ACQUISITION AGREEMENT
AGREEMENT, dated as of ___________, 1996, but effective as of _________,
1996 by and between X.X. Xxx, Inc. a Nevada corporation (hereinafter "X.X.
XXX"), and all of the shareholders (hereinafter "Shareholders") of Quality
Prince Limited (hereinafter "Quality"), the controlling shareholders of Hang
Xxxx Jewellery Company Limited and Kai Hang Jewellery Company Limited
(hereinafter referred to collectively as "Hang Xxxx" or the "Hang Xxxx Group.")
RECITALS
WHEREAS, the Shareholders own or control in their respective capacities and
have the right to sell, transfer and exchange all of the capital stock of
Quality;
WHEREAS, X.X. XXX, wishes to acquire all of the issued and outstanding
capital stock of Quality in exchange for 10,500,000 shares of X.X. XXX common
stock, par value $.001 per share (hereinafter referred to as the X.X. XXX Common
Stock") representing approximately 87.5% of the issued and outstanding shares of
X.X. XXX immediately following the exchange, and 100,000 shares of Class A
Preferred Stock with a superior voting right as a class always equivalent to 30%
of the total vote (hereinafter called "Class A Preferred Stock") on all
corporate matters of X.X. XXX;
WHEREAS, the Shareholders wish to exchange their shares of Quality for X.X.
XXX Common Stock and Class A Preferred Stock;
NOW THEREFORE, in consideration of the premises herein contained, and the
mutual covenants hereinafter set forth, the parties hereto have agreed, and by
these presents, do hereby contract as follows:
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I. EXCHANGE OF SECURITIES
Subject to the terms and conditions hereinafter set forth, at the time of
the closing referred to in Article V hereof (hereinafter the "Closing Date"),
X.X. XXX will issue and deliver to the Shareholders, 10,500,000 shares of X.X.
XXX'x Common Stock, and 100,000 shares of Class A Preferred Stock as designated
in the Shareholder Ownership Schedule (further described below), in exchange for
which the Shareholders will deliver, to X.X. XXX all of the issued and
outstanding stock of Quality. Immediately following the exchange, the
Shareholders will own approximately 87.50% of the issued and outstanding shares
of X.X. XXX; and Quality will own 100% of the Class B shares of each member of
the Hang Xxxx Group.
II. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders represent and warrant to X.X. XXX, all of which
representations and warranties shall be true and complete at the Closing Date,
and shall survive the Closing Date for a period for three (3) years except those
set forth in subsection 6 which shall survive the later of twelve months from
the Closing Date, or twelve months from the date the accounts receivable become
due and payable, that:
1. Organization. Both Quality and each member of the Hang Xxxx Group are
corporations duly organized the validly existing and in good standing under the
laws of the jurisdiction of their incorporation and each has the corporate power
to own its property and carry on its businesses and activities as and where they
are now being conducted. Certified copies of the Memorandum and Articles of
Association of each member of the Hang Xxxx Group are attached hereto as Exhibit
1 and constitute true and correct copies of the Memorandum and Articles of
Association of each company and include all amendments thereto to the date
hereof.
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2. Capital Stock
(a) Quality Prince Limited. The authorized capital stock Quality
Prince Limited consist of US$50,000 consisting of one class of
common stock, US$1.00 per value each, of which 70 shares are
authorized have been validly issued each are now outstanding.
(b) Hang Xxxx Jewellery Company Limited. The authorized capital stock
of Hang Xxxx Jewellery Company Limited consists of HK$500,000
divided into two classes: non-voting Class A shares, HK$1.00 par
value each, of which two shares are authorized and have been
validly issued and are now outstanding; and Class B voting
shares, HK$1.00 par value each, of which 499,998 shares are
authorized and 2 shares have been validly issued and are now
outstanding.
(c) Kai Hang Jewellery Company Limited. The authorized capital stock
of Kai Hang Jewellery Company Limited consists of HK$11,000
divided into two classes: non-voting Class A shares, HK$1.00 par
value each of which 10,000 shares are authorized and have been
validly issued and are now outstanding; voting Class B voting
shares, HK$1.00 par value each, of which 1,000 shares are
authorized and 2 shares have been validly issued and are now
outstanding.
(d) Shareholder Ownership Schedule. The Shareholders represent and
warrant that all of the Shareholders of Quality, and their
respective number of shares owned is correctly designated in the
Shareholder Ownership Schedule attached hereto and incorporated
herein. These shareholders collectively own 100% of the capital
stock of Quality. Further more the 10,500,000 X.X. XXX common
shares, and the X.X. XXX Class A Preferred stock to be exchanged
is to be allocated according to the designations on the
Shareholder Ownership Schedule.
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3. Authority. The Shareholders have the full power and authority to
exchange the shares of the capital stock of Quality upon the term and conditions
provided for in this Agreement, and all such shares have been validly issued,
are fully paid and non-assessable, and are free and clear of any and all liens
or other encumbrances.
4. Financials. The combined financial statements audited by Xxxxxx Xxxxxxxx
& Co., Certified Public Accountants, at and for the year ended March 31, 1996,
attached hereto as Exhibit 2, are true and correct statements as of the date
thereof of the financial condition of Quality and each member of the Hang Xxxx
Group and of their assets and liabilities prepared in accordance with generally
accepted accounting principles consistently applied. From March 31, 1996, and
until the Closing Date, no dividends or distributions of capital, surplus or
profits shall be paid or declared by Quality or any other member of the Hang
Xxxx Group nor will there be any redemption of any member's outstanding shares
or otherwise, other than in the ordinary course of business, nor has any
additional debt or equity securities been issued by Quality or any other member
of the Hang Xxxx Group, nor have any agreements or commitments been entered into
for the issuance of any such securities.
5. Inventories. The inventories of the Hang Xxxx Group as shown in Exhibit
2, and as specifically set forth in separate schedules dated as of March 31,
1996, and September 30, 1996 and attached hereto as Exhibit 3 are valued at the
lower of cost or net realizable value.
6. Accounts Receivable. The accounts receivable of the Hang Xxxx Group
shown in Exhibit 2, and detailed on a separate schedule as of September 30,
1996, specifically set forth in Exhibit 4, or those which are due and payable
after the Closing Date shall be valid and collectible pursuant to their terms,
and can reasonably be anticipated to be paid within 12 months after the Closing
Date or the date when the accounts receivable are due and payable.
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7. Other transactions. Since March 31, 1996, neither Quality nor any other
member of the Hang Xxxx Group has engaged in any transaction other than
transactions in the normal course of the operations of their businesses, except
as specifically authorized by X.X. XXX in writing. Since March 31, 1996 no
member of the Hang Xxxx Group has sold, assigned, or transferred any patent
rights formulas, trademarks trade names copyrights licenses or other intangible
assets.
8. Litigation. Neither Quality nor any other member of the Hang Xxxx Group
is involved in any pending or threatened litigation which would materially
affect the consolidated financial condition as shown by the respective balance
sheets of March 31, 1996, shown on Exhibit 2 hereto, which has not been provided
for on such balance sheets, or referred to in such balance sheets or footnotes
attached thereto, or disclosed to X.X. XXX in writing.
9. Title. Quality and each member of the Hang Xxxx Group has and will have
at the Closing Date, good and marketable title to all of their property and
assets shown on Exhibit 2 hereto, free and clear of any and all liens or
encumbrances or restrictions, except as shown on Exhibit 2 hereto, except for
taxes and assessments due and payable after the Closing Date, or easements or
minor restrictions which do not materially effect the present value or use of
such real property. Additionally, Quality and each member of the Hang Xxxx Group
have and will have at the Closing Date, good and marketable title to all of the
property and assets shown on Exhibit 2 hereto, free and clear of any and all
liens, encumbrances or restrictions, except as shown on Exhibit 2 hereto, except
for taxes and assessments due and payable after the Closing Date or easements or
minor restrictions which do not materially affect the present value or use of
such real property.
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10. Compliance with Securities Law. In connection with their acquisition of
shares of X.X. XXX, each of the Shareholders hereby make the representations and
warranties set forth in Article V, and such are incorporated herein.
11. Taxes. Quality and each member of the Hang Xxxx Group have filed all
federal state or their equivalent income tax returns in each state, country or
jurisdiction where they are qualified doing business, or incorporated and have
filed all franchise tax returns or their equivalent which are required to be
filed under applicable law and each member of the Hang Xxxx Group have paid all
taxes as shown on such returns as such taxes have become due and payable and
have paid all assessments received thereon that have become due.
12. Brokers/Finder's Fees. Neither Quality nor any member of the Hang Xxxx
Group have retained or otherwise utilized the services of any broker or finder
in connection with the transaction contemplated by this agreement. Furthermore,
neither Quality nor any member of the Hang Xxxx Group has done any act to give
rise to any valid claim(s) against X.X. XXX for a brokerage commission, finder's
fee or similar charge.
13. Subsequent Actions. Between the date hereof and the Closing Date, both
Quality and each member of the Hang Xxxx Group shall conduct their business as
in the same manner in which they had theretofore been conducted and the
Shareholders will not permit Quality or any other member of the Hang Xxxx Group
to (1) enter into any contract, etc., other than in the ordinary course of
business, or (2) declare or make any distribution of any kind to the
Shareholders without first obtaining the written consent of X.X. XXX.
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III. REPRESENTATIONS AND WARRANTIES OF X.X. XXX
X.X. XXX represents and warrants to the Shareholders, all of which
representations and warranties shall be true as of the Closing Date, and shall
survive the Closing Date for a period of three (3) years that :
1. Organization. X.X. XXX is a corporation duly organized and validly
existing and in good standing under the laws of the State of Nevada and has the
corporate powers to own its properties and carry on its business as now being
conducted and has authorized 50,000,000 capital stock consisting of 25,000,000
shares of Common Stock, $.001 par value per share, and 25,000,000 Preferred
stock also having a $.001 par value. 1,500,000 shares of Common Stock are issued
and outstanding as of the date hereof and there does not now exist nor will
there exist at the Closing Date any agreement or commitment to issue any such
securities. As of the Closing Date, there shall be 1,500,000 issued and
outstanding shares of Common Stock, $.001 par value and as of such date, there
shall be no other debt or equity securities of X.X. XXX outstanding and no
agreement or commitment by X.X. XXX to issue any such securities. True and
correct copies of X.X. XXX'x Articles of Incorporation and Bylaws as amended
through the date hereof, are attached hereto as Exhibit 5 and no amendment shall
occur through the Closing Date.
2. Authorization. X.X. XXX has the corporate power to execute and perform
this Agreement and to deliver the stock required to be delivered to the
Shareholders hereunder. The execution and delivery of this Agreement, and the
issuance of the stock required hereunder will have been duly authorized by all
necessary corporate actions and neither the execution and delivery of this
Agreement, the issuance of the stock, nor the performance, observance or
compliance with the terms and provisions of this Agreement will violate any
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provision of law, an order of any court or other government agency, the Articles
of Incorporation or Bylaws of X.X. XXX, or any indenture, agreement or other
instrument to which X.X. XXX is a party, or by which X.X. XXX is bound or by
which any of its property is bound.
3. Common Stock. The shares of X.X. XXX'x Common Stock deliverable
hereunder will upon delivery in accordance with the terms hereof, be duly
authorized, validly issued, fully paid and non-assessable, and free and clear of
any and all liens, claims or other encumbrances. Such shares will be restricted
and cannot be sold or exchanged except pursuant to registration or an exemption
therefrom.
4. Financials. The financial statements prepared by Xxxxxxxx, Xxxxxxx &
Associates, Ltd., Certified Public Accountants, for the year ending June 30,
1996, attached hereto as Exhibit 7 constitute true and correct statements as of
such date of the financial condition of X.X. XXX and of its assets, liabilities
and income prepared in accordance with generally accepted accounting principles
consistently applied. From June 30, 1996, and until the Closing Date, no
dividend or distribution of capital, surplus, or profit have been paid or
declared by X.X. XXX in redemption of any of its outstanding shares or
otherwise.
5. Material Liabilities. Except as previously described to the shareholders
in writing, X.X. XXX has no material liabilities of any nature except:
(a) Liabilities reflected or reserved for in the X.X. XXX financial
statements attached hereto;
(b) Liabilities incurred by X.X. XXX subsequent to the date of the
latest statement of financial condition submitted as part of the
X.X. XXX financial statements but incurred in the ordinary course
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of business and consistent with past practice and disclosed in
writing to the shareholders.
As used in this section, "material" means amounts of $5,000 or more.
6. Subsequent Actions. Since June 30, 0000, X.X. XXX has not engaged in any
transaction other than transactions in the normal course of the operations of
its business, except as specifically authorized by the Shareholders in writing.
Except as previously disclosed to the Shareholders in writing, there has not
been since June 30, 1996, nor shall there be through and including the Closing
Date any of the follow:
(a) Any event, condition or state of facts, which individually or in
the aggregate, has resulted in any known adverse material change
in condition (financial or otherwise) of the assets, liabilities,
prospects or business taken as a whole;
(b) Any declaration, setting aside payment, directly or indirectly,
or a distribution of assets in the nature of dividends or a
partial liquidation, pro rata or otherwise;
(c) Any damages, destruction, loss or other casualty, whether or not
covered by insurance, or any strike, work stoppage, slowdown, or
other labor trouble materially adversely affecting the business
or properties considered as a whole;
(d) Any material change in the method of record keeping employed;
(e) Any issuance or sale of any capital stock, bond debentures, notes
or other securities;
(f) Any discharge or satisfaction of any lien or encumbrance or the
payment of any obligation or liability, accrued, absolute or
contingent, in excess of $5,000 in the aggregate other than
liabilities shown in the latest X.X. XXX financial statements and
liabilities arising out of obligations incurred since June 30,
1996, in the ordinary course of business or disclosed in writing
to the Shareholders prior to the execution of this agreement.
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(g) Any amendment or termination or receipt of notice of any proposed
amendment or termination of any material contract, franchise,
agreement, plan lease, license or permit to which X.X. XXX is a
party or by which it may be bound which materially affects or
will affect its business as presently conducted.
(h) Any mortgage, pledge or subjection of any lien, charge, option or
other encumbrance upon any of the property or assets, tangible or
intangible of X.X. XXX.
(i) Any sale, assignment, transfer or agreement to sell, assign, or
transfer any of the assets of X.X. XXX, or the making of any
commitment or the incurring of any material liability, or the
cancellation or compromise or agreement to cancel or compromise
any of the debts or claims of either such entity;
(j) Any sale, assignment, transfer or agreement to sell, assign, or
transfer any trademark or trade name, or application therefore,
or computer software or hardware or other proprietary
information; or
(k) Any other material transaction or event by X.X. XXX other than in
the ordinary course of business.
7. Litigation X.X. XXX is not involved in any pending or threatened
litigation which would materially adversely affect its financial condition as
shown by its balance sheet as of June 30, 1996, attached hereto as Exhibit 7,
which has not been provided for on such balance sheet, or referred to in the
footnotes of such balance sheet or described in Exhibit 7 hereto.
8. Representations. No representation, warranty or covenant of X.X. XXX
made in this agreement or any certificate or other document furnished or to be
furnished by X.X. XXX pursuant to this agreement contains or will contain a
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material misstatement of fact, omit or will omit a material fact necessary to
make the statements contained therein or herein not misleading. No officer or
director of X.X. XXX has knowledge of any act or matter which may have a
material adverse effect upon X.X. XXX or its securities.
9. SEC Reports. The 1,500,000 issued and outstanding shares of X.X. XXX
were issued pursuant to an exemption from registration under Rule 504 of the
Securities Act of 1933.
10. Compliance with Securities Laws. In connection with its acquisition of
Quality, X.X. XXX also make the representations and warranties in Article V and
such are incorporated herein.
11. Contracts. During the period commencing with date hereof and ending
with the closing date, X.X. XXX will not enter into any such agreement, contract
or commitment, or be subject of any such approval, consent order, registration,
authorization, license permit, or the application without the prior written
consent of the Shareholders. Except as previously disclosed to the Shareholders
in writing, X.X. XXX is not a party to any of the following :
(a) Collectively bargaining agreements involving its employees;
(b) Bonus, deferred compensation, pension, profit sharing, stock option,
stock purchase, incentive or retirement plans or other employee
benefit arrangement;
(c) Employment agreement, contracts or commitments not terminable at will
without penalty, with or between X.X. XXX and a director, officer or
employee of X.X. XXX;
(d) Agreements of guaranty or indemnification to any person or entity;
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(e) Agreements, contracts or commitments containing any covenant limiting
the right of X.X. XXX to engage in any line of business or compete
with any person or entity;
(f) Agreements, contracts or commitments to which it is a party or by
which it is bound evidencing or providing for loans to others;
(g) Agreements, contracts or commitments relating to material future
payments;
(h) Agreements, contracts or commitments relating to a merger,
recapitalization, reorganization or the acquisition of assets or
capital stock of any business enterprise;
(i) Government or government agency or authority approvals, consents,
orders registrations, authorizations, licenses and permits, and
applications, with respect thereto which are material to its business
and operations;
(j) Agreements, contracts or commitments which may require consent by any
other person or entity in connection with the consummation of the
transactions contemplated hereby either to prevent a breach or to
continue the effectiveness thereof;
12. Board Approval. Subject to the terms and condition hereof, the board of
directors of X.X. XXX has duly approved this agreement and its execution and the
carrying out of the transactions contemplated herein and represents that
shareholder approval is not necessary in conjunction with the execution and
carrying out of the transactions contemplated herein, or has been obtained if
required.
13. Other negotiations. Prior to the Closing Date, X.X. XXX shall not
negotiate or directly or indirectly solicit or propose to enter into any
negotiations which have as their sole purpose the sale of the X.X. XXX common
stock or all or any material portion of the assets of, or make a tender offer,
merger or other acquisition proposal involving X.X. XXX, or its assets, with any
person or entity other than the Shareholders.
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14. Interim operations. X.X. XXX agree except as other wise consented to or
approved by the Shareholder in writing that prior to the closing date it will:
(a) Operate its business substantially as now operated and only in the
ordinary course and that it will use its best efforts to preserve its
relationships with persons having business dealings with it;
(b) Maintain all of its properties in customary repair, order and
condition, reasonable wear and tear excepted;
(c) Maintain its books, accounts, and records in the usual, regular and
ordinary manner and in accordance with generally accepted accounting
principles of the United States applied on a consistent basis;
(d) Timely file all federal, state, local tax returns and reports
including without limitation, income, excise, ad valorem, and other
taxes with respect to their business and properties, and to pay all
taxes or assessments, except taxes being contested in good faith by
appropriate proceedings, as they become due;
(e) Maintain insurance upon its properties in accordance with current
practice;
(f) Comply in all material respect with all laws, regulations rules
ordinances applicable to it and to the conduct of its business; and
(g) Comply with any contracts, agreements, commitments, mortgages and
similar instruments to which it is a party.
15. Brokers/Finder's fees. X.X. XXX has not retained or otherwise utilized
the services of any broker or finder in connection with the transaction
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contemplated by this agreement, nor has done anything to give rise to any valid
claim(s) against the Shareholders for a brokerage commission, finder's fee or
similar charge in connection with this transaction.
IV. CONDITIONS TO THE OBLIGATIONS OF X.X. XXX
The obligations of X.X. XXX hereunder shall be subject to the conditions
that:
1. Error or Misstatement. X.X. XXX shall not have discovered any material
error or misstatement in any of the representations and warranties made by the
Shareholders and all the terms and conditions of this Agreement to be performed
and complied with by the Shareholders on or prior to the Closing Date shall have
been performed and complied with;
2. Legal Opinions. X.X. XXX shall have received the opinion of Messrs.
Vanderkam and Xxxxxxx, legal counsel for Quality and each member of the Hang
Xxxx Group to the effect that (a) each is duly organized and validly existing
under the laws of the jurisdiction of its incorporation and has the power and
authority to own its properties and to carry on its respective business wherever
the same may be located and operated as of the Closing Date, and (b) the
Agreement has been duly executed, and when delivered by the Shareholders is
enforceable in accordance with its terms, subject to the general principles of
equity and the valid exercise of police power. In rendering such opinion,
Vanderkam and Xxxxxxx may rely on opinions of counsel licensed to practice law
in applicable jurisdictions where Vanderkam and Xxxxxxx is not so licensed.
V. CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS
The obligations of the Shareholders hereunder are subject to the conditions
that:
1. Representations. All representations or warranties of X.X. XXX shall be
true and correct as of the date made and as of the Closing Date, and all other
terms and conditions of this agreement to performed and complied with by S.W.
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XXX on or prior to the Closing Date shall have been performed and complied by
the Closing Date;
2. Changes. There shall have been no substantial adverse changes in the
conditions, financial, business or otherwise of X.X. XXX from June 30, 1996 to
the Closing Date, and between such dates the business and assets of X.X. XXX
shall not have been materially adversely affected as the result of any fire,
explosion, earthquake, flood, accident, strike, lockout, combination or workmen,
environmental concerns, taking over of any such assets by any governmental
authorities, riot, activities or armed forces, or acts of God or of the public
enemies.
3. Legal Opinion. The Shareholders shall have received the opinion of
_____________, counsel for X.X. XXX, to the effect that (a) X.X. XXX is a
corporation duly organized and validly existing under the laws of the State of
Nevada, and has the power to own and operate its properties wherever the same
shall be located as of the Closing Date; (b) the execution delivery and
performance of X.X. XXX has been duly authorized by all necessary corporate
action and such constitutes a legal, valid and binding obligation of X.X. XXX
and is enforceable in accordance with its terms; (c) the stock to be delivered
to the Shareholders pursuant to the terms of this Agreement has been validly
issued, is fully paid and non-assessable; and (d) the exchange of the stock
herein contemplated does not require the registration of the X.X. XXX'x Common
Stock pursuant to any Federal law dealing with the issuance, sale, transfer,
and/or exchange of corporate securities.
V. CLOSING
1. Closing Date. The closing shall take place at 10:00 A.M. Central
Standard Time, on December ___, 1996, at the offices of Vanderkam & Xxxxxxx,
Houston, Texas, or at such other time and place as the parties hereto shall
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agree upon. The Agreement shall be effective as of the close of business on the
Closing Date.
2. Actions at Closing. At the closing, X.X. XXX and the Shareholders will
each deliver, or cause to be delivered to the other, the securities to be
exchanged in accordance with Section 1 of this Agreement and each party shall
pay any and all Federal and State taxes required to be paid in connection with
the issuance and the delivery of such. In addition, the following transactions
will take place.
(a) X.X. XXX will deliver to the Shareholders:
(i) Duly certified copies all corporate resolutions and other
corporate proceedings taken by X.X. XXX to authorize the
execution, delivery and performance of this Agreement.
(ii) The opinion of ____________, counsel for X.X. XXX, as provided in
Article IV of this Agreement.
(iii)A Certificate executed by a principal officer of X.X. XXX
attesting to the fact that all of the representations and
warranties of X.X. XXX are true and correct as of the Closing
Date, and that all of the conditions to the obligations of the
Shareholders to performed by X.X. XXX have been performed as of
the Closing Date.
(iv) A Certificate of Incumbency and Signatures of the officers of
X.X. XXX dated as of the date of this Agreement.
(v) The written resignations of all directors and such officers and
auditors of X.X. XXX as are requested by the Shareholders, which
resignations shall contain an acknowledgment from each resignee
that they have no claims against X.X. XXX for loss of office or
otherwise.
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(vi) All registration certificates, statutory books, minutes books and
common seals of X.X. XXX, all accounts books and all documents of
title relating to X.X. XXX'x assets (unless already in the
possession of the Shareholders) as are required by the
Shareholders.
(vii)Stock certificates in an aggregate amount of 10,500,000 of X.X.
XXX common stock, $.001 par value and stock Certificates in an
aggregate amount of 100,000 shares of Class A preferred Stock, as
set forth in Article I and as designated in the Shareholder
Ownership Schedule.
(b) The Shareholders will deliver to X.X. XXX:
(i) The opinion of Vanderkam and Xxxxxxx, counsel for the
Shareholders, as provided for in Article IV hereof.
(ii) A certificate of corporate good standing from the jurisdiction of
incorporation as a recent date for Quality and each other member
of the Hang Xxxx Group.
(iii)A certificate of the Shareholders signed by each Shareholder that
each of representations and warranties of the Shareholders are
true and correct as of the Closing Date and that all of the
conditions to the obligations of X.X. XXX to be performed by the
Shareholders have been performed as of the Closing Date.
(iv) All of the outstanding common share certificates of Quality, duly
endorsed to X.X. XXX.
VI. COMPLIANCE WITH SECURITIES LAWS
1. Shareholder representations. Each Shareholder acknowledges that the
shares of X.X. XXX to be delivered to each Shareholder pursuant to this
agreement have not been registered under the Securities Act of 1993 as amended,
referred to in this agreement as the "Securities Act," or the laws of any other
jurisdiction, and that therefore the stock is not fully transferable except as
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permitted under various exemptions, if any contained in the act and the rules of
the Securities and Exchange Commission interpreting the act. The provisions
contained in this paragraph are intended to ensure compliance with the
Securities Act. Under US law, X.X. XXX Common Stock cannot be sold or
transferred by the Shareholder unless they are subsequently registered under
applicable law or an exemption from registration is available. X.X. XXX is not
required to register or assist in the registration of the X.X. XXX Common Stock
or to make any exemption from registration available. Each Shareholder
represents and warrants to X.X. XXX that:
(a) the Shareholder is acquiring the shares of X.X. XXX common stock under
this agreement for the Shareholder's own account for investment, and
not for the purpose of resale or any other distribution of such
shares.
(b) the Shareholder has no present intention of disposing of all or any
part of such shares at any particular time, for any particular price
or on the happening of any particular circumstances.
(c) the Shareholder has such knowledge and experience in financial and
business matters that the Shareholder is capable of evaluating the
merits and risks of an investment in X.X. XXX.
(d) the Shareholder acknowledges that X.X. XXX is relying on the truth and
accuracy of these warranties and representations in issuing the shares
without first registering the shares under the Securities Act.
(e) none of the shares of X.X. XXX capital stock to be issued to the
Shareholder pursuant to this agreement, will be offered, sold,
assigned, pledged, transferred, or otherwise disposed of except after
full compliance with all of the applicable provisions of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission under the Securities Act.
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(f) the Shareholder agrees not to sell or otherwise dispose of any of the
shares of X.X. XXX'x common stock received pursuant to this agreement
unless the Shareholder: (i) has delivered to X.X. XXX a written legal
opinion in form and substance satisfactory to counsel for X.X. XXX to
the effect that the disposition is permissible under the terms of the
Securities Act and regulations interpreting the act; (ii) has complied
with the registration and prospectus requirements of the Securities
Act relating to such disposition; or (iii) has presented X.X. XXX
satisfactory evidence that such a disposition is exempt from
registration under the act.
(g) the Shareholder understands, and agrees that X.X. XXX shall place a
stop transfer order against transfers of shares until one of the
conditions set forth in this paragraph have been met.
(h) the certificates evidencing the shares that the Shareholder will
receive under this agreement will contain the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND HAVE BEEN TAKEN FOR INVESTMENT, THE SECURITIES MAY
NOT BE SOLD OR OFFERED FOR SALE UNLESS A REGISTRATION STATEMENT UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED IS IN EFFECT FOR THE SECURITIES, OR
AN EXEMPTION FROM REGISTRATION REQUIREMENTS OF SUCH ACT IS IN FACT APPLICABLE TO
SUCH OFFER OR SALE, AND SUCH EXEMPTION IS EVIDENCED BY AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER.
2. Representations of X.X. XXX. X.X. XXX acknowledges that the shares of
Quality to be delivered pursuant to this agreement have not been registered
under the Securities Act or the laws of any other jurisdiction, and that
therefore the stock is not fully transferable except as permitted under various
19
exemptions, if any contained in the act and the rules of the Securities and
Exchange Commission interpreting the act. The provisions contained in this
paragraph are intended to ensure compliance with the Securities Act. Under US
law, Quality Common Stock cannot be sold or transferred by X.X. XXX unless it is
subsequently registered under applicable law or an exemption from registration
is available. Quality is not required to register or assist in the registration
of the Quality Common Stock or to make any exemption from registration
available. X.X. XXX represents and warrants to the Shareholders of Quality that:
(a) it is acquiring the shares of Quality common stock under this
agreement for its own account for investment, and not for the purpose
of resale or any other distribution of such shares.
(b) it has no present intention of disposing of all or any part of such
shares at any particular time, for any particular price or on the
happening of any particular circumstances.
(c) it has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment
in Quality.
(d) it acknowledge that Quality and the Shareholders are relying on the
truth and accuracy of these warranties and representations in issuing
the shares without first registering the shares under the Securities
Act.
(e) none of the shares of Quality capital stock to be issued to X.X. XXX
pursuant to this agreement, will be offered, sold, assigned, pledged,
transferred, or otherwise disposed of except after full compliance
with all of the applicable provisions of the Securities Act and the
rules and regulations of the Securities and Exchange Commission under
the Securities Act.
20
(f) it agrees not to sell or otherwise dispose of any of the shares of
Quality common stock received pursuant to this agreement unless (i) it
has delivered to Quality a written legal opinion in form and substance
satisfactory to counsel for Quality to the effect that the disposition
is permissible under the terms of the Securities Act and regulations
interpreting the act; (ii) it has complied with the registration and
prospectus requirements of the Securities Act relating to such
disposition; or (ii) it has presented Quality satisfactory evidence
that such a disposition is exempt from registration under the act.
(g) it understands and agrees that Quality will place a stop transfer
order against transfers of shares until one of the conditions set
forth in this paragraph has been met.
(h) the certificates, evidencing the shares that X.X. XXX will receive
under this agreement will contain the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND HAVE BEEN TAKEN FOR INVESTMENT. THE SECURITIES MAY
NOT BE SOLD OR OFFERED FOR SALE UNLESS A REGISTRATION STATEMENT UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED IS IN EFFECT FOR THE SECURITIES, OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS IN FACT
APPLICABLE TO SUCH OFFER OR SALE, AND SUCH EXEMPTION IS EVIDENCED BY AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER.
VII. DISSOLUTION OF THE BOARD OF DIRECTORS
Upon completion of the acquisition, the existing Board of Directors of X.X.
XXX will be dissolved or resign and a new board shall be constituted by Quality.
VIII. ACCESS TOT HE PROPERTIES AND BOOKS
The Shareholders hereby grant to X.X. XXX and its duly authorized
representatives during normal business hours between the date hereof and the
Closing Date, the right of full and complete access to the properties of Quality
21
and each member of the Hang Xxxx Group, full opportunity to examine their books
and records. A similar access to X.X. XXX'x properties, books and records in
granted to the Shareholders, and their duly authorized representatives.
IX. CONFIDENTIAL MATTERS
1. Covenants. X.X. XXX acknowledges and agrees that during, and as a result
of any discussions furnishing of documents, their own investigation and
otherwise, that it will have access to certain confidential information (as
hereinafter defined.) Therefore, X.X. XXX agrees for itself and for each of its
officers, directors, employees agents, representatives and affiliates:
(a) To keep secret and confidential and not to use directly or indirectly
for its own benefit or the benefit of others or to the detriment of
the Shareholders or Quality or any other members of the Hang Xxxx
Group, each and every item of the Confidential Information, and to use
the Confidential Information solely for the purpose of evaluating the
transactions described herein;
(b) To restrict access to the Confidential Information to those of its
officers, directors, employees, agents, representatives, consultants,
financial advisors, and potential investors who, in the performance of
its or their duties, reasonably require access to the Confidential
Information;
(c) To the best of its ability ensure that its officers, directors,
employees, agents, representatives, consultants, financial advisors,
and potential investors and potential lenders who obtain access to the
Confidential Information maintain the secrecy and confidentiality
thereof and do not use directly or indirectly any such Confidential
Information for its or their own benefit or the benefit of others or
disclose any of the Confidential Information to any person or entity
not entitled to the same pursuant to the terms hereof or any written
consent of the Shareholders and Quality; and
22
(d) To use the Confidential Information for no other purposes than those
specifically authorized hereunder.
2. Definition. For purposes of this agreement "Confidential Information"
shall include but not limited to (a) all subsequent, prior and derivative drafts
hereof, and all information contained or described in the exhibits and schedules
attached hereto; (b) the identity of the Shareholders or the members of the Hang
Xxxx Group; (c) the nature, structure and terms of the transactions described
herein and contemplated hereby and any arrangement related thereto; (d) all
information pertaining to or related to, or arising out of or in connection
with, any of the foregoing, regardless of the source of such information,
projections, financial margins, or any other information relating to the
transactions described herein and the Shareholders or Quality or any other
member of the Hang Xxxx Group including but not limited to customer lists, trade
secrets, computer programs, products being developed, marketed and distributed
by the Shareholders or Quality or any member of the Hang Xxxx Group engineering,
technical and scientific data, tapes, designs, skills, procedures, formulations,
methods, drawings, facilities, information and know-how, and other confidential
information regarding the Shareholders or Quality or any other member of the
Hang Xxxx Group.
3. Dissemination. X.X. XXX further agree that they will deliver to the
Shareholders and their counsel for their approval all proposed press releases,
reports or forms to be filed with the Securities and Exchange Commission and
other statements disclosures or reports, regarding the transactions or matters
described herein, contemplated hereby or related hereto.
23
4. Survival. The provisions of this article and the agreements of X.X. XXX
as set forth in this Article shall apply whether or not the Shareholders
actually acquire controlling interest of X.X. XXX and accordingly, shall
continue to apply after termination, of the discussions regarding these
acquisitions for whatever reasons and shall have no termination or expiration
date.
5. Injunctive Relief. X.X. XXX agrees that disclosure of any Confidential
Information would cause immediate and irreparable harm to the Shareholders,
Quality and any other member of the Hang Xxxx Group for which damages would not
constitute adequate compensation and that in the event that X.X. XXX has violate
or is about to violate any provision of this agreement, either the Shareholders,
Quality, or any other member of the Hang Xxxx Group may bring an action for and
obtain injunctive relief in any court having jurisdiction over X.X. XXX or their
assets without providing a bond or other security. The Shareholders and/or
Quality, or any other member of the Hang Xxxx Group may recover their attorneys
fees and other costs of successfully enforcing this agreement or their rights
hereunder or in recovering damages for the breach thereof.
X. COSTS AND EXPENSES
Each party hereto shall pay its own expenses and costs incident to the
preparation of this Agreement and to the consummation of the transaction
contemplated herein.
XI. MISCELLANEOUS
1. Choice of Law. This Agreement shall be controlled, construed and
enforced in accordance with the laws of the State of Nevada.
2. Assignment. This Agreement shall not be assignable by either party
without the prior written consent of the other.
24
3. Headings. All paragraph headings herein are inserted for the parties
convenience in identifying the provisions of this Agreement, and shall not
affect the construction or interpretation of the provisions of this Agreement.
4. Entire Agreement. This Agreement sets forth the entire understanding
between the parties, there being no terms, conditions, warranties or
representations other than those contained herein, and no amendments hereto
shall be valid unless made in writing and signed by the parties hereto.
5. Binding Successors. This Agreement shall be binding upon and shall inure
to the benefit of the heirs, executors, administrators and assigns of all
parties.
6. Notices. All notices, requests, instructions, or other documents to be
given hereunder shall be in writing and sent by registered mail:
If to Shareholders: Xxx Xxx Wing
Chan Yam Fai, Xxxx
Xxxx 000-000X, 0xx Xxxxx
Xx Xxxx Industrial Building
No. 1 Xxx Xxxx Street East
Xxxx Xxx, Kowloon, Hong Kong
If to X.X. XXX X.X. Xxx, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
with copies to : Messrs. Vanderkam & Xxxxxxx
000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
7. Signatures. For purposes of this Agreement only, facsimile signatures
shall be considered original signatures.
8. Multiple Counterparts. This agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be original, and all of which taken
together shall constitute one and the same agreement.
25
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date and year first above written.
X.X. Xxx, Inc.
--------------------------
By:
-----------------------
President
SHAREHOLDERS OF
QUALITY PRINCE LTD.
/s/ illegible
----------------------------
Xxx Xxx Wing
/s/ illegible
----------------------------
Chan Yam Fai, Xxxx
26
Country:
-----------------
On December ____, 1996, before me the undersigned authority personally appeared
Xxx Xxx Wing who, after being sworn, on oath did state that he was executing
this agreement upon such authority, and for the considerations therein stated.
--------------------------
Notary Public
[SEAL]
Country:
-----------------
On December ____, 1996, before me the undersigned authority personally appeared
Chan Yam Fai, Jane, who, after being sworn, on oath did state that she was
executing this agreement upon such authority, and for the considerations therein
stated.
--------------------------
Notary Public
[SEAL]
STATE OF
COUNTRY OF
On December ____, 1996 personally appeared before me, a Notary Public,
________________, who acknowledged that he executed the above document, and that
he is the ____________ of X.X. Xxx Inc., duly authorized to execute this
document on its behalf.
--------------------------
Notary Public
[SEAL]
27
