SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT (this "Agreement"), dated September 5, 2006, among
Pay88, Inc., a Nevada corporation (the "Buyer"); Chongqing Qianbao Technology
Ltd., a limited liability company organized under the laws of the People's
Republic of China (the "Company"); Xxxx Xxx ("Bao"); and Chongqing Yahu
Information Development Co., Ltd., a limited liability company organized under
the laws of the People's Republic of China ("Yahu"; and together with Bao, the
"Sellers").
R E C I T A L S :
A. Sellers in the aggregate own one hundred percent (100%) of the
shares of the registered capital stock of the Company (the "Shares").
B. The parties hereto desire that the Buyer acquire the Company by
purchasing from Seller all of the Shares upon the terms and subject to the
conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein, and the other good and valuable consideration, the adequacy, sufficiency
and receipt of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS AND USAGE
1.1 DEFINITIONS
Certain capitalized terms used in this Agreement are defined in Exhibit 1.1
attached hereto.
1.2 USAGE
(a) Interpretation. In this Agreement, unless a clear contrary intention
appears: (i) the singular number includes the plural number and vice versa; (ii)
reference to any Person includes such Person's successors and assigns but, if
applicable, only if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually; (iii) reference to any gender
includes each other gender; (iv) reference to any agreement, document or
instrument means such agreement, document or instrument as amended or modified
and in effect from time to time in accordance with the terms thereof; (v)
reference to any Legal Requirement means such Legal Requirement as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder, and
reference to any section or other provision of any Legal Requirement means that
provision of such Legal Requirement from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision; (vi) "hereunder," "hereof,"
"hereto," and words of similar import shall be deemed references to this
Agreement as a whole and not to any particular Article, Section or other
provision hereof; (vii) "including" (and with correlative meaning "include")
means including without limiting the generality of any description preceding
such term; (viii) "or" is used in the inclusive sense of "and/or"; (ix) with
respect to the determination of any period of time, "from" means "from and
including" and "to" means "to but excluding"; and (x) references to documents,
instruments or agreements shall be deemed to refer as well to all addenda,
exhibits, schedules or amendments thereto.
(b) Accounting Terms and Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
(c) Legal Representation of the Parties. The parties agree that each party was
either represented by its own separate and independent counsel or had an
opportunity to be so represented in connection with this Agreement and the
transactions contemplated hereby. This Agreement was negotiated by the parties
with the benefit of legal representation, and any rule of construction or
interpretation otherwise requiring this Agreement to be construed or interpreted
against any party shall not apply to any construction or interpretation hereof.
ARTICLE II
SALE OF SHARES; CONSIDERATION; CLOSING
2.1 THE SALE
Upon the terms and subject to the conditions of this Agreement, at the Closing:
(a) Each Seller shall sell, transfer and assign to the Buyer, and the Buyer
shall purchase from each Seller, such Seller's respective Shares and any and all
rights in the Shares to which such Seller is entitled, and by doing so Sellers
shall be deemed to have assigned all of the right, title and interest in and to
the Shares to Buyer. Such sale of the Shares shall be evidenced by stock
certificates, duly endorsed in blank or accompanied by stock powers duly
executed in blank, or other instruments of transfer in form and substance
satisfactory to the Buyer.
(b) In consideration therefor, the Buyer shall issue to an aggregate of
5,000,000 (five million) shares (the "Consideration Shares") of Series A
Preferred Stock of the Buyer, which shall be allocated between Shareholders as
follows: 4,950,000 Consideration Shares to Yahu and 50,000 Consideration Shares
to Bao. The Consideration Shares shall be payable at the Closing by the issuance
and delivery by Buyer to Shareholders of certificates in definitive form dated
as of the Closing Date registered in the names and in such amounts as
aforementioned.
2.2 CLOSING
The purchase and sale provided for in this Agreement (the "Closing") will take
place at the offices of Xxxxx Xxxxx & Associates, PLLC, 00 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx 00000, commencing at 10:00 a.m. (local time) on
September 5, 2006. Subject to the provisions of Article 9, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.2 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement. In such a situation, the Closing will occur as soon as
practicable, subject to Article 9.
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2.3 CLOSING OBLIGATIONS
In addition to any other documents to be delivered under other provisions of
this Agreement, at the Closing:
(a) Sellers or Company, as the case may be, shall deliver to Buyer:
(i) stock certificates evidencing the Shares, duly endorsed in blank or
accompanied by stock powers duly executed in blank, with signatures guaranteed
by a commercial bank, or other instruments of transfer in form and substance
reasonably satisfactory to Buyer;
(ii) the stock books, stock ledgers, minute books, and corporate seals
of Company;
(iii) the financial statements referred to in Section 3.4 hereof and
other information required to be filed pursuant to the Exchange Act with the SEC
by Buyer on its Current Report on Form 8-K in connection with the Closing;
(iv) a certificate executed by each Seller representing and warranting
to Buyer that each of Seller's representations and warranties in this Agreement
was accurate in all respects as of the date of this Agreement and is accurate in
all respects as of the Closing Date as if made on the Closing Date (giving full
effect to any supplements to the Schedules that were delivered by Seller to
Buyer prior to the Closing Date in accordance with Section 5.5);
(v) an opinion of counsel to the Company and Sellers in the form
annexed hereto as Exhibit 2.3(a)(v); and
(vi) such other documents and other instruments of transfer and
conveyance as may be requested by Buyer, each in form and substance satisfactory
to Buyer and its legal counsel and executed by Seller, if necessary.
(b) Buyer shall deliver to the Seller:
(i) stock certificates evidencing the Consideration Shares; and
(ii) a certificate executed by Buyer as to the accuracy of its
representations and warranties as of the date of this Agreement and as of the
Closing and as to its compliance with and performance of its covenants and
obligations to be performed or complied with at or before the Closing.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of Sellers and the Company, jointly and severally, represent and warrant to
Buyer, as of the date hereof and as of the Closing Date, as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Schedule 3.1(a) contains a complete and accurate list of Company's
jurisdiction of organization and any other jurisdictions in which it is
qualified to do business as a foreign entity. Company is a limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under the Company Contracts. Company is duly qualified to do business as a
foreign entity and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification.
(b) Complete and accurate copies of English translations of the Governing
Documents of Company, as currently in effect, are attached to Schedule 3.1(b)
hereto.
(c) Company has no subsidiaries and does not own any shares of capital stock or
other securities of any other Person.
3.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid and binding obligation of each
of Seller and the Company, enforceable against each of them in accordance with
its terms. Upon the execution and delivery by each of Seller and the Company of
this Agreement and each other agreement to be executed or delivered by Sellers
at the Closing (collectively, the "Sellers' Closing Documents"), the Sellers'
Closing Documents will constitute the legal, valid and binding obligation of
each of Seller and the Company, enforceable against each of them in accordance
with its terms. Each of Seller and the Company has the absolute and unrestricted
right, power and authority to execute and deliver this Agreement and the
Sellers' Closing Documents to which it is a party and to perform its obligations
under this Agreement and the Sellers' Closing Documents, and such action has
been duly authorized by all necessary action by Sellers and the Company. Each of
Seller and the Company has all necessary legal capacity to enter into this
Agreement and the Sellers' Closing Documents to which it is a party and to
perform such its obligations hereunder and thereunder.
(b) Neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) Breach (A) any provision of any of the Governing Documents of
Company or (B) any resolution adopted by the board of directors or the
shareholders of Company;
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(ii) Breach or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under any Legal Requirement or any Order to which Company or
any of Seller, or any of the Assets, may be subject;
(iii) contravene, conflict with or result in a violation or breach of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by Company or that otherwise relates to the Assets or
to the business of Company;
(iv) Breach any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or payment under, or to cancel, terminate or modify, any Company
Contract; or
(v) result in the imposition or creation of any Encumbrance upon or
with respect to any of the Assets.
(c) Neither Company nor any of Seller is required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
(d) Yahu is the sole record and beneficial owner of 99% of the Shares and Bao is
the sole record and beneficial owner of 1% of the Shares. Each Seller has good
and marketable title to the Shares, free and clear of any Encumbrance. Upon the
execution and delivery of this Agreement and issuance of the Consideration
Shares to the Sellers, Buyer shall be the lawful record and beneficial owner of
the Shares, free and clear of all Encumbrances. There are no stockholders'
agreements, voting trust, proxies, options, rights of first refusal or any other
agreements or understandings with respect to the Shares.
3.3 CAPITALIZATION
(a) Schedule 3.3(a) correctly and completely sets forth: (i) the authorized
capitalization of the Company; and (ii) the percentage of each class of
registered capital stock of the Company issued and outstanding. Sellers are and
will be on the Closing Date the sole shareholders of the Company. Each Seller is
and will be on the Closing Date the record and beneficial owner of such Seller's
respective Shares, free and clear of all Encumbrances. The Shares constitute one
hundred (100%) percent of the issued and outstanding shares of the registered
capital stock of the Company. The Shares have been duly authorized and validly
issued and are fully paid and non-assessable. Neither Seller has any obligation
to the Company for the Shares. The Shares were issued in compliance with all
Legal Requirements.
(b) There are no Contracts relating to the issuance, sale or transfer of any
equity securities or other securities of Company, including any of the
following: options, warrants, agreements, or other rights for the acquisition of
shares of the Company's capital stock; securities or other obligations of the
Company which are convertible into shares of the Company's capital stock; or
sale agreements, shareholder agreements, pledges, proxies, voting trusts, powers
of attorney, restrictions on transfer or other agreements or instruments that
are binding on Seller or the Company, including without limitation, any such
agreements or instruments that relate to the ownership, voting or transfer of
any shares of the Company's capital stock.
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3.4 FINANCIAL STATEMENTS
Prior to Closing, Company will have delivered to Buyer certain following
financial statements, including an audited balance sheet of Company as at June
30, 2006 (including the notes thereto, the "Balance Sheet"), and the related
audited statements of income, changes in Sellers' equity and cash flows,
together with the report thereon of Xxxxxxxx & Xxxxxxxxxxx, LLP, independent
certified public accountants, and an unaudited balance sheet of Company for July
and August (the "Interim Balance Sheet") and the related unaudited statements of
income, changes in Sellers' equity, and cash flows for the months then ended,
including in each case the notes thereto certified by Company's chief financial
officer. Such financial statements fairly present (and the financial statements
delivered pursuant to Section 5.8 will fairly present) the financial condition
and the results of operations, changes in Shareholders' equity and cash flows of
Company as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP. The financial statements
referred to in this Section 3.4 and delivered pursuant to Section 5.8 reflect
and will reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
financial statements. The financial statements have been and will be prepared
from and are in accordance with the accounting Records of Company.
3.5 BOOKS AND RECORDS
The books of account and other financial and other Records of Company, all of
which have been made available to Buyer, are complete and correct and represent
actual, bona fide transactions and have been maintained in accordance with sound
business practices. The minute books of Company, all of which have been made
available to Buyer, contain accurate and complete Records of all meetings held
of, and corporate action taken by, the shareholders, the board of directors and
committees of the board of directors of Company, and no meeting of any such
shareholders, board of directors or committee has been held for which minutes
have not been prepared or are not contained in such minute books.
3.6 TANGIBLE PERSONAL PROPERTY; SUFFICIENCY OF ASSETS
(a) Schedule 3.6(a) is a complete and accurate schedule describing, and
specifying the location of, all Tangible Personal Property. Company owns good
and marketable title to all of the Tangible Personal Property, free and clear of
any Encumbrances, and none of the Tangible Personal Property is held under any
lease, security agreement, conditional sales contract, license, or other title
retention or security arrangement, or is located other than in the possession of
Company.
(b) The Assets (i) constitute all of the assets, tangible and intangible, of any
nature whatsoever, necessary to operate Company's business in the manner
presently operated by Company and (ii) include all of the operating assets of
Company.
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3.7 DESCRIPTION OF OWNED REAL PROPERTY
Schedule 3.7 contains a correct legal description, street address and tax parcel
identification number of all tracts, parcels and subdivided lots in which
Company has an ownership interest.
3.8 DESCRIPTION OF LEASED REAL PROPERTY
Schedule 3.8 contains a correct legal description, street address and tax parcel
identification number of all tracts, parcels and subdivided lots in which
Company has a leasehold interest and an accurate description (by location, name
of lessor, date of Lease and term expiry date) of all real property leases.
3.9 TITLE TO REAL PROPERTY
Company owns good and marketable title to its respective estates in the Real
Property, free and clear of any Encumbrances, other than: (i) liens for Taxes
for the current tax year which are not yet due and payable; and (ii) those
described in Schedule 3.9(a) ("Real Estate Encumbrances").True and complete
copies of (A) all deeds, existing title insurance policies and surveys of or
pertaining to the Real Property and (B) all instruments, agreements and other
documents evidencing, creating or constituting any Real Estate Encumbrances have
been delivered to Buyer. At the time of Closing, the Real Estate shall be free
and clear of all Real Estate Encumbrances.
3.10 CONDITION OF FACILITIES
(a) Use of the Real Property for the various purposes for which it is presently
being used is permitted as of right under all applicable zoning legal
requirements and is not subject to "permitted nonconforming" use or structure
classifications. All Improvements are in compliance with all applicable Legal
Requirements, including those pertaining to zoning, building and the disabled,
are in good repair and in good condition, ordinary wear and tear excepted, and
are free from latent and patent defects. No part of any Improvement encroaches
on any real property not included in the Real Property, and there are no
buildings, structures, fixtures or other Improvements primarily situated on
adjoining property which encroach on any part of the Land. The Land for each
owned Facility abuts on and has direct vehicular access to a public road or has
access to a public road via a permanent, irrevocable, appurtenant easement
benefiting such Land and comprising a part of the Real Property, is supplied
with public or quasi-public utilities and other services appropriate for the
operation of the Facilities located thereon and is not located within any flood
plain or area subject to wetlands regulation or any similar restriction. There
is no existing or proposed plan to modify or realign any street or highway or
any existing or proposed eminent domain proceeding that would result in the
taking of all or any part of any Facility or that would prevent or hinder the
continued use of any Facility as heretofore used in the conduct of the business
of Seller.
(b) Each item of Tangible Personal Property is in good repair and good operating
condition, ordinary wear and tear excepted, is suitable for immediate use in the
Ordinary Course of Business and is free from latent and patent defects. No item
of Tangible Personal Property is in need of repair or replacement other than as
part of routine maintenance in the Ordinary Course of Business. All Tangible
Personal Property used in Company's business is in the possession of Company.
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3.11 ACCOUNTS RECEIVABLE
All Accounts Receivable that are reflected on the Balance Sheet or the Interim
Balance Sheet or on the accounting Records of Company as of the Closing Date
represent or will represent valid obligations arising from sales actually made
or services actually performed by Company in the Ordinary Course of Business.
Except to the extent paid prior to the Closing Date, such Accounts Receivable
are or will be as of the Closing Date current and collectible net of the
respective reserves shown on the Balance Sheet or the Interim Balance Sheet
(which reserves are adequate and calculated consistent with past practice).
Subject to such reserves, each of such Accounts Receivable either has been or
will be collected in full, without any setoff, within ninety (90) days after the
day on which it first becomes due and payable. There is no contest, claim,
defense or right of setoff, other than returns in the Ordinary Course of
Business of Company, under any Contract with any account debtor of an Account
Receivable relating to the amount or validity of such Account Receivable.
3.12 NO UNDISCLOSED LIABILITIES
Except as expressly disclosed herein, the Company has no Liabilities.
3.13 TAXES
(a) Tax Returns Filed and Taxes Paid. Company has filed or caused to be filed on
a timely basis all Tax Returns and all reports with respect to Taxes that are or
were required to be filed pursuant to applicable Legal Requirements. All Tax
Returns and reports filed by Company are true, correct and complete. Company has
paid, or made provision for the payment of, all Taxes that have or may have
become due for all periods covered by the Tax Returns or otherwise, or pursuant
to any assessment received by Company, except such Taxes, if any, as to which
adequate reserves (determined in accordance with GAAP) have been provided in the
Balance Sheet and the Interim Balance Sheet. Company currently is not the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made or is expected to be made by any Governmental Body in a
jurisdiction where Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Encumbrances on any of
the Assets that arose in connection with any failure (or alleged failure) to pay
any Tax, and Company has no Knowledge of any basis for assertion of any claims
attributable to Taxes which, if adversely determined, would result in any such
Encumbrance.
(b) Delivery of Tax Returns and Information Regarding Audits and Potential
Audits. Company has delivered or made available to Buyer or Buyer's
representatives copies of all Tax Returns filed by the Company. There are no
deficiencies or similar items with respect to the Tax Returns or any Taxes paid
and no dispute or claim concerning any Taxes of Company either (i) claimed or
raised by any Governmental Body in writing or (ii) as to which Company has
Knowledge.
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(c) Proper Accrual. The charges, accruals and reserves with respect to Taxes on
the Records of Company are adequate (determined in accordance with GAAP) and are
at least equal to Company's liability for Taxes. There exists no proposed tax
assessment or deficiency against Company.
(d) Specific Potential Tax Liabilities and Tax Situations.
(i) Withholding. All Taxes that Company is or was required by Legal
Requirements to withhold, deduct or collect have been duly withheld, deducted
and collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.
(ii) Tax Sharing or Similar Agreements. There is no tax sharing
agreement, tax allocation agreement, tax indemnity obligation or similar written
or unwritten agreement, arrangement, understanding or practice with respect to
Taxes (including any advance pricing agreement, closing agreement or other
arrangement relating to Taxes) that will require any payment by Company.
3.14 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not been any material adverse
change in the business, operations, prospects, assets, results of operations or
condition (financial or other) of Company, and no event has occurred or
circumstance exists that may result in such a material adverse change. Since the
date of the Balance Sheet, the Company has conducted its business only in the
Ordinary Course of Business and there has not been any:
(a) change in Company's authorized or issued capital stock, grant of any stock
option or right to purchase shares of capital stock of Company or issuance of
any security convertible into such capital stock;
(b) amendment to the Governing Documents of Company;
(c) payment (except in the Ordinary Course of Business) or increase by Company
of any bonuses, salaries or other compensation to any Seller, director, officer
or employee or entry into any employment, severance or similar Contract with any
director, officer or employee;
(d) adoption of, amendment to or increase in the payments to or benefits under,
any Employee Plan;
(e) damage to or destruction or loss of any Asset, whether or not covered by
insurance;
(f) entry into, termination of or receipt of notice of termination of (i) any
license, distributorship, dealer, sales representative, joint venture, credit or
similar Contract to which Company is a party, or (ii) any Contract or
transaction involving a total remaining commitment by Company of at least
$10,000;
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(g) sale (other than sales of Inventories in the Ordinary Course of Business),
lease or other disposition of any Asset or property of Company (including the
Intellectual Property Assets) or the creation of any Encumbrance on any Asset;
(h) cancellation or waiver of any claims or rights with a value to Company in
excess of $10,000;
(i) indication by any customer or supplier of an intention to discontinue or
change the terms of its relationship with Company;
(j) material change in the accounting methods used by Company; or
(k) Contract by Company to do any of the foregoing.
3.15 PERSONNEL MATTERS
(a) Schedule 3.15(a) sets forth a correct and complete list of each director,
officer, employee, independent contractor, consultant and agent of Company,
including but not limited to, each employee on leave of absence or layoff
status. No retired employee, director, of officer of Company is receiving
benefits or scheduled to receive benefits in the future.
(b) The Company is not a party to any employment, consulting or similar
agreement, written or oral, with any Person.
(c) No employees of the Company are represented by any labor union or similar
organization. The Company is not party to any collective bargaining or similar
agreement covering any of its employees. No labor union or similar organization
or group of employees has made a demand for recognition, filed a petition
seeking a representation proceeding or given the Company notice of any intention
to hold an election of a collective bargaining representative at any time during
the past three years.
(d) The Company does not, and never has had, any "employee benefit plans" as
defined by Section 3(3) of the Employee Retirement Income Security Act of 1974,
pension, retirement, bonus, profit-sharing, stock option, or other such
arrangements providing for employee remuneration or benefits (the "Employee
Plans").
(e) The Company has complied in all respects with all Legal Requirements
relating to employment practices, terms and conditions of employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar Taxes and
occupational safety and health. The Company is not liable for the payment of any
Taxes, fines, penalties, or other amounts, however designated, for failure to
comply with any of the foregoing Legal Requirements.
(f) No officer, director, agent, employee, consultant, or contractor of Company
is bound by any Contract that purports to limit the ability of such officer,
director, agent, employee, consultant, or contractor to engage in or continue or
perform any conduct, activity, duties or practice relating to the business of
Company. No former or current employee of Company is a party to, or is otherwise
bound by, any Contract that in any way adversely affected, affects, or will
affect the ability of Company or Buyer to conduct the business as heretofore
carried on by Company.
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3.16 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Company is, and at all times has been, in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct or operation of
its business or the ownership or use of any of its Assets. No event has occurred
or circumstance exists that (with or without notice or lapse of time) may
constitute or result in a violation by Company of, or a failure on the part of
Company to comply with, any Legal Requirement or may give rise to any obligation
on the part of Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature. Company has not received any notice or
other communication (whether oral or written) from any Governmental Body or any
other Person regarding any actual, alleged, possible or potential violation of,
or failure to comply with, any Legal Requirement or any actual, alleged,
possible or potential obligation on the part of Company to undertake, or to bear
all or any portion of the cost of, any remedial action of any nature.
(b) Schedule 3.16(b) contains a complete and accurate list of each Governmental
Authorization that is held by Company or that otherwise relates to Company's
business or the Assets. Each Governmental Authorization listed or required to be
listed in Schedule 3.16(b) is valid and in full force and effect. Except as set
forth in Schedule 3.16(b):
(i) Company is, and has been, in full compliance with all of the terms
and requirements of each Governmental Authorization identified or required to be
identified in Schedule 3.16(b);
(ii) 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 term or requirement of any
Governmental Authorization listed or required to be listed in Schedule 3.16(b)
or (B) result directly or indirectly in the revocation, withdrawal, suspension,
cancellation or termination of, or any modification to, any Governmental
Authorization listed or required to be listed in Schedule 3.16(b);
(iii) Company has not received any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible or potential violation of or failure
to comply with any term or requirement of any Governmental Authorization or (B)
any actual, proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of or modification to any Governmental Authorization;
and
(iv) all applications required to have been filed for the renewal of
the Governmental Authorizations listed or required to be listed in Schedule
3.16(b) have been duly filed on a timely basis with the appropriate Governmental
Bodies, and all other filings required to have been made with respect to such
Governmental Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.
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(v) The Governmental Authorizations listed in Schedule 3.16(b)
collectively constitute all of the Governmental Authorizations necessary to
permit Company to lawfully conduct and operate its business in the manner in
which it currently conducts and operates such business and to permit Company to
own and use its Assets in the manner in which it currently owns and uses such
Assets.
3.17 LEGAL PROCEEDINGS; ORDERS
(a) There is no pending or threatened Proceeding: (i) by or against Company or
that otherwise relates to or may affect the business of, or any of the Assets
owned or used by, Company; or (ii) that challenges, or that may have the effect
of preventing, delaying, making illegal or otherwise interfering with, any of
the Contemplated Transactions. To the Knowledge of Company or any Seller, no
event has occurred or circumstance exists that is reasonably likely to give rise
to or serve as a basis for the commencement of any such Proceeding.
(b) There is no Order to which Company, its business or any of the Assets is
subject. To the Knowledge of Company or any Seller, no officer, director, agent
or employee of Company is subject to any Order that prohibits such officer,
director, agent or employee from engaging in or continuing any conduct, activity
or practice relating to the business of Company.
(c) Company is and has at all times been in compliance with all of the terms and
requirements of each Order to which it or any of the Assets is or has been
subject. No event has occurred or circumstance exists that is reasonably likely
to constitute or result in (with or without notice or lapse of time) a violation
of or failure to comply with any term or requirement of any Order to which
Company or any of the Assets is subject; and
(d) Company has not received any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding any actual,
alleged, possible or potential violation of, or failure to comply with, any term
or requirement of any Order to which Company or any of the Assets is or has been
subject.
3.18 CONTRACTS; NO DEFAULTS
(a) Schedule 3.18(a) contains an accurate and complete list, and Company has
delivered to Buyer, accurate and complete copies of each Company Contract.
Schedule 3.18(a) sets forth reasonably complete details concerning such
Contracts, including the parties to the Contracts and the amount of the
remaining commitment of Company under the Contracts.
(b) Seller has not and may not acquire any rights under, and Seller has not or
may not become subject to any obligation or liability under, any Contract that
relates to the business of Company or any of the Assets.
(c) Except as set forth in Schedule 3.18(c):
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(i) each Contract identified or required to be identified in Schedule
3.18(a) is in full force and effect and is valid and enforceable in accordance
with its terms;
(ii) to the Knowledge of Company or any Seller, no Contract identified
or required to be identified in Schedule 3.18(a) will upon completion or
performance thereof have a material adverse affect on the business, assets or
condition of Company or the business to be conducted by Buyer with the Assets.
(d) Except as set forth in Schedule 3.18(d):
(i) Company is, and at all times has been, in compliance with all
applicable terms and requirements of each Company Contract which is being
assumed by Buyer;
(ii) each other Person that has or had any obligation or liability
under any Company Contract is, and at all times has been, in full compliance
with all applicable terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with or result in a
Breach of, or give Company or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
payment under, or to cancel, terminate or modify, any Company Contract that is
being assigned to or assumed by Buyer;
(iv) no event has occurred or circumstance exists under or by virtue of
any Contract that (with or without notice or lapse of time) would cause the
creation of any Encumbrance affecting any of the Assets; and
(v) Company has not given to or received from any other Person any
notice or other communication (whether oral or written) regarding any actual,
alleged, possible or potential violation or Breach of, or default under, any
Contract which is being assigned to or assumed by Buyer.
(e) There are no renegotiations of, attempts to renegotiate or outstanding
rights to renegotiate any material amounts paid or payable to Company under
current or completed Contracts with any Person having the contractual or
statutory right to demand or require such renegotiation and no such Person has
made written demand for such renegotiation.
(f) Each Contract relating to the sale, design, manufacture or provision of
products or services by Company has been entered into in the Ordinary Course of
Business of Company and has been entered into without the commission of any act
alone or in concert with any other Person, or any consideration having been paid
or promised, that is or would be in violation of any Legal Requirement.
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3.19 INSURANCE
(a) Company has delivered to Buyer accurate and complete copies of all policies
of insurance (and correspondence relating to coverage thereunder) to which
Company is a party.
(b) Schedule 3.19(b) describes all obligations of Company to provide insurance
coverage to Third Parties (for example, under Leases or service agreements) and
identifies the policy under which such coverage is provided.
(c) All policies of insurance to which Company is a party or that provide
coverage to Company: (i) are valid, outstanding and enforceable; (ii) are issued
by an insurer that is financially sound and reputable; (iii) taken together,
provide adequate insurance coverage for the Assets and the operations of Company
for all risks normally insured against by a Person carrying on the same business
or businesses as Company in the same location or locations and for all risks to
which Company is normally subject; and (iv) are sufficient for compliance with
all Legal Requirements and Company Contracts;
(d) Company has not received (i) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights or (ii) any notice of
cancellation or any other indication that any policy of insurance is no longer
in full force or effect or that the issuer of any policy of insurance is not
willing or able to perform its obligations thereunder. Company has paid all
insurance premiums as, and when due, and has otherwise performed all of its
obligations under each policy of insurance to which it is a party or that lists
Company as a beneficiary. Company has given notice to all insurers of any claims
that may be submitted under said policies of insurance.
3.20 ENVIRONMENTAL MATTERS
(a) Company is, and at all times has been, in full compliance with, and has not
been and is not in violation of or liable under, any Environmental Law. None of
Company nor any Seller has any basis to expect, nor has any of them or any other
Person for whose conduct they are or may be held to be responsible received, any
actual or threatened order, notice or other communication from (i) any
Governmental Body or private citizen acting in the public interest or (ii) the
current or prior owner or operator of any Facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual or
threatened obligation to undertake or bear the cost of any Environmental, Health
and Safety Liabilities with respect to any Facility or other property or asset
(whether real, personal or mixed) in which Company has or had an interest, or
with respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used or processed by
Company or any other Person for whose conduct it is or may be held responsible,
or from which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled or received.
(b) There are no pending or, to the Knowledge of Company or any Seller,
threatened claims, Encumbrances, or other restrictions of any nature resulting
from any Environmental, Health and Safety Liabilities or arising under or
pursuant to any Environmental Law with respect to or affecting any Facility or
any other property or asset (whether real, personal or mixed) in which Company
has or had an interest.
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(c) None of Company nor any Seller has any Knowledge of or any basis to expect,
nor has any of them, or any other Person for whose conduct they are or may be
held responsible, received, any citation, directive, inquiry, notice, Order,
summons, warning or other communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or potential violation or failure
to comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health and Safety
Liabilities with respect to any Facility or property or asset (whether real,
personal or mixed) in which Company has or had an interest, or with respect to
any property or facility to which Hazardous Materials generated, manufactured,
refined, transferred, imported, used or processed by Company or any other Person
for whose conduct it is or may be held responsible, have been transported,
treated, stored, handled, transferred, disposed, recycled or received.
(d) Neither Company nor any other Person for whose conduct it is or may be held
responsible has any Environmental, Health and Safety Liabilities with respect to
any Facility or, to the Knowledge of Company, with respect to any other property
or asset (whether real, personal or mixed) in which Company (or any predecessor)
has or had an interest or at any property geologically or hydrologically
adjoining any Facility or any such other property or asset.
(e) There are no Hazardous Materials present on or in the Environment at any
Facility or at any geologically or hydrologically adjoining property, including
any Hazardous Materials contained in barrels, aboveground or underground storage
tanks, landfills, land deposits, dumps, equipment (whether movable or fixed) or
other containers, either temporary or permanent, and deposited or located in
land, water, sumps, or any other part of the Facility or such adjoining
property, or incorporated into any structure therein or thereon. Neither Company
nor any Person for whose conduct it is or may be held responsible, or to the
Knowledge of Company, any other Person, has permitted or conducted, or is aware
of, any Hazardous Activity conducted with respect to any Facility or any other
property or assets (whether real, personal or mixed) in which Company has or had
an interest except in full compliance with all applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of Company, Threat of
Release, of any Hazardous Materials at or from any Facility or at any other
location where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by any Facility, or
from any other property or asset (whether real, personal or mixed) in which
Company has or had an interest, or to the Knowledge of Company any geologically
or hydrologically adjoining property, whether by Company or any other Person.
(g) Company has delivered to Buyer true and complete copies and results of any
reports, studies, analyses, tests, or monitoring possessed or initiated by
Company pertaining to Hazardous Materials or Hazardous Activities in, on, or
under the Facilities, or concerning compliance, by Company or any other Person
for whose conduct it is or may be held responsible, with Environmental Laws.
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3.21 INTELLECTUAL PROPERTY ASSETS
(a) The term "Intellectual Property Assets" means all intellectual property
owned or licensed (as licensor or licensee) by Company in which Company has a
proprietary interest, including: (i) Company's name, all assumed fictional
business names, trade names, registered and unregistered trademarks, service
marks and applications (collectively, "Marks"); (ii) all patents, patent
applications and inventions and discoveries that may be patentable
(collectively, "Patents"); (iii) all registered and unregistered copyrights in
both published works and unpublished works (collectively, "Copyrights"); (iv)
all rights in mask works; (v) all know-how, trade secrets, confidential or
proprietary information, customer lists, Software, technical information, data,
process technology, plans, drawings and blue prints (collectively, "Trade
Secrets"); and (vi) all rights in internet web sites and internet domain names
presently used by Company (collectively "Net Names").
(b) Schedule 3.21(b) contains a complete and accurate list and summary
description, including any royalties paid or received by Company, and Company
has delivered to Buyer accurate and complete copies, of all Company Contracts
relating to the Intellectual Property Assets. There are no outstanding and no
threatened disputes or disagreements with respect to any such Contract.
(c) The Intellectual Property Assets are all those necessary for the operation
of Company's business as it is currently conducted. Company is the owner or
licensee of all right, title and interest in and to each of the Intellectual
Property Assets, free and clear of all Encumbrances, and has the right to use
without payment to a Third Party all of the Intellectual Property Assets, other
than in respect of licenses listed in Schedule 3.21(c).
(d) All former and current employees of Company have executed written Contracts
with Company that assign to Company all rights to any inventions, improvements,
discoveries or information relating to the business of Company.
(e) Schedule 3.21(e) contains a complete and accurate list and summary
description of all Patents. All of the issued Patents are currently in
compliance with formal legal requirements (including payment of filing,
examination and maintenance fees and proofs of working or use), are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions
falling due within ninety (90) days after the Closing Date. No Patent has been
or is now involved in any interference, reissue, reexamination, or opposition
Proceeding. There is no potentially interfering patent or patent application of
any Third Party.
(f) Except as set forth in Schedule 3.21(e), (A) no Patent is infringed or, to
the Knowledge of Company or any Seller, has been challenged or threatened in any
way and (B) none of the products manufactured or sold, nor any process or
know-how used, by Company infringes or is alleged to infringe any patent or
other proprietary right of any other Person.
(g) All products made, used or sold under the Patents have been marked with the
proper patent notice.
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(h) Schedule 3.21(h) contains a complete and accurate list and summary
description of all Marks. All Marks are currently in compliance with all formal
Legal Requirements (including the timely post-registration filing of affidavits
of use and incontestability and renewal applications), are valid and enforceable
and are not subject to any maintenance fees or taxes or actions falling due
within ninety (90) days after the Closing Date. No Xxxx has been or is now
involved in any opposition, invalidation or cancellation Proceeding and, to the
Knowledge of Company or any Seller, no such action is threatened with respect to
any of the Marks. To the Knowledge of Company or any Seller, there is no
potentially interfering trademark or trademark application of any other Person.
No Xxxx is infringed or, to Company's Knowledge, has been challenged or
threatened in any way. None of the Marks used by Company infringes or is alleged
to infringe any trade name, trademark or service xxxx of any other Person. All
products and materials containing a Xxxx xxxx the proper federal registration
notice where permitted by law.
(i) Schedule 3.21(i) contains a complete and accurate list and summary
description of all Copyrights. All of the registered Copyrights are currently in
compliance with formal Legal Requirements, are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due within
ninety (90) days after the date of Closing. No Copyright is infringed or, to the
Knowledge of Company or any Seller, has been challenged or threatened in any
way. None of the subject matter of any of the Copyrights infringes or is alleged
to infringe any copyright of any Third Party or is a derivative work based upon
the work of any other Person. All works encompassed by the Copyrights have been
marked with the proper copyright notice.
(j) With respect to each Trade Secret, the documentation relating to such Trade
Secret is current, accurate and sufficient in detail and content to identify and
explain it and to allow its full and proper use without reliance on the
knowledge or memory of any individual. Company has taken all reasonable
precautions to protect the secrecy, confidentiality and value of all Trade
Secrets (including the enforcement by Company of a policy requiring each
employee or contractor to execute proprietary information and confidentiality
agreements substantially in Company's standard form, and all current and former
employees and contractors of Company have executed such an agreement). Company
has good title to and an absolute right to use the Trade Secrets. The Trade
Secrets are not part of the public knowledge or literature and, to the Knowledge
of Company or any Seller, have not been used, divulged or appropriated either
for the benefit of any Person (other than Company) or to the detriment of
Company. No Trade Secret is subject to any adverse claim or has been challenged
or threatened in any way or infringes any intellectual property right of any
other Person.
(k) Schedule 3.21(k) contains a complete and accurate list and summary
description of all Net Names.
3.22 RELATIONSHIPS WITH RELATED PERSONS
Except as disclosed in Schedule 3.22, neither Company nor any of Seller nor any
Related Person of any of them has any interest in any property (whether real,
personal or mixed and whether tangible or intangible) used in or pertaining to
Company's business. Neither Company nor any of Seller nor any Related Person of
any of them owns, or since January 1, 2005, has owned, of record or as a
beneficial owner, an equity interest or any other financial or profit interest
in any Person that has (a) had business dealings or a material financial
interest in any transaction with Company other than business dealings or
transactions disclosed in Schedule 3.22, each of which has been conducted in the
Ordinary Course of Business with Company at substantially prevailing market
prices and on substantially prevailing market terms or (b) engaged in
competition with Company with respect to any line of the products or services of
Company (a "Competing Business") in any market presently served by Company,
except for ownership of less than one percent (1%) of the outstanding capital
stock of any Competing Business that is publicly traded on any recognized
exchange or in the over-the-counter market. Except as set forth in Schedule
3.22, neither Company nor any of Seller nor any Related Person of any of them is
a party to any Contract with, or has any claim or right against, Company.
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3.23 BROKERS OR FINDERS
None of Company, any of Seller, nor any of its Representatives have incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payments in connection with the sale of
the Shares or the Company's business or the Assets or the Contemplated
Transactions.
3.24 SECURITIES LAW MATTERS
(a) Each Seller understands that the Consideration Shares are being offered and
made in reliance on one or more exemptions from the registration requirements of
United States federal and state securities laws and that the Buyer is relying
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Sellers set forth herein in order to
determine the applicability of such exemptions and the suitability of the
Sellers to acquire the Consideration Shares.
(b) Each Seller is acquiring the Consideration Shares for Seller's own account
and not with a view to its distribution within the meaning of Section 2(11) of
the Securities Act. Each Seller is not a U.S. person (as that term is defined in
Regulation S Promulgated under the Securities Act). Each Seller is an
"accredited investor" (as that term is defined in Rule 501 of the General Rules
and Regulations under the Securities Act by reason of Rule 501(a)(3)), and each
Seller is (i) experienced in making investments of the kind described in this
Agreement and the related documents, (ii) able, by reason of the business and
financial experience of its officers (if an entity) and professional advisors
(who are not affiliated with or compensated in any way by Buyer or any of its
affiliates or selling agents), to protect its own interests in connection with
the transactions described in this Agreement, and the related documents, and
(iii) able to afford the entire loss of the investment in the Consideration
Shares. Each Seller has been provided an opportunity for a reasonable period of
time prior to the date hereof to obtain additional information concerning the
Consideration Shares, the Buyer and all other information to the extent the
Buyer possesses such information or can acquire it without unreasonable effort
or expense.
(c) Each Seller understands that the Consideration Shares shall be "restricted"
(as that term is defined in Rule 144 promulgated under the Securities Act), and
each certificate representing the Consideration Shares shall be endorsed with
one or more of the following restrictive legends, in addition to any other
legend required to be placed thereon by applicable federal or state securities
laws:
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"THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT
U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE SECURITIES ACT"))
AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE
UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.
TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT."
3.25 DISCLOSURE
(a) No representation or warranty or other statement made by Company or any of
Seller in this Agreement, the Schedules, any supplement to the Schedules, the
certificates delivered pursuant to Section 2.3(a) or otherwise in connection
with the Contemplated Transactions contains any untrue statement or omits to
state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
(b) None of any of Seller nor the Company has Knowledge of any fact that has
specific application to Company (other than general economic or industry
conditions) or the Shares and that may materially adversely affect the Shares or
the assets, business, prospects, financial condition or results of operations of
Company that has not been set forth in this Agreement. There does not now exist
any event, condition, or other matter, or any series of events, conditions or
other matters, individually or in the aggregate, adversely affecting the Shares
or the Company's assets, business, prospects, financial condition or results of
its operations that has not been specifically disclosed to Buyer in writing by
Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Company and Sellers, as of the date hereof and
as of the Closing Date, as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, with full corporate power and authority
to conduct its business as it is now conducted.
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4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Upon the execution and
delivery by Buyer of the other agreements to be executed or delivered by Buyer
at Closing (collectively, the "Buyer's Closing Documents"), each of the Buyer's
Closing Documents will constitute the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its respective terms. Buyer
has the absolute and unrestricted right, power and authority to execute and
deliver this Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents, and such
action has been duly authorized by all necessary corporate action.
(b) Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay or otherwise interfere with any
of the Contemplated Transactions pursuant to: (i)any provision of Buyer's
Governing Documents; (ii) any resolution adopted by the board of directors of
Buyer; (iii) any Legal Requirement or Order to which Buyer may be subject; or
(iv) any Contract to which Buyer is a party or by which Buyer may be bound.
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 FILINGS WITH THE SEC
To the best of Company's knowledge, the Company has not provided to the
undersigned any information that, according to applicable law, rule or
regulation, should have been disclosed publicly prior to the date hereof by the
Company, but which has not been so disclosed. As of their respective dates, the
documents filed by the Company with the SEC (the "SEC Documents") complied in
all material respects with the requirements of the Securities Act of or the
Exchange Act, as the case may be, and other federal, state and local laws, rules
and regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply as to form and substance in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such financial statements or the
notes thereto or (b) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
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4.4 VALID ISSUANCE
The issuance of the Consideration Shares, in accordance with the terms and on
the bases of the representations and warranties of the Seller set forth herein,
may and shall be properly issued by the Company to the undersigned pursuant to
applicable federal law. When issued and paid for as herein provided, the
Consideration Shares shall be duly and validly issued, fully paid, and
nonassessable.
4.5 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been threatened.
4.6 BROKERS OR FINDERS
Neither Buyer nor any of its Representatives have incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with the Contemplated
Transactions.
ARITCLE V
COVENANTS PRIOR TO CLOSING
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, and upon reasonable
advance notice, Sellers and Company, on the one hand, and Buyer on the other
hand, shall (a) afford the other party and its Representatives and prospective
lenders and their Representatives full and free access, during regular business
hours, to its personnel, properties, Contracts, Governmental Authorizations,
books and Records and other documents and data, such rights of access to be
exercised in a manner that does not unreasonably interfere with its operations;
(b) furnish the other party with copies of all such Contracts, Governmental
Authorizations, books and Records and other existing documents and data as the
other party may reasonably request; (c) furnish the other party with such
additional financial, operating and other relevant data and information as the
other party may reasonably request; and (d) otherwise cooperate and assist, to
the extent reasonably requested by the other party, with the other party's
investigation of the properties, assets and financial condition related to it.
In addition, the other party shall have the right to have the real property and
Tangible Personal Property inspected by it, at the other party's sole cost and
expense, for purposes of determining the physical condition and legal
characteristics of the real property and Tangible Personal Property.
5.2 OPERATION OF THE BUSINESS AND CONDUCT OF SELLERS PRIOR TO CLOSING
(a) Between the date of this Agreement and the Closing, Company shall (and
Sellers shall cause Company to):
(i) conduct its business only in the Ordinary Course of Business;
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(ii) except as otherwise directed by Buyer in writing, and without
making any commitment on Buyer's behalf, use its Best Efforts to preserve intact
its current business organization, keep available the services of its officers,
employees and agents and maintain its relations and good will with suppliers,
customers, landlords, creditors, employees, agents and others having business
relationships with it;
(iii) confer with Buyer prior to implementing operational decisions of
a material nature;
(iv) otherwise report periodically to Buyer concerning the status of
its business, operations and finances;
(v) make no material changes in management personnel without prior
consultation with Buyer;
(vi) maintain the Assets in a state of repair and condition that
complies with Legal Requirements and is consistent with the requirements and
normal conduct of Company's business;
(vii) keep in full force and effect, without amendment, all material
rights relating to Company's business;
(viii) comply with all Legal Requirements and contractual obligations
applicable to the operations of Company's business;
(ix) continue in full force and effect the insurance coverage under the
policies set forth in Schedule 3.19 or substantially equivalent policies;
(x) cooperate with Buyer and assist Buyer in identifying the
Governmental Authorizations required by Buyer to operate the business from and
after the Closing Date and either transferring existing Governmental
Authorizations of Company to Buyer, where permissible, or obtaining new
Governmental Authorizations for Buyer;
(xi) upon request from time to time, execute and deliver all documents,
make all truthful oaths, testify in any Proceedings and do all other acts that
may be reasonably necessary or desirable in the opinion of Buyer to consummate
the Contemplated Transactions, all without further consideration; and
(xii) maintain all books and Records of Company relating to Company's
business in the Ordinary Course of Business.
(b) Between the date of this Agreement and the Closing, each Seller shall:
(i) not sell, transfer or otherwise dispose of any of the Shares or any
interest in the Shares and not agree to do any of the foregoing;
(ii) not accept any dividend or other distribution in respect of any of
the Shares;
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(iii) not incur, make, assume or suffer to exist any Encumbrance or
other matter affecting title to any of the Shares;
(iv) not enter into any shareholder agreements, voting trusts,
restrictions on transfer or other agreements or instruments that would be
binding on the Buyer as the owner of the Shares; and
(v) take no action, and use their best efforts to prevent the
occurrence of any event or the existence of any condition, that would result in
any of the Seller's representations and warranties in this Agreement not being
true and correct.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted herein, between the date of this
Agreement and the Closing Date, Company shall not, and Seller shall not permit
Company to, without the prior written Consent of Buyer, (a) take any affirmative
action, or fail to take any reasonable action within its control, as a result of
which any of the changes or events listed in Section 3.14 would be likely to
occur; (b) make any modification to any material Contract or Governmental
Authorization; (c) allow the levels of raw materials, supplies or other
materials included in the Inventories to vary materially from the levels
customarily maintained; or (d) enter into any compromise or settlement of any
litigation, proceeding or governmental investigation relating to Company, its
Assets, or its business.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Company shall make
all filings required by Legal Requirements to be made by it in order to
consummate the Contemplated Transactions. Company and Seller also shall
cooperate with Buyer and its Representatives with respect to all filings that
Buyer elects to make or, pursuant to Legal Requirements, shall be required to
make in connection with the Contemplated Transactions. Company and Seller also
shall cooperate with Buyer and its Representatives in obtaining all Material
Consents. In China there's no requirement of filing
5.5 NOTIFICATION
Between the date of this Agreement and the Closing, any of Seller or the Company
shall promptly notify Buyer in writing upon becoming aware of (a) any fact or
condition that causes or constitutes a Breach of any of Company's
representations and warranties made as of the date of this Agreement or (b) the
occurrence after the date of this Agreement of any fact or condition that would
or be reasonably likely to (except as expressly contemplated by this Agreement)
cause or constitute a Breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence of, or
Company's or Seller's discovery of, such fact or condition. Should any such fact
or condition require any change to the representations an warranties made
herein, the Company and Sellers shall promptly deliver to Buyer a supplement to
the Schedules attached hereto specifying such change. Such delivery shall not
affect any rights of Buyer under Section 9.2 and Article 11. During the same
period, Company and Sellers also shall promptly notify Buyer of the occurrence
of any Breach of any covenant of Company or Seller in this Article 5 or of the
occurrence of any event that may make the satisfaction of the conditions in
Article 7 impossible or unlikely.
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5.6 NO NEGOTIATION
Until such time as this Agreement shall be terminated pursuant to Section 9.1,
neither Company nor any of Seller shall directly or indirectly solicit,
initiate, encourage or entertain any inquiries or proposals from, discuss or
negotiate with, provide any nonpublic information to or consider the merits of
any inquiries or proposals from any Person (other than Buyer) relating to any
business combination transaction involving Company, including the sale by any
Seller of Company's stock, the merger or consolidation of Company or the sale of
Company's business or any of the Assets (other than in the Ordinary Course of
Business). Company and Sellers shall notify Buyer of any such inquiry or
proposal within twenty-four (24) hours of receipt or awareness of the same by
Company or Seller.
5.7 BEST EFFORTS
Company and Sellers shall use their Best Efforts to cause the conditions in
Article 7 and Section 8.3 to be satisfied.
5.8 PAYMENT OF LIABILITIES
Company shall pay or otherwise satisfy in the Ordinary Course of Business all of
its Liabilities and obligations.
5.9 COOPERATION WITH RESPECT TO FINANCIAL REPORTING
After the date of this Agreement, Sellers and Company shall reasonably cooperate
with Buyer in connection with Buyer's preparation of financial statements and
other information as required for Buyer's filings with the SEC under the
Exchange Act, including Buyer's Current Report on Form 8-K that is to be filed
with the SEC pursuant to the Exchange Act in connection with the Closing.
ARTICLE VI
COVENANTS OF BUYER PRIOR TO CLOSING
6.1 BEST EFFORTS
Buyer shall use its Best Efforts to cause the conditions in Article 8 and
Section 7.3 to be satisfied.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions required
to be taken by Buyer at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Buyer, in whole or in part):
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7.1 ACCURACY OF REPRESENTATIONS
All of Sellers' and Company's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), shall have been accurate in all material respects as
of the date of this Agreement, and shall be accurate in all material respects as
of the time of the Closing as if then made, without giving effect to any
supplement to the Schedules.
7.2 COMPANY'S PERFORMANCE
All of the covenants and obligations that Company and Seller are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), shall have been duly performed and complied with in
all material respects.
7.3 CONSENTS
Each of the Consents identified in Schedule 7.3 (the " Consents") shall have
been obtained and shall be in full force and effect.
7.4 ADDITIONAL DOCUMENTS
Company and Seller shall have caused the documents and instruments required by
Section 2.3(a) and the following documents to be delivered (or tendered subject
only to Closing) to Buyer:
(a) The charter and all amendments thereto of Company, duly certified as of a
recent date by the Secretary of State of the jurisdiction of Company's
organization;
(b) If requested by Buyer, any Consents or other instruments that may be
required to permit Buyer's qualification in each jurisdiction in which Company
is licensed or qualified to do business as a foreign entity;
(c) Certificates dated as of a date not earlier than the third business day
prior to the Closing as to the good standing of Company, executed by the
appropriate officials in each jurisdiction in which Company is licensed or
qualified to do business as a foreign entity as specified in Schedule 3.1(a);
and
(d) Such other documents as Buyer may request for the purpose of: (i) evidencing
the accuracy of any of Company's representations and warranties; (ii) evidencing
the performance by Company or Seller of, or the compliance by Company or Seller
with, any covenant or obligation required to be performed or complied with by
Company or such Seller; (iii) evidencing the satisfaction of any condition
referred to in this Article 7; or (iv) otherwise facilitating the consummation
or performance of any of the Contemplated Transactions.
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7.5 NO PROCEEDINGS
Since the date of this Agreement, there shall not have been commenced or
threatened against Buyer, or against any Related Person of Buyer, any Proceeding
(a) involving any challenge to, or seeking Damages or other relief in connection
with, any of the Contemplated Transactions or (b) that may have the effect of
preventing, delaying, making illegal, imposing limitations or conditions on or
otherwise interfering with any of the Contemplated Transactions.
7.6 NO CONFLICT
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of or cause Buyer or
any Related Person of Buyer to suffer any adverse consequence under (a) any
applicable Legal Requirement or Order or (b) any Legal Requirement or Order that
has been published, introduced or otherwise proposed by or before any
Governmental Body, excluding Bulk Sales Laws.
7.7 GOVERNMENTAL AUTHORIZATIONS
Buyer shall have received such Governmental Authorizations as are necessary or
desirable to allow Buyer to operate the Company's businesses from and after the
Closing.
7.8 SATISFACTION WITH DUE DILIGENCE
Buyer's due diligence investigation shall not have indicated that any of the
information provided for in the Agreement or in any of the information provided
by any of Seller or the Company is inaccurate, incomplete or untrue in any way,
and Buyer's due diligence investigation shall not have revealed any facts,
circumstances, liabilities or conditions that, in such party's discretion, may
adversely affect the value or prospects of the Shares or the Company or that may
expose the Company to any liability not heretofore fully disclosed to Buyer.
7.9 FINANCIAL INFORMATION
Company shall have prepared and delivered to Buyer the financial statements
referred to in Sections 3.4 and 5.8 hereto and other information required to be
filed pursuant to the Exchange Act with the SEC by Buyer on its Current Report
on Form 8-K in connection with the Closing.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions required to
be taken by Company at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Company in whole or in part):
26
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), shall have been accurate in all material respects as of the date
of this Agreement and shall be accurate in all material respects as of the time
of the Closing as if then made.
8.2 BUYER'S PERFORMANCE
All of the covenants and obligations that Buyer is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), shall have been performed and complied with in all material
respects.
8.3 CONSENTS
Each of the Consents identified in Schedule 8.3 shall have been obtained and
shall be in full force and effect.
8.4 ADDITIONAL DOCUMENTS
Buyer shall have caused the documents and instruments required by Section 2.3(b)
and the following documents to be delivered (or tendered subject only to
Closing) to Company and Seller such other documents as Company may reasonably
request for the purpose of (i) evidencing the accuracy of any representation or
warranty of Buyer, (ii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be performed or
complied with by Buyer or (iii) evidencing the satisfaction of any condition
referred to in this Article 8.
8.5 NO INJUNCTION
There shall not be in effect any Legal Requirement or any injunction or other
Order that (a) prohibits the consummation of the Contemplated Transactions and
(b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
ARTICLE IX
TERMINATION
9.1 TERMINATION EVENTS
By notice given prior to or at the Closing, subject to Section 9.2, this
Agreement may be terminated as follows:
(a) by Buyer, if a material Breach of any provision of this Agreement has been
committed by Company or Seller and such Breach has not been waived by Buyer;
(b) by Buyer, if its due diligence investigation indicates that any of the
information provided for in the Agreement or in any of the information provided
by the Seller or the Company is inaccurate, incomplete or untrue in any way, or
if such due diligence investigation reveals any facts, circumstances,
liabilities or conditions that, in such party's discretion, may adversely affect
the value or prospects of the Shares or the Company or that may expose the
Company to any liability not heretofore fully disclosed to Buyer; or
27
(c) by the majority of Sellers, if a material Breach of any provision of this
Agreement has been committed by Buyer and such Breach has not been waived by
Sellers' Agent or the Company;
(d) by Buyer, if any condition in Article 7 has not been satisfied as of the
date specified for Closing in the first sentence of Section 2.2 or if
satisfaction of such a condition by such date is or becomes impossible (other
than through the failure of Buyer to comply with its obligations under this
Agreement), and Buyer has not waived such condition on or before such date;
(e) by the Sellers, if any condition in Article 8 has not been satisfied as of
the date specified for Closing in the first sentence of Section 2.2 or if
satisfaction of such a condition by such date is or becomes impossible (other
than through the failure of Company or the Seller to comply with their
obligations under this Agreement), and Company has not waived such condition on
or before such date;
(f) by mutual consent of Buyer, the Sellers, and Company;
(g) by Buyer, if the Closing has not occurred on or before ninety (90) days
after the date hereof, or such later date as the parties may agree upon, unless
the Buyer is in material Breach of this Agreement; or
(h) by the Sellers, if the Closing has not occurred on or before ninety (90)
days after the date hereof, or such later date as the parties may agree upon,
unless any of Seller or the Company is in material Breach of this Agreement.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of such
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 9.2 and Articles 12 and 13 will survive, provided, however, that, if
this Agreement is terminated because of a Breach of this Agreement by the
non-terminating party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the non-terminating party's failure to comply with its obligations
under this Agreement, the terminating party's right to pursue all legal remedies
will survive such termination unimpaired.
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ARTICLE X
ADDITIONAL COVENANTS
10.1 CUSTOMER AND OTHER BUSINESS RELATIONSHIPS
After the Closing, Sellers shall cooperate with Buyer in its efforts to continue
and maintain for the benefit of Buyer those business relationships of Company
existing prior to the Closing and relating to the business to be operated by
Buyer after the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers and others. Sellers will
refer to Buyer all inquiries relating to such business. Sellers shall not take
any action that would tend to diminish the value of, or interfere with, the
Company's business after the Closing, including disparaging the name or business
of Buyer.
10.2 FURTHER ASSURANCES
From and after the date hereof, and continuing after the Closing, the parties
shall cooperate reasonably with each other and with their respective
Representatives in connection with any steps required to be taken as part of
their respective obligations under this Agreement, and shall (a) furnish upon
request to each other such further information; (b) execute and deliver to each
other such other documents; and (c) do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the Contemplated Transactions.
10.3 POST-CLOSING SEC FILINGS
As soon as practicable following the Closing, Buyer shall cause the transactions
contemplated hereunder to be memorialized and disclosed by making all filings or
recordings required under applicable law. Sellers hereby covenant and agree to
aid Buyer, as specifically requested by Buyer, in preparing and making such
filings or recordings.
ARTICLE XI
INDEMNIFICATION; REMEDIES
11.1 SURVIVAL
(a) All representations, warranties, covenants and obligations in this
Agreement, the Schedules, any supplements to the Schedules, the certificates
delivered pursuant to Section 2.3, and any other certificate or document
delivered pursuant to this Agreement shall survive the Closing and the
consummation of the Contemplated Transactions until the expiration of their
respective statutes of limitations.
(b) The right to indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and obligations shall not be affected by
any investigation (including any environmental investigation or assessment)
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 or the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with any such representation, warranty, covenant or obligation.
The waiver of any condition based upon 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, reimbursement or other
remedy based upon such representations, warranties, covenants and obligations.
29
11.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS
Sellers and the Company shall, jointly and severally, indemnify and hold
harmless Buyer, and its representatives, shareholders, directors, officers,
employees, agents, subsidiaries, and affiliates (collectively, the "Buyer
Indemnified Persons"), and shall reimburse the Buyer Indemnified Persons for any
loss, liability, claim, damage, expense (including costs of investigation and
defense and reasonable attorneys' fees and expenses) or diminution of value,
whether or not involving a Third-Party Claim (collectively, "Damages"), arising
from or in connection with:
(a) any Breach of any representation or warranty made by any Seller or the
Company in this Agreement and any other certificate, document, writing or
instrument delivered by any Seller or the Compay pursuant to this Agreement;
(b) any Breach of any covenant or obligation of any Seller or the Company in
this Agreement or in any other certificate, document, writing or instrument
delivered by any Seller or the Company pursuant to this Agreement;
(c) any Liability arising out of the operation of the Company or its business or
Assets prior to the Closing Date;
(d) any product or any services sold, included in Inventory, or otherwise
provided by, the Company, in whole or in part, prior to the Closing Date,
including claims for breach of warranty or product liability;
(e) any Liability under any Company Contract entered into prior to the Closing
Date, including any Liability arising out of or relating to Seller's credit
facilities or any security interest related thereto;
(f) any Liability for Taxes, including (1) any Taxes arising as a result of the
Company's operation of its Business or ownership of its Assets prior to the
Closing Date, and (2) any Taxes that will arise as a result of the sale of the
Shares pursuant to this Agreement;
(g) any Liability relating to payroll, vacation, sick leave, workers'
compensation, unemployment benefits, pension benefits, employee stock option or
profit-sharing plans, health care plans or benefits or any other employee plans
or benefits of any kind for the Company's employees or former employees or both;
(h) any Liability relating to the payment of all wages and other remuneration
due to any Company's employees with respect to their services as employees of
Company through the close of business on the Closing Date, including pro rata
bonus payments and all vacation pay earned prior to the Closing Date and the
payment of any termination or severance payments and the provision of health
plan continuation coverage;
30
(i) any Liability arising out of any Proceeding commenced after the Closing Date
and arising out of or relating to any occurrence or event happening prior to the
Closing Date, and any Liability under any Company Contract that arises after the
Closing but that arises out of or relates to any Breach that occurred prior to
the Closing, and any such other Liability;
(j) any Liability arising out of or resulting from the Company's compliance or
noncompliance with any Legal Requirement or Order of any Governmental Body;
(k) any Liability of the Company under this Agreement or any other document
executed in connection with the Contemplated Transactions; and
(l) any Liability of the Company based upon any Seller's acts or omissions
occurring after the Closing Date.
11.3 INDEMNIFICATION AND REIMBURSEMENT BY BUYER
Buyer will indemnify and hold harmless Sellers and the Company, and will
reimburse Sellers and the Company, for any Damages arising from or in connection
with:
(a) any Breach of any representation or warranty made by Buyer in this Agreement
or in any certificate, document, writing or instrument delivered by Buyer
pursuant to this Agreement;
(b) any Breach of any covenant or obligation of Buyer in this Agreement or in
any other certificate, document, writing or instrument delivered by Buyer
pursuant to this Agreement; and
(c) any claim by any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by such Person with Buyer (or any Person acting on Buyer's behalf) in
connection with any of the Contemplated Transactions.
11.4 THIRD-PARTY CLAIMS
(a) Promptly after receipt by a Person entitled to indemnity under Section 11.2,
11.3 (to the extent provided in the last sentence of Section 11.3) (an
"Indemnified Person") of notice of the assertion of a Third-Party Claim against
it, such Indemnified Person shall give notice to the Person obligated to
indemnify under such Section (an "Indemnifying Person") of the assertion of such
Third-Party Claim, provided that the failure to notify the Indemnifying Person
will not relieve the Indemnifying Person of any liability that it may have to
any Indemnified Person, except to the extent that the Indemnifying Person
demonstrates that the defense of such Third-Party Claim is prejudiced by the
Indemnified Person's failure to give such notice.
31
(b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to
Section 11.4(a) of the assertion of a Third-Party Claim, the Indemnifying Person
shall be entitled to participate in the defense of such Third-Party Claim and,
to the extent that it wishes (unless (i) the Indemnifying Person is also a
Person against whom the Third-Party Claim is made and the Indemnified Person
determines in good faith that joint representation would be inappropriate or
(ii) the Indemnifying Person fails to provide reasonable assurance to the
Indemnified Person of its financial capacity to defend such Third-Party Claim
and provide indemnification with respect to such Third-Party Claim), to assume
the defense of such Third-Party Claim with counsel satisfactory to the
Indemnified Person. After notice from the Indemnifying Person to the Indemnified
Person of its election to assume the defense of such Third-Party Claim, the
Indemnifying Person shall not, so long as it diligently conducts such defense,
be liable to the Indemnified Person under this Article 11 for any fees of other
counsel or any other expenses with respect to the defense of such Third-Party
Claim, in each case subsequently incurred by the Indemnified Person in
connection with the defense of such Third-Party Claim, other than reasonable
costs of investigation. If the Indemnifying Person assumes the defense of a
Third-Party Claim, (i) such assumption will conclusively establish for purposes
of this Agreement that the claims made in that Third-Party Claim are within the
scope of and subject to indemnification, and (ii) no compromise or settlement of
such Third-Party Claims may be effected by the Indemnifying Person without the
Indemnified Person's Consent unless (A) there is no finding or admission of any
violation of Legal Requirement or any violation of the rights of any Person; (B)
the sole relief provided is monetary damages that are paid in full by the
Indemnifying Person; and (C) the Indemnified Person shall have no liability with
respect to any compromise or settlement of such Third-Party Claims effected
without its Consent. If notice is given to an Indemnifying Person of the
assertion of any Third-Party Claim and the Indemnifying Person does not, within
ten (10) days after the Indemnified Person's notice is given, give notice to the
Indemnified Person of its election to assume the defense of such Third-Party
Claim, the Indemnifying Person will be bound by any determination made in such
Third-Party Claim or any compromise or settlement effected by the Indemnified
Person.
(c) Notwithstanding the foregoing, if an Indemnified Person determines in good
faith that there is a reasonable probability that a Third-Party Claim may
adversely affect it or its Related Persons other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the Indemnified Person may, by notice to the Indemnifying Person, assume the
exclusive right to defend, compromise or settle such Third-Party Claim, but the
Indemnifying Person will not be bound by any determination of any Third-Party
Claim so defended for the purposes of this Agreement or any compromise or
settlement effected without its Consent (which may not be unreasonably
withheld).
(d) Notwithstanding the provisions of Section 13.4, Company and Seller hereby
consent to the nonexclusive jurisdiction of any court in which a Proceeding in
respect of a Third-Party Claim is brought against any Buyer Indemnified Person
for purposes of any claim that a Buyer Indemnified Person may have under this
Agreement with respect to such Proceeding or the matters alleged therein and
agree that process may be served on Company and Seller with respect to such a
claim anywhere in the world.
(e) With respect to any Third-Party Claim subject to indemnification under this
Article 11: (i) both the Indemnified Person and the Indemnifying Person, as the
case may be, shall keep the other Person fully informed of the status of such
Third-Party Claim and any related Proceedings at all stages thereof where such
Person is not represented by its own counsel, and (ii) the parties agree (each
at its own expense) to render to each other such assistance as they may
reasonably require of each other and to cooperate in good faith with each other
in order to ensure the proper and adequate defense of any Third-Party Claim.
32
(f) With respect to any Third-Party Claim subject to indemnification under this
Article 11, the parties agree to cooperate in such a manner as to preserve in
full (to the extent possible) the confidentiality of all Confidential
Information and the attorney-client and work-product privileges. In connection
therewith, each party agrees that: (i) it will use its Best Efforts, in respect
of any Third-Party Claim in which it has assumed or participated in the defense,
to avoid production of Confidential Information (consistent with applicable law
and rules of procedure), and (ii) all communications between any party hereto
and counsel responsible for or participating in the defense of any Third-Party
Claim shall, to the extent possible, be made so as to preserve any applicable
attorney-client or work-product privilege.
11.5 OTHER CLAIMS
A claim for indemnification for any matter not involving a Third-Party Claim may
be asserted by notice to the party from whom indemnification is sought and shall
be paid promptly after such notice.
11.6 INDEMNIFICATION IN CASE OF STRICT LIABILITY OR INDEMNITEE NEGLIGENCE
THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE 11 SHALL BE ENFORCEABLE
REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS,
CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY PAST, PRESENT OR FUTURE
ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW
OR PRODUCTS LIABILITY, SECURITIES OR OTHER LEGAL REQUIREMENT) AND REGARDLESS OF
WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT)
ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE
OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY
IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.
ARTICLE XII
CONFIDENTIALITY
12.1 CONFIDENTIAL INFORMATION
Each party agrees that, unless and until the Closing has been consummated, each
party will hold in strict confidence, and will not use to the detriment of any
other party hereto, any data and information obtained in connection with this
Agreement or the Contemplated Transactions, except insofar as this data and
information may be required by law to be included in documents required to be
filed by Buyer with the SEC under the Exchange Act and the rules and regulations
promulgated thereunder.
33
ARTICLE XIII
GENERAL PROVISIONS
13.1 EXPENSES
Except as otherwise provided in this Agreement, each party to this Agreement
will bear its respective fees and expenses incurred in connection with the
preparation, negotiation, execution and performance of this Agreement and the
Contemplated Transactions, including all fees and expense of its
Representatives. If this Agreement is terminated, the obligation of each party
to pay its own fees and expenses will be subject to any rights of such party
arising from a Breach of this Agreement by another party.
13.2 PUBLIC ANNOUNCEMENTS
Any public announcement, press release or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer determines. Except with the prior consent of
Buyer or as permitted by this Agreement, neither Company, Seller nor any of
their Representatives shall disclose to any Person (a) the fact that any
confidential information of Company or Seller has been disclosed to Buyer or its
Representatives, that Buyer or its Representatives have inspected any portion of
the confidential information of Company or Seller, that any confidential
information of Buyer has been disclosed to Company, Seller or their
Representatives or that Company, Seller or their Representatives have inspected
any portion of the confidential information of Buyer or (b) any information
about the Contemplated Transactions, including the status of such discussions or
negotiations, the execution of any documents (including this Agreement) or any
of the terms of the Contemplated Transactions or the related documents
(including this Agreement). Seller and Buyer will consult with each other
concerning the means by which Company's employees, customers, suppliers and
others having dealings with Company will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
13.3 NOTICES
All notices, Consents, waivers and other communications required or permitted by
this Agreement shall be in writing and shall be deemed given to a party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses and facsimile numbers and marked to the
attention of the person (by name or title) designated below (or to such other
address, facsimile number, e-mail address or person as a party may designate by
notice to the other parties):
Company:
Chongqing Qianbao Technology Ltd.
Xx. 00 0xx Xxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxxx, Xxxxxxxxx
Xxxxx.
Attention:
----------
Facsimile:
----------
34
Sellers:
Chongqing Yahu Information Development Co., Ltd.
x/x Xx. 00 0xx Xxxxxx Xxxxxxx
Jiangbei District, Chongqing
China.
Attention: Xx. Xxx Fan
Facsimile:
----------
Xxxx Xxx
x/x Xx. 00 0xx Xxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxxx, Xxxxxxxxx
Xxxxx.
Facsimile:
----------
Buyer: Pay88, Inc.
0000 Xxxxx Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile:
----------
with a mandatory copy to:
Xxxxx Xxxxx & Associates, PLLC
00 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
13.4 JURISDICTION; SERVICE OF PROCESS
Any Proceeding arising out of or relating to this Agreement or any Contemplated
Transaction may be brought in the state or federal courts located within the
County of New York of the State of New York, and each of the parties irrevocably
submits to the exclusive jurisdiction of each such court in any such Proceeding,
waives any objection it may now or hereafter have to venue or to convenience of
forum, agrees that all claims in respect of the Proceeding shall be heard and
determined only in any such court and agrees not to bring any Proceeding arising
out of or relating to this Agreement or any Contemplated Transaction in any
other court. The parties agree that either or both of them may file a copy of
this paragraph with any court as written evidence of the knowing, voluntary and
bargained agreement between the parties irrevocably to waive any objections to
venue or to convenience of forum. Process in any Proceeding referred to in the
first sentence of this section may be served on any party anywhere in the world.
35
13.5 ENFORCEMENT OF AGREEMENT
Each Seller acknowledges and agrees that Buyer would be irreparably damaged if
any of the provisions of this Agreement are not performed in accordance with
their specific terms and that any Breach of this Agreement by Company or Sellers
could not be adequately compensated in all cases by monetary damages alone.
Accordingly, in addition to any other right or remedy to which Buyer may be
entitled, at law or in equity, it shall be entitled to enforce any provision of
this Agreement by a decree of specific performance and to temporary, preliminary
and permanent injunctive relief to prevent Breaches or threatened Breaches of
any of the provisions of this Agreement, without posting any bond or other
undertaking.
13.6 WAIVER; REMEDIES CUMULATIVE
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither any failure nor any delay by any party in exercising any
right, power or privilege under this Agreement or any of the documents referred
to in this Agreement will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege. To the maximum extent permitted
by applicable law, (a) no claim or right arising out of this Agreement or any of
the documents referred to in this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of that party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
13.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements, whether written or oral, between
the parties with respect to its subject matter (including any letter of intent
and any confidentiality agreement between Buyer, on the one hand, and Seller or
Company, on the other hand) and constitutes (along with the Schedules, Exhibits
and other documents delivered pursuant to this Agreement) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended, supplemented,
or otherwise modified except by a written agreement executed by the party to be
charged with the amendment.
13.8 SCHEDULES
(a) The information in the Schedules constitutes (i) exceptions to particular
representations, warranties, covenants and obligations of Sellers as set forth
in this Agreement or (ii) descriptions or lists of assets and liabilities and
other items referred to in this Agreement. If there is any inconsistency between
the statements in this Agreement and those in the Schedules (other than an
exception expressly set forth as such in the Schedules with respect to a
specifically identified representation or warranty), the statements in this
Agreement will control.
36
(b) The statements in the Schedules, and those in any supplement thereto, relate
only to the provisions in the Section of this Agreement to which they expressly
relate and not to any other provision in this Agreement.
13.9 ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS
Neither the Company nor the Sellers may assign any of its rights or delegate any
of its obligations under this Agreement without the prior written consent of the
Buyer, and any such attempted assignment shall be null and void and of no force
or effect. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon and inure to the benefit of the successors and
permitted assigns of the parties and their representatives and heirs. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 13.9.
13.10 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
13.11 CONSTRUCTION
The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Articles," "Sections," "Exhibits," and "Schedules" refer to the
corresponding Articles, Sections, Exhibits, and Schedules of this Agreement.
13.12 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
13.13 GOVERNING LAW
This Agreement will be governed by and construed under the laws of the State of
New York, without regard to conflicts-of-laws principles that would require the
application of any other law.
13.14 EXECUTION OF AGREEMENT
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. The exchange
of copies of this Agreement and of signature pages by facsimile transmission
shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all purposes.
Signatures of the parties transmitted by facsimile shall be deemed to be their
original signatures for all purposes.
37
13.15 SELLER AND COMPANY LIABILITY; SELLERS' RELEASE
(a) The liability of each Seller hereunder shall be joint and several with the
other Sellers. Where in this Agreement provision is made for any action to be
taken or not taken by Company, Sellers jointly and severally undertake to cause
Company to take or not take such action, as the case may be. Without limiting
the generality of the foregoing, Sellers shall be jointly and severally liable
for the indemnities set forth in Article 11.
(b) The liability of Company prior to Closing shall be joint and several with
the Sellers. Upon Closing, Company shall be forever discharged and released from
all liability hereunder, including any claims from the Sellers. In addition, in
consideration for the transactions contemplated hereby, as of the Closing,
Sellers and their respective heirs, executors, successors and assigns (the
"Waiving Parties"), release, waive and forever discharge, in all capacities,
including as stockholders of Company, from and after the Closing any and all
claims, known or unknown, that the Waiving Parties ever had, now have or may
have against Company and its officers, directors, employees or agents in
connection with or arising out of any act or omission of Company or its
officers, directors, employees, advisers or agents, in such capacity, at or
prior to the Closing.
13.16 WAIVER OF TRIAL BY JURY
THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS,
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS
PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND
BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND
THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF
THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
[Remainder of Page Intentionally Omitted; Signature Pages to Follow]
38
IN WITNESS WHEREOF, the parties have executed this Share Purchase
Agreement as of the date first written above.
BUYER:
PAY88, INC.
By: /s/ Guo Fan
-----------
Name: Guo Fan
Title: Chief Executive Officer
SELLERS:
CHONGQING YAHU INFORMATION
DEVELOPMENT CO., LTD.
By: /s/ Xxxx Xxx
------------
Name: Xxxx Xxx
Title: CFO
/s/ Xxxx Xxx
------------
XXXX XXX
THE COMPANY:
CHONGQING QIANBAO TECHNOLOGY LTD.
By: /s/ Tao Fan
-----------
Name: Tao Fan
Title: CEO
39
LIST OF EXHIBITS
Exhibit 1.1 Definitions
Exhibit 2.3(a)(v): Seller's Legal Opinion
40
LIST OF SCHEDULES
Schedule 3.1(a): Jurisdictions of Company
Schedule 3.1(b): Governing Documents of Company
Schedule 3.3(a): Company's Capitalization
Schedule 3.6(a): Company's Assets
Schedule 3.7: Real Estate Owned by Company
Schedule 3.7: Real Estate Leased by Company
Schedule 3.9(a): Encumbrances on Real Estate of Company
Schedule 3.15(a): Company Personnel Matters
Schedule 3.16(b): Company Governmental Authorizations
Schedule 3.18(a): Company Contracts
Schedule 3.18(c): Enforceability of Company Contracts
Schedule 3.18(d): Compliance with Company Contracts
Schedule 3.19(b): Third Party Obligations of Company to Provide Insurance
Coverage
Schedule 3.21(b): Company Intellectual Property Matters
Schedule 3.21(c): Intellectual Property Licenses
Schedule 3.21(e): Company Patents
Schedule 3.21(h): Company Marks
Schedule 3.21(i): Company Copyrights
Schedule 3.21(k): Company Net Names
Schedule 3.22: Company Related Persons
Schedule 3.23: Company Brokers
Schedule 4.7: Buyer Brokers
Schedule 7.3: Company Material Consents
Schedule 8.3: Buyer Material Consents
41
EXHIBITS
42
EXHIBIT 1.1
DEFINITIONS
For purposes of this Agreement, the following terms and variations thereof have
the meanings specified or referred to in this Section 1.1:
"Accounts Receivable"--(a) all trade accounts receivable and other
rights to payment from customers of the Company and the full benefit of all
security for such accounts or rights to payment, including all trade accounts
receivable representing amounts receivable in respect of goods shipped or
products sold or services rendered to customers of the Company, (b) all other
accounts or notes receivable of the Company and the full benefit of all security
for such accounts or notes and (c) any claim, remedy or other right related to
any of the foregoing.
"Assets"-- all real property; all Tangible Personal Property; all
Inventories; all Accounts Receivable; all Company Contracts; all data and
Records related to the operations of Company; and all of the intangible rights
and property of Company, including Intellectual Property Assets, going concern
value, goodwill, telephone, facsimile and e-mail addresses.
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the efforts that a prudent Person desirous of achieving
a result would use in similar circumstances to achieve that result as
expeditiously as possible, provided, however, that a Person required to use Best
Efforts under this Agreement will not be thereby required to take actions that
would result in a material adverse change in the benefits to such Person of this
Agreement and the Contemplated Transactions or to dispose of or make any change
to its business, expend any material funds or incur any other material burden.
"Breach"--any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any covenant or
obligation, in or of this Agreement or any other Contract, or any event which
with the passing of time or the giving of notice, or both, would constitute such
a breach, inaccuracy or failure.
"Business Day"--any day other than (a) Saturday or Sunday or (b) any
other day on which banks in New York are permitted or required to be closed.
"Buyer"--as defined in the first paragraph of this Agreement.
"Buyer Indemnified Persons"--as defined in Section 11.2.
"Closing"--as defined in Section 2.2.
"Closing Date"--the date on which the Closing actually takes place.
"Code"--the Internal Revenue Code of 1986.
43
"Company"--as defined in the first paragraph of this Agreement.
"Company Contract"--any Contract (a) under which Company has or may
acquire any rights or benefits; (b) under which Company has or may become
subject to any obligation or liability; or (c) by which Company or any of the
assets owned or used by Company is or may become bound.
"Confidential Information"--as defined in Section 12.1.
"Consent"--any approval, consent, ratification, waiver or other
authorization.
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement.
"Contract"--any agreement, contract, Lease, consensual obligation,
promise or undertaking (whether written or oral and whether express or implied),
whether or not legally binding.
"Damages"--as defined in Section 11.2.
"Encumbrance"--any charge, claim, community or other marital property
interest, condition, equitable interest, lien, option, pledge, security
interest, mortgage, right of way, easement, encroachment, servitude, right of
first option, right of first refusal or similar restriction, including any
restriction on use, voting (in the case of any security or equity interest),
transfer, receipt of income or exercise of any other attribute of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life and any other environmental medium or natural resource.
"Environmental, Health and Safety Liabilities"--any cost, damages,
expense, liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law, including those
consisting of or relating to:
(a) any environmental, health or safety matter or condition (including
on-site or off-site contamination, occupational safety and health and regulation
of any chemical substance or product);
(b) any fine, penalty, judgment, award, settlement, legal or
administrative proceeding, damages, loss, claim, demand or response, remedial or
inspection cost or expense arising under any Environmental Law or Occupational
Safety and Health Law;
(c) financial responsibility under any Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any cleanup, removal, containment or other remediation or response
actions ("Cleanup") required by any Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or
44
(d) any other compliance, corrective or remedial measure required under
any Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial" and "response action" include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA).
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees or the public of
intended or actual Releases of pollutants or hazardous substances or materials,
violations of discharge limits or other prohibitions and the commencement of
activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the Release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the Release or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil or other potentially
harmful substances;
(g) cleaning up pollutants that have been Released, preventing the
Threat of Release or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"Exchange Act"--the Securities Exchange Act of 1934.
"Facilities"--any real property, leasehold or other interest in real
property currently owned or operated by Company, including the Tangible Personal
Property used or operated by Company at the respective locations of the Real
Property specified herein. Notwithstanding the foregoing, for purposes of the
definitions of "Hazardous Activity" and "Remedial Action", "Facilities" shall
mean any real property, leasehold or other interest in real property currently
or formerly owned or operated by Company, including the Tangible Personal
Property used or operated by Company at the respective locations of the Real
Property specified herein.
45
"GAAP"--generally accepted accounting principles for financial
reporting in the United States, applied on a basis consistent with the basis on
which the Balance Sheet and the other financial statements referred to in
Section 3.4 were prepared.
"Governing Documents"--with respect to any particular entity, (a) if a
U.S. corporation, the articles or certificate of incorporation and the bylaws;
(b) if a U.S. general partnership, the partnership agreement and any statement
of partnership; (c) if a U.S. limited partnership, the limited partnership
agreement and the certificate of limited partnership; (d) if a U.S. limited
liability company, the articles of organization and operating agreement; (e) if
another type of Person, any other charter or similar document adopted or filed
in connection with the creation, formation or organization of the Person; (f)
all equityholders' agreements, voting agreements, voting trust agreements, joint
venture agreements, registration rights agreements or other agreements or
documents relating to the organization, management or operation of any Person or
relating to the rights, duties and obligations of the equityholders of any
Person; and (g) any amendment or supplement to any of the foregoing.
"Governmental Authorization"--any Consent, license, registration or
permit issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"Governmental Body"--any: (a) nation, state, county, city, town,
borough, village, district or other jurisdiction; (b) federal, state, local,
municipal, foreign or other government; (c) governmental or quasi-governmental
authority of any nature (including any agency, branch, department, board,
commission, court, tribunal or other entity exercising governmental or
quasi-governmental powers); (d) multinational organization or body; (e) body
exercising, or entitled or purporting to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power; or (f) official of any of the foregoing.
"Ground Lease"--any long-term lease of land in which most of the rights
and benefits comprising ownership of the land and the improvements thereon or to
be constructed thereon, if any, are transferred to the tenant for the term
thereof.
"Ground Lease Property"--any land, improvements and appurtenances
subject to a Ground Lease in favor of Company.
"Hazardous Activity"--the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of Hazardous Material in, on, under,
about or from any of the Facilities or any part thereof into the Environment and
any other act, business, operation or thing that increases the danger, or risk
of danger, or poses an unreasonable risk of harm, to persons or property on or
off the Facilities.
"Hazardous Material"--any substance, material or waste which is or will
foreseeably be regulated by any Governmental Body, including any material,
substance or waste which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste," "restricted
hazardous waste," "contaminant," "toxic waste" or "toxic substance" under any
provision of Environmental Law, and including petroleum, petroleum products,
asbestos, presumed asbestos-containing material or asbestos-containing material,
urea formaldehyde and polychlorinated biphenyls.
46
"Improvements"--all buildings, structures, fixtures and improvements
located on the Land or included in the Assets, including those under
construction.
"Interim Balance Sheet"--as defined in Section 3.4.
"Inventories"--all inventories of Company, wherever located, including
all finished goods, work in process, raw materials, spare parts and all other
materials and supplies to be used or consumed by Company in the production of
finished goods.
"IRS"--the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"Knowledge"--an individual will be deemed to have Knowledge of a
particular fact or other matter if: (a) that individual is actually aware of
that fact or matter; or (b) a prudent individual could be expected to discover
or otherwise become aware of that fact or matter in the course of conducting a
reasonably comprehensive investigation regarding the accuracy of any
representation or warranty contained in this Agreement. A Person (other than an
individual) will be deemed to have Knowledge of a particular fact or other
matter if any individual who is serving, or who has at any time served, as a
director, officer, partner, executor or trustee of that Person (or in any
similar capacity) has, or at any time had, Knowledge of that fact or other
matter (as set forth in (a) and (b) above), and any such individual (and any
individual party to this Agreement) will be deemed to have conducted a
reasonably comprehensive investigation regarding the accuracy of the
representations and warranties made herein by that Person or individual.
"Land"--all parcels and tracts of land in which Company has an
ownership interest.
"Lease"--any Real Property Lease or any lease or rental agreement,
license, right to use or installment and conditional sale agreement to which
Company is a party and any other Company Contract pertaining to the leasing or
use of any Tangible Personal Property.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.
"Liability"--with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.
47
"Order"--any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be
deemed to have been taken in the Ordinary Course of Business only if that
action:
(a) is consistent in nature, scope and magnitude with the past practices of such
Person and is taken in the ordinary course of the normal, day-to-day operations
of such Person;
(b) does not require authorization by the board of directors or shareholders of
such Person (or by any Person or group of Persons exercising similar authority)
and does not require any other separate or special authorization of any nature;
and
(c) is similar in nature, scope and magnitude to actions customarily taken,
without any separate or special authorization, in the ordinary course of the
normal, day-to-day operations of other Persons that are in the same line of
business as such Person.
"Person"--an individual, partnership, corporation, business trust,
limited liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint venture or other entity or a
Governmental Body.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"Real Property"--the Land and Improvements and all Appurtenances
thereto and any Ground Lease Property.
"Real Property Lease"--any Ground Lease or Space Lease.
"Record"--information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.
"Related Person":
With respect to a particular individual: (a) each other member of such
individual's Family; (b) any Person that is directly or indirectly controlled by
any one or more members of such individual's Family; (c) any Person in which
members of such individual's Family hold (individually or in the aggregate) a
Material Interest; and (d) any Person with respect to which one or more members
of such individual's Family serves as a director, officer, partner, executor or
trustee (or in a similar capacity).
With respect to a specified Person other than an individual: (a) any
Person that directly or indirectly controls, is directly or indirectly
controlled by or is directly or indirectly under common control with such
specified Person; (b) any Person that holds a Material Interest in such
specified Person; (c) each Person that serves as a director, officer, partner,
executor or trustee of such specified Person (or in a similar capacity); (d) any
Person in which such specified Person holds a Material Interest; and (e) any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity).
48
For purposes of this definition, (a) "control" (including
"controlling," "controlled by," and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and shall be construed as such term is
used in the rules promulgated under the Securities Act; (b) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse, (iii) any
other natural person who is related to the individual or the individual's spouse
within the second degree and (iv) any other natural person who resides with such
individual; and (c) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of voting securities
or other voting interests representing at least ten percent (10%) of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least ten percent (10%) of the outstanding equity
securities or equity interests in a Person.
"Release"--any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching
or migration on or into the Environment or into or out of any property.
"Remedial Action"--all actions, including any capital expenditures,
required or voluntarily undertaken (a) to clean up, remove, treat or in any
other way address any Hazardous Material or other substance; (b) to prevent the
Release or Threat of Release or to minimize the further Release of any Hazardous
Material or other substance so it does not migrate or endanger or threaten to
endanger public health or welfare or the Environment; (c) to perform
pre-remedial studies and investigations or post-remedial monitoring and care; or
(d) to bring all Facilities and the operations conducted thereon into compliance
with Environmental Laws and environmental Governmental Authorizations.
"Representative"--with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that Person.
"SEC"--the United States Securities and Exchange Commission.
"Securities Act"--Securities Act of 1933, as amended.
"Seller"--as defined in the first paragraph of this Agreement.
"Tangible Personal Property"--all machinery, equipment, tools,
furniture, office equipment, computer hardware, supplies, materials, vehicles
and other items of tangible personal property (other than Inventories) of every
kind owned or leased by Company (wherever located and whether or not carried on
Company's books).
49
"Tax"--any income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or registration,
capital stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on minimum and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever
and any interest, penalty, addition or additional amount thereon imposed,
assessed or collected by or under the authority of any Governmental Body or
payable under any tax-sharing agreement or any other Contract.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"Third Party"--a Person that is not a party to this Agreement.
"Third-Party Claim"--any claim against any Indemnified Person by a
Third Party, whether or not involving a Proceeding.
"Threat of Release"--a reasonable likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
50
EXHIBIT 2.3(a)(vi)
SELLER'S LEGAL OPINION
JianJun Bi, Attorney
Chongqing Sicheng Law Office Ltd.
5-1, 7th cell, Xx. 00 Xxxxxxxx Xxxxxxx Xxxx, Xxxxxx
Xxxxx Xxxxxxxx, Xxxxxxxxx, Xxxxx
Phone: 00-00000000000
Fax: 00-00000000
E-mail: xxxxxxxxx@000.xxx
August 24, 2006
Xxxxx Xxxxx
Xxxxx Xxxxx & Associates, PLLC
00 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Dear Xxxxx Xxxxx:
I represent for Chongqing Qianbao Technology Ltd. I write, with their
permission, to convey the content of legal opinions given our clients by the
Chongqing Sicheng Law Office Ltd. under my direction.
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the People's Republic of China, with corporate
power and corporate authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it owns or uses, and to
perform all its obligations under the Company Contracts. The Company has no
subsidiaries and does not own any shares of capital stock or other securities of
any other Person
2. The Company owns good and marketable title to all of the Assets, free
and clear of any Encumbrances, and none of the Assets are held under any lease,
security agreement, conditional sales contract, license, or other title
retention or security arrangement, or is located other than in the possession of
Company. The Assets (i) constitute all of the assets, tangible and intangible,
of any nature whatsoever, necessary to operate Company's business in the manner
presently operated by Company and (ii) include all of the operating assets of
Company.
3. The Company is, and at all times has been, in full compliance with each
Legal Requirement that is or was applicable to it or to the conduct or operation
of its business or the ownership or use of any of its Assets. The Company has no
Liabilities, other than as disclosed on Schedule 3.11 to the Purchase Agreement.
4. No event has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a violation by Company
of, or a failure on the part of Company to comply with, any Legal Requirement or
(B) may give rise to any obligation on the part of Company to undertake, or to
bear all or any portion of the cost of, any remedial action of any nature.
51
5. The Company has not received any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible or potential violation of, or failure to comply
with, any Legal Requirement or (B) any actual, alleged, possible or potential
obligation on the part of Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.
6. There is no pending or threatened Proceeding: (i) by or against Company
or that otherwise relates to or may affect the business of, or any of the Assets
owned or used by, Company; or (ii) that challenges, or that may have the effect
of preventing, delaying, making illegal or otherwise interfering with, any of
the Contemplated Transactions.
7. Schedule 3.18(a) to the Purchase Agreement contains an accurate and
complete list of the Company Contracts. The Company has no other Contracts or
obligations to any third party other than as contained in said Contracts.
8. The only record and beneficial shareholders of the Company are Bao, who
holds 1 % of the Company's issued and outstanding shares and Yahu, which holds
99% of the Company's issued and outstanding shares. The Shares were issued in
compliance with all Legal Requirements and the Governing Documents of the
Company, were duly authorized, and are fully paid and non-assessable. The
Shares, which constitute one hundred (100%) percent of the issued and
outstanding shares of capital stock of the Company, are free and clear of any
Encumbrances. Neither Seller has any obligation to the Company for the Shares.
9. There are no Contracts relating to the issuance, sale or transfer of
any equity securities or other securities of Company, including any of the
following: options, warrants, agreements, or other rights for the acquisition of
shares of the Company's capital stock; securities or other obligations of the
Company which are convertible into shares of the Company's capital stock; or
sale agreements, shareholder agreements, pledges, proxies, voting trusts, powers
of attorney, restrictions on transfer or other agreements or instruments that
are binding on Seller or the Company, including without limitation, any such
agreements or instruments that relate to the ownership, voting or transfer of
any shares of the Company's capital stock.
10. The Purchase Agreement has been duly authorized, executed and
delivered by the Company, Yahu and Bao and assuming due authorization, execution
and delivery by Buyer, the Purchase Agreement constitutes valid and binding
obligation of the Company, Yahu and Bao enforceable against the Company, Yahu
and Bao in accordance with its respective terms. The execution, delivery and
performance of the Purchase Agreement shall convey good and marketable title of
the Shares to Buyer, and no further action is necessary to effectuate such
transfer to Buyer.
11. Each of Sellers and the Company has the absolute and unrestricted
right, power and authority to execute and deliver this Agreement and the
Sellers' Closing Documents to which it is a party and to perform its respective
obligations under this Agreement and the Sellers' Closing Documents, and such
52
action has been duly authorized by all necessary action by Sellers and the
Company. Each of Seller and the Company has all necessary legal capacity to
enter into this Agreement and the Sellers' Closing Documents to which it is a
party and to perform such its obligations thereunder.
12. Neither the execution and delivery of the Purchase Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time); (i) Breach (A)
any provision of any of the Governing Documents of Company or (B) any resolution
adopted by the board of directors or the shareholders of Company; (ii) Breach or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under
any Legal Requirement or any Order to which Company or any of Seller, or any of
the Assets, may be subject; (iii) contravene, conflict with or result in a
violation or breach of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or
modify, any Governmental Authorization that is held by Company or that otherwise
relates to the Assets or to the business of Company; (iv) Breach any provision
of, or give any Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or payment under, or to
cancel, terminate or modify, any Company Contract; or (v) result in the
imposition or creation of any Encumbrance upon or with respect to any of the
Assets.
13. Neither Company nor any Seller is required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
Please feel free to contact me if you have any questions.
Regards,
JianJun Bi /s/ JianJun Bi
August 24, 2006
JianJun Bi, Attorney
Chongqing Sicheng Law Office Ltd.
5-1, 7th cell, Xx. 00 Xxxxxxxx Xxxxxxx Xxxx, Xxxxxx
Xxxxx Xxxxxxxx, Xxxxxxxxx, Xxxxx
Phone: 00-00000000000
Fax: 00-00000000
E-mail: xxxxxxxxx@000.xxx
53
SCHEDULES
54
Schedule 3.1(a):
Jurisdictions of Company
1. People's Republic of China
55
Schedule 3.1(b):
Governing Documents of Company
56
Schedule 3.3(a):
Company's Capitalization
The Registered Capital Stock of the Company is owned as follows: 99% by
Chongqing Yahu Information Development Co., Ltd.; 1% by Xxxx Xxx.
57
Schedule 3.6(a):
Company's Assets
Name Quantity
1. Server (ZRI) 2
2. Server (ZRI) 1
3. Server (8D) 1
4. Office computer (8d PC) 21
5. Laptop(ASUS W3H) 1
6. Laptop(ASUS M6000) 2
7. Laptop(ASUS W6) 1
8. Laptop(Lenovo E200) 1
9. Laptop(IBM T30) 1
10. PockPC (ASUS , A620) 1
11. Projector (Epson EMP-Tw10H) 1
12. Copy Machine (Sansung SCX-4116) 1
13. Multiple use Fax Machine (HP4110) 2
14. Printer (HP1010) 1
15. Office table 18
16. Bigger office table 5
17. Phones 25
18. Office Sofa 4
19. Book shelve 5
20. Meeting Table 1
21. Table Tennis Table 1
58
Schedule 3.7:
Real Estate Owned by Company
1. Xx. 00 0xx Xxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxxx, Xxxxxxxxx, Xxxxx.
59
Schedule 3.8:
Real Estate Leased by Company
None
60
Schedule 3.9(a):
Encumbrances on Real Estate of Company
None
61
Schedule 3.15(a):
Company Personnel Matters
62
Schedule 3.16(b):
Company Governmental Authorizations
None
63
Schedule 3.18(a):
Company Contracts
1. Sales Contract 3-1, dated July 3, 2006, between Chongqing Yinxin Realty
Development Ltd. and Chongqing Qianbao Technology Ltd., for the
purchase of offices located at Xx. 00 0xx Xxxxxx Xxxxxxx, Xxxxxxxx
Xxxxxxxx, Xxxxxxxxx, China.
2. Sales Contract 3-2, dated July 3, 2006, between Chongqing Yinxin Realty
Development Ltd. and Chongqing Qianbao Technology Ltd., for the
purchase of offices located at Xx. 00 0xx Xxxxxx Xxxxxxx, Xxxxxxxx
Xxxxxxxx, Xxxxxxxxx, China.
3. Sales Contract 3-2, dated July 3, 2006, between Chongqing Yinxin Realty
Development Ltd. and Chongqing Qianbao Technology Ltd., for the
purchase of offices located at Xx. 00 0xx Xxxxxx Xxxxxxx, Xxxxxxxx
Xxxxxxxx, Xxxxxxxxx, China.
4. Form of Employment Agreement executed by Company's employees.
5. Form of Confidentiality Agreement executed by Company's employees.
64
Schedule 3.18(c):
Enforceability of Company Contracts
None
65
Schedule 3.18(d):
Compliance with Company Contracts
None
66
Schedule 3.19(b):
Third Party Obligations of Company to Provide Insurance Coverage
None
67
Schedule 3.21(b):
Company Intellectual Property Matters
None
68
Schedule 3.21(c):
Intellectual Property Licenses
None
69
Schedule 3.21(e):
Company Patents
None
70
Schedule 3.21(h):
Company Marks
None
71
Schedule 3.21(i):
Company Copyrights
None
72
Schedule 3.21(k):
Company Net Names
xxx.xxxxxxxxx.xxx
73
Schedule 3.22:
Company Related Persons
None
74
Schedule 3.23:
Company Brokers
None
75
Schedule 4.7:
Buyer Brokers
None
76
Schedule 7.3:
Company Material Consents
None
77
Schedule 8.3:
Buyer Material Consents
None
78
