SHARE EXCHANGE AGREEMENT
Exhibit
2.1
SHARE
EXCHANGE AGREEMENT,
dated
as of October 31, 2008 (this “Agreement”)
by and
among Magnify Wealth Enterprise Limited, a British Virgin Islands company
(the
“Ally
Profit Shareholder”),
Ally
Profit Investments Limited, a British Virgin Islands company (“Ally
Profit”),
Lihua
International, Inc. (f/k/a Plastron Acquisition Corp I.), a Delaware corporation
(“Lihua”)
and
the stockholders of Lihua set forth on Schedule I hereto (the “Lihua
Controlling Stockholder[s]”).
WHEREAS,
the
Ally Profit Shareholder owns 100% of the issued and outstanding ordinary
shares
of Ally Profit, such shares being hereinafter referred to as the “Ally
Profit Shares”;
and
WHEREAS,
(i) the
Ally Profit Shareholder and Ally Profit believe it is in their respective
best
interests for the Ally Profit Shareholder to exchange all of the Ally Profit
Shares for 14,025,000 newly-issued shares (the “Lihua Shares”)
of
common stock, $0.0001 par value per share, of Lihua (“Common
Stock”),
which, prior to the consummation of the Private Placement (as hereinafter
defined), shall constitute 93.5% of the issued and outstanding shares of
Lihua
Common Stock immediately after the closing of the transactions contemplated
herein, and (ii) Lihua believes it is in its best interest and the best interest
of its stockholders to acquire the Ally Profit Shares in exchange for the
Lihua
Shares, all upon the terms and subject to the conditions set forth in this
Agreement (the “Share
Exchange”);
and
WHEREAS,
it is
the intention of the parties that: (i) the Share Exchange shall qualify as
a
tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue
Code
of 1986, as amended (the “Code”);
and
(ii) the Share Exchange shall qualify as a transaction in securities exempt
from
registration or qualification under the Securities Act of 1933, as amended
and
in effect on the date of this Agreement (the “Securities
Act”);
and
WHEREAS,
immediately following the consummation of the Share Exchange, and pursuant
to a
securities purchase agreement (the “Securities Purchase Agreement”) to be dated
as of the Closing Date (as
hereinafter defined) by and among Lihua and certain investors (collectively,
the
“Investors”),
Lihua
will issue shares of series A convertible preferred stock to the Investors
in a
private placement (the “Private
Placement”)
for an
aggregate purchase price of $15,000,000, upon the terms and conditions set
forth
in the relevant Private Placement transaction documents; and
WHEREAS,
concurrent with the Share Exchange and as a condition to its consummation,
Ally
Profit will pay to Lihua the sum of US$100,000 in consideration for the
consummation of the Share Exchange of which $45,061 shall be used for the
repurchase (the “Repurchase”)
of
aggregate of 5,817,024 shares of Common Stock held by the stockholders of
Lihua,
including the Lihua Controlling Stockholders pursuant to Repurchase Agreements
substantially in the forms of Exhibit
G-1
and
Exhibit
G-2
attached
hereto (the “Repurchase
Agreements”),
and
the remaining $54,939 shall be used for the repayment of outstanding loans
and
payables of Lihua immediately prior to the Closing Date (the “Repayment”);
NOW,
THEREFORE,
in
consideration of the mutual terms, conditions and other agreements set forth
herein, the parties hereto agree as follows:
ARTICLE
I
EXCHANGE
OF ALLY PROFIT SHARES FOR LIHUA SHARES
Section
1.1 Agreement
to Exchange Ally Profit Shares for Lihua Shares.
On the
Closing Date (as hereinafter defined) and upon the terms and subject to the
conditions set forth in this Agreement, the Ally Profit Shareholder shall
(i)
assign, transfer, convey and deliver the Ally Profit Shares to Lihua, and
(ii)
make a cash payment to Lihua in the aggregate amount of $100,000, of which
$45,061 shall be used for the Repurchase, and $54,939 shall be used for the
Repayment. In consideration and exchange for the Ally Profit Shares, Lihua
shall
issue, transfer, convey and deliver the Lihua Shares to the Ally Profit
Shareholder.
Section
1.2 Withholding.
Lihua
shall be entitled to deduct and withhold from the Lihua Shares otherwise
issuable pursuant to this Agreement to the Ally Profit Shareholder such amounts
as it is required to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended, or any provision
of
state, local, provincial or foreign tax law. To the extent that amounts are
so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Ally Profit Shareholder in respect of
which
such deduction and withholding was made.
Section
1.3 Closing
and Actions at Closing.
The
closing of the Share Exchange (the “Closing”)
shall
take place at 10:00 a.m. E.D.T. on the day the conditions to closing set
forth
in Articles V and VI herein have been satisfied or waived, or at such other
time
and date as the parties hereto shall agree in writing (the “Closing
Date”),
at
the offices of Loeb & Loeb LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
Section
1.4 Directors
of Lihua at Closing Date.
On the
Closing Date, Xxxxxxx Xxxx, Xxxxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxx, the current
directors of Lihua, shall resign from the board of directors of Lihua (the
“Lihua
Board”)
and
Xx. Xxxxxxx Xxx, Xx. Xxxxxx Xxxx and Xx. Xxx Xx’x appointment to the Lihua Board
shall become effective, as disclosed in the Schedule 14(f) information statement
under the Exchange Act (the “Schedule
14(f)”)
filed
and mailed to the stockholders of record of Lihua.
Section
1.5 Officers
of Lihua at Closing Date.
On the
Closing Date, Xxxxxxx Xxxx and Xxxxxx Xxxxxxxxx shall resign from each officer
position held at Lihua and immediately thereafter, the Lihua Board shall
appoint
Xx. Xxx to serve as Chief Executive Officer and President, Xx. Xxx Xx to
serve
at Chief Financial Officer and Treasurer and Xx. Xxxx to serve as Chief
Operational Officer and Secretary.
2
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF LIHUA
Lihua
represents, warrants and agrees that all of the statements in the following
subsections of this Article II are true and complete as of the date hereof.
The
disclosure schedule attached hereto as Schedules
2.1 through 2.25
(the“Lihua
Disclosure Schedules”)
are
divided into sections that correspond to the sections of this Article II.
The
Lihua Disclosure Schedules comprise lists of all exceptions to the truth
and
accuracy in all material respects of, and of all disclosures or descriptions
required by, the representations and warranties set forth in this Article
II.
Section
2.1 Corporate
Organization
a. Lihua
is a corporation duly organized, validly existing and in good standing under
the
laws of Delaware, and has all requisite corporate power and authority to
own its
properties and assets and governmental licenses, authorizations, consents
and
approvals to conduct its business as now conducted and is duly qualified
to do
business and is in good standing in each jurisdiction in which the nature
of its
activities makes such qualification and being in good standing necessary,
except
where the failure to be so qualified and in good standing will not have a
Material Adverse Effect on the activities, business, operations, properties,
assets, condition or results of operation of Lihua. “Material
Adverse Effect”
means,
when used with respect to Lihua, any event, occurrence, fact, condition,
change
or effect, which, individually or in the aggregate, would reasonably be expected
to be materially adverse to the business, operations, properties, assets,
condition (financial or otherwise), or operating results of Lihua, or materially
impair the ability of Lihua to perform its obligations under this Agreement,
excluding any change, effect or circumstance resulting from (i) the
announcement, pendency or consummation of the transactions contemplated by
this
Agreement, or (ii) changes in the United States securities markets
generally.
b. Copies
of the certificate of incorporation and by-laws of Lihua with all amendments
thereto, as of the date hereof (the “Lihua
Charter Documents”),
have
been furnished to the Ally Profit Shareholder and to Ally Profit, and such
copies are accurate and complete as of the date hereof. The minute books
of
Lihua are current as required by law, contain the minutes of all meetings
of the
Lihua Board and stockholders of Lihua from its date of incorporation to the
date
of this Agreement, and adequately reflect all material actions taken by the
Lihua Board and stockholders of Lihua. Lihua is not in violation of any of
the
provisions of the Lihua Charter Documents.
Section
2.2 Capitalization
of Lihua.
a. The
authorized capital stock of Lihua consists of 85,000,000 shares: 75,000,000
shares are authorized as Common Stock, of which 6,792,024 shares are issued
and
outstanding immediately prior to the Repurchase, the Share Exchange and the
Private Placement, and 10,000,000 shares are authorized as preferred stock,
of
which no shares are issued and outstanding immediately prior to the Repurchase,
the Share Exchange and the Private Placement.
3
b. All
of the issued and outstanding shares of Common Stock of Lihua immediately
prior
to the Repurchase, the Share Exchange and the Private Placement are duly
authorized, validly issued, fully paid and non-assessable, have been issued
in
compliance with all applicable U.S. federal and state securities laws and
state
corporate laws, and have been issued free of preemptive rights of any security
holder. Except with respect to securities to be issued in connection with
the
Private Placement and to the Ally Profit Shareholder pursuant to the terms
hereof, as of the date of this Agreement there are no outstanding or authorized
options, warrants, agreements, commitments, conversion rights, preemptive
rights
or other rights to subscribe for, purchase or otherwise acquire or receive
any
shares of Lihua’s capital stock, nor are there or will there be any outstanding
or authorized stock appreciation, phantom stock, profit participation or
similar
rights, pre-emptive rights or rights of first refusal with respect to Lihua
or
any Common Stock, or any voting trusts, proxies or other agreements,
understandings or restrictions with respect to the voting of Lihua’s capital
stock. Except with respect to securities to be issued pursuant to the Securities
Purchase Agreement, there are no registration or anti-dilution rights, and
there
is no voting trust, proxy, rights plan, anti-takeover plan or other agreement
or
understanding to which Lihua is a party or by which it is bound with respect
to
any equity security of any class of Lihua. Lihua is not a party to, and it
has
no knowledge of, any agreement restricting the transfer of any shares of
the
capital stock of Lihua. The issuance of all of the shares of Lihua described
in
this Section 2.2 have been, or will be, as applicable, in compliance with
U.S.
federal and state securities laws and state corporate laws and no stockholder
of
Lihua has any right to rescind or bring any other claim against Lihua for
failure to comply with the Securities Act of 1933, as amended (the “Securities
Act”), or state securities laws.
Section
2.3 Subsidiaries
and Equity Investments.
Lihua
does not directly or indirectly own any capital stock or other securities
of, or
any beneficial ownership interest in, or hold any equity or similar interest,
or
have any investment in any corporation, limited liability company, partnership,
limited partnership, joint venture or other company, person or other
entity.
Section
2.4 Authorization,
Validity and Enforceability of Agreements.
Lihua
has all corporate power and authority to execute and deliver this Agreement
and
all agreements, instruments and other documents to be executed and delivered
in
connection with the transactions contemplated by this Agreement (collectively,
the “Transaction Documents”) to perform its obligations hereunder and to
consummate the transactions contemplated hereby and thereby. The execution
and
delivery of this Agreement and each of the Transaction Documents by Lihua
and
the consummation by Lihua of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action of Lihua, and
no
other corporate proceedings on the part of Lihua are necessary to authorize
this
Agreement or the Transaction Documents or to consummate the transactions
contemplated hereby and thereby. This Agreement constitutes the valid and
legally binding obligation of Lihua and is enforceable in accordance with
its
terms, except as such enforcement may be limited by general equitable
principles, or by bankruptcy, insolvency and other similar laws affecting
the
enforcement of creditors rights generally. Lihua does not need to give any
notice to, make any filings with, or obtain any authorization, consent or
approval of any government or governmental agency or other person in order
for
it to consummate the transactions contemplated by this Agreement, other than
filings that may be required or permitted under states securities laws, the
Securities Act and/or the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”)
resulting from the issuance of the Lihua Shares or securities in connection
with
the Private Placement.
4
Section
2.5 No
Conflict or Violation.
Neither
the execution and delivery of this Agreement or the Transaction Documents
by
Lihua, nor the consummation by Lihua of the transactions contemplated hereby
will: (i) contravene, conflict with, or violate any provision of the Lihua
Charter Documents; (ii) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or other restriction
of any government, governmental agency, court, administrative panel or other
tribunal to which Lihua is subject, (iii) conflict with, result in a breach
of, constitute a default (or an event or condition which, with notice or
lapse
of time or both, would constitute a default) under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify or cancel,
or
require any notice under any agreement, contract, lease, license, instrument
or
other arrangement to which Lihua is a party or by which it is bound, or to
which
any of its assets or properties are subject; or (iv) result in or require
the
creation or imposition of any encumbrance of any nature upon or with respect
to
any of Lihua’s assets, including without limitation the Lihua
Shares.
Section
2.6 Agreements.
Lihua
is not a party to or bound by any contracts, including, but not limited to,
any:
a. employment,
advisory or consulting contract;
b. plan
providing for employee benefits of any nature, including any severance
payments;
c. lease
with respect to any property or equipment;
d. contract,
agreement, understanding or commitment for any future expenditure in excess
of
$5,000 in the aggregate;
e. contract
or commitment pursuant to which it has assumed, guaranteed, endorsed, or
otherwise become liable for any obligation of any other person, entity or
organization; or
f. agreement
with any person relating to the dividend, purchase or sale of securities,
that
has not been settled by the delivery or payment of securities when due, and
which remains unsettled upon the date of this Agreement, except with respect
to
the Lihua Shares or the securities to be issued pursuant to the Securities
Purchase Agreement.
Lihua
has
provided to Ally Profit and the Ally Profit Shareholder, prior to the date
of
this Agreement, true, correct and complete copies of each contract (whether
written or oral), including each amendment, supplement and modification thereto
(the “Lihua Contracts”).
Section
2.7 Litigation.
There
is no action, suit, proceeding or investigation (“Action”)
pending or, to the knowledge of Lihua, currently threatened against Lihua
or any
of its affiliates, that may affect the validity of this Agreement or the
Transaction Documents or the right of Lihua to enter into this Agreement
and the
Transaction Documents or to consummate the transactions contemplated hereby
or
thereby. There is no Action pending or, to the knowledge of Lihua, currently
threatened against Lihua or any of its affiliates, before any court or by
or
before any governmental body or any arbitration board or tribunal, nor is
there
any judgment, decree, injunction or order of any court, governmental department,
commission, agency, instrumentality or arbitrator against Lihua or any of
its
affiliates. Neither Lihua nor any of its affiliates is a party or subject
to the
provisions of any order, writ, injunction, judgment or decree of any court
or
government agency or instrumentality. There is no Action by Lihua or any
of its
affiliates relating to Lihua currently pending or which Lihua or any of its
affiliates intends to initiate.
5
Section
2.8 Compliance
with Laws.
Lihua
has been and is in compliance with, and has not received any notice of any
violation of any, applicable law, order, ordinance, regulation or rule of
any
kind whatsoever, including without limitation the Securities Act, the Exchange
Act, the applicable rules and regulations of the SEC or the applicable
securities laws and rules and regulations of any state.
Section
2.9 Financial
Statements; SEC Filings.
a. Lihua’s
financial statements (the “Financial
Statements”)
contained in its periodic reports filed with the SEC have been prepared in
accordance with generally accepted accounting principles applicable in the
United States of America (“U.S.
GAAP”)
applied
on a consistent basis throughout the periods indicated, except that those
Financial Statements that are not audited do not contain all footnotes required
by U.S. GAAP. The Financial Statements fairly present the financial condition
and operating results of Lihua as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments. Except as set forth
in
the Financial Statements or as disclosed in Schedule
2.9(a),
Lihua
has no material liabilities (contingent or otherwise). Lihua is not a guarantor
or indemnitor of any indebtedness of any other person, entity or organization.
Lihua maintains a standard system of accounting established and administered
in
accordance with U.S. GAAP.
b. Except
as disclosed on Schedule
2.9(b),
Lihua
has timely made all filings with the SEC that it has been required to make
under
the Securities Act and the Exchange Act ( the “Public
Reports”).
Each
of the Public Reports has complied in all material respects with the applicable
provisions of the Securities Act, the Exchange Act, and the Sarbanes/Oxley
Act
of 2002 (the “Sarbanes/Oxley
Act”)
and/or
regulations promulgated thereunder. None of the Public Reports, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements made therein not
misleading. There is no event, fact or circumstance that would cause any
certification signed by any officer of Lihua in connection with any Public
Report pursuant to the Sarbanes/Oxley Act to be untrue, inaccurate or incorrect
in any respect. There is no revocation order, suspension order, injunction
or
other proceeding or law affecting the trading of Lihua’s Common Stock, it being
acknowledged that none of Lihua’s securities are approved or listed for trading
on any exchange or quotation system.
Section
2.10 Books,
Financial Records and Internal Controls.
All the
accounts, books, registers, ledgers, Lihua Board minutes and financial and
other
records of whatsoever kind of Lihua have been fully, properly and accurately
kept and completed; there are no material inaccuracies or discrepancies of
any
kind contained or reflected therein; and they give and reflect a true and
fair
view of the financial, contractual and legal position of Lihua. Lihua maintains
a system of internal accounting controls sufficient, in the judgment of Lihua,
to provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared
with
the existing assets at reasonable intervals and appropriate actions are taken
with respect to any differences.
6
Section
2.11 Employee
Benefit Plans.
Lihua
does not have any “Employee Benefit Plan” as defined in the U.S. Employee
Retirement Income Security Act of 1974 or similar plans under any applicable
laws.
Section
2.12 Tax
Returns, Payments and Elections.
Lihua
has filed all Tax (as defined below) returns, statements, reports, declarations
and other forms and documents (including, without limitation, estimated tax
returns and reports and material information returns and reports) (“Tax
Returns”)
required pursuant to applicable law to be filed with any Tax Authority (as
defined below). All such Tax Returns are accurate, complete and correct in
all
material respects, and Lihua has timely paid all Taxes due and adequate
provisions have been and are reflected in Lihua’s Financial Statements for all
current taxes and other charges to which Lihua is subject and which are not
currently due and payable. None of Lihua’s federal income tax returns have been
audited by the Internal Revenue Service. Lihua has no knowledge of any
additional assessments, adjustments or contingent tax liability (whether
federal
or state) of any nature whatsoever, whether pending or threatened against
the
Lihua for any period, nor of any basis for any such assessment, adjustment
or
contingency. Lihua has withheld or collected from each payment made to each
of
its employees, if applicable, the amount of all Taxes (including, but not
limited to, United States income taxes and other foreign taxes) required
to be
withheld or collected therefrom, and has paid the same to the proper Tax
Authority. For purposes of this Agreement, the following terms have the
following meanings: “Tax”
(and,
with correlative meaning, “Taxes” and “Taxable”) means any and all taxes
including, without limitation, (x) any net income, alternative or add-on
minimum
tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, value added, net worth, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other
like
assessment or charge of any kind whatsoever, together with any interest or
any
penalty, addition to tax or additional amount imposed by any United States,
local or foreign governmental authority or regulatory body responsible for
the
imposition of any such tax (domestic or foreign) (a “Tax
Authority”),
(y)
any liability for the payment of any amounts of the type described in (x)
as a
result of being a member of an affiliated, consolidated, combined or unitary
group for any taxable period or as the result of being a transferee or successor
thereof, and (z) any liability for the payment of any amounts of the type
described in (x) or (y) as a result of any express or implied obligation
to
indemnify any other person.
Section
2.13 No
Debt Obligations.
Upon
the Closing Date, Lihua will have no debt, obligations or liabilities of
any
kind whatsoever other than with respect to the transactions contemplated
hereby.
Lihua is not a guarantor of any indebtedness of any other person, entity
or
corporation.
Section
2.14 No
Broker Fees. No
brokers, finders or financial advisory fees or commissions will be payable
by or
to Lihua or any of their affiliates with respect to the transactions
contemplated by this Agreement, except fees, commissions and expenses payable
to
Broadband Capital Management LLC, whose principals and senior management
also
are officers and directors of Lihua (“Broadband”), in connection with the
Private Placement.
7
Section
2.15 No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or anticipated by Lihua
to
arise, between Lihua and any accountants and/or lawyers formerly or presently
engaged by Lihua. Lihua is current with respect to fees owed to its accountants
and lawyers.
Section
2.16 Disclosure.
This
Agreement and any certificate attached hereto or delivered in accordance
with
the terms hereby by or on behalf of Lihua in connection with the transactions
contemplated by this Agreement do not contain any untrue statement of a material
fact or omit any material fact necessary in order to make the statements
contained herein and/or therein not misleading.
Section
2.17 Absence
of Undisclosed Liabilities.
Since
the date of the filing of its quarterly report on Form 10-Q for the quarter
ended June 30, 2008, except as specifically disclosed in the Public Reports
and
except as set forth on Schedule
2.17:
(A)
there has been no event, occurrence or development that has resulted in or
could
result in a Material Adverse Effect; (B) Lihua has not incurred any liabilities,
obligations, claims or losses, contingent or otherwise, including debt
obligations, other than professional fees; (C) Lihua has not declared or
made
any dividend or distribution of cash or property to its shareholders, purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, or issued any equity securities other than with respect to transactions
contemplated hereby; (D) Lihua has not made any loan, advance or capital
contribution to or investment in any person or entity; (E) Lihua has not
discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities paid in
the
ordinary course of business; (F) Lihua has not suffered any substantial losses
or waived any rights of material value, whether or not in the ordinary course
of
business, or suffered the loss of any material amount of prospective business;
and (G) except for the Share Exchange, Lihua has not entered into any other
transaction other than in the ordinary course of business, or entered into
any
other material transaction, whether or not in the ordinary course of business.
Section
2.18 No
Repurchase Requirements.
Other
than the Repurchase, there are no outstanding contractual obligations
(contingent or otherwise) of Lihua to retire, repurchase, redeem or otherwise
acquire any outstanding shares of capital stock of, or other ownership interests
in, Lihua or to provide funds to or make any investment (in the form of a
loan,
capital contribution or otherwise) in any other person.
Section
2.19 Duly
Authorized.
The
issuance of the Lihua Shares has been duly authorized and, upon delivery
to the
Ally Profit Shareholder of certificates therefor in accordance with the terms
of
this Agreement, the Lihua Shares will be validly issued in compliance with
all
applicable U.S. federal and state securities and corporate laws, fully paid,
and
nonassessable, will have the rights, preferences and privileges specified,
will
be free of preemptive rights, and will be free and clear of all liens and
restrictions, other than liens created by the Ally Profit Shareholder and
restrictions on transfer imposed by this Agreement and any applicable securities
laws and the regulations and rules promulgated thereunder.
8
Section
2.20 No
Integrated Offering.
Lihua
does not have any registration statement pending before the Commission or
currently under the Commission’s review and since June 27, 2008, except as
contemplated under the Transaction Documents, Lihua has not offered or sold
any
of its equity securities or debt securities convertible into shares of Common
Stock.
Section
2.21 Employees.
a. Lihua
has no employees.
b. Other
than Xxxxxxx Xxxx, Xxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxx, Xxxxx does not have
any
officers or directors. No director or officer of Lihua is a party to, or
is
otherwise bound by, any contract (including any confidentiality, non-competition
or proprietary rights agreement) with any other person that in any way adversely
affects or will materially affect (a) the performance of his duties as a
director or officer of Lihua or (b) the ability of Lihua to conduct its
business.
Section
2.22 Interested
Party Transactions.
Except
for fees, commissions and expenses to be paid to Broadband in connection
with
the Private Placement, no officer, director or principal stockholder of Lihua
or
any affiliate or “associate” (as such term is defined in Rule 405 as promulgated
by the SEC under the Securities Act) of any such person, has or has had,
either
directly or indirectly, (1) an interest in any person which
(a) furnishes or sells services or products which are furnished or sold or
are proposed to be furnished or sold by Lihua, or (b) purchases from or
sells or furnishes to, or proposes to purchase from, sell to or furnish Lihua
any goods or services; or (2) a beneficial interest in any contract or
agreement to which Lihua is a party or by which it may be bound or affected.
Section
2.23 Intellectual
Property.
Lihua
does not own, use or license any Intellectual Property in its activities
as
presently conducted.
Section
2.24 No
Undisclosed Events or Circumstances.
No
event or circumstance has occurred or exists with respect to Lihua or its
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure
or
announcement by Lihua but which has not been so publicly announced or disclosed.
Lihua has not provided to Ally Profit, or the Ally Profit Shareholder, any
material non-public information or other information which, according to
applicable law, rule or regulation, was required to have been disclosed publicly
by Lihua but which has not been so disclosed, other than with respect to
the
transactions contemplated by this Agreement and/or the Private Placement.
Section
2.25 Disclosure.
This
Agreement, the schedules hereto and any certificate attached hereto or delivered
in accordance with the terms hereof by or on behalf of Lihua or any of the
Lihua
Controlling Stockholders in connection with the transactions contemplated
by
this Agreement, when taken together, do not contain any untrue statement
of a
material fact or omit to state any material fact necessary in order to make
the
statements contained herein and/or therein not misleading.
9
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE ALLY PROFIT COMPANIES
Ally
Profit represents, warrants and agrees that all of the statements in the
following subsections of this Article III, pertaining to Ally Profit and
the
Ally Profit Companies, are true and complete as of the date hereof. The
disclosure schedules attached hereto as Schedules
3.1 through 3.23
(the“Ally
Profit Disclosure Schedules”)
are
divided into sections that correspond to the sections of this Article III.
The
Ally Profit Disclosure Schedules comprise lists of all exceptions to the
truth
and accuracy in all material respects of, and of all disclosures or descriptions
required by, the representations and warranties set forth in this Article
III.
For the purposes of this Agreement, the “Ally Profit Companies” means, Ally
Profit, LiHua Holdings Limited, a Hong Kong Company, and Danyang Lihua Electron
Co., Ltd. and Jiangsu Lihua Copper Industry Co., Ltd., which are both PRC
wholly owned foreign enterprises (the “PRC
Companies”).
Section
3.1 Corporate
Organization of the Ally Profit Companies.
a. Corporate
Organization of Ally Profit.
Ally
Profit is organized as a company limited by shares under the laws of the
British
Virgin Islands and is validly existing and in good standing under the laws
of
the British Virgin Islands; and has the requisite corporate power and authority
to own, lease and operate its assets and properties and to carry on its business
as it is now being or currently planned to be conducted.
b. Corporate
Organization of the LiHua Holdings.
LiHua
Holdings is organized as a company under the laws of Hong Kong and is validly
existing and in good standing under the laws of the Hong Kong; and has the
requisite corporate power and authority to own, lease and operate its assets
and
properties and to carry on its business as it is now being or currently planned
to be conducted.
c. Corporate
Organization of the PRC Companies.
Each of
the PRC Companies is a limited liability company duly established and valid
under the existing laws of the PRC; and has the requisite corporate power
and
authority to own, lease and operate its assets and properties and to carry
on
its business as it is now being or currently planned to be
conducted.
d. Each
of the Ally Profit Companies are in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders (“Approvals”) necessary to own, lease and operate the properties it
purports to own, operate or lease and to carry on its business as it is now
being conducted and to consummate the transactions contemplated under this
Agreement, except where the failure to have such Approvals would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the business, operations, properties, assets, condition
or
results of operation of the Ally Profit Companies. The Ally Profit Companies
have delivered to Lihua and the Lihua Controlling Stockholders complete and
correct copies of the following documents (collectively referred to herein
as
“Ally
Profit Charter Documents”):
(a) Articles of Association and the Memorandum of Association of Ally
Profit; (b) the articles or certificate of incorporation and the by-laws or
code of regulations of LiHua Holdings and the PRC Companies (as hereinafter
defined); (c) any other document performing a similar function to the
documents specified in clauses (a), (b) adopted or filed in connection with
the
creation, formation or organization of a Person (as defined elsewhere in
this
Agreement); and (d) any and all amendments to any of the foregoing. The
Ally Profit Companies are not in violation of any of the provisions of their
respective Ally Profit Charter Documents. The minute books or the equivalent
of
the Ally Profit Companies contain true and accurate records of all meetings
and
consents in lieu of meetings of their respective Board of Directors and
stockholders (“Corporate
Records”),
from
the time of their organization until the date hereof. The stock ledgers and
other ownership records of the shares of each of the Ally Profit Companies’
capital stock are true, complete and accurate records of the ownership of
the
shares of such capital stock as of the date thereof and contain all issuances
and transfers of such shares since the time of organization of the Ally Profit
Companies.
10
Section
3.2 Capitalization
of the Ally Profit Companies.
a. Capitalization
of Ally Profit.
Ally
Profit has authorized capital consisting of 50,000 ordinary shares, par value
US
$1.00 per share, of which 100 shares, constituting all of the Ally Profit
Shares, are issued and outstanding. All of the Ally Profit Shares are owned
of
record by the Ally Profit Shareholder. The Ally Profit Shares are the sole
outstanding shares of capital stock of Ally Profit and there are no other
outstanding shares of capital stock or voting securities and no outstanding
commitments to issue any shares of capital stock or voting securities. The
Ally
Profit Shares have been duly authorized, validly issued, fully paid and
non-assessable, are free of any liens or encumbrances, and are not subject
to
preemptive rights or rights of first refusal created by statute, organizational
documents or any agreement to which Ally Profit is a party or by which it
is
bound. There are no outstanding or authorized options, warrants, purchase
agreements, participation agreements, subscription rights, conversion rights,
exchange rights or other securities or contracts that could require Ally
Profit
to issue, sell or otherwise cause to become outstanding any of its respective
authorized but unissued shares of capital stock, or to create, authorize,
issue,
sell or otherwise cause to become outstanding any new class of capital stock.
There are no outstanding stockholders’ agreements, voting trusts or
arrangements, rights of first refusal or other contracts pertaining to the
capital stock of Ally Profit. None of the outstanding shares of capital stock
of
Ally Profit have been issued in violation of any rights of any Person or
in
violation of any Law.
b. Capitalization
of LiHua Holdings. LiHua
Holdings has authorized capital consisting of 10,000 ordinary shares, par
value
HK $1.00 per share, of which one (1) share is issued and outstanding. All
of the
issued and outstanding shares of LiHua Holdings are owned of record by Ally
Profit. The shares of LiHua Holdings are the sole outstanding shares of capital
stock of LiHua Holdings and there are no other outstanding shares of capital
stock or voting securities and no outstanding commitments to issue any shares
of
capital stock or voting securities. The shares of LiHua Holdings have been
duly
authorized, validly issued, fully paid and non-assessable, are free of any
liens
or encumbrances, and are not subject to preemptive rights or rights of first
refusal created by statute, organizational documents or any agreement to
which
LiHua Holdings is a party or by which it is bound. There are no outstanding
or
authorized options, warrants, purchase agreements, participation agreements,
subscription rights, conversion rights, exchange rights or other securities
or
contracts that could require LiHua Holdings to issue, sell or otherwise cause
to
become outstanding any of its respective authorized but unissued shares of
capital stock, or to create, authorize, issue, sell or otherwise cause to
become
outstanding any new class of capital stock. There are no outstanding
stockholders’ agreements, voting trusts or arrangements, rights of first refusal
or other contracts pertaining to the capital stock of LiHua Holdings. None
of
the outstanding shares of capital stock of LiHua Holdings has been issued
in
violation of any rights of any Person or in violation of any
law.
11
c. Capitalization
of the PRC Companies.
The
capitalization, including the ownership of equity securities, of each of
the PRC
Companies is set forth on Schedule
3.2(c).
There
are no other outstanding shares of capital stock or voting securities and
no
outstanding commitments to issue any shares of capital stock or voting
securities. The issued and outstanding equity of each of the PRC Companies
set
forth on such schedule have been duly authorized, validly issued, fully paid
and
non-assessable, are free of any liens or encumbrances, and are not subject
to
preemptive rights or rights of first refusal created by statute, their
respective organizational documents or any agreement to which either of the
PRC
Companies is a party or by which it is bound, and such shares constitute
all of
the issued and outstanding capital stock of each of the PRC Companies All
registered capital and other capital contributions regarding the PRC Companies
have been duly paid in accordance with the relevant PRC regulations and
requirements and all necessary capital verification reports have been duly
issued and not revoked or withdrawn. The owners of the shares of each of
the PRC
Companies own, and have good, valid and marketable title to, all shares of
capital stock of each such PRC Companies. Except as set forth on Schedule
3.2(c),
there
are no outstanding or authorized options, warrants, purchase agreements,
participation agreements, subscription rights, conversion rights, exchange
rights or other securities or contracts that could require any of the PRC
Companies to issue, sell or otherwise cause to become outstanding any of
its
respective authorized but unissued shares of capital stock, or to create,
authorize, issue, sell or otherwise cause to become outstanding any new class
of
capital stock. There are no outstanding stockholders’ agreements, voting trusts
or arrangements, rights of first refusal or other contracts pertaining to
the
capital stock of any of the PRC Companies. None of the outstanding shares
of
capital stock of any of the PRC Companies has been issued in violation of
any
rights of any Person or in violation of any Law.
Section
3.3 Subsidiaries
and Equity Investments.
a. Schedule
3.3(a)
sets
forth a list of the ownership by any Ally Profit Company of any capital stock
or
other securities of, or any beneficial ownership interest in, or any equity
or
similar interest, or any investment in any corporation, limited liability
company, partnership, limited partnership, joint venture or other company,
person or other entity.
b. Except
as set forth on Schedule
3.3(a),
neither
Ally Profit nor any of the Ally Profit Companies, directly or indirectly,
owns
any capital stock or other securities of, or have any beneficial ownership
interest in, or hold any equity or similar interest, or have any investment
in
any corporation, limited liability company, partnership, limited partnership,
joint venture or other company, person or other entity. For each entity listed
thereon, Schedule
3.3(a)
sets
forth its jurisdiction of organization and the percentage of the outstanding
capital stock or other equity interests of such entity that is held by the
Ally
Profit Companies. Each entity listed on Schedule
3.3(a)
is duly
organized and
validly existing and, except as set forth on Schedule
3.3(a),
is in
good standing under the laws of the jurisdiction of its formation; has the
requisite corporate power and authority to own its properties and to carry
on
its business as now being conducted; and, if applicable, is duly qualified
as a
foreign entity to do business and, to the extent legally applicable, is in
good
standing in every jurisdiction in which its ownership of property or the
nature
of the business conducted by it makes such qualification necessary, except
to
the extent that the failure to be so qualified or be in good standing would
not
have a Material Adverse Effect (as hereinafter defined).
12
Section
3.4 Authorization,
Validity and Enforceability of Agreements.
Ally
Profit has all corporate power and authority to execute and deliver this
Agreement and the Transaction Documents, to perform its obligations hereunder
and to consummate the transactions contemplated hereby and thereby. This
Agreement and the Transaction Documents constitutes the valid and legally
binding obligation of Ally Profit and is enforceable in accordance with its
terms, except as such enforcement may be limited by general equitable
principles, or by bankruptcy, insolvency and other similar laws affecting
the
enforcement of creditors rights generally. Neither Ally Profit, nor any of
the
Ally Profit Companies, needs to give any notice to, make any filings with,
or
obtain any authorization, consent or approval of any government or governmental
agency or other person in order for Ally Profit to consummate the transactions
contemplated by this Agreement and the Transaction Documents, other than
filings
that may be required under BVI law, state securities laws, the Securities
Act
and/or the Exchange Act resulting from the transfer and exchange of the Ally
Profit Shares. The execution and delivery of this Agreement and the Transaction
Documents by Ally Profit and the consummation by Ally Profit of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action of Ally Profit, and no other corporate proceedings on the
part
of Ally Profit or any Ally Profit Company are necessary to authorize this
Agreement and the Transaction Documents or to consummate the transactions
contemplated hereby or thereby.
Section
3.5 No
Conflict or Violation.
Neither
the execution and delivery of this Agreement or the Transaction Documents
by
Ally Profit, nor the consummation by Ally Profit of the transactions
contemplated hereby or thereby will: (i) violate any provision of Ally
Profit’s or any Ally Profit Company’s Charter Documents, (ii) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any government, governmental agency,
court, administrative panel or other tribunal to which the Ally Profit Companies
are subject, (iii) conflict with, result in a breach of or (with or without
notice or lapse of time or both), constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify
or cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which any of the Ally Profit Companies
is a
party or by which any of them is bound, or to which any of their assets is
subject; or (iv) result in or require the creation or imposition of any
encumbrance of any nature upon or with respect to any of the Ally Profit
Companies’ assets.
13
Section
3.6 Compliance
with Laws and Other Instruments. Except
as
would not have a Material Adverse Effect on the Ally Profit Companies and
except
as set forth on Schedule 3.6(a), the business and operations of the Ally
Profit
Companies have been and are being conducted in accordance with all applicable
foreign, federal, state and local laws, rules and regulations and all applicable
orders, injunctions, decrees, writs, judgments, determinations and awards
of all
courts and governmental agencies and instrumentalities. Except as would not
have
a Material Adverse Effect on the Ally Profit Companies, the Ally Profit
Companies are not, and are not alleged to be, in violation of, or (with or
without notice or lapse of time or both) in default under, or in breach of,
any
term or provision of the Ally Profit Companies’ Charter Documents or of any
indenture, loan or credit agreement, note, deed of trust, mortgage, security
agreement or other material agreement, lease, license or other instrument,
commitment, obligation or arrangement to which any of the Ally Profit Companies
are a party or by which any of the Ally Profit Companies’ properties, assets or
rights are bound or affected. No other party to any material contract,
agreement, lease, license, commitment, instrument or other obligation to
which
any of the Ally Profit Companies are a party are (with or without notice
or
lapse of time or both) in default thereunder or in breach of any term thereof.
The Ally Profit Companies are not subject to any obligation or restriction
of
any kind or character, nor are there, to the knowledge of the Ally Profit
Companies, any event or circumstance relating to the Ally Profit Companies
that
materially and adversely affects in any way their business, properties, assets
or prospects or that would prevent or make burdensome their performance of
or
compliance with all or any part of this Agreement or the Transaction Documents,
or the consummation of the transactions contemplated hereby or thereby.
“Material
Adverse Effect” means,
when used with respect to the Ally Profit Companies, any event, occurrence,
change, effect or circumstance which, individually or in the aggregate,
(a) has a material adverse effect on the business, assets, financial
condition, results of operations of the Ally Profit Companies, in each case
taken as a whole or (b) materially impair the ability of Ally Profit to
perform its obligations under this Agreement, excluding any change, effect
or
circumstance resulting from (i) the announcement, pendency or consummation
of the transactions contemplated by this Agreement, (ii) changes in the
United States securities markets generally, or (iii) changes in general
economic, currency exchange rate, political or regulatory conditions in
industries in which the Ally Profit Companies operate.
Section
3.7 Brokers’
Fees. The
Ally
Profit Companies have no liability to pay any fees or commissions or other
consideration to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement, other than as listed under Schedule
3.7.
Section
3.8 Title
to and Condition of Properties.
Except
as set forth on Schedule 3.8, the Ally Profit Companies own or hold under
valid
leases or other rights to use all real property, plants, machinery and equipment
necessary for the conduct of the business of the Ally Profit Companies as
presently conducted, except where the failure to own or hold such property,
plants, machinery and equipment would not have a Material Adverse Effect.
The
material buildings, plants, machinery and equipment necessary for the conduct
of
the business of the Ally Profit Companies as presently conducted are
structurally sound, are in good operating condition and repair and are adequate
for the uses to which they are being put, in each case, taken as a whole,
and
none of such buildings, plants, machinery or equipment are in need of
maintenance or repairs, except for ordinary, routine maintenance and repairs
that are not material in nature or cost.
Section
3.9 Absence
of Undisclosed Liabilities.
Except
as set forth on Schedule
3.9,
the
Ally Profit Companies have no debt, obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due)
arising out of any transaction entered into at or prior to the Closing Date
or
any act or omission at or prior to the Closing Date, except to the extent
set
forth on or reserved against on the Company Audited Financial Statements
(as
hereinafter defined). The Ally Profit Companies have not incurred any
liabilities or obligations under agreements entered into, except in the usual
and ordinary course of business, since June 30, 2008 .
14
Section
3.10 Changes.
The
Ally Profit Companies have not, since June 30, 2008:
a. Ordinary
Course of Business.
Entered
into any transaction with third parties other than in the usual and ordinary
course of business, except for this Agreement and the other documents to
be
entered into in connection with the transactions contemplated by this
Agreement;
b. Adverse
Changes.
Suffered or experienced any change in, or affecting, their condition (financial
or otherwise), properties, assets, liabilities, business, operations or results
of operations other than changes, events or conditions in the usual and ordinary
course of their business, none of which would have a Material Adverse
Effect;
c. Loans.
Made
any loans or advances or extended credit to any Person (for purposes of this
Agreement, “Person”
means
all natural persons, corporations, business trusts, associations, companies,
partnerships, limited liability companies, joint ventures and other entities,
governments, agencies and political subdivisions) other than travel advances
and
reimbursement of expenses made to employees, officers and directors in the
ordinary course of business;
d. Liens.
Created
or permitted to exist any material Lien on any property or asset of any of
the
Ally Profit Companies, other than (a) Liens for taxes not yet payable or
in
respect of which the validity thereof is being contested in good faith by
appropriate proceedings and for the payment of which the relevant party has
made
adequate reserves; (b) Liens in respect of pledges or deposits under workmen’s
compensation laws or similar legislation, carriers, warehousemen, mechanics,
laborers and materialmen and similar Liens, if the obligations secured by
such
Liens are not then delinquent or are being contested in good faith by
appropriate proceedings conducted and for the payment of which the relevant
party has made adequate reserves; (c) statutory Liens incidental to the conduct
of the business of the relevant party which were not incurred in connection
with
the borrowing of money or the obtaining of advances or credits and that do
not
in the aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business; and (d) Liens that
would not have a Material Adverse Effect (“Permitted
Liens”);
e. Capital
Stock.
Issued,
sold, disposed of or encumbered, or authorized the issuance, sale, disposition
or encumbrance of, or granted or issued any option to acquire any shares
of
their capital stock or any other of their securities or any equity security
of
any class of any of the Ally Profit Companies, or altered the term of any
of
their outstanding securities or made any change in their outstanding shares
of
capital stock or their capitalization, whether by reason of reclassification,
recapitalization, stock split, combination, exchange or readjustment of shares,
stock dividend or otherwise, except as may have been required in connection
with
the restructuring of the Ally Profit Companies in anticipation of the
transactions contemplated hereby;
15
f. Dividends.
Declared, set aside, made or paid any dividend or other distribution to any
of
their stockholders;
g. Material
Ally Profit Contracts.
Terminated or modified any or all agreements, contracts, arrangements, leases,
commitments or otherwise, of any of the Ally Profit Companies, of the type
and
nature that is required to be filed with the SEC (each a “Material
Ally Profit Contract”),
except for termination upon expiration in accordance with the terms thereof
or
as set forth in Schedule
3.10(g);
h. Claims.
Released, waived or cancelled any claims or rights relating to or affecting
any
of the Ally Profit Companies in excess of US$150,000 in the aggregate or
instituted or settled any Action involving in excess of US$150,000 in the
aggregate;
i. Discharged
Liabilities.
Except
as set forth on Schedule
3.10(i),
paid,
discharged or satisfied any claim, obligation or liability in excess of
US$150,000 in the aggregate, except for liabilities incurred prior to the
date
of this Agreement in the ordinary course of business;
j. Indebtedness.
Except
as set forth on Schedule
3.10(j),
Created, incurred, assumed or otherwise become liable for any indebtedness
in
excess of US$150,000 in the aggregate, other than professional
fees;
k. Guarantees.
Guaranteed or endorsed any obligation or net worth of any Person;
l. Acquisitions.
Acquired the capital stock or other securities or any ownership interest
in, or
substantially all of the assets of, any other Person;
m. Accounting.
Changed
their method of accounting or the accounting principles or practices utilized
in
the preparation of their Financial Statements;
n. Agreements.
Except
as set forth on Schedule
3.10(n),
entered
into any agreement, or otherwise obligated themselves, to do any of the
foregoing.
Section
3.11 Material
Ally Profit Contracts.
The
Ally Profit Companies have made available to Lihua and the Lihua Controlling
Stockholders, prior to the date of this Agreement, true, correct and complete
copies of each Material Ally Profit Contract.
a. No
Defaults.
Each
Material Ally Profit Contract is a valid and binding agreement of the Ally
Profit Companies and is in full force and effect. Except as would not have
a
Material Adverse Effect, the Ally Profit Companies are not in breach or default
of any Material Ally Profit Contract to which they are a party and no other
party to any Material Ally Profit Contract are in breach or default thereof.
Except as would not have a Material Adverse Effect, no event has occurred
or
circumstance exists that (with or without notice or lapse of time) would
(a)
contravene, conflict with or result in a violation or breach of, or become
a
default or event of default under, any provision of any Material Ally Profit
Contract or (b) permit the Ally Profit Companies or any other Person the
right
to declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate or modify any Material Ally Profit
Contract. The Ally Profit Companies have not received notice of the pending
or
threatened cancellation, revocation or termination of any Material Ally Profit
Contract to which they are a party. There are no renegotiations of, or attempts
to renegotiate, or outstanding rights to renegotiate any material terms of
any
Material Ally Profit Contract.
16
Section
3.12 Material
Assets.
The
Financial Statements of the Ally Profit Companies reflect the material
properties and assets (real and personal) owned or leased by the Ally Profit
Companies.
Section
3.13 Litigation;
Orders.
There
are no Actions (whether U.S. or non-U.S. federal, state, local or foreign)
pending or, to the knowledge of the Ally Profit Companies, threatened against
or
affecting any of the Ally Profit Companies or any of the Ally Profit Companies’
properties, assets, business or employees. To the knowledge of the Ally Profit
Companies, there are no facts that might result in or form the basis for
any
such Action. The Ally Profit Companies are not subject to any
Orders.
Section
3.14 Licenses.
Except
as would not have a Material Adverse Effect and except as set forth on Schedule
3.14, the Ally Profit Companies possess from the appropriate federal or
national, state or provincial, municipal or local government, governmental
authority, regulatory or administrative agency, governmental commission,
department, board, bureau, agency or instrumentality, political subdivision,
commission, court, tribunal, official, arbitrator or arbitral body, in each
case
whether U.S. or non-U.S. (“Governmental
Authority”),
all
licenses, permits, authorizations, approvals, franchises and rights that
are
necessary for the Ally Profit Companies to engage in their business as currently
conducted and to permit any of the Ally Profit Companies to own and use their
properties and assets in the manner in which they currently own and use such
properties and assets (collectively, “Ally
Profit Companies Permits”).
The
Ally Profit Companies have not received notice from any Governmental Authority
or other Person that they are lacking any license, permit, authorization,
approval, franchise or right necessary for the Ally Profit Companies to engage
in their business as currently conducted and to permit the Ally Profit Companies
to own and use their properties and assets in the manner in which they currently
own and use such properties and assets. Except as would not have a Material
Adverse Effect, the Ally Profit Companies Permits are valid and in full force
and effect. Except as would not have a Material Adverse Effect, no event
has
occurred or circumstance exists that may (with or without notice or lapse
of
time): (a) constitute or result, directly or indirectly, in a violation of
or a failure to comply with any Ally Profit Companies Permit; or
(b) result, directly or indirectly, in the revocation, withdrawal,
suspension, cancellation or termination of, or any modification to, any Ally
Profit Companies Permit. None of the Ally Profit Companies have received
notice
from any Governmental Authority or any other Person regarding: (a) any
actual, alleged, possible or potential contravention of any Ally Profit
Companies Permit; or (b) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination of, or
modification to, any Ally Profit Companies Permit. All applications required
to
have been filed for the renewal of the Ally Profit Companies Permits have
been
duly filed on a timely basis with the appropriate Persons, and all other
filings
required to have been made with respect to the Ally Profit Companies Permits
have been duly made on a timely basis with the appropriate Persons. All Ally
Profit Companies Permits are renewable by their terms or in the ordinary
course
of business without the need to comply with any special qualification procedures
or to pay any amounts other than routine fees or similar charges, all of
which
have, to the extent due, been duly paid.
17
Section
3.15 Interested
Party Transactions.
Except
as disclosed on Schedule
3.15,
no
officer, director or stockholder of any of the Ally Profit Companies or any
affiliate or “associate” (as such term is defined in Rule 405 promulgated by the
SEC under the Securities Act) of any such Person, have or have had, either
directly or indirectly, (1) an interest in any Person which (a) furnishes
or
sells services or products which are furnished or sold or are proposed to
be
furnished or sold by the Ally Profit Companies, or (b) purchases from or
sells
or furnishes to, or proposes to purchase from, sell to or furnish any Ally
Profit Companies any goods or services; or (2) a beneficial interest in any
contract or agreement to which the Ally Profit Companies are a party or by
which
they may be bound or affected.
Section
3.16 Governmental
Inquiries.
Ally
Profit has provided to Lihua a copy of each material written inspection report,
questionnaire, inquiry, demand or request for information received by the
Ally
Profit Companies from any Governmental Authority, and the Ally Profit Companies’
response thereto, and each material written statement, report or other document
filed by the Ally Profit Companies with any Governmental Authority.
Section
3.17 Intellectual
Property.
Except
as set forth on Schedule
3.17
hereto,
the Ally Profit Companies do not own, use or license any Intellectual Property
in their business as presently conducted. For purposes of this Agreement,
“Intellectual Property” means all industrial and intellectual property,
including, without limitation, all U.S. and non-U.S. patents, patent
applications, patent rights, trademarks, trademark applications, common law
trademarks, Internet domain names, trade names, service marks, service xxxx
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation
and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world. No Intellectual Property
of any of the Ally Profit Companies has been or is now involved in any dispute,
opposition, invalidation or cancellation proceeding, and no such action has
been
threatened. No Intellectual Property, wherever situated or registered, of
any of
the Ally Profit Companies, to the knowledge of the Ally Profit Companies
is
infringed, or has been challenged or, to the knowledge of the Ally Profit
Companies , threatened in any way, and no Intellectual Property of any of
the
Ally Profit Companies to the knowledge of the Ally Profit Companies interferes
with the Intellectual Property of any other Person, and no Intellectual Property
of any of the Ally Profit Companies is alleged to infringe or interfere with
the
Intellectual Property of any other Person. Except as would not have a Material
Adverse Effect, none of the Ally Profit Companies have taken any action that
would result in the voiding or invalidation of any of its Intellectual
Property.
18
Section
3.18 Stock
Option Plans; Employee Benefits.
a. Except
as set forth on Schedule
3.18(a)
hereto,
none of the Ally Profit Companies have stock option plans providing for the
grant by the Ally Profit Companies of stock options to directors, officers
or
employees.
b. Except
as set forth on Schedule
3.18(b)
hereto,
none of the Ally Profit Companies have employee benefit plans or arrangements
covering their present and former employees or providing benefits to such
persons in respect of services provided to the Ally Profit
Companies.
c. Neither
the consummation of the transactions contemplated hereby alone, nor in
combination with another event, with respect to each director, officer, employee
and consultant of the Ally Profit Companies, will result in (a) any payment
(including, without limitation, severance, unemployment compensation or bonus
payments) becoming due from the Ally Profit Companies, (b) any increase in
the
amount of compensation or benefits payable to any such individual or (c)
any
acceleration of the vesting or timing of payment of compensation payable
to any
such individual. No agreement, arrangement or other contract of the Ally
Profit
Companies provides benefits or payments contingent upon, triggered by, or
increased as a result of a change in the ownership or effective control of
the
Ally Profit Companies.
Section
3.19 Environmental
and Safety Matters.
Except
as set forth on Schedule
3.19
and
except as would not have a Material Adverse Effect:
a. The
Ally Profit Companies have at all times been and are in compliance with all
Environmental Laws (as defined below) applicable to the Ally Profit
Companies.
b. There
are no Actions pending or threatened against the Ally Profit Companies alleging
the violation of any Environmental Law (as defined below) or Environmental
Permit applicable to the Ally Profit Companies or alleging that the Ally
Profit
Companies are potentially responsible parties for any environmental site
contamination.
c. Neither
this Agreement nor the consummation of the transactions contemplated by this
Agreement shall impose any obligations to notify or obtain the consent of
any
Governmental Authority or third Persons under any Law or other requirement
relating to the environment, natural resources, or public or employee health
and
safety (“Environmental Laws”) applicable to the Ally Profit
Companies.
Section
3.20 Board
Recommendation.
The
Board of Directors of Ally Profit, at a meeting duly called and held, has
determined that this Agreement and the transactions contemplated by this
Agreement are advisable and in the best interests of the Ally Profit
Shareholder.
Section
3.21 Financial
Statements. Attached
as Schedule
3.21
are Ally
Profit’s audited consolidated financial statements for the periods ended
December 31, 2006 and 2007, including, in each case, the notes thereto (the
“Company
Audited Financial Statements”)
and
the unaudited consolidated financial statements for the six months ended
June
30, 2008 (the “Company
Unaudited Financial Statements”).
The
Company Audited Financial Statements and the Company Unaudited Financial
Statements (a) are in accordance with the books and records of the Ally Profit
Companies; (b) present fairly the financial condition and the results of
operations, changes in stockholder’s equity and cash flow of the Ally Profit
Companies for the periods therein specified; and (c) have been prepared in
accordance with GAAP applied on a consistent basis during the periods
concerned.
19
Section
3.22 Tax
Returns, Payments and Elections.
The
Ally Profit Companies have filed all Tax Returns, required pursuant to
applicable law to be filed with any Tax Authority. All such Tax Returns are
accurate, complete and correct in all material respects, and the Ally Profit
Companies have timely paid all Taxes due. The Ally Profit Companies have
withheld or collected from each payment made to each of its employees, if
applicable, the amount of all Taxes (including foreign taxes) required to
be
withheld or collected therefrom, and has paid the same to the proper Tax
Authority.
Section
3.23 Disclosure.
This
Agreement, the schedules hereto and any certificate attached hereto or delivered
in accordance with the terms hereof by or on behalf of the Ally Profit Companies
or the Ally Profit Shareholder in connection with the transactions contemplated
by this Agreement, when taken together, do not contain any untrue statement
of a
material fact or omit to state any material fact necessary in order to make
the
statements contained herein and/or therein not misleading.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF ALLY PROFIT SHAREHOLDER
The
Ally
Profit Shareholder hereby represents and warrants to Lihua:
Section
4.1 Authority.
The
Ally Profit Shareholder has the right, power, authority and capacity to execute
and deliver this Agreement and each of the Transaction Documents to which
the
Ally Profit Shareholder is a party, to consummate the transactions contemplated
by this Agreement and each of the Transaction Documents to which the Ally
Profit
Shareholder is a party, and to perform the Ally Profit Shareholder’s obligations
under this Agreement and each of the Transaction Documents to which the Ally
Profit Shareholder is a party. This Agreement has been, and each of the
Transaction Documents to which the Ally Profit Shareholder is a party will
be,
duly and validly authorized and approved, executed and delivered by the Ally
Profit Shareholder. Assuming this Agreement and the Transaction Documents
have
been duly and validly authorized, executed and delivered by the parties thereto
other than the Ally Profit Shareholder, this Agreement is, and each of the
Transaction Documents to which the Ally Profit Shareholder is a party have
been,
duly authorized, executed and delivered by the Ally Profit Shareholder and
constitutes the legal, valid and binding obligation of the Ally Profit
Shareholder, enforceable against the Ally Profit Shareholder in accordance
with
their respective terms, except as such enforcement is limited by general
equitable principles, or by bankruptcy, insolvency and other similar Laws
affecting the enforcement of creditors rights generally.
Section
4.2 No
Conflict.
Neither
the execution or delivery by the Ally Profit Shareholder of this Agreement
or
any Transaction Document to which the Ally Profit Shareholder is a party,
nor
the consummation or performance by the Ally Profit Shareholder of the
transactions contemplated hereby or thereby will, directly or indirectly,
(a) contravene, conflict with, or result in a violation of any provision of
the Organizational Documents of the Ally Profit Shareholder (if the Ally
Profit
Shareholder is not a natural person); (b) contravene, conflict with,
constitute a default (or an event or condition which, with notice or lapse
of
time or both, would constitute a default) under, or result in the termination
or
acceleration of, any agreement or instrument to which the Ally Profit
Shareholder is a party or by which the properties or assets of the Ally Profit
Shareholder are bound; or (c) contravene, conflict with, or result in a
violation of, any Law or Order to which the Ally Profit Shareholder, or any
of
the properties or assets of the Ally Profit Shareholder, may be
subject.
20
Section
4.3 Litigation.
There
is no pending Action against the Ally Profit Shareholder that involves the
Ally
Profit Shares or that challenges, or may have the effect of preventing, delaying
or making illegal, or otherwise interfering with, any of the transactions
contemplated by this Agreement or the business of the Ally Profit Companies
and,
to the knowledge of the Ally Profit Shareholder, no such Action has been
threatened, and no event or circumstance exists that is reasonably likely
to
give rise to or serve as a basis for the commencement of any such
Action.
Section
4.4 Acknowledgment.
The
Ally Profit Shareholder understands and agrees that the Lihua Shares to be
issued pursuant to this Agreement have not been registered under the Securities
Act or the securities laws of any state of the U.S. and that the issuance
of the
Lihua Shares is being effected in reliance upon an exemption from registration
afforded either under Section 4(2) of the Securities Act for transactions
by an
issuer not involving a public offering or Regulation D promulgated thereunder
or
Regulation S for offers and sales of securities outside the U.S.
i Status.
By its
execution of this Agreement, the Ally Profit Shareholder represents and warrants
to Lihua as indicated on Exhibit
A,
that it
is an accredited investor, as defined in Regulation D promulgated under the
Securities Act. The Ally Profit Shareholder understands that the Lihua
Shares are being offered and sold to the Ally Profit Shareholder in reliance
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Ally Profit Shareholder set forth
in
this Agreement, in order that Lihua may determine the applicability and
availability of the exemptions from registration of the Lihua Shares on which
Lihua is relying.
ii Additional
Representations and Warranties.
The Ally
Profit Shareholder further makes the representations and warranties to Lihua
set
forth on Exhibit
B.
Section
4.5 Stock
Legends.
The
Ally Profit Shareholder hereby agrees with Lihua as follows:
a. Securities
Act Legend Accredited Investors. The certificates evidencing the Lihua Shares
issued to the Ally Profit Shareholder will bear the following
legend:
21
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY
BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT
TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO
AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND
APPLICABLE STATE SECURITIES LAWS, OR (3) IN ACCORDANCE WITH THE PROVISIONS
OF
REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION
OF
COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY,
THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED.
b. Other
Legends.
The
certificates representing such Lihua Shares, and each certificate issued
in
transfer thereof, will also bear any other legend required under any applicable
law, including, without limitation, any U.S. state corporate and state
securities law, or contract.
c. Opinion.
The
Ally Profit Shareholder shall not transfer any or all of the Lihua Shares
pursuant to Rule 144, under the Securities Act, Regulation S or absent
an effective registration statement under the Securities Act and applicable
state securities law covering the disposition of the Lihua Shares, without
first
providing Lihua with an opinion of counsel (which counsel and opinion are
reasonably satisfactory to the Lihua) to the effect that such transfer will
be
made in compliance with Rule 144, under the Securities Act,
Regulation S or will be exempt from the registration and the prospectus
delivery requirements of the Securities Act and the registration or
qualification requirements of any applicable U.S. state securities
laws.
Section
4.6 Ownership
of Shares.
The
Ally Profit Shareholder is both the record and beneficial owner of the Ally
Profit Shares. The Ally Profit Shareholder is not the record or beneficial
owner
of any other shares of Ally Profit. The Ally Profit Shareholder has and shall
transfer at the Closing, good and marketable title to the Ally Profit Shares,
free and clear of all liens, claims, charges, encumbrances, pledges, mortgages,
security interests, options, rights to acquire, proxies, voting trusts or
similar agreements, restrictions on transfer or adverse claims of any nature
whatsoever.
Section
4.7 Pre-emptive
Rights.
At
Closing, no Ally Profit Shareholder has any pre-emptive rights or any other
rights to acquire any shares of Ally Profit that have not been waived or
exercised.
22
ARTICLE
V
CONDITIONS
TO OBLIGATIONS OF ALLY PROFIT
AND
THE ALLY PROFIT SHAREHOLDER
The
obligations of Ally Profit and the Ally Profit Shareholder to consummate
the
transactions contemplated by this Agreement are subject to the fulfillment,
at
or before the Closing Date, of the following conditions, any one or more
of
which may be waived by Ally Profit and the Ally Profit Shareholder at their
sole
discretion:
Section
5.1 Representations
and Warranties of Lihua.
All
representations and warranties made by Lihua in this Agreement shall be true
and
correct in all material respects on and as of the Closing Date, except insofar
as the representations and warranties relate expressly and solely to a
particular date or period, in which case, subject to the limitations applicable
to the particular date or period, they will be true and correct in all material
respects on and as of the Closing Date with respect to such date or
period.
Section
5.2 Agreements
and Covenants.
Lihua
shall have performed and complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with
by on
or prior to the Closing Date.
Section
5.3 Consents
and Approvals.
All
consents, waivers, authorizations and approvals of any governmental or
regulatory authority, domestic or foreign, and of any other person, firm
or
corporation, required in connection with the execution, delivery and performance
of this Agreement shall be in full force and effect on the Closing
Date.
Section
5.4 No
Violation of Orders.
No
preliminary or permanent injunction or other order issued by any court or
governmental or regulatory authority, domestic or foreign, nor any statute,
rule, regulation, decree or executive order promulgated or enacted by any
government or governmental or regulatory authority, which declares this
Agreement invalid in any respect or prevents the consummation of the
transactions contemplated hereby, or which materially and adversely affects
the
assets, properties, operations, prospects, net income or financial condition
of
Lihua shall be in effect; and no action or proceeding before any court or
governmental or regulatory authority, domestic or foreign, shall have been
instituted or threatened by any government or governmental or regulatory
authority, domestic or foreign, or by any other person, or entity which seeks
to
prevent or delay the consummation of the transactions contemplated by this
Agreement or which challenges the validity or enforceability of this
Agreement.
Section
5.5 Other
Closing Documents.
Ally
Profit shall have received such certificates, instruments and documents in
confirmation of the representations and warranties of Lihua, Lihua’s performance
of its obligations hereunder, and/or in furtherance of the transactions
contemplated by this Agreement as the Ally Profit Shareholders and/or their
respective counsel may reasonably request.
Section
5.6 Consummation
of Private Placement.
The
definitive documents with respect to the Private Placement and the financing
contemplated thereby shall have been finalized for execution by the parties
immediately following consummation of the Share Exchange.
23
Section
5.7 Documents.
Lihua
must have caused the following documents to be delivered to Ally Profit and
the
Ally Profit Shareholders:
a. share
certificates evidencing the Lihua Shares registered in the name of the Ally
Profit Shareholder;
b. a
Secretary’s Certificate, dated the Closing Date, certifying attached copies of
(A) the Lihua Charter Documents, (B) the resolutions of the Lihua
Board approving this Agreement, the Transaction Documents and the transactions
contemplated hereby and thereby; and (C) the incumbency of each authorized
officer of Lihua signing this Agreement and the Transaction Documents to
which
Lihua is a party;
c. a
Certificate of Good Standing of Lihua;
d. this
Agreement and each of the Transaction Documents to which Lihua is a party,
duly
executed;
e. the
resignation of each of Xxxxxxx Xxxx and Xxxxxx Xxxxxxxxx as officers of Lihua
as
of the Closing Date;
f. the
resignation of Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx and Xxxxxx Xxxxxxxxx as directors
of Lihua on the Closing Date;
g. legal
opinion of Xxxxxxx Xxxxxxxxx & Xxxxx LLP, in substantially the form of
Exhibit C; and
h. an
Officer’s Certificate, dated the Closing Date, certifying as to Sections 5.1,
5.2, 5.3 and 5.4.
i. such
other documents as Ally Profit may reasonably request for the purpose of
(i) evidencing the accuracy of any representation or warranty of Lihua,
(ii) evidencing the performance by Lihua of, or the compliance by Lihua
with, any covenant or obligation required to be performed or complied with
by
Lihua, (iii) evidencing the satisfaction of any condition referred to in
this Article V, or (iv) otherwise facilitating the consummation of any of
the transactions contemplated by this Agreement and the Transaction
Documents.
ARTICLE
VI
CONDITIONS
TO OBLIGATIONS OF LIHUA
The
obligations of Lihua to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date,
of the
following conditions, any one or more of which may be waived by Lihua in
its
sole discretion:
24
Section
6.1 Representations
and Warranties of Ally Profit and the Ally Profit Shareholder and other Ally
Profit Companies.
All
representations and warranties made by Ally Profit and the Ally Profit
Shareholder on behalf of themselves individually, and on behalf of the other
Ally Profit Companies in this Agreement shall be true and correct on and
as of
the Closing Date except insofar as the representation and warranties relate
expressly and solely to a particular date or period, in which case, subject
to
the limitations applicable to the particular date or period, they will be
true
and correct in all material respects on and as of the Closing Date with respect
to such date or period.
Section
6.2 Agreements
and Covenants.
Ally
Profit and the Ally Profit Shareholder shall have performed and complied
in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by each of them on or prior to the Closing
Date.
Section
6.3 Consents
and Approvals.
All
consents, waivers, authorizations and approvals of any governmental or
regulatory authority, domestic or foreign, and of any other person, firm
or
corporation, required in connection with the execution, delivery and performance
of this Agreement, shall have been duly obtained and shall be in full force
and
effect on the Closing Date.
Section
6.4 No
Violation of Orders.
No
preliminary or permanent injunction or other order issued by any court or
other
governmental or regulatory authority, domestic or foreign, nor any statute,
rule, regulation, decree or executive order promulgated or enacted by any
government or governmental or regulatory authority, domestic or foreign,
that
declares this Agreement invalid or unenforceable in any respect or which
prevents the consummation of the transactions contemplated hereby, or which
materially and adversely affects the assets, properties, operations, prospects,
net income or financial condition of Ally Profit and the Ally Profit Companies,
taken as a whole, shall be in effect; and no action or proceeding before
any
court or government or regulatory authority, domestic or foreign, shall have
been instituted or threatened by any government or governmental or regulatory
authority, domestic or foreign, or by any other person, or entity which seeks
to
prevent or delay the consummation of the transactions contemplated by this
Agreement or which challenges the validity or enforceability of this
Agreement.
Section
6.5 Other
Closing Documents.
Lihua
shall have received such certificates, instruments and documents in confirmation
of the representations and warranties of the Ally Profit Companies and the
Ally
Profit Shareholders, the performance of the Ally Profit Companies’ and the Ally
Profit Shareholders’ respective obligations hereunder and/or in furtherance of
the transactions contemplated by this Agreement as Lihua or its counsel may
reasonably request.
Section
6.6 Consummation
of Private Placement.
The
definitive documentation with respect to the Private Placement and the financing
contemplated thereby shall have been finalized for execution by the parties
thereto immediately following consummation of the Share
Exchange.
25
Section
6.7 Opinions
of Counsel, Etc. At
the Closing, Ally Profit deliver, or cause to be delivered, to the Lihua
Controlling Stockholders, the following:
a. (i)
the opinion of Xxxxxx and Xxxxxx, BVI counsel to Ally Profit, in substantially
the form of Exhibit
D-1
attached
hereto; (ii) the opinion of Xxxxxx and Calder, BVI counsel to Magnify Wealth,
in
substantially the form of Exhibit
D-2
attached
hereto; (iii) the opinion of Han Kun, PRC counsel to Ally Profit, in
substantially the form of Exhibit
E
attached
hereto; and (iv) the opinion of Loeb & Loeb LLP, US counsel to Ally Profit,
in substantially the form of Exhibit
F.
Section
6.8 Documents.
Ally
Profit and the Ally Profit Shareholder must deliver to Lihua at the
Closing:
a. share
certificates evidencing the number of Ally Profit Shares, along with executed
share transfer forms transferring such Ally Profit Shares to Lihua, together
with a certified copy of a board resolution of Ally Profit approving the
registration of the transfer of such shares to Lihua (subject to Closing
and
payment of stamp duty);
b. this
Agreement and each of the Transaction Documents to which the Ally Profit
and the
Ally Profit Shareholder is a party, duly executed;
c. such
other documents as Lihua may reasonably request for the purpose of (A)
evidencing the accuracy of any of the representations and warranties of the
Ally
Profit and the Ally Profit Shareholder , (B) evidencing the performance of,
or
compliance by Ally Profit and the Ally Profit Shareholder with, any covenant
or
obligation required to be performed or complied with by Ally Profit and the
Ally
Profit Shareholder, as the case may be, (C) evidencing the satisfaction of
any
condition referred to in this Article VI, or (D) otherwise facilitating the
consummation or performance of any of the transactions contemplated by this
Agreement and the other Transaction Documents.
Section
6.9 No
Claim Regarding Stock Ownership or Consideration.
There
must not have been made or threatened by any Person, any claim asserting
that
such Person (a) is the holder of, or has the right to acquire or to obtain
beneficial ownership of the Ally Profit Shares, or any other stock, voting,
equity, or ownership interest in, Ally Profit or any of the Ally Profit
Companies, or (b) is entitled to all or any portion of the Lihua
Shares.
Section
6.10 Cash
Payment.
On the Closing Date Ally Profit shall have paid to Lihua the sum of
US$100,000 in the aggregate in consideration for the consummation of the
Share
Exchange.
Section
6.11 Repurchase.
The
Repurchase Agreements shall have been executed and delivered by all parties,
and
the Repurchase shall have been consummated, including the payment
of US$45,061 to the stockholders of Lihua who executed
the Repurchase Agreements, contemporaneous with the
Closing.
26
ARTICLE
VII
POST-CLOSING
AGREEMENTS
Section
7.1 SEC
Documents.
From
and after the Closing Date, in the event the SEC notifies Lihua of its intent
to
review any Public Report filed prior to the Closing Date or Lihua receives
any
oral or written comments from the SEC with respect to any Public Report filed
prior to the Closing Date, Lihua shall promptly notify the Lihua Controlling
Stockholders and the Lihua Controlling Stockholders shall reasonably cooperate
with Lihua in responding to any such oral or written comments.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1 Survival
of Provisions.
The
respective representations, warranties, covenants and agreements of each
of the
parties to this Agreement (except covenants and agreements which are expressly
required to be performed and are performed in full on or before the Closing
Date) shall expire on the first day of the eighteen-month anniversary of
the
Closing Date (the “Survival
Period”).
The
right to indemnification, payment of damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected
by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement, with respect to the accuracy or inaccuracy
of or
compliance with, any such representation, warranty, covenant, or obligation.
The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will
not
affect the right to indemnification, payment of damages, or other remedy
based
on such representations, warranties, covenants, and obligations.
Section
8.2 Indemnification.
a. Indemnification
Obligations in favor of the Controlling Stockholders of Lihua.
Notwithstanding the limitation set forth in Section 9.1, from and after the
Closing Date until the expiration of the Survival Period, the Ally Profit
Companies and the Ally Profit Shareholder shall reimburse and hold harmless
the
Lihua Controlling Stockholders (each such person and his heirs, executors,
administrators, agents, successors and assigns is referred to herein as a
“Lihua
Indemnified Party”)
against and in respect of any and all damages, losses, settlement payments,
in
respect of deficiencies, liabilities, costs, expenses and claims suffered,
sustained, incurred or required to be paid by any Lihua Indemnified Party,
and
any and all actions, suits, claims, or legal, administrative, arbitration,
governmental or other procedures or investigation against any Lihua Indemnified
Party, which arises or results from a third-party claim brought against a
Lihua
Indemnified Party to the extent based on a breach of the representations
and
warranties with respect to the business, operations or assets of the Ally
Profit
Companies. All claims of Lihua pursuant to this Section 9.2 shall be brought
by
the Lihua Controlling Stockholders on behalf of Lihua and those Persons who
were
stockholders of Lihua Company immediately prior to the Closing
Date.
27
b. Indemnification
in favor of Ally Profit and the Ally Profit Shareholder.
Notwithstanding the limitations set forth in Section 8.1 and in the last
sentence of this Section 8.2(b), from and after the Closing Date until the
expiration of the Survival Period, the Lihua Controlling Stockholders will,
severally and not jointly, indemnify and hold harmless Ally Profit, the Ally
Profit Shareholder, and their respective officers, directors, agents, attorneys
and employees, and each person, if any, who controls or may “control” (within
the meaning of the Securities Act) any of the forgoing persons or entities
(hereinafter referred to individually as a “Ally
Profit Indemnified Person”)
from
and against any and all losses, costs, damages, liabilities and expenses
arising
from claims, demands, actions, causes of action, including, without limitation,
legal fees, (collectively, “Damages”)
arising out of any (i) any breach of representation or warranty made by
Lihua or the Lihua Controlling Stockholders in this Agreement, and in any
certificate delivered by Lihua or the Lihua Controlling Stockholders pursuant
to
this Agreement, (ii) any breach by Lihua or the Lihua Controlling
Stockholders of any covenant, obligation or other agreement made by Lihua
or the
Lihua Controlling Stockholders in this Agreement, and (iii) a third-party
claim based on any acts or omissions by Lihua or the Lihua Controlling
Stockholders since January 24, 2006 through and including the Closing Date.
In
no event shall any such indemnification payments exceed $100,000 in the
aggregate from all Lihua Controlling Stockholders.
ARTICLE
IX
MISCELLANEOUS
PROVISIONS
Section
9.1 Publicity.
No
party shall cause the publication of any press release or other announcement
with respect to this Agreement or the transactions contemplated hereby without
the consent of the other parties, unless a press release or announcement
is
required by law. If any such announcement or other disclosure is required
by
law, the disclosing party agrees to give the non-disclosing parties prior
notice
and an opportunity to comment on the proposed disclosure.
Section
9.2 Successors
and Assigns.
This
Agreement shall inure to the benefit of, and be binding upon, the parties
hereto
and their respective successors and assigns; provided, however, that no party
shall assign or delegate any of the obligations created under this Agreement
without the prior written consent of the other parties.
Section
9.3 Fees
and Expenses.
Except
as otherwise expressly provided in this Agreement, all legal and other fees,
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
fees,
costs or expenses.
Section
9.4 Notices.
All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been given or made if in writing and
delivered personally or sent by registered or certified mail (postage prepaid,
return receipt requested)or facsimile to the parties at the following
addresses:
28
If
to
Ally Profit or the Ally Profit Shareholder, to:
Lihua
Holdings Limited
Houxiang
Five-Star Industry District
Danyang
City, Jiangsu Province PRC
Attention:
Xx. Xxx
Tel.
No.:
x00 000 0000 0000
Fax
No.:
x00 000 0000 0000
with
copies, which shall not constitute notice, to:
Loeb
& Loeb LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxxxx Xxxxxxxx
Tel.
No.:
000.000.0000
Fax
No.:
000.000.0000
If
to
Lihua or the Lihua Controlling Stockholders, to:
Lihua
International, Inc.
c/o
Broadband Capital Management
000
Xxxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxxxx Xxxxxxx
Tel.
No.:
000.000.000
Fax
No.:
000.000.000
with
copies, which shall not constitute notice, to:
Xxxxxxx
Xxxxxxxxx & Xxxxx LLP
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Attention:
Xxxxx X. Xxxxxxx, Esq.
Tel.
No.:
000.000.0000
Fax
No.:
000.000.0000
or
to
such other persons or at such other addresses as shall be furnished by any
party
by like notice to the others, and such notice or communication shall be deemed
to have been given or made as of the date so delivered or mailed. No change
in
any of such addresses shall be effective insofar as notices under this Section
9.4 are concerned unless such changed address is located in the United States
of
America (or, in the case of the Ally Profit Shareholder or Ally Profit, in
the
British Virgin Islands or the United States of America) and notice of such
change shall have been given to such other party hereto as provided in this
Section 9.4.
Section
9.5 Entire
Agreement.
This
Agreement, together with the exhibits hereto, represents the entire agreement
and understanding of the parties with reference to the transactions set forth
herein and no representations or warranties have been made in connection
with
this Agreement other than those expressly set forth herein or in the exhibits,
certificates and other documents delivered in accordance herewith. This
Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings and agreements between the parties relating
to
the subject matter of this Agreement and all prior drafts of this Agreement,
all
of which are merged into this Agreement. No prior drafts of this Agreement
and
no words or phrases from any such prior drafts shall be admissible into evidence
in any action or suit involving this Agreement.
29
Section
9.6 Severability.
This
Agreement shall be deemed severable, and the invalidity or unenforceability
of
any term or provision hereof shall not affect the validity or enforceability
of
this Agreement or of any other term or provision hereof. Furthermore, in
lieu of
any such invalid or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Agreement a provision as similar
in
terms to such invalid or unenforceable provision as may be possible so as
to be
valid and enforceable.
Section
9.7 Titles
and Headings.
The
Article and Section headings contained in this Agreement are solely for
convenience of reference and shall not affect the meaning or interpretation
of
this Agreement or of any term or provision hereof.
Section
9.8 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall be considered one and
the
same agreement.
Section
9.9 Convenience
of Forum; Consent to Jurisdiction.
The
parties to this Agreement, acting for themselves and for their respective
successors and assigns, without regard to domicile, citizenship or residence,
hereby expressly and irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with this Agreement,
and consent and subject themselves to the jurisdiction of, the courts of
the
State of New York located in County of New York, and/or the United States
District Court for the Southern District of New York, in respect of any matter
arising under this Agreement. Service of process, notices and demands of
such
courts may be made upon any party to this Agreement by personal service at
any
place where it may be found or giving notice to such party as provided in
Section 9.5.
Section
9.10 Enforcement
of the Agreement.
The
parties hereto agree that irreparable damage would occur if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that
the
parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Agreement and to enforce specifically the terms and provisions hereto,
this
being in addition to any other remedy to which they are entitled at law or
in
equity.
Section
9.11 Governing
Law.
This
Agreement shall be governed by and interpreted and enforced in accordance
with
the laws of the State of New York without giving effect to the choice of
law
provisions thereof.
Section
9.12 Amendments
and Waivers.
Except
as otherwise provided herein, no amendment or waiver of any provision of
this
Agreement shall be valid unless the same shall be in writing and signed by
all
of the parties hereto. No waiver by any party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not,
shall
be deemed to extend to any prior or subsequent default, misrepresentation,
or
breach of warranty or covenant hereunder or affect in any way any rights
arising
by virtue of any such prior or subsequent occurrence.
[REST
OF
PAGE DELIBERATELY LEFT BLANK]
30
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the date first above
written.
|
|
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By:
|
/s/
Xxx Xxxxxxx
|
|
Name:
Xxx Xxxxxxx
|
|
|
Title:
Sole Director
|
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ALLY
PROFIT INVESTMENTS LIMITED
|
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|
By:
|
/s/
Xxx Xxxxxxx
|
|
Name:
Xxx Xxxxxxx
|
|
|
Title:
Sole Director
|
|
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|
LIHUA
INTERNATIONAL, INC.
|
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|
|
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By:
|
/s/
Xxxxxxx Xxxx
|
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Name:
Xxxxxxx Xxxx
|
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Title:
President
|
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CONTROLLING
STOCKHOLDERS
|
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By:
|
/s/
Xxxxxxx Xxxx
|
|
Xxxxxxx
Xxxx
|
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By:
|
/s/
Xxxx Xxxxxxxxx
|
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Xxxx
Xxxxxxxxx
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By:
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/s/
Xxxxxxxx Xxxxxxx
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31
SCHEDULE
1
Lihua
Controlling Stockholders
Xxxxxxxx
Xxxxxxx
Xxxxxxx
Xxxx
Xxxxxx
Xxxxxxxxx
32
EXHIBIT
A
DEFINITION
OF “ACCREDITED INVESTOR”
The
term
“accredited investor” means:
|
|
o
|
A
bank as defined in Section 3(a)(2) of the Securities Act, or a
savings and
loan association or other institution as defined in Section 3(a)(5)(A)
of
the Securities Act, whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15
of the
Securities Exchange Act of 1934; an insurance company as defined
in
Section 2(13) of the Securities Act; an investment company registered
under the Investment Company Act of 1940 (the “Investment Company Act”) or
a business development company as defined in Section 2(a)(48) of
the
Investment Company Act; a Small Business Investment Company licensed
by
the U.S. Small Business Administration under Section 301(c) or
(d) of the
Small Business Investment Act of 1958; a plan established and maintained
by a state, its political subdivisions or any agency or instrumentality
of
a state or its political subdivisions for the benefit of its employees,
if
such plan has total assets in excess of US $5,000,000; an employee
benefit
plan within the meaning of the Employee Retirement Income Security
Act of
1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of ERISA, which is either a bank, savings
and
loan association, insurance company, or registered investment advisor,
or
if the employee benefit plan has total assets in excess of US $5,000,000
or, if a self-directed plan, with investment decisions made solely
by
persons that are accredited
investors.
|
|
|
o
|
A
private business development company as defined in Section 202(a)(22)
of
the Investment Advisers Act of
1940.
|
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|
o
|
An
organization described in Section 501(c)(3) of the Internal Revenue
Code,
corporation, Massachusetts or similar business trust, or partnership,
not
formed for the specific purpose of acquiring the securities offered,
with
total assets in excess of US
$5,000,000.
|
|
|
o
|
A
director or executive officer of
Lihua.
|
|
|
o
|
A
natural person whose individual net worth, or joint net worth with
that
person’s spouse, at the time of his or her purchase exceeds US
$1,000,000.
|
|
|
o
|
A
natural person who had an individual income in excess of US $200,000
in
each of the two most recent years or joint income with that person’s
spouse in excess of US $300,000 in each of those years and has
a
reasonable expectation of reaching the same income level in the
current
year.
|
|
|
o
|
A
trust, with total assets in excess of US $5,000,000, not formed
for the
specific purpose of acquiring the securities offered, whose purchase
is
directed by a sophisticated person as described in Rule 506(b)(2)(ii)
(i.e., a person who has such knowledge and experience in financial
and
business matters that he is capable of evaluating the merits and
risks of
the prospective investment).
|
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|
x
|
Any
entity in which all of the equity owners are accredited
investors
|
33
EXHIBIT
B
ACCREDITED
INVESTOR REPRESENTATIONS
Magnify
Wealth further represents and warrants to Lihua as follows:
|
1.
|
Such
person or entity qualifies as an Accredited Investor on the basis
set
forth on Exhibit A to this
Agreement.
|
|
2.
|
Such
person or entity has sufficient knowledge and experience in finance,
securities, investments and other business matters to be able to
protect
such Shareholder’s interests in connection with the transactions
contemplated by this Agreement.
|
|
3.
|
Such
person or entity has consulted, to the extent that it has deemed
necessary, with its tax, legal, accounting and financial advisors
concerning its investment in Lihua
Shares.
|
|
4.
|
Such
person or entity understands the various risks of an investment
in Lihua
Shares and can afford to bear such risks for an indefinite period
of time,
including, without limitation, the risk of losing its entire investment
in
Lihua Shares.
|
|
5.
|
Such
person or entity has had access to Lihua’s publicly filed reports with the
SEC.
|
|
6.
|
Such
person or entity has been furnished during the course of the transactions
contemplated by this Agreement with all other public information
regarding
Lihua that such person or entity has requested and all such public
information is sufficient for such person or entity to evaluate
the risks
of investing in Lihua Shares.
|
|
7.
|
Such
person or entity has been afforded the opportunity to ask questions
of and
receive answers concerning Lihua and the terms and conditions of
the
issuance of Lihua Shares.
|
|
8.
|
Such
person or entity is not relying on any representations and warranties
concerning Lihua made by Lihua or any officer, employee or agent
of Lihua,
other than those contained in this
Agreement.
|
|
9.
|
Such
person or entity is acquiring Lihua Shares for such person’s or entity’s,
as the case may be, own account, for investment and not for distribution
or resale to others.
|
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10.
|
Such
person or entity will not sell or otherwise transfer Lihua Shares,
unless
either (a) the transfer of such securities is registered under
the
Securities Act or (b) an exemption from registration of such securities
is
available.
|
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11.
|
Such
person or entity understands and acknowledges that Lihua is under
no
obligation to register Lihua Shares for sale under the Securities
Act.
|
|
12.
|
Such
person or entity consents to the placement of a legend on any certificate
or other document evidencing Lihua Shares substantially in the
form set
forth in Section 4.5(a).
|
34
|
13.
|
Such
person or entity represents that the address furnished on its signature
page to this Agreement is the principal residence if he is an individual
or its principal business address if it is a corporation or other
entity.
|
|
14.
|
Such
person or entity understands and acknowledges that Lihua Shares
have not
been recommended by any federal or state securities commission
or
regulatory authority, that the foregoing authorities have not confirmed
the accuracy or determined the adequacy of any information concerning
Lihua that has been supplied to such person or entity and that
any
representation to the contrary is a criminal
offense.
|
|
15.
|
Such
person or entity acknowledges that the representations, warranties
and
agreements made by such person or entity herein shall survive the
execution and delivery of this Agreement and the purchase of Lihua
Shares.
|
35
EXHIBIT
C
FORM
OF OPINION OF COUNSEL TO LIHUA
|
1.
|
The
Company is a corporation duly incorporated, validly existing and
in good
standing under the laws of the State of Delaware. The Company has
full
corporate power and authority to own, lease and operate its properties
and
to carry on its business in the places and in the manner currently
conducted.
|
|
2.
|
The
Company has the requisite corporate power and authority to execute,
deliver and perform the Share Exchange Agreement and the Repurchase
Agreements. The execution, delivery and performance of the Share
Exchange
Agreement and the Repurchase Agreements have been duly authorized
by all
necessary corporate action on the part of the
Company.
|
|
3.
|
Each
of the Share Exchange Agreement and the Repurchase Agreements has
been
duly executed and delivered by the Company Controlling Stockholders
and
the Company (to the extent they are party thereto), and constitutes
the
legal, valid and binding obligation of each of the Company Controlling
Stockholders and the Company, enforceable in accordance with its
terms,
except to the extent that their enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
similar
laws affecting the enforcement of creditors’ rights generally and to
general equitable principles.
|
|
4.
|
Execution
and delivery by the Company Controlling Stockholders and the Company
of,
and performance of their agreements in, the Share Exchange Agreement
and
the Repurchase Agreements do not (i) violate any law, statute,
rule,
regulation or court order applicable to the Company Controlling
Stockholders and/or the Company and known to us, (ii) breach, result
in a
default or loss of rights under, result in the creation of a right
of
termination, acceleration or modification under, or result in the
creation
of, or the right to create, any security interest in or lien on
any assets
of the Company pursuant to any agreements known to us to which
the Company
is a party or by which it or its assets is bound, or (iii) violate,
conflict with, result in a breach of any terms or provisions of,
or
constitute a default under, the Company’s Certificate of Incorporation or
Bylaws.
|
|
5.
|
No
consent, approval, authorization, order or action of, filing with
or
notice or payment to any regulatory agency or authority of the
State of
Delaware or the United States Federal Government is required to
be
obtained or made by the Company Controlling Stockholders or the
Company
for the Company Controlling Stockholders or the Company to perform
their
obligations under the Share Exchange Agreement or the Repurchase
Agreements and consummate the transactions contemplated thereunder,
except
for such as have been obtained or made, other than any filings
required to
comply with any applicable federal and state securities
laws.
|
36
|
6.
|
Based
solely upon a review of the Company’s certificate of incorporation and all
amendments thereto, in each case certified by the Secretary of
State of
Delaware, and of the Company’s stock records, the authorized capital stock
of the Company consists of 85,000,000 shares: 75,000,000 shares
are
authorized as Common Stock, of which 6,792,024 shares are issued
and
outstanding immediately prior to the consummation of the transactions
contemplated under the Share Exchange Agreement and the Repurchase
Agreements, and 10,000,000 shares are authorized as preferred stock,
of
which no shares are issued and outstanding. Based solely upon a
representation from the Company and/or the Company Controlling
Stockholders, we believe that all issued and outstanding shares
of Common
Stock have been duly authorized and validly issued, are fully paid
and
nonassessable and have not been issued in violation of any preemptive
right of stockholders. Except as described in the Share Exchange
Agreement
or the exhibits thereto, to our knowledge there are no options,
warrants,
or other rights or agreements of any kind for the purchase or acquisition
from, or the issuance or sale by, the Company of any shares of
such
authorized capital stock, nor any outstanding securities or debt
of any
kind that is convertible into or exchangeable for any shares of
such
authorized capital stock.
|
|
7.
|
Based
in part upon the representations of the Company Controlling Stockholders
contained in the Share Exchange Agreement, and the representations
of the
Ally Profit Shareholder that either (i) the Ally Profit Shareholder
is an
“accredited investor” as such term is defined in Regulation D promulgated
under the Securities Act of 1933, as amended (the “Securities Act”) or
(ii) if the parties are relying on the exemption from registration
provided pursuant to Regulation S promulgated under the Securities
Act
(“Regulation S”), that the Ally Profit Shareholder will comply with all of
the requirements of Regulation S, the issuance of the Shares in
accordance
with the Share Exchange Agreement will be exempt from registration
under
the Securities Act. The Shares which are being issued on the date
hereof
to the Ally Profit Shareholder, pursuant to the Share Exchange
Agreement,
have been duly authorized and validly issued and are fully paid
and
nonassessable and free of preemptive or similar rights contained
in the
Company’s Certificate of Incorporation or Bylaws or in any agreement to
which the Company is a party.
|
|
8.
|
To
our knowledge, there are no current claims, actions, suits, investigations
or proceedings, or any pending or threatened claim, action, suit,
investigation or proceeding against the Company before any court,
arbitrator or governmental authority which, if determined adversely
to the
Company would have a material adverse effect on the ability of
the Company
to perform its obligations under the Share Exchange Agreement or
the
Repurchase Agreements.
|
37
EXHIBIT
D-1
FORM
OF OPINION OF BVI COUNSEL TO ALLY PROFIT
38
Based
upon, and subject to, the foregoing assumptions and the
qualifications set out below, and having regard to such legal considerations
as
we deem relevant, we are of the opinion that:
1.1
The Company is a company limited
by shares
registered under the BVI Business Companies Act, 2004 (the "Act"), in good standing at the
Registry
of Corporate Affairs and validly existing under the laws of the British
Virgin
Islands, and possesses the capacity to xxx and be sued in its own name.
1.2
The Company has full power and
authority
under its Memorandum and Articles of Association to enter into, execute
and
perform its obligations under the Agreement.
1.3
The execution and delivery of
the
Agreement and the performance by the Company of its obligations thereunder
does
not conflict with or result in a breach of any of the terms or provisions
of the
Memorandum and Articles of Association of the Company or any law, public
rule or
regulation applicable to the Company in the British Virgin Islands currently
in
force.
1.4
The execution, delivery and performance
of
the Agreement has been authorised by and on behalf of the Company and the
Agreement has been duly executed on behalf of the Company and will constitute
the legal, valid and binding obligations of the Company enforceable in
accordance with its terms.
1.5
No authorisations, consents, approvals,
licenses, validations or exemptions are required by law from any governmental
authorities or agencies or other official bodies in the <?xml:namespace prefix =
st1 />British Virgin Islands in connection
with:
(a)
the creation, execution or delivery
of the
Agreement by the Company;
(b)
enforcement of the Agreement against
the
Company; or
(c)
the performance by the Company
of its
obligations under the Agreement.
1.6
With the exception of filing fees
charged
by the Registry of Corporate Affairs in respect of any optional filings
made at
the Registry of Corporate Affairs no taxes, fees or charges (including
stamp
duty) are payable (either by direct assessment or withholding) to the government
or other taxing authority in the British Virgin Islands under the laws
of the
British Virgin Islands in respect of:
(a)
the execution or delivery of the
Agreement;
(b)
the enforcement of the Agreement;
or
(c)
payments made under, or pursuant
to, the
Agreement.
Companies
incorporated or registered under the Act are currently
exempt from income and corporate tax.
In addition, the British Virgin Islands
currently does not levy capital gains tax on companies incorporated or
registered under the Act. There is
no applicable statutory usury or interest limitation law in the British Virgin Islands which would restrict the recovery
of payments or the performance by the Company of its obligations under
the
Agreement.
39
1.7
The courts of the British Virgin Islands will observe and give effect
to the
choice of the Governing Law as the governing law of the
Agreement.
1.8
Based solely on our inspection
of the High
Court Registry from the date of incorporation of the Company there were
no
actions or petitions pending against the Company in the High Court of the
British Virgin Islands as at the time of our searches on 29 October
2008.
1.9
On the basis of our searches conducted
at
the Registry of Corporate Affairs and at the High Court Registry, no currently
valid order or resolution for the winding-up of the Company and no current
notice of appointment of a receiver over the Company, or any of its assets,
appears on the records maintained in respect of the Company. It is a requirement that notice
of
appointment of a receiver be registered with the Registry of Corporate
Affairs
under section 118 of the Insolvency Xxx 0000. In addition we refer you to the
Registered Agent’s Certificate that states that the registered agent is not
aware that any liquidation, dissolution or insolvency proceedings have
been
commenced against the Company or that a receiver has been appointed over
the
Company or any of its assets.
1.10
On the basis of our search conducted
at
the Registry of Corporate Affairs, no charge created by the Company has
been
registered pursuant to section 163 of the Act. We also refer you to the Registered
Agent’s Certificate that no entries have been made on the Company’s register of
charges maintained pursuant to section 162 of the Act.
1.11
The submission to the jurisdiction
of the
courts of the State of New York located in the County of New York, and/or
the
United States District Court for the Southern District of New York, contained
in
the Agreement is a valid one and will be upheld by the courts of the British
Virgin Islands.
1.12
Service of process in the British Virgin Islands on the Company may be effected
by
leaving at the registered office of the Company the relevant document to
be
served. On the basis of our search
at the Registry of Corporate Affairs, the registered office of the Company
is
NovaSage Incorporations (BVI) Limited, X.X. Xxx 0000, Xxxx Xxxx, Xxxxxxx,
Xxxxxxx Xxxxxx Xxxxxxx.
1.13
Any final and conclusive monetary
judgment
obtained against the Company in the courts of the State of New York in
respect
of the Agreement, for a definite sum, may be treated by the courts of the
British Virgin Islands as a cause of action in itself so that no retrial
of the
issues would be necessary provided that in respect of the foreign judgment:
(a)
the foreign court issuing the
judgment had
jurisdiction in the matter and the Company either submitted to such jurisdiction
or was resident or carrying on business within such jurisdiction and was
duly
served with process;
(b)
the judgment given by the foreign
court
was not in respect of penalties, taxes, fines or similar fiscal or revenue
obligations of the Company;
(c)
in obtaining judgment there was
no fraud
on the part of the person in whose favour judgment was given or on the
part of
the court;
(d)
recognition or enforcement of
the judgment
in the British Virgin Islands would not be
contrary to public policy; and
40
(e)
the proceedings pursuant to which
judgment
was obtained were not contrary to natural justice.
1.14
It is not necessary to be licensed,
qualified or otherwise entitled to carry on business in, or otherwise registered
with, any governmental or other authority of or in the British Virgin Islands
in
order to claim and enforce in the British Virgin
Islands any right in the Agreement.
1.15
It is not necessary to ensure
the
legality, validity, enforceability or admissibility in evidence of the
Agreement
that any document be filed, recorded or enrolled with any governmental
authority
or agency or any official body in the British Virgin
Islands.
1.16
The parties to the Agreement (other
than
the Company) will not be deemed to be resident, domiciled or carrying on
business in, or subject to, the laws of the British Virgin Islands by reason
only of the execution, delivery, performance or enforcement of the
Agreement.
1.17
The Company is subject to the
jurisdiction
of the courts of the British Virgin Islands and is not entitled to claim
any
immunity from suit or execution of any judgment on the grounds of sovereignty
or
otherwise.
1.18
Based on the Registered Agent’s
Certificate, the Company is authorised to issue 50,000 shares of one class
with
a par value US1.00, each of which 100 shares have been issued to Magnify
Wealth
Enterprise Limited.
<?xml:namespace
prefix = o />
41
EXHIBIT
D-2
FORM
OF OPINION OF BVI COUNSEL TO MAGNIFY WEALTH
42
| 1 |
OPINIONS
|
Based
upon, and subject to, the foregoing assumptions and the qualifications
set out
below, and having regard to such legal considerations as we deem relevant,
we
are of the opinion that:
| 1.1 |
The
Company is a company limited by shares registered under the BVI
Business
Companies Act, 2004 (the "Act"),
in good standing at the Registry of Corporate Affairs and validly
existing
under the laws of the British Virgin Islands, and possesses the
capacity
to xxx and be sued in its own name.
|
| 1.2 |
The
Company has full power and authority under its Memorandum and Articles
of
Association to enter into, execute and perform its obligations
under the
Agreement.
|
| 1.3 |
The
execution and delivery of the Agreement and the performance by
the Company
of its obligations thereunder does not conflict with or result
in a breach
of any of the terms or provisions of the Memorandum and Articles
of
Association of the Company or any law, public rule or regulation
applicable to the Company in the British Virgin Islands currently
in
force.
|
| 1.4 |
The
execution, delivery and performance of the Agreement has been authorised
by and on behalf of the Company and the Agreement has been duly
executed
on behalf of the Company and will constitute the legal, valid and
binding
obligations of the Company enforceable in accordance with its
terms.
|
| 1.5 |
No
authorisations, consents, approvals, licenses, validations or exemptions
are required by law from any governmental authorities or agencies
or other
official bodies in the British Virgin Islands in connection with:
|
| (a) |
the
creation, execution or delivery of the Agreement by the Company;
|
| (b) |
enforcement
of the Agreement against the Company; or
|
| (c) |
the
performance by the Company of its obligations under the
Agreement.
|
| 1.6 |
With
the exception of filing fees charged by the Registry of Corporate
Affairs
in respect of any optional filings made at the Registry of Corporate
Affairs no taxes, fees or charges (including stamp duty) are payable
(either by direct assessment or withholding) to the government
or other
taxing authority in the British Virgin Islands under the laws of
the
British Virgin Islands in respect of:
|
| (a) |
the
execution or delivery of the Agreement;
|
| (b) |
the
enforcement of the Agreement; or
|
| (c) |
payments
made under, or pursuant to, the
Agreement.
|
Companies
incorporated or registered under the Act are currently exempt from income
and
corporate tax. In addition, the British Virgin Islands currently does not
levy
capital gains tax on companies incorporated or registered under the Act.
There
is no applicable statutory usury or interest limitation law in the British
Virgin Islands which would restrict the recovery of payments or the performance
by the Company of its obligations under the Agreement.
43
| 1.7 |
The
courts of the British Virgin Islands will observe and give effect
to the
choice of the Governing Law as the governing law of the
Agreement.
|
| 1.8 |
Based
solely on our inspection of the High Court Registry from the date
of
incorporation of the Company there were no actions or petitions
pending
against the Company in the High Court of the British Virgin Islands
as at
the time of our searches on 29 October
2008.
|
| 1.9 |
On
the basis of our searches conducted at the Registry of Corporate
Affairs
and at the High Court Registry, no currently valid order or resolution
for
the winding-up of the Company and no current notice of appointment
of a
receiver over the Company, or any of its assets, appears on the
records
maintained in respect of the Company. It is a requirement that
notice of
appointment of a receiver be registered with the Registry of Corporate
Affairs under section 118 of the Insolvency Xxx 0000. In addition
we refer
you to the Registered Agent’s Certificate that states that the registered
agent is not aware that any liquidation, dissolution or insolvency
proceedings have been commenced against the Company or that a receiver
has
been appointed over the Company or any of its
assets.
|
| 1.10 |
On
the basis of our search conducted at the Registry of Corporate
Affairs, no
charge created by the Company has been registered pursuant to section
163
of the Act. We also refer you to the Registered Agent’s Certificate that
states that no entries have been made on the Company’s register of charges
maintained pursuant to section 162 of the
Act.
|
| 1.11 |
| 1.12 |
Service
of process in the British Virgin Islands on the Company may be
effected by
leaving at the registered office of the Company the relevant document
to
be served. On the basis of our search at the Registry of Corporate
Affairs, the registered office of the Company is NovaSage Incorporations
(BVI) Limited, X.X. Xxx 0000, Xxxx Xxxx, Xxxxxxx, Xxxxxxx Xxxxxx
Xxxxxxx.
|
| 1.13 |
Any
final and conclusive monetary judgment obtained against the Company
in the
courts of the State of New York in respect of the Agreement, for
a
definite sum, may be treated by the courts of the British Virgin
Islands
as a cause of action in itself so that no retrial of the issues
would be
necessary provided that in respect of the foreign judgment:
|
| (a) |
the
foreign court issuing the judgment had jurisdiction in the matter
and the
Company either submitted to such jurisdiction or was resident or
carrying
on business within such jurisdiction and was duly served with
process;
|
| (b) |
the
judgment given by the foreign court was not in respect of penalties,
taxes, fines or similar fiscal or revenue obligations of the
Company;
|
| (c) |
in
obtaining judgment there was no fraud on the part of the person
in whose
favour judgment was given or on the part of the
court;
|
| (d) |
recognition
or enforcement of the judgment in the British Virgin Islands would
not be
contrary to public policy; and
|
44
| (e) |
the
proceedings pursuant to which judgment was obtained were not contrary
to
natural justice.
|
| 1.14 |
It
is not necessary to be licensed, qualified or otherwise entitled
to carry
on business in, or otherwise registered with, any governmental
or other
authority of or in the British Virgin Islands in order to claim
and
enforce in the British Virgin Islands any right in the
Agreement.
|
| 1.15 |
It
is not necessary to ensure the legality, validity, enforceability
or
admissibility in evidence of the Agreement that any document be
filed,
recorded or enrolled with any governmental authority or agency
or any
official body in the British Virgin
Islands.
|
| 1.16 |
The
parties to the Agreement (other than the Company) will not be deemed
to be
resident, domiciled or carrying on business in, or subject to,
the laws of
the British Virgin Islands by reason only of the execution, delivery,
performance or enforcement of the
Agreement.
|
| 1.17 |
The
Company is subject to the jurisdiction of the courts of the British
Virgin
Islands and is not entitled to claim any immunity from suit or
execution
of any judgment on the grounds of sovereignty or
otherwise.
|
45
EXHIBIT
E
FORM
OF OPINION OF PRC COUNSEL TO THE ALLY PROFIT COMPANIES
46
| 1. |
Each
of the Danyang Lihua and Lihua Copper has been duly incorporated
and
validly exists as a limited liability company under the laws and
regulations of the PRC, with corporate power and authority, as
authorized
by the PRC government, to own, use, lease its assets and conduct
its
business as described in their respective business licenses.
|
| 2. |
The
articles of association, the business licenses and the approval
certificates (the “Constitutional
Documents”)
of Danyang Lihua and Lihua Copper are in compliance with the requirements
of applicable PRC laws and regulations and are in full force and
effect.
Based on review of the Constitutional Documents of Danyang Lihua
and Lihua
Copper, each of the Danyang Lihua and Lihua Copper’s business as described
in their respective business licenses is not prohibited from foreign
investment.
|
| 3. |
The
registered capital of Danyang Lihua has been fully contributed
in
accordance with the verification reports issued by Danyang Zhongxin
Certified Public Accountants (丹槍中信会瑟师事务所)
dated July 12, 2007, July 19, 2007 and August 23, 2007 respectively.
The
Company is holding 100% equity interest of Danyang Lihua. The registered
capital of Lihua Copper is USD15,000,000, of which USD4,371,351.11
has
been contributed in accordance with the verification reports issued
by
Danyang Zhongxin Certified Public Accountants (丹槍中信会瑟师事务所)
dated November 9, 2007 and January 21, 2008 respectively. The Company
is
holding 100% equity interest of Lihua
Copper.
|
| 4. |
Subject
to the Documents and to our best knowledge after due inquiry against
the
Company, Danyang Lihua and Lihua Copper, each of Danyang Lihua
and Lihua
Copper has obtained all necessary licenses, authorizations, approvals,
registrations and permits from PRC governmental agency or any other
regulatory body having jurisdiction over it (“Authorizations”)
for it to own, lease, license and use properties and assets and
to conduct
its business as described in its business license, to the extent
applicable, in so far as such properties and assets and the conduct
of
such business is governed by PRC laws and regulations, and such
Authorizations are in full force and effect. Based on our review
of
relevant land use right certificates and real estate title documents,
each
of Danyang Lihua and Lihua Copper has complete and clear title
to each
piece of land and to each building thereon, as listed in the Schedule
B
hereto, under the PRC laws.
|
| 5. |
Subject
to the Documents and to our best knowledge after due inquiry against
the
Company, Danyang Lihua and Lihua Copper, there are no legal, arbitral
or
governmental proceedings currently pending or threatened in the
PRC to
which any of Danyang Lihua and Lihua Copper is a
party.
|
| 6. |
Based
on our review of the Documents and to our best knowledge after
due inquiry
against the Company, Danyang Lihua and Lihua Copper, there are
no
outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital of,
or direct
interest in, Danyang Lihua or Lihua
Copper.
|
47
| 7. |
According
to the Circular
on Relevant Issues concerning Foreign Exchange Administration of
Financing
and Inbound Investment through Offshore Special Purpose Companies
by PRC
Residents,
which was issued by the PRC State Administration of Foreign Exchange
(the
“SAFE”)
on October 21, 2005 and became effective on November 1, 2005 [coded
Hui Fa
[2005] No. 75] (the “Circular
75”),
the PRC residents who control, as set forth in Circular 75, the
Company
and/or other offshore companies directly or indirectly, shall apply
for
registration with the local SAFE office. After review of the Documents,
including the documents of offshore companies holding equity interest
in
the Company, directly or indirectly, and our due inquiry against
the
Company, we are of the opinion that (i) none of the ultimate shareholders
who control, as set forth in Circular 75, the Company and/or other
offshore companies holding equity interest in the Company directly
or
indirectly (the “Ultimate
Controllers”)
is a PRC citizen, and (ii) none of the Ultimate Controllers habitually
reside in China. Therefore, the Ultimate Controllers are not subject
to
the requirement of registration with SAFE under Circular 75.
|
48
EXHIBIT
F
FORM
OF OPINION OF US SECURITIES COUNSEL TO ALLY PROFIT
49
1. To
our
knowledge, there are no actions, suits, arbitrations, claims, governmental
or
other proceedings or investigations pending or threatened against the Ally
Profit Companies or any of their respective operations, businesses, properties
or assets before or by any court, governmental authority or instrumentality
which challenge the validity of any actions taken or to be taken by the
Ally
Profit Companies pursuant to the Agreement or the transactions contemplated
thereby.
2. Assuming
the accuracy of the representations and warranties of Lihua made in the
Agreement, the transfer of the Ally Profit Shares by the Ally Profit Shareholder
to Lihua is exempt from the registration requirements of the Securities
Act.
50
EXHIBIT
G-1
FORM
OF REPURCHASE AGREEMENT WITH CONTROLLING STOCKHOLDERS AND ONE ADDITIONAL
LIHUA
STOCKHOLDER
51
REPURCHASE
AGREEMENT
This
Agreement (the “Agreement”) is made as of the __ day of October, 2008 by and
between LIHUA INTERNATIONAL, INC. (the “Company”), a Delaware corporation having
its offices c/o Broadband Capital Management, 000 Xxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 and Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxx, Xxxxxx Xxxxxxxxx
and BCM Equity Partners II LLC (the “Sellers”).
W
I T
N E S S E T H:
WHEREAS,
the Sellers are the owners of 6,192,024 shares of the Company’s common stock,
par value $0.0001 per share (“Common Stock”);
WHEREAS,
the Sellers desire to sell to the Company, and the Company desires to purchase
from the Sellers, 5,704,525 of the 6,012,024 shares of Common Stock owned
by the
Sellers (the “Shares”), on and subject to the terms of this Agreement (the
“Repurchase”); and
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
contained, the Company and the Sellers hereby agree as follows:
1. Sale
of the Shares.
Subject
to the terms and conditions of this Agreement, and in reliance upon the
representations, warranties, covenants and agreements contained in this
Agreement, the Sellers shall sell the Shares to the Company, and the Company
shall purchase the Shares from the Sellers for an aggregate purchase price
(the
“Purchase Price”) equal to $39,061 ($.00685
per share) for
the
purchase of the 5,704,525 Shares held by the Sellers. The Purchase Price
shall
be allocated and paid to the Sellers as set forth on Schedule 1 annexed
hereto.
2. Closing.
The
purchase and sale of the Shares shall take place upon execution and delivery
of
this Agreement (the “Closing”), to be held at such time and place as shall be
determined by the parties. At the Closing, the Sellers shall deliver to
the
Company certificates for the Shares, duly endorsed in form for transfer
to the
Company and the Company shall pay the Purchase Price for the Shares.
3. Representations
of the Sellers.
(a) The
Sellers have all necessary power and authority to enter into and to perform
their obligations hereunder. This Agreement constitutes the valid and binding
obligation of the Sellers, enforceable against the Sellers in accordance
with
its terms, subject to: (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors; and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(b) The
Sellers own all right, title and interest in and to, and have the right
to
transfer to the Company, in connection with the Repurchase provided for
herein,
all of the Shares being repurchased by the Company, pursuant to the terms
of
this Agreement, free and clear of all liens, security interests, charges
and
other encumbrances.
(c) The
Sellers have had a reasonable opportunity to ask questions of and receive
answers from a person or persons acting on behalf of the Company concerning
the
Repurchase of the Shares and the business, financial condition, and results
of
operations of the Company, and all such questions have been answered to
the full
satisfaction of the Sellers.
52
(d) The
Sellers acknowledge and understand that the Company on or around the date
of the
consummation of the Repurchase may (i) sell shares of Common Stock, or
other
securities of the Company, to third parties at per share, or effective
per-share, purchase prices that may be significantly higher or lower than
the
per share purchase price being paid hereunder by the Company for the Shares;
(ii) repurchase shares of Common Stock from other shareholders of the Company
at
per share, or effective per-share, purchase prices that may be significantly
higher or lower than the per share purchase price being paid hereunder
by the
Company for the Shares; and/or (iii) repurchase shares of Common Stock
from
other shareholders including, without limitation, among the Sellers herein,
for
a number of shares that is more or less than the percentage being repurchased
from each of the Sellers. Notwithstanding any such sales or other repurchases,
the Sellers agree to accept the Purchase Price as full and fair payment
for the
Shares. Additionally, the Sellers each acknowledge and agree that to the
extent
the Company repurchases a lesser percentage of the number of shares of
Common
Stock held by other shareholders of the Company than repurchased from each
of
the Sellers, their interests in the Company will be diluted.
4. Representations
of the
Company
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) The
Company has all necessary corporate power and authority to enter into and
to
perform its obligations under this Agreement, and the execution, delivery
and
performance by the Company of this Agreement have been duly authorized
by all
necessary action on the part of the Company and its board of directors.
This
Agreement constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to:
(i)
laws of general application relating to bankruptcy, insolvency and the
relief of
debtors; and (ii) rules of law governing specific performance, injunctive
relief
and other equitable remedies.
5. Miscellaneous.
This
Agreement constitutes the entire agreement of the parties, superseding
and
terminating any and all prior or contemporaneous oral and written agreements,
understandings or letters of intent between or among the parties with respect
to
the subject matter of this Agreement. No part of this Agreement may be
modified
or amended, nor may any right be waived, except by a written instrument
which
expressly refers to this Agreement, states that it is a modification or
amendment of this Agreement and is signed by the parties to this Agreement,
or,
in the case of waiver, by the party granting the waiver. If any section,
term or
provision of this Agreement shall to any extent be held or determined to
be
invalid or unenforceable, the remaining sections, terms and provisions
shall
nevertheless continue in full force and effect. This Agreement shall be
governed
and construed in accordance with the laws of the State of Delaware applicable
to
agreements executed and to be performed wholly within such State, without
regard
to any principles of conflicts of law. This Agreement shall be binding
upon the
parties and their respective heirs, executors, administrators, legal
representatives, successors and assigns; provided, however, that neither
party
may assign this Agreement or any of its rights under this Agreement without
the
prior written consent of the other party. This Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be
deemed an
original but all of which together shall constitute one and the same
instrument.
53
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly executed as of the
date
first above written.
|
LIHUA
INTERNATIONAL, INC.
By:___________________________
Name:
Title:
|
|
|
SELLERS:
By:___________________________
Xxxxxxxx
Xxxxxxx
|
|
|
By:___________________________
Xxxxxxx
Xxxx
|
|
|
By:
___________________________
Xxxxxx
Xxxxxxxxx
|
|
|
BCM
EQUITY PARTNERS II LLC
By:___________________________
Name:_________________________
Title:__________________________
|
54
SCHEDULE
1
Allocation
of Purchase Price among Sellers
|
Name
of Seller
|
Number
of Shares Repurchased
|
Purchase
Price
|
|
Xxxxxxxx
Xxxxxxx
|
1,007,405
|
$6,898
|
|
Xxxxxxx
Xxxx
|
2,876,045
|
$19,693
|
|
Xxxxxx
Xxxxxxxxx
|
1,738,575
|
$11,905
|
|
BCM
Equity Partners II LLC
|
82,500
|
$565
|
55
EXHIBIT
G-2
FORM
OF REPURCHASE AGREEMENT WITH OTHER LIHUA STOCKHOLDERS
56
REPURCHASE
AGREEMENT
This
Agreement (the “Agreement”) is made as of the __ day of October, 2008 by and
between LIHUA INTERNATIONAL, INC. (the “Company”), a Delaware corporation having
its offices c/o Broadband Capital Management, 000 Xxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 and Penumbra Worldwide Ltd. and Xxxxxx Xxxxx Xxxxxxx
(the “Sellers”).
W
I T
N E S S E T H:
WHEREAS,
the Sellers are the owners of 600,000 shares of the Company’s common stock, par
value $0.0001 per share (“Common Stock”);
WHEREAS,
the Sellers desire to sell to the Company, and the Company desires to purchase
from the Sellers, 112,500 of the 600,000 shares of Common Stock owned by
the
Sellers (the “Shares”), on and subject to the terms of this Agreement (the
“Repurchase”); and
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
contained, the Company and the Sellers hereby agree as follows:
1. Sale
of the Shares.
Subject
to the terms and conditions of this Agreement, and in reliance upon the
representations, warranties, covenants and agreements contained in this
Agreement, the Sellers shall sell the Shares to the Company, and the Company
shall purchase the Shares from the Sellers for an aggregate purchase price
(the
“Purchase Price”) equal to $6,000 ($.05333
per share) for the purchase of the 112,500 Shares held by the Sellers.
The
Purchase Price shall be allocated and paid to the Sellers as set forth
on
Schedule 1 annexed hereto.
2. Closing.
The
purchase and sale of the Shares shall take place upon execution and delivery
of
this Agreement (the “Closing”), to be held at such time and place as shall be
determined by the parties. At the Closing, the Sellers shall deliver to
the
Company certificates for the Shares, duly endorsed in form for transfer
to the
Company and the Company shall pay the Purchase Price for the Shares.
3. Representations
of the Sellers.
(a) The
Sellers have all necessary power and authority to enter into and to perform
their obligations hereunder. This Agreement constitutes the valid and binding
obligation of the Sellers, enforceable against the Sellers in accordance
with
its terms, subject to: (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors; and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(b) The
Sellers own all right, title and interest in and to, and have the right
to
transfer to the Company, in connection with the Repurchase provided for
herein,
all of the Shares being repurchased by the Company, pursuant to the terms
of
this Agreement, free and clear of all liens, security interests, charges
and
other encumbrances.
(c) The
Sellers have had a reasonable opportunity to ask questions of and receive
answers from a person or persons acting on behalf of the Company concerning
the
Repurchase of the Shares and the business, financial condition, and results
of
operations of the Company, and all such questions have been answered to
the full
satisfaction of the Sellers.
57
(d) The
Sellers acknowledge and understand that the Company on or around the date
of the
consummation of the Repurchase may (i) sell shares of Common Stock, or
other
securities of the Company, to third parties at per share, or effective
per-share, purchase prices that may be significantly higher or lower than
the
per share purchase price being paid hereunder by the Company for the Shares;
(ii) repurchase shares of Common Stock from other shareholders of the Company
at
per share, or effective per-share, purchase prices that may be significantly
higher or lower than the per share purchase price being paid hereunder
by the
Company for the Shares; and/or (iii) repurchase shares of Common Stock
from
other shareholders for a number of shares that is more or less than the
percentage being repurchased from each of the Sellers. Notwithstanding
any such
sales or other repurchases, the Sellers agree to accept the Purchase Price
as
full and fair payment for the Shares. Additionally,
the Sellers each acknowledge and agree that to the extent the Company
repurchases a lesser percentage of the number of shares of Common Stock
held by
other shareholders of the Company than repurchased from each of the Sellers,
their interests in the Company will be diluted.
4. Representations
of the
Company
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) The
Company has all necessary corporate power and authority to enter into and
to
perform its obligations under this Agreement, and the execution, delivery
and
performance by the Company of this Agreement have been duly authorized
by all
necessary action on the part of the Company and its board of directors.
This
Agreement constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to:
(i)
laws of general application relating to bankruptcy, insolvency and the
relief of
debtors; and (ii) rules of law governing specific performance, injunctive
relief
and other equitable remedies.
5. Miscellaneous.
This
Agreement constitutes the entire agreement of the parties, superseding
and
terminating any and all prior or contemporaneous oral and written agreements,
understandings or letters of intent between or among the parties with respect
to
the subject matter of this Agreement. No part of this Agreement may be
modified
or amended, nor may any right be waived, except by a written instrument
which
expressly refers to this Agreement, states that it is a modification or
amendment of this Agreement and is signed by the parties to this Agreement,
or,
in the case of waiver, by the party granting the waiver. If any section,
term or
provision of this Agreement shall to any extent be held or determined to
be
invalid or unenforceable, the remaining sections, terms and provisions
shall
nevertheless continue in full force and effect. This Agreement shall be
governed
and construed in accordance with the laws of the State of Delaware applicable
to
agreements executed and to be performed wholly within such State, without
regard
to any principles of conflicts of law. This Agreement shall be binding
upon the
parties and their respective heirs, executors, administrators, legal
representatives, successors and assigns; provided, however, that neither
party
may assign this Agreement or any of its rights under this Agreement without
the
prior written consent of the other party. This Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be
deemed an
original but all of which together shall constitute one and the same
instrument.
58
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly executed as of the
date
first above written.
|
LIHUA
INTERNATIONAL, INC.
By:
________________________________
Name:
Title:
|
|
|
SELLERS:
PENUMBRA
WORLDWIDE LTD.
By:
___________________________
Name:_________________________
Title:__________________________
|
|
|
By:
___________________________
Xxxxxx
Xxxxx Xxxxxxx
|
59
SCHEDULE
1
Allocation
of Purchase Price among Sellers
|
Name
of Seller
|
Number
of Shares Repurchased
|
Purchase
Price
|
|
Penumbra
Worldwide Ltd.
|
56,250
|
$3,000
|
|
Xxxxxx
Xxxxx Xxxxxxx
|
56,250
|
$3,000
|
60
