SHARE EXCHANGE AGREEMENT
Exhibit
2.1
This
SHARE EXCHANGE AGREEMENT (this “Agreement”), dated as of February 7, 2007, is by
and among United National Film Corporation, a Nevada corporation (the “Parent”),
Universe Faith Group Limited, a British Virgin Islands company (the “Company”),
and Fame Good International Limited, a British Virgin Islands company and the
sole stockholder of the Company (the “Stockholder”).
BACKGROUND
The
Company has 10,000 issued shares (the “Company Stock”), all of which are held
legally and beneficially by the Stockholder. The Stockholder desires to transfer
all of its shares of Company Stock to Parent in exchange for 17,912,446 newly
issued shares (the “Shares”) of common stock, par value $0.0001 per share, of
Parent (the “Parent Stock”).
The
exchange of Company Stock for Parent Stock is intended to constitute a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986 (the “Code”), as amended or such other tax free
reorganization exemptions that may be available under the Code.
The
Board
of Directors of Parent and of the Company have determined that it is desirable
to effect this plan of reorganization and share exchange.
AGREEMENT
NOW
THEREFORE, the parties agree as follows:
ARTICLE
I
EXCHANGE
OF SHARES
SECTION
1.01. Exchange
by Stockholder.
At the
Closing (as defined in Section 1.02), the Stockholder shall sell, transfer,
convey, assign and deliver to Parent 100% of the Company Stock held by it,
free
and clear of all Liens (as defined below), in exchange for the issuance to
it of
the Shares of Parent Stock.
SECTION
1.02. Closing.
The
closing (the “Closing”) of the transactions contemplated hereby (the
“Transactions”) shall take place on the date hereof (the “Closing
Date”).
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF STOCKHOLDER
The
Stockholder hereby represents and warrants to Parent as follows:
SECTION
2.01. Good
Title.
The
Stockholder is the legal and beneficial owner, and has good title to its Company
Stock, with the right and authority to sell and deliver such Company Stock.
Upon
delivery of a duly executed share transfer form and any certificate or
certificates in respect of the Company Stock, and following approval of the
transfer of Company Stock by the board of directors of the Company and upon
registering of Parent as the new owner of such Company Stock in the share
register of the Company, Parent will receive good title to such Company Stock,
free and clear of all liens, security interests, pledges, equities and claims
of
any kind, voting trusts, stockholder agreements and other encumbrances
(collectively, “Liens”).
SECTION
2.02. Organization.
The
Stockholder is duly incorporated and validly existing as a company under the
laws of the British Virgin Islands.
SECTION
2.03. Power
and Authority.
The
Stockholder has the legal power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. All acts required to be
taken by the Stockholder to enter into this Agreement and to carry out the
Transactions have been properly taken. This Agreement constitutes a legal,
valid
and binding obligation of the Stockholder, enforceable against such Stockholder
in accordance with the terms hereof.
SECTION
2.04. No
Conflicts.
The
execution and delivery of this Agreement by the Stockholder and the performance
by the Stockholder of its obligations hereunder in accordance with the terms
hereof: (i) will not require the consent of any third party or any federal,
state, local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (“Governmental Entity”) under any statutes,
laws, ordinances, rules, regulations, orders, writs, injunctions, judgments,
or
decrees (collectively, “Laws”), except for such consents received prior to the
date hereof; (ii) will not violate any Laws applicable to such Stockholder
and
(iii) will not violate or breach any contractual obligation to which such
Stockholder is a party.
SECTION
2.05. No
Finder’s Fee.
With
the exception of fees owed to 1st
BridgeHouse Securities, LLC, the Stockholder has not created any obligation
for
any finder’s, investment banker’s or broker’s fee in connection with the
Transactions.
SECTION
2.06. Purchase
Entirely for Own Account.
The
Parent Stock proposed to be acquired by the Stockholder hereunder will be
acquired for investment for its own account, and not with a view to the resale
or distribution of any part thereof, and the Stockholder has no present
intention of selling or otherwise distributing the Parent Stock, except in
compliance with applicable securities laws.
SECTION
2.07. Available
Information.
The
Stockholder has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of investment in the
Parent.
SECTION
2.08. Non-Registration.
The
Stockholder understands that the Parent Stock has not been registered under
the
Securities Act of 1933, as amended (the “Securities Act”) and, if issued in
accordance with the provisions of this Agreement, will be issued by reason
of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Stockholder’s representations as expressed
herein.
SECTION
2.09. Restricted
Securities.
The
Stockholder understands that the Parent Stock is characterized as “restricted
securities” under the Securities Act inasmuch as this Agreement contemplates
that, if acquired by the Stockholder pursuant hereto, the Parent Stock would
be
acquired in a transaction not involving a public offering. The Stockholder
further acknowledges that if the Parent Stock is issued to the Stockholder
in
accordance with the provisions of this Agreement, such Parent Stock may not
be
resold without registration under the Securities Act or the existence of an
exemption therefrom. The Stockholder represents that it is familiar with Rule
144 promulgated under the Securities Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities
Act.
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SECTION
2.10. Legends.
It is
understood that the Parent Stock will bear the following legend:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) OR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS
FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO THE COMPANY AN
OPINION OF COUNSEL (WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY)
CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION.
The
Parent Stock will also bear any legend required by the “blue sky” laws of any
state to the extent such laws are applicable to the securities represented
by
the certificate so legended.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Parent that, except as set forth in the
Company Disclosure Letter (as defined below) (and regardless of whether or
not
the Company Disclosure Letter is referenced below with respect to any particular
representation or warranty), dated as of the date of this Agreement, from the
Company to the Parent, which Company Disclosure Letter incorporates by reference
all of the disclosure contained in that certain Due Diligence Report, dated
December 15, 2006, issued by Global Law Firm and delivered to Parent, relating
to the Company’s subsidiaries (the “Company Disclosure Letter”):
SECTION
3.01. Organization,
Standing and Power.
Each of
the Company and its subsidiaries (the “Company Subsidiaries”) is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the corporate power and authority and possesses
all governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a material adverse effect on the Company, a material adverse
effect on the ability of the Company to perform its obligations under this
Agreement or on the ability of the Company to consummate the Transactions (a
“Company Material Adverse Effect”). The Company and each Company Subsidiary is
duly qualified to do business in each jurisdiction where the nature of its
business or its ownership or leasing of its properties make such qualification
necessary except where the failure to so qualify would not reasonably be
expected to have a Company Material Adverse Effect. The Company has delivered
to
the Parent true and complete copies of the memorandum and articles of
association of the Company and such other constituent instruments of the Company
as may exist, each as amended to the date of this Agreement (as so amended,
the
“Company Constituent Instruments”), and the comparable charter, organizational
documents and other constituent instruments of each Company Subsidiary, in
each
case as amended through the date of this Agreement.
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SECTION
3.02. Company
Subsidiaries; Equity Interests.
(a) The
Company Disclosure Letter lists each Company Subsidiary and its jurisdiction
of
organization. Except as specified in the Company Disclosure Letter, all the
outstanding shares of capital stock or equity investments of each Company
Subsidiary have been validly issued and are fully paid and nonassessable and
are, as of the date of this Agreement, owned by the Company, by another Company
Subsidiary or by the Company and another Company Subsidiary, free and clear
of
all Liens.
(b) Except
for its interests in the Company Subsidiaries, the Company does not as of the
date of this Agreement own, directly or indirectly, any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any person.
SECTION
3.03. Capital
Structure.
The
authorized share capital of the Company consists of 50,000 ordinary shares,
of
which 10,000 ordinary shares are issued and outstanding, all of which are held
legally and beneficially by the Stockholder. Except as set forth above, no
shares or other voting securities of the Company are issued, reserved for
issuance or outstanding. Except as specified in the Company Disclosure Letter,
the Company is the sole legal and beneficial owner of all of the issued shares
of each Company Subsidiary, either directly or indirectly. All outstanding
shares of the Company and each Company Subsidiary are duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued in violation
of any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the applicable
corporate laws of the British Virgin Islands, the Company Constituent
Instruments or any Contract (as defined in Section 3.05) to which the Company
is
a party or otherwise bound. Except as set forth in this section 3.03 and in
the
Company Disclosure Letter, there are not any bonds, debentures, notes or other
indebtedness of the Company or any Company Subsidiary having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which holders of Company Stock or the common stock of any
Company Subsidiary may vote (“Voting Company Debt”). Except as set forth above,
as of the date of this Agreement, there are not any options, warrants, rights,
convertible or exchangeable securities, “phantom” stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which the Company or any Company
Subsidiary is a party or by which any of them is bound (i) obligating the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, the Company or any
Company Subsidiary or any Voting Company Debt, (ii) obligating the Company
or
any Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, Contract, arrangement or undertaking
or (iii) that give any person the right to receive any economic benefit or
right
similar to or derived from the economic benefits and rights occurring to holders
of the shares of the Company or of any Company Subsidiary. Except as set forth
in the Company Disclosure Letter, as of the date of this Agreement, there are
not any outstanding contractual obligations of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock of Parent.
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SECTION
3.04. Authority;
Execution and Delivery; Enforceability.
The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the Transactions. The execution and delivery
by
the Company of this Agreement and the consummation by the Company of the
Transactions have been duly authorized and approved by the Board of Directors
of
the Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the Transactions. When executed and
delivered, this Agreement will be enforceable against the Company in accordance
with its terms.
SECTION
3.05. No
Conflicts; Consents.
(a) Except
as
set forth in the Company Disclosure Letter, the execution and delivery by the
Company of this Agreement does not, and the consummation of the Transactions
and
compliance with the terms hereof and thereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Company
or any Company Subsidiary under, any provision of (i) the Company Constituent
Instruments or the comparable charter or organizational documents of any Company
Subsidiary, (ii) any material contract, lease, license, indenture, note, bond,
agreement, permit, concession, franchise or other instrument (a “Contract”) to
which the Company or any Company Subsidiary is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 3.05(b), any material judgment, order
or
decree (“Judgment”) or material Law applicable to the Company or any Company
Subsidiary or their respective properties or assets, other than, in the case
of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
(b) Except
as
set forth in the Company Disclosure Letter and except for required filings
with
the Securities and Exchange Commission (the “SEC”) and applicable “Blue Sky” or
state securities commissions and foreign exchange registration of the
shareholders of the Stockholder in the People’s Republic of China (the “PRC”)
with respect to the Transactions, no material consent, approval, license,
permit, order or authorization (“Consent”) of, or registration, declaration or
filing with, or permit from, any Governmental Entity is required to be obtained
or made by or with respect to the Company or any Company Subsidiary in
connection with the execution, delivery and performance of this Agreement or
the
consummation of the Transactions.
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SECTION
3.06. Taxes.
(a) Each
of
the Company and each Company Subsidiary has timely filed, or has caused to
be
timely filed on its behalf, all Tax Returns required to be filed by it, and
all
such Tax Returns are true, complete and accurate, except to the extent any
failure to file or any inaccuracies in any filed Tax Returns, individually
or in
the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect. All Taxes shown to be due on such Tax Returns,
or otherwise owed, have been timely paid, except to the extent that any failure
to pay, individually or in the aggregate, has not had and would not reasonably
be expected to have a Company Material Adverse Effect. There are no unpaid
taxes
in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim.
(b) The
Company Financial Statements (as defined in Section 3.15) reflect an adequate
reserve for all Taxes payable by the Company and the Company Subsidiaries (in
addition to any reserve for deferred Taxes to reflect timing differences between
book and Tax items) for all taxable periods and portions thereof through the
date of such financial statements. No deficiency with respect to any Taxes
has
been proposed, asserted or assessed against the Company or any Company
Subsidiary, and no requests for waivers of the time to assess any such Taxes
are
pending, except to the extent any such deficiency or request for waiver,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect.
(c) For
purposes of this Agreement:
“Taxes”
includes all forms of taxation, whenever created or imposed, and whether imposed
by a local, municipal, governmental, state, foreign, federal or other
Governmental Entity, or in connection with any agreement with respect to Taxes,
including all interest, penalties and additions imposed with respect to such
amounts.
“Tax
Return” means all federal, state, local, provincial and foreign Tax returns,
declarations, statements, reports, schedules, forms and information returns
and
any amended Tax return relating to Taxes.
SECTION
3.07. Benefit
Plans.
(a) Except
as
set forth in the Company Disclosure Letter, neither the Company nor any Company
Subsidiary has or maintains any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding) providing benefits
to any current or former employee, officer or director of the Company or any
Company Subsidiary (collectively, “Company Benefit Plans”). Except as set forth
in the Company Disclosure Letter, as of the date of this Agreement there are
not
any severance or termination agreements or arrangements between the Company
or
any Company Subsidiary and any current or former employee, officer or director
of the Company or any Company Subsidiary, nor does the Company or any Company
Subsidiary have any general severance plan or policy.
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(b) Since
December 31, 2005, there has not been any adoption or amendment in any material
respect by the Company or any Company Subsidiary of any Company Benefit
Plan.
SECTION
3.08. Litigation.
There
is no action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting the Company, any subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local
or
foreign), stock market, stock exchange or trading facility (“Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of
this
Agreement or (ii) could, if there were an unfavorable decision, individually
or
in the aggregate, have or reasonably be expected to result in a Company Material
Adverse Effect. Neither the Company nor any Company Subsidiary, nor any director
or officer thereof (in his or her capacity as such), is or has been the subject
of any Action involving a claim or violation of or liability under federal
or
state securities laws or a claim of breach of fiduciary duty.
SECTION
3.09. Compliance
with Applicable Laws.
The
Company and the Company Subsidiaries are in compliance with all applicable
Laws,
including those relating to occupational health and safety and the environment,
except for instances of noncompliance that, individually and in the aggregate,
have not had and would not reasonably be expected to have a Company Material
Adverse Effect. Except as set forth in the Company Disclosure Letter, the
Company has not received any written communication during the past two years
from a Governmental Entity that alleges that the Company is not in compliance
in
any material respect with any applicable Law. This Section 3.09 does not relate
to matters with respect to Taxes, which are the subject of Section
3.06.
SECTION
3.10. Brokers;
Schedule of Fees and Expenses.
Other
than 1st
BridgeHouse Securities, LLC, no broker, investment banker, financial advisor
or
other person is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company.
SECTION
3.11. Contracts.
Except
as disclosed in the Company Disclosure Letter, there are no Contracts that
are
material to the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company and its
subsidiaries taken as a whole. Neither the Company nor any Company Subsidiary
is
in violation of or in default under (nor does there exist any condition which
upon the passage of time or the giving of notice would cause such a violation
of
or default under) any Contract to which it is a party or by which it or any
of
its properties or assets is bound, except for violations or defaults that would
not, individually or in the aggregate, reasonably be expected to result in
a
Company Material Adverse Effect.
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SECTION
3.12. Title
to Properties.
Except
as set forth in the Company Disclosure Letter, the Company and the Company
Subsidiaries do not own any real property. Each of the Company and the Company
Subsidiaries has sufficient title to, or valid leasehold interests in, all
of
its properties and assets used in the conduct of its businesses. All such assets
and properties, other than assets and properties in which the Company or any
of
the Company Subsidiaries has leasehold interests, are free and clear of all
Liens other than those set forth in the Company Disclosure Letter and except
for
Liens that, in the aggregate, do not and will not materially interfere with
the
ability of the Company and the Company Subsidiaries to conduct business as
currently conducted.
SECTION
3.13. Intellectual
Property.
The
Company and the Company Subsidiaries own, or are validly licensed or otherwise
have the right to use, all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, service marks, service xxxx rights, copyrights
and other proprietary intellectual property rights and computer programs
(collectively, “Intellectual Property Rights”) which are material to the conduct
of the business of the Company and the Company Subsidiaries taken as a whole.
The Company Disclosure Letter sets forth a description of all Intellectual
Property Rights which are material to the conduct of the business of the Company
and the Company Subsidiaries taken as a whole. There are no claims pending
or,
to the knowledge of the Company, threatened that the Company or any of the
Company Subsidiaries is infringing or otherwise adversely affecting the rights
of any person with regard to any Intellectual Property Right. To the knowledge
of the Company, no person is infringing the rights of the Company or any of
the
Company Subsidiaries with respect to any Intellectual Property
Right.
SECTION
3.14. Labor
Matters.
There
are no collective bargaining or other labor union agreements to which the
Company or any of the Company Subsidiaries is a party or by which any of them
is
bound. No material labor dispute exists or, to the knowledge of the Company,
is
imminent with respect to any of the employees of the Company.
SECTION
3.15. Financial
Statements.
The
Company has delivered to Parent (i) audited financial statements for Wuhan
Blower Co., Ltd., a wholly owned subsidiary of the Company, for the fiscal
years
ended December 31, 2005 and 2004 and (ii) unaudited financial statements for
the
Company for the fiscal quarter ended September 30, 2006 (collectively, the
“Company Financial Statements”). The Company Financial Statements have been
prepared in accordance with U.S. generally accepted accounting principles (GAAP)
applied on a consistent basis throughout the periods indicated. The Company
Financial Statements fairly present in all material respects the financial
condition and operating results of the Company and the Company Subsidiaries,
as
of the dates, and for the periods, indicated therein. Neither the Company nor
any Company Subsidiary has any material liabilities or obligations, contingent
or otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to September 30, 2006, and (ii) obligations under contracts
and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in the Company
Financial Statements, which, in both cases, individually and in the aggregate
would not be reasonably expected to result in a Company Material Adverse
Effect.
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SECTION
3.16. Insurance.
Except
as set forth in the Company Disclosure Letter, the Company and the Company
Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary
in the businesses in which the Company and the Company Subsidiaries are engaged
and in the geographic areas where they engage in such businesses. The Company
has no reason to believe that it will not be able to renew its and its
subsidiaries’ existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to continue
its business on terms consistent with market for the Company’s and such
subsidiaries’ respective lines of business.
SECTION
3.17. Transactions
With Affiliates and Employees.
Except
as set forth in the Company Disclosure Letter and the Company Financial
Statements, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently
a
party to any transaction with the Company or any Company Subsidiary (other
than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to
the
knowledge of the Company, any entity in which any officer, director, or any
such
employee has a substantial interest or is an officer, director, trustee or
partner.
SECTION
3.18. Disclosure.
To the
best of the Company’s knowledge, all disclosure provided to Parent regarding the
Company and the Company Subsidiaries, their business and the transactions
contemplated hereby, furnished by or on behalf of the Company (including the
Company’s representations and warranties set forth in this Agreement) are true
and correct and do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
SECTION
3.19. Absence
of Certain Changes or Events.
Except
as disclosed in the Company Disclosure Letter, since September 30, 2006, the
Company has conducted its business only in the ordinary course, and during
such
period there has not been:
(a) any
change in the assets, liabilities, financial condition or operating results
of
the Company or any Company Subsidiary, except changes in the ordinary course
of
business that have not caused, in the aggregate, a Company Material Adverse
Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance, that would
have a Company Material Adverse Effect;
(c) any
waiver or compromise by the Company or any Company Subsidiary of a valuable
right or of a material debt owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of
any
obligation by the Company or any Company Subsidiary, except in the ordinary
course of business and the satisfaction or discharge of which would not have
a
Company Material Adverse Effect;
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(e) any
material change to a material Contract by which the Company or any Company
Subsidiary or any of its respective assets is bound or subject;
(f) any
mortgage, pledge, transfer of a security interest in, or lien, created by the
Company or any Company Subsidiary, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable and liens
that arise in the ordinary course of business and do not materially impair
the
Company’s or such Company Subsidiary’s ownership or use of such property or
assets;
(g) any
loans
or guarantees made by the Company or any Company Subsidiary to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(h) any
alteration of the Company’s method of accounting or the identity of its
auditors;
(i) any
declaration or payment of dividend or distribution of cash or other property
to
Stockholders or any purchase, redemption or agreements to purchase or redeem
any
shares of Company Stock;
(j) any
issuance of equity securities to any officer, director or affiliate, except
pursuant to existing Company stock option plans; or
(k) any
arrangement or commitment by the Company or any Company Subsidiary to do any
of
the things described in this Section 3.19.
SECTION
3.20. No
Undisclosed Liabilities.
Except
as disclosed in the Company Disclosure Letter, neither the Company nor any
Company Subsidiary has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) other than those set forth on the balance sheet as of September
30, 2006 included in the Company Financial Statements or incurred in the
ordinary course of the Company’s or its subsidiaries’ respective businesses
since September 30, 2006, and which, individually or in the aggregate, do not
have a Company Material Adverse Effect.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PARENT
Parent
represents and warrants as follows to the Stockholder and the Company that,
except as set forth in the letter, dated as of the date of this Agreement,
from
Parent to the Company and the Stockholder (the “Parent Disclosure
Letter”):
SECTION
4.01. Organization,
Standing and Power.
Parent
is duly organized, validly existing and in good standing under the laws of
the
State of Nevada and has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its business as presently conducted, other than such franchises,
licenses, permits, authorizations and approvals the lack of which, individually
or in the aggregate, has not had and would not reasonably be expected to have
a
material adverse effect on Parent, a material adverse effect on the ability
of
Parent to perform its obligations under this Agreement or on the ability of
Parent to consummate the Transactions (a “Parent Material Adverse Effect”).
Parent is duly qualified to do business in each jurisdiction where the nature
of
its business or their ownership or leasing of its properties make such
qualification necessary and where the failure to so qualify would reasonably
be
expected to have a Parent Material Adverse Effect. Parent has delivered to
the
Company true and complete copies of the articles of incorporation of Parent,
as
amended to the date of this Agreement (as so amended, the “Parent Charter”), and
the Bylaws of Parent, as amended to the date of this Agreement (as so amended,
the “Parent Bylaws”).
-10-
SECTION
4.02. Subsidiaries;
Equity Interests.
Parent
does not own, directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
person.
SECTION
4.03. Capital
Structure.
The
authorized capital stock of Parent consists of 100,000,000 shares of Parent
Common Stock, par value $0.0001 per share, and 50,000,000 shares of preferred
stock, par value $0.0001 per share. As of the date hereof (i) 1,800,000 shares
of Parent Common Stock are issued and outstanding, (ii) no shares of preferred
stock are outstanding and (iii) no shares of Parent Common Stock or preferred
stock are held by Parent in its treasury. Except as set forth above, no shares
of capital stock or other voting securities of Parent were issued, reserved
for
issuance or outstanding. All outstanding shares of the capital stock of Parent
are, and all such shares that may be issued prior to the date hereof will be
when issued, duly authorized, validly issued, fully paid and nonassessable
and
not subject to or issued in violation of any purchase option, call option,
right
of first refusal, preemptive right, subscription right or any similar right
under any provision of the General Corporation Law of the State of Nevada,
the
Parent Charter, the Parent Bylaws or any Contract to which Parent is a party
or
otherwise bound. There are not any bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of Parent Common Stock may vote (“Voting Parent Debt”). Except as set
forth above, as of the date of this Agreement, there are not any options,
warrants, rights, convertible or exchangeable securities, “phantom” stock
rights, stock appreciation rights, stock-based performance units, commitments,
Contracts, arrangements or undertakings of any kind to which Parent is a party
or by which it is bound (i) obligating Parent to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, Parent
or
any Voting Parent Debt, (ii) obligating Parent to issue, grant, extend or enter
into any such option, warrant, call, right, security, commitment, Contract,
arrangement or undertaking or (iii) that give any person the right to receive
any economic benefit or right similar to or derived from the economic benefits
and rights occurring to holders of the capital stock of Parent. As of the date
of this Agreement, there are not any outstanding contractual obligations of
Parent to repurchase, redeem or otherwise acquire any shares of capital stock
of
Parent. Except as set forth in the Company Disclosure Letter, Parent is not
a
party to any agreement granting any security holder of Parent the right to
cause
Parent to register shares of the capital stock or other securities of Parent
held by such security holder under the Securities Act. The stockholder list
provided to the Company is a current shareholder list generated by its stock
transfer agent, and such list accurately reflects all of the issued and
outstanding shares of the Parent Stock.
-11-
SECTION
4.04. Authority;
Execution and Delivery; Enforceability.
The
execution and delivery by Parent of this Agreement and the consummation by
Parent of the Transactions have been duly authorized and approved by the Board
of Directors of Parent and no other corporate proceedings on the part of Parent
are necessary to authorize this Agreement and the Transactions. The Shares
to be
issued at the Closing have been duly authorized by all necessary corporate
action and, when issued in accordance with the terms hereof, the Shares will
be
validly issued, fully paid and non-assessable and free and clear of all liens,
encumbrances and rights of first refusal of any kind and the holders shall
be
entitled to all rights accorded to a holder of Parent Stock. This Agreement
constitutes a legal, valid and binding obligation of Parent, enforceable against
Parent in accordance with the terms hereof.
SECTION
4.05. No
Conflicts; Consents.
(a) Except
as
set forth in the Parent Disclosure Letter, the execution and delivery by Parent
of this Agreement, does not, and the consummation of Transactions and compliance
with the terms hereof and thereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of
any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of the properties or
assets of Parent under, any provision of (i) the Parent Charter or the Parent
Bylaws, (ii) any material Contract to which Parent is a party or by which any
of
its properties or assets is bound or (iii) subject to the filings and other
matters referred to in Section 4.05(b), any material Judgment or material Law
applicable to Parent or its properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Parent
Material Adverse Effect.
(b) No
Consent of, or registration, declaration or filing with, or permit from, any
Governmental Entity is required to be obtained or made by or with respect to
Parent in connection with the execution, delivery and performance of this
Agreement or the consummation of the Transactions, other than the (A) filing
with the SEC of reports under Section 13 of the Securities Exchange Act of
1934,
as amended (the “Exchange Act”), and (B) filings under state “blue sky” laws, as
may be required in connection with this Agreement and the
Transactions.
SECTION
4.06. SEC
Documents; Undisclosed Liabilities.
(a) The
Parent Stock is not currently registered pursuant to Section 12(b) or 12(g)
of
the Exchange Act, but Parent has filed all reports, schedules, forms, statements
and other documents required to be filed by Parent with the SEC pursuant to
the
reporting requirements of the Exchange Act, including material filed pursuant
to
Section 13(a) or 15(d) of the Exchange Act (all of the foregoing, including
filings incorporated by reference therein, the “Parent SEC
Documents”).
-12-
(b) As
of its
respective filing date, each Parent SEC Document complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to such Parent SEC Document, and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any Parent
SEC Document has been revised or superseded by a later filed Parent SEC
Document, none of the Parent SEC Documents contains any untrue statement of
a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Parent included in the Parent SEC Documents comply as to form
in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with U.S. generally accepted accounting principals (“GAAP”) (except,
in the case of unaudited statements, as permitted by the rules and regulations
of the SEC) applied on a consistent basis during the periods involved (except
as
may be indicated in the notes thereto) and fairly present the financial position
of Parent as of the dates thereof and the results of its operations and cash
flows for the periods shown (subject, in the case of unaudited statements,
to
normal year-end audit adjustments)
(c) Except
as
set forth in the Parent SEC Documents, Parent has no liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) required
by
GAAP to be set forth on a balance sheet of Parent or in the notes thereto that
are not so set forth. The Parent Disclosure Letter sets forth all financial
and
contractual obligations and liabilities (including any obligations to issue
capital stock or other securities of Parent) due after the date hereof. As
of
the date hereof, other than legal fees payable to the Law Offices of Xxxxxx
X.
Xxxxxxx for services rendered in connection with the Transactions, Parent has
total liabilities of less than $5,000, all of which liabilities shall be paid
off at or prior to the Closing and shall in no event remain liabilities of
Parent, the Company or the Stockholder following the Closing.
SECTION
4.07. Absence
of Certain Changes or Events.
Except
as disclosed in the Parent SEC Documents or in the Parent Disclosure Letter,
from the date of the most recent audited financial statements included in the
Parent SEC Documents to the date of this Agreement, Parent has conducted its
business only in the ordinary course, and during such period there has not
been:
(a) any
change in the assets, liabilities, financial condition or operating results
of
Parent from that reflected in the Parent SEC Documents, except changes in the
ordinary course of business that have not caused, in the aggregate, a Parent
Material Adverse Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance, that would
have a Parent Material Adverse Effect;
-13-
(c) any
waiver or compromise by Parent of a valuable right or of a material debt owed
to
it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of
any
obligation by Parent, except in the ordinary course of business and the
satisfaction or discharge of which would not have a Parent Material Adverse
Effect;
(e) any
material change to a material Contract by which Parent or any of its assets
is
bound or subject;
(f) any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder;
(g) any
resignation or termination of employment of any officer of Parent;
(h) any
mortgage, pledge, transfer of a security interest in, or lien, created by
Parent, with respect to any of its material properties or assets, except liens
for taxes not yet due or payable and liens that arise in the ordinary course
of
business and do not materially impair Parent’s ownership or use of such property
or assets;
(i) any
loans
or guarantees made by Parent to or for the benefit of its employees, officers
or
directors, or any members of their immediate families, other than travel
advances and other advances made in the ordinary course of its
business;
(j) any
declaration, setting aside or payment or other distribution in respect of any
of
Parent’s capital stock, or any direct or indirect redemption, purchase, or other
acquisition of any of such stock by Parent;
(k) any
alteration of Parent’s method of accounting or the identity of its
auditors;
(l) any
issuance of equity securities to any officer, director or affiliate;
or
(m) any
arrangement or commitment by Parent to do any of the things described in this
Section 4.07.
SECTION
4.08. Taxes.
(a) Parent
has timely filed, or has caused to be timely filed on its behalf, all Tax
Returns required to be filed by it, and all such Tax Returns are true, complete
and accurate, except to the extent any failure to file or any inaccuracies
in
any filed Tax Returns, individually or in the aggregate, have not had and would
not reasonably be expected to have a Parent Material Adverse Effect. All Taxes
shown to be due on such Tax Returns, or otherwise owed, has been timely paid,
except to the extent that any failure to pay, individually or in the aggregate,
has not had and would not reasonably be expected to have a Parent Material
Adverse Effect.
-14-
(b) The
most
recent financial statements contained in the Parent SEC Documents reflect an
adequate reserve for all Taxes payable by Parent (in addition to any reserve
for
deferred Taxes to reflect timing differences between book and Tax items) for
all
taxable periods and portions thereof through the date of such financial
statements. No deficiency with respect to any Taxes has been proposed, asserted
or assessed against Parent, and no requests for waivers of the time to assess
any such Taxes are pending, except to the extent any such deficiency or request
for waiver, individually or in the aggregate, has not had and would not
reasonably be expected to have a Parent Material Adverse Effect.
(c) There
are
no Liens for Taxes (other than for current Taxes not yet due and payable) on
the
assets of Parent. Parent is not bound by any agreement with respect to
Taxes.
SECTION
4.09. Benefit
Plans.
Except
as set forth in the Parent Disclosure Letter, Parent does not have or maintain
any collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of Parent (collectively, “Parent Benefit Plans”).
As of the date of this Agreement there are not any employment, consulting,
indemnification, severance or termination agreements or arrangements between
Parent and any current or former employee, officer or director of Parent, nor
does Parent have any general severance plan or policy.
SECTION
4.10. ERISA
Compliance; Excess Parachute Payments.
Parent
does not, and since its inception never has, maintained, or contributed to
any
“employee pension benefit plans” (as defined in Section 3(2) of ERISA),
“employee welfare benefit plans” (as defined in Section 3(1) of ERISA) or any
other Parent Benefit Plan for the benefit of any current or former employees,
consultants, officers or directors of Parent.
SECTION
4.11. Litigation.
Except
as disclosed in the Parent SEC Documents or in the Parent Disclosure Letter,
there is no Action which (i) adversely affects or challenges the legality,
validity or enforceability of either this Agreement or the Shares or (ii) could,
if there were an unfavorable decision, individually or in the aggregate, have
or
reasonably be expected to result in a Parent Material Adverse Effect. Neither
the Parent nor any director or officer thereof (in his capacity as such), is
or
has been the subject of any Action involving a claim or violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty.
SECTION
4.12. Compliance
with Applicable Laws.
Except
as disclosed in the Parent SEC Documents or in the Parent Disclosure Letter,
Parent is in compliance with all applicable Laws, including those relating
to
occupational health and safety and the environment, except for instances of
noncompliance that, individually and in the aggregate, have not had and would
not reasonably be expected to have a Parent Material Adverse Effect. Except
as
set forth in the Parent SEC Documents or in the Parent Disclosure Letter, Parent
has not received any written communication during the past two years from a
Governmental Entity that alleges that Parent is not in compliance in any
material respect with any applicable Law. Parent is in compliance with all
requirements of the Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and
regulations thereunder, that are applicable to it. This Section 4.12 does not
relate to matters with respect to Taxes, which are the subject of Section
4.08.
-15-
SECTION
4.13. Contracts.
Except
as disclosed in and filed as exhibits to the Parent SEC Documents, there are
no
Contracts that are material to the business, properties, assets, condition
(financial or otherwise), results of operations or prospects of the Parent.
Parent is not in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice would cause
such a violation of or default under) any Contract to which it is a party or
by
which it or any of its properties or assets is bound, except for violations
or
defaults that would not, individually or in the aggregate, reasonably be
expected to result in a Parent Material Adverse Effect.
SECTION
4.14. Title
to Properties.
Parent
does not own any real property. Parent has good title to, or valid leasehold
interests in, all of its properties and assets used in the conduct of its
business. All such assets and properties, other than assets and properties
in
which the Parent has leasehold interests, are free and clear of all Liens other
than those set forth in the Parent Disclosure Letter and except for Liens that,
in the aggregate, do not and will not materially interfere with the ability
of
the Parent to conduct business as currently conducted. Parent is in compliance
in all material respects with the terms of all material leases to which it
is a
party and under which it is in occupancy, and all such leases are in full force
and effect. Parent enjoys peaceful and undisturbed possession under all such
material leases.
SECTION
4.15. Intellectual
Property.
Parent
owns, or is validly licensed or otherwise has the right to use, all Intellectual
Property Rights which are material to the conduct of the business of the Parent.
The Parent Disclosure Letter sets forth a description of all Intellectual
Property Rights which are material to the conduct of the business of Parent.
There are no claims pending or, to the knowledge of Parent, threatened that
Parent is infringing or otherwise adversely affecting the rights of any person
with regard to any Intellectual Property Right. To the knowledge of Parent,
no
person is infringing the rights of Parent with respect to any Intellectual
Property Right.
SECTION
4.16. Labor
Matters.
There
are no collective bargaining or other labor union agreements to which Parent
is
a party or by which it is bound. No material labor dispute exists or, to the
knowledge of Parent, is imminent with respect to any of the employees of the
Parent.
SECTION
4.17. Market
Makers.
Parent
has at least two market makers for its common shares.
SECTION
4.18. Transactions
With Affiliates and Employees.
Except
as set forth in the Parent SEC Documents and Parent Disclosure Letter, none
of
the officers or directors of Parent and, to the knowledge of Parent, none of
the
employees of Parent is presently a party to any transaction with Parent (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to
the
knowledge of Parent, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
-16-
SECTION
4.19. Disclosure
Controls.
Parent
has established disclosure controls and procedures for Parent and designed
such
disclosure controls and procedures to ensure that information required to be
disclosed in the Parent SEC Documents is recorded, processed, summarized and
reported within the time period specified by SEC rules. Parent’s officers have
evaluated the effectiveness of Parent’s controls and procedures and concluded
that such disclosure controls are effective. Since June 30, 2006, there have
been no significant changes in Parent’s internal controls or in other factors
that could significantly affect Parent’s internal controls subsequent to the
date such evaluation was carried out.
SECTION
4.20. No
Applicable Takeover Protections.
There
are no applicable control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under Parent’s charter documents or the laws of its
state of incorporation that is or could become applicable to the Company or
the
Stockholder as a result of the Company and the Stockholder and the Parent
fulfilling their obligations or exercising their rights under this Agreement,
including, without limitation, the issuance of the Shares and the Stockholder’s
ownership of the Shares.
SECTION
4.21. No
Additional Agreements.
Parent
does not have any agreement or understanding with the Company or the Stockholder
with respect to the transactions contemplated by this Agreement other than
as
specified in this Agreement.
SECTION
4.22. Investment
Company.
The
Parent is not, and is not an affiliate of, and immediately following the Closing
will not have become, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
SECTION
4.23. Disclosure.
Parent
confirms that neither it nor any person acting on its behalf has provided the
Company or the Stockholder or its respective agents or counsel with any
information that Parent believes constitutes material, non-public information
except insofar as the existence and terms of the proposed transactions hereunder
may constitute such information and except for information that will be
disclosed by Parent under a Current Report on Form 8-K filed within one four
(4)
business days after the Closing. Parent understands and confirms that the
Stockholder will rely on the foregoing representations and covenants in
effecting transactions in securities of Parent. All disclosure provided to
the
Company and the Stockholder regarding Parent, its business and the transactions
contemplated hereby, furnished by or on behalf of Parent (including Parent’s
representations and warranties set forth in this Agreement) are true and correct
and do not contain any untrue statement of a material fact or omit to state
any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
SECTION
4.24. Certain
Registration Matters.
Except
as specified in the Parent Disclosure Letter and Parent SEC Documents, Parent
has not granted or agreed to grant to any person any rights (including
“piggy-back” registration rights) to have any securities of Parent registered
with the SEC or any other governmental authority that have not been
satisfied.
-17-
SECTION
4.25. Listing
and Maintenance Requirements.
Parent
is, and has no reason to believe that it will not in the foreseeable future
continue to be, in compliance with the listing and maintenance requirements
for
continued listing of the Parent Stock on the trading market or quotation service
on which the Parent Stock is currently listed or quoted. The issuance and sale
of the Shares under this Agreement does not contravene the rules and regulations
of the trading market or quotation service on which the Parent Stock is
currently listed or quoted, and no approval of the stockholders of Parent is
required for Parent to issue and deliver to the Stockholder the Shares
contemplated by this Agreement.
SECTION
4.26. No
Undisclosed Events, Liabilities, Developments or Circumstances.
No
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to Parent, or its business, properties,
prospects, operations or financial condition, that would be required to be
disclosed by Parent under applicable securities laws on a registration statement
on Form S-1 filed with the SEC relating to an issuance and sale by Parent of
its
Common Stock and which has not been publicly announced or
disclosed.
SECTION
4.27. Foreign
Corrupt Practices.
Neither
Parent, nor to Parent’s knowledge, any director, officer, agent, employee or
other person acting on behalf of the Parent has, in the course of its actions
for, or on behalf of, Parent (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or
domestic government official or employee.
SECTION
4.28. No
Material Adverse Change.
Since
December 31, 2005, no event has occurred which has or could reasonably be
expected to have a Parent Material Adverse Effect.
-18-
ARTICLE
V
DELIVERIES
SECTION
5.01. Deliveries
of the Stockholder.
(a) Concurrently
herewith the Stockholder is delivering to the Parent this Agreement executed
by
the Stockholder.
(b) At
or
prior to the Closing, the Stockholder shall deliver to the Parent:
(i) certificates
representing its Company Stock; and
(ii) duly
executed share transfer instrument in respect of the Company Stock.
SECTION
5.02. Deliveries
of Parent.
(a) Concurrently
herewith, Parent is delivering:
(i) to
the
Stockholder and to the Company, a copy of this Agreement executed by Parent
together with the Parent Disclosure Letter;
(ii) to
the
Company, a certificate from Parent, signed by its Secretary or Assistant
Secretary certifying that the attached copies of the Parent Charter, Parent
Bylaws and resolutions of the Board of Directors of Parent approving the
Agreement and the Transactions are all true, complete and correct and remain
in
full force and effect;
(iii) to
the
Company, a letter of resignation of Xxxxx Xxxxxx from all offices he holds
with
Parent effective upon the Closing and from his position as a director of Parent
effective upon the Closing;
(iv) to
the
Company, evidence of the due election of Xx. Xx Jie, as a director and as the
Chief Executive Officer and President of Parent effective upon the
Closing;
(v) to
the
Company, such payoff letters and releases relating to liabilities as the Company
shall request and such payoff letters and releases shall be in form and
substance satisfactory to the Company; and
(vi) to
the
Stockholder, a certificate representing the new Shares of Parent Stock issued
to
the Stockholder.
(b) At
or
before the Closing, counsel to Parent shall have delivered to the Company and
the Stockholder a legal opinion substantially in the form of Exhibit
A
hereto.
-19-
SECTION
5.03. Deliveries
of the Company.
(a) Concurrently
herewith, the Company is delivering to the Parent:
(i) this
Agreement executed by Company together with the Company Disclosure Letter;
and
(ii) a
certificate from the Company, signed by its authorized officer certifying that
the attached copies of the Company Constituent Instruments and resolutions
of
the Board of Directors of the Company approving the Agreement and the
Transactions and instructing the registered agent of the Company to update
the
register of members accordingly, are all true, complete and correct and remain
in full force and effect.
ARTICLE
VI
COVENANTS
SECTION
6.01. SEC
Filings; Blue Sky Laws.
(a) The
Company and Parent shall work together to comply with the obligation to file
a
Current Report on Form 8-K within four (4) business days following the Closing
containing the requisite audited consolidated financial statements of the Parent
and the Company and the requisite disclosure regarding the Company required
by
Item 2.01(f) of Form 8-K.
(b) Parent
shall take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified) required to be taken under any applicable
state securities laws in connection with the issuance of Parent Stock in
connection with this Agreement.
SECTION
6.02. Public
Announcements.
Parent
and the Company will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the Agreement and the Transactions and shall
not issue any such press release or make any such public statement prior to
such
consultation, except as may be required by applicable Law, court process or
by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION
6.03. Fees
and Expenses.
All
fees and expenses incurred in connection with this Agreement shall be paid
by
the party incurring such fees or expenses, whether or not this Agreement is
consummated.
SECTION
6.04. Continued
Efforts.
Each
party hereto shall use commercially reasonable efforts to (a) take all action
reasonably necessary to consummate the Transactions, and (b) take such steps
and
do such acts as may be necessary to keep all of its representations and
warranties true and correct as of the Closing Date with the same effect as
if
the same had been made, and this Agreement had been dated, as of the Closing
Date.
-20-
SECTION
6.05. Conduct
of Business.
During
the period from the date hereof through the Closing Date, Parent and the Company
shall carry on their respective businesses in the ordinary and usual course
consistent with past practice.
SECTION
6.06. Filing
of 8-K and Press Release.
Parent
shall file, within four business
days of the Closing Date, a Current Report on Form 8-K with the SEC (and attach
as exhibits all relevant agreements) disclosing the terms of this Agreement
and
other requisite disclosure regarding the Transactions and including the
requisite audited consolidated financial statements of the Company and the
requisite disclosure regarding the Company required under Item 2.01(f) of Form
8-K. In addition, the Parent shall issue a press release prior to 9:30 a.m.
(New
York Time) on the business day following the Closing Date, announcing the
closing of the transaction.
SECTION
6.07. Furnishing
of Information.
As long
as the Stockholder owns the Shares and is not eligible to sell any Shares under
Rule 144(k), Parent covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to
be
filed by Parent after the date hereof pursuant to the Exchange Act as if Parent
Stock were registered pursuant to the Exchange Act. As long as the Stockholder
owns Shares, if Parent is not required to file reports pursuant to such laws,
it
will prepare and furnish to the Stockholder and make publicly available in
accordance with Rule 144(c) promulgated by the SEC pursuant to the Securities
Act, such information as is required for the Stockholder to sell the Shares
under Rule 144. Parent further covenants that it will take such further action
as any holder of Shares may reasonably request, all to the extent required
from
time to time to enable such person to sell the Shares without registration
under
the Securities Act within the limitation of the exemptions provided by Rule
144.
SECTION
6.08. Integration.
The
Company shall not, and shall use its best efforts to ensure that no affiliate
of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Shares in a manner
that would require the registration under the Securities Act of the acquisition
of the Shares by the Stockholder pursuant to the Agreement, or that would be
integrated with the offer or sale of the Shares for purposes of the rules and
regulations of any trading market in a manner that would require stockholder
approval of the sale of the securities to the Stockholder.
SECTION
6.09. Subsequent
Registrations.
Other
than pursuant to the registration statement filed in connection with the
transactions contemplated by this Agreement, prior to the date that such
registration statement is declared effective by the SEC, Parent may not file
any
registration statement (other than on Form S-8) with the SEC with respect to
any
securities of Parent.
SECTION
6.10. Indemnification
of Investors.
Parent
will indemnify and hold the Stockholder and its directors, officers,
shareholders, partners, employees and agents (each, an “Investor Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation (collectively, “Losses”) that any such Investor Party may suffer
or incur as a result of or relating to any misrepresentation, breach or
inaccuracy of any representation, warranty, covenant or agreement made by the
Company or Parent in this or any other transaction document. In addition to
the
indemnity contained herein, Parent will reimburse each Investor Party for its
reasonable legal and other expenses (including the cost of any investigation,
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred.
-21-
SECTION
6.11. Non-Public
Information.
Each of
the Company and Parent covenant and agree that neither it nor any other person
acting on their behalf will provide the Stockholder or its agents or counsel
with any information that the Company or Parent believes constitutes material
non-public information, unless prior thereto the Stockholder shall have executed
a written agreement regarding the confidentiality and use of such information.
Each of the Company and Parent understands and confirms that the Stockholder
shall be relying on the foregoing representations in effecting transactions
in
securities of the Parent.
SECTION
6.12. Listing
of Securities.
Parent
agrees, (i) if Parent applies to have Parent Stock listed for trading on any
exchange, it will include in such application the Shares, and will take such
other action as is necessary or desirable to cause the Shares to be listed
on
such exchange as promptly as possible, and (ii) it will take all action
reasonably necessary to continue the listing and trading of Parent Stock on
any
such exchange and will comply in all material respects with Parent’s reporting,
filing and other obligations under the bylaws or rules of the
exchange.
SECTION
6.13. Assumption
of Company Obligations.
The
Parent hereby assumes and agrees to perform those obligations included in that
certain Series A Convertible Preferred Stock Purchase Agreement, dated on or
about the date hereof, among Parent and the purchasers of the Company’s Series A
Convertible Preferred Stock named in such agreement, that are to be performed
by
the “Company,” as defined therein.
-22-
ARTICLE
VII
MISCELLANEOUS
SECTION
7.01. Notices.
All
notices, requests, claims, demands and other communications under this Agreement
shall be in writing and shall be deemed given upon receipt by the parties at
the
following addresses (or at such other address for a party as shall be specified
by like notice):
If
to the
Parent, to:
Untied
National Film Corporation
000
Xxxx
Xxxx Xxxxxx
Xxxxxxx,
Xxxxx 00000
Attention:
Xxxxx X. Little
Facsimile:
(000) 000-0000
with
a
copy to:
Law
Offices of Xxxxxx X. Xxxxxxx
000
Xxxxx
Xxxxxx, Xxxxx 000
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxxx
Facsimile:
(000) 000-0000
If
to the
Company, to:
Universe
Faith Group Limited
Canglong
Dao Science Park of Wuhan
East
Lake
Development Zone
Wuhan,
Hubei 430200
Peoples
Republic of China
Attention:
Xxx Xx
Facsimile:
(00) 000 0000 0000
If
to
Stockholder, to:
Fame
Good
International Limited
Canglong
Dao Science Park of Wuhan
East
Lake
Development Zone
Wuhan,
Hubei 430200
Peoples
Republic of China
Attention:
Xx Xxx
Facsimile:
(00) 000 0000 0000
-23-
with
a
copy to:
Xxxxxxxx
Xxxxxxx LLP
The
Chrysler Building
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxxx, Esq.
Facsimile:
(000) 000-0000
SECTION
7.02. Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company, Parent and the Stockholder. No waiver of
any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such
right.
SECTION
7.03. Replacement
of Securities.
If any
certificate or instrument evidencing any Shares is mutilated, lost, stolen
or
destroyed, Parent shall issue or cause to be issued in exchange and substitution
for and upon cancellation thereof, or in lieu of and substitution therefor,
a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to Parent of such loss, theft or destruction and customary and
reasonable indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Shares. If a replacement
certificate or instrument evidencing any Shares is requested due to a mutilation
thereof, Parent may require delivery of such mutilated certificate or instrument
as a condition precedent to any issuance of a replacement.
SECTION
7.04. Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Stockholder, Parent and the
Company will be entitled to specific performance under this Agreement. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
SECTION
7.05. Limitation
of Liability.
Notwithstanding anything herein to the contrary, each of Parent and the Company
acknowledge and agree that the liability of the Stockholder arising directly
or
indirectly, under any transaction document of any and every nature whatsoever
shall be satisfied solely out of the assets of the Stockholder, and that no
trustee, officer, other investment vehicle or any other affiliate of the
Stockholder or any investor, shareholder or holder of shares of beneficial
interest of the Stockholder shall be personally liable for any liabilities
of
the Stockholder.
SECTION
7.06. Interpretation;
Disclosure Letters.
When a
reference is made in this Agreement to a Section, such reference shall be to
a
Section of this Agreement unless otherwise indicated. Whenever the words
“include,” “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.”
-24-
SECTION
7.07. Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule or Law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely
as
possible in an acceptable manner to the end that Transactions contemplated
hereby are fulfilled to the extent possible.
SECTION
7.08. Counterparts;
Facsimile Execution.
This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to
the
other parties. Facsimile execution and delivery of this Agreement is legal,
valid and binding for all purposes.
SECTION
7.09. Entire
Agreement; Third Party Beneficiaries.
This
Agreement, taken together with the Company Disclosure Letter and the Parent
Disclosure Letter, (a) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the Transactions and (b) are not intended to confer upon any person
other than the parties any rights or remedies.
SECTION
7.10. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof, except to the extent the
laws of Nevada are mandatorily applicable to the Transactions.
SECTION
7.11. Consent
to Jurisdiction.
(a) The
Parent (i) hereby irrevocably submits to the jurisdiction of the United States
District Court sitting in the Southern District of New York and the courts
of
the State of New York located in New York county for the purposes of any suit,
action or proceeding brought by the Company or the Stockholder arising out
of or
relating to this Agreement or the transactions contemplated hereby and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or
that
the venue of the suit, action or proceeding is improper. The Parent consents
to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 7.11(a) shall
affect or limit any right to serve process in any other manner permitted by
law.
-25-
(b) Each
of
the Company and the Stockholder (i) hereby irrevocably submits to the
jurisdiction of the United States District Court sitting in the Western District
of Texas and the courts of the State of Texas located in Midland county for
the
purposes of any suit, action or proceeding brought by the Parent arising out
of
or relating to this Agreement or the transactions contemplated hereby and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or
that
the venue of the suit, action or proceeding is improper. Each of the Company
and
the Stockholder consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect
for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section 7.11(b) shall affect or limit any right to serve process in any other
manner permitted by law.
SECTION
7.12. Assignment.
Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent of the other
parties. Any purported assignment without such consent shall be void. Subject
to
the preceding sentences, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
[Signature
Page Follows]
-26-
The
parties hereto have executed and delivered this Share Exchange Agreement as
of
the date first above written.
|
Parent:
|
||
|
UNITED
NATIONAL FILM CORPORATION
|
||
| |
|
|
| By: | /s/ Xxxxx X. Little | |
|
Name:
Xxxxx X. Little
|
||
|
Title:
Chief Executive Officer
|
||
|
The
Company:
|
||
|
UNIVERSE
FAITH GROUP LIMITED
|
||
| |
|
|
| By: | /s/ Xx Xxx | |
|
Name:
Xx Xxx
|
||
|
Title:
Director
|
||
|
The
Stockholder:
|
||
|
FAME
GOOD INTERNATIONAL LIMITED
|
||
| |
|
|
| By: | /s/ Xx Xxx | |
|
Name:
Xx Xxx
|
||
|
Title:
Director
|
||
-27-
EXHIBIT
A
Form
of Opinion of Counsel to Parent
1. Parent
is
a corporation duly incorporated, validly existing and in good standing under
the
laws of the State of Nevada and has the requisite corporate power to own, lease
and operate its properties and assets, and to carry on its business as presently
conducted.
2. Parent
has the requisite corporate power and authority to enter into and perform its
obligations under the Share Exchange Agreement, to consummate the Transactions
and to issue the Shares. The execution, delivery and performance of the Share
Exchange Agreement by Parent, the consummation by it of the Transactions and
the
issuance of the Shares have been duly and validly authorized by all necessary
corporate action and no further consent or authorization of Parent or its Board
of Directors is required. The Share Exchange Agreement has been duly executed
and delivered, and the certificates representing the Shares have been duly
executed, issued and delivered by Parent and the Share Exchange Agreement
constitutes a legal, valid and binding obligation of Parent enforceable against
Parent in accordance with its terms. The Shares are not subject to any
preemptive rights under the Parent Charter or the Parent Bylaws.
3. The
Shares have been duly authorized and, when delivered against payment in full
as
provided in the Share Exchange Agreement, will be validly issued, fully paid
and
nonassessable and free and clear of all liens, encumbrances and rights of first
refusal of any kind and the holders shall be entitled to all rights accorded
to
a holder of Parent Stock.
4. The
execution, delivery and performance of and compliance with the terms of the
Share Exchange Agreement, the consummation of the Transactions and the issuance
of the Shares do not (a) violate any provision of the Parent Charter or Parent
Bylaws, (b) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which Parent is a party and which
is known to us, (c) create or impose a lien, charge or encumbrance on any
property of Parent under any agreement or any commitment known to us to which
Parent is a party or by which Parent is bound or by which any of its respective
properties or assets are bound, or (d) result in a violation of any Federal,
state, local or foreign statute, rule, regulation, order, judgment, injunction
or decree (including Federal and state securities laws and regulations)
applicable to Parent or by which any property or asset of Parent is bound or
affected, except, in all cases other than violations pursuant to clauses (a)
and
(d) above, for such conflicts, default, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect.
5. No
consent, approval or authorization of or designation, declaration or filing
with
any governmental authority on the part of Parent is required under Federal,
state or local law, rule or regulation in connection with the valid execution,
delivery and performance of the Share Exchange Agreement or the offer, sale
or
issuance of the Shares, other than filings as may be required by applicable
Federal and state securities laws and regulations.
-28-
6. To
our
knowledge, there is no action, suit, claim, investigation or proceeding pending
or threatened against Parent which questions the validity of the Share Exchange
Agreement or the Transactions or any action taken or to be taken pursuant
thereto. There is no action, suit, claim, investigation or proceeding pending,
or to our knowledge, threatened, against or involving Parent or any of its
properties or assets and which, if adversely determined, is reasonably likely
to
result in a Material Adverse Effect. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against Parent or any officers or directors of Parent in their
capacities as such.
-29-
