Business (including but not limited to minimum wage standards
and relating to employee bonus, pension, retirement and other fund and
benefit obligations).
2. Section H2 of the Disclosure Schedule lists all the persons material to
the operations of the Business on the date of this Contract and details
of the date of commencement of employment, and the job
description/title of each such person.
3. All employment obligations with respect to the Employees required to be
satisfied on or prior to the Effective Date, including bonus, pension,
retirement and other employee funds and benefit obligations have been
contributed in full and will continue to be made in full by the
Business Sellers up to the Effective Date.
4. Full and accurate records regarding the employment of each of the
Employees (including but not limited to details of employment, payments
of funds and benefits, income tax and employee bonus scheme benefits)
have been maintained and will be maintained up to the Effective Date.
5. There is no ongoing claim, legal procedure, lawsuit, arbitration,
administrative litigation or proceeding (or threat of any such action)
to which the Company or Xxxx Xxxx or the Business Sellers are a party
relating to employment matters concerning any Employee.
I. Litigation and Claims
1. Except as set out in Section I.1 of the Disclosure Schedule, during the
four (4) year period prior to the date of this Contract, there has not
been, and there is not now, any legal procedure, lawsuit, arbitration,
administrative litigation or proceeding, or government investigation
(or to the knowledge of Xxxx Xxxx, threat of such action) against or
with respect to the Business, any of the Purchased Assets which had or
is likely to have a Material or Adverse Effect.
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EXECUTION VERSION
2. There is no ongoing legal procedure, lawsuit, arbitration,
administrative litigation or proceeding (or to the knowledge of Xxxx
Xxxx, any threat of such action), or other government or court order,
interdiction, decision or ruling to which any of Xxxx Xxxx is a party
and which binds or affects the Business or is capable of so doing.
3. None of Xxxx Xxxx, the Business Sellers or the Company has been
declared bankrupt or is the subject of proceedings for bankruptcy,
dissolution or liquidation or is unable to pay its debts as they become
due.
J. Contracts
1. Section J.1 of the Disclosure Schedule contains a true, correct, and
complete list of all agreements, leases, licenses, contracts,
obligations, promises, commitments, arrangements, understandings, or
undertakings, (whether oral or written or express or implied) to which
any of the Business Sellers is a party, under which the Business
Sellers or the Company may become subject to any obligation or
liability, or by which the Business Sellers, the Company or any of its
assets may become bound (collectively, the "Material Contracts"). True,
correct and complete copies of each Material Contract have been made
available to Stonepath. Except as otherwise set forth in Section J.1 of
the Disclosure Schedule, (i) all of the Material Contracts are valid,
binding and enforceable against the respective parties thereto in
accordance with their respective terms; (ii) neither the Business
Sellers nor any other party is in default or in arrears under the terms
of a Material Contract, and no condition exists or event has occurred
to which the Business Seller has actual knowledge which, with the
giving of notice or lapse of time or both, would constitute a default
thereunder; (iii) Business Sellers have fulfilled, or taken action to
fulfill when due, all of its obligations under each of the Material
Contracts; (iv) the Business Sellers have no reason to believe that the
products or services called for by any executory Material Contract
cannot be supplied in accordance with the terms of such Material
Contract, and there is no reason to believe that any unfinished
Material Contract will, upon performance by Business Sellers, result in
a material loss by Business Sellers or Stonepath; and (v) the Business
Sellers have not committed any act, and there has been no omission,
which may result in, and there has been no occurrence which may give
rise to, a liability for breach of warranty (whether or not covered by
insurance) on the part of the Business Sellers with respect to services
rendered or products sold by the Business.
2. None of the Business Sellers are aware of the invalidity of or a ground
for termination or avoidance of any Material Contract.
3. None of the Business Sellers is in material breach of any Material
Contract to which he or it is a party, or is aware of the existence of
any fact or circumstance which could give rise to a material breach of
any Material Contract, or is aware of any breach or any circumstance
which could give rise to a breach of any Material Contract by a Third
Person.
4. None of Xxxx Xxxx or the Business Sellers is a party to, or is subject
to, any Material Contract other than the contracts described in Section
J.4 of the Disclosure Schedule.
5. Each sales contracts entered into by the Business other than the
Material Contracts is substantially in the form of the standard form
used by the Business, contains no obligations on the Company's
materially different from those contained in the Material Contracts and
does not impose any liabilities on the Company of a nature materially
different from the liabilities imposed on the Company's in the Material
Contracts.
6. Except as disclosed in Section A of the Disclosure Schedule, no
contracts entered into by the Business contain any provisions granting
a party other than the Company the right to terminate the contract due
to a change of control in the Company.
29
