THIS AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION
TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE 1933
ACT) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"). NONE OF THE SECURITIES TO WHICH THIS AGREEMENT RELATES
HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND,
UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN
THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT.
ACQUISITION DEFINITIVE AGREEMENT
(FINAL APPROVED)
THIS AGREEMENT is made as of the 7th day of August, 2006
AMONG:
CHINA HEALTH HOLDINGS, INC., a corporation formed pursuant to the laws of
the State of Nevada and having a business address located at101 Xxxxxxxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000-0000 XXX and mailing address
at Suite 000-000 Xxxxxxx Xx. Xxxx Xxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx X0X 0X0.
(Hereinafter called "China Health")
AND:
Henan Furen Huaiqingtang Pharmaceuticals Co. Ltd.
a company formed pursuant to the laws of the People's Republic of China and
having an office for business located at Suke Building, 218 Dongming Road,
Zhengzhou, P.R. China (??????(0)OAI??????218?????))
(Hereinafter called " Henan Furen Huaiqingtang Pharmaceutical")
AND: Xx. Xxx, WenChen, Chairman of Board
Henan Furen Pharmaceutical Group Co. Ltd., a group company formed pursuant
to the laws of the People's Republic of China and having an office for business
located at Suke Building, 218 Dongming Road, Zhengzhou, P.R. China
The shareholders of Henan Furen Huaiqingtang Pharmaceutical, each of whom
are set forth on the signature page of this Agreement
Hereinafter called "Henan Furen Huaiqingtang Pharmaceutical Shareholders")
WHEREAS:
A. The Henan Furen Huaiqingtang Pharmaceutical Shareholders own 60%
registered and issued and outstanding shares of Henan Furen Huaiqingtang
Pharmaceutical, constituting 60% of the presently issued and outstanding Henan
Furen Huaiqingtang Pharmaceutical Shares;
B. China Health is a public trading and reporting company whose common
stock is quoted on the OTCBB NASDAQ USA; and
C. The respective Boards of Directors of China Health, and Henan Furen
Huaiqingtang Pharmaceutical deem it advisable and in the best interests of China
Health and Henan Furen Huaiqingtang Pharmaceutical and Shareholders that China
Health acquire 60% of the total outstanding shares of Henan Furen Huaiqingtang
Pharmaceutical (the "Acquisition") pursuant to this Agreement with Exclusive
Right and First Refusal Rigth until/prior to the closing date of the transaction
legally fully.
NOW THEREFORE THIS AGREEMENT WITNESSETH that for $1USD and in consideration of
the premises and the mutual covenants, agreements, representations and
warranties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement the following terms will have the following meanings:
(a) "Acquisition" means the Acquisition, at the Closing, of Henan Furen
Huaiqingtang Pharmaceutical by China Health pursuant to this
Agreement;
(b) "Acquisition Shares" means the China Health Common Shares to be
issued/paid to the Henan Furen Huaiqingtang Pharmaceutical
Shareholders at Closing pursuant to the terms of the Acquisition;
(c) "Agreement" means this share purchase agreement among China Health,
Henan Furen Huaiqingtang Pharmaceutical, and the Henan Furen
Huaiqingtang Pharmaceutical Shareholders;
(d) "Closing" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 10 hereof;
(e) "Closing Date" means the day on which all conditions precedent to the
completion of the transaction as contemplated hereby have been
satisfied or waived;
(f) "China Health Business" means all aspects of any business conducted by
China Health;
(g) "China Health Common Shares" means the shares of common stock in the
capital of China Health;
(h) "China Health Financial Statements" means, collectively, the audited
consolidated financial statements of China Health for the two fiscal
years ended December 31, 2005, together with the qualified auditors'
report thereon, true copies of which are attached as Schedule "A"
hereto;
(i) "China Health Goodwill" means the goodwill of the China Health
Business including the right to all corporate, operating and trade
names associated with the China Health Business, or any variations of
such names as part of or in connection with the China Health Business,
all books and records and other information relating to the China
Health Business, all necessary licenses and authorizations and any
other rights used in connection with the China Health Business;
(j) "Place of Closing" means at the office of Henan Furen Huaiqingtang
Pharmaceutical Co. Ltd. at Suke Building, 218 Dongming Road,
Zhengzhou, P.R. China , ZhangZhou, Henan Province, PR China and or
such other place as China Health and Henan Furen Huaiqingtang
Pharmaceutical may mutually agree upon;
(k) "Henan Furen Huaiqingtang Pharmaceutical Accounts Payable and
Liabilities" means all accounts payable and liabilities of Henan Furen
Huaiqingtang Pharmaceutical, due and owing or otherwise constituting a
binding obligation of Henan Furen Huaiqingtang Pharmaceutical (other
than a Henan Furen Huaiqingtang Pharmaceutical Material Contracts) as
of December 31, 2005 as set forth in Schedule "K" hereto;
(l) "Henan Furen Huaiqingtang Pharmaceutical Accounts Receivable" means
all accounts receivable and other debts owing to Henan Furen
Huaiqingtang Pharmaceutical, as of December 31, 2005 as set forth in
Schedule "L" hereto;
2
(m) "Henan Furen Huaiqingtang Pharmaceutical Assets" means the undertaking
and all the property and assets of the Henan Furen Huaiqingtang
Pharmaceutical Business of every kind and description wheresoever
situated including, without limitation, Henan Furen Huaiqingtang
Pharmaceutical Equipment, Henan Furen Huaiqingtang Pharmaceutical
Inventory, Henan Furen Huaiqingtang Pharmaceutical Material Contracts,
Henan Furen Huaiqingtang Pharmaceutical Accounts Receivable, Henan
Furen Huaiqingtang Pharmaceutical Cash, Henan Furen Huaiqingtang
Pharmaceutical Intangible Assets and Henan Furen Huaiqingtang
Pharmaceutical Goodwill, and all credit cards, charge cards and
banking cards issued to Henan Furen Huaiqingtang Pharmaceutical;
(n) "Henan Furen Huaiqingtang Pharmaceutical Bank Accounts" means all of
the bank accounts, lock boxes and safety deposit boxes of Henan Furen
Huaiqingtang Pharmaceutical or relating to the Henan Furen
Huaiqingtang Pharmaceutical Business as set forth in Schedule "M"
hereto;
(o) "Henan Furen Huaiqingtang Pharmaceutical Business" means all aspects
of the business conducted by Henan Furen Huaiqingtang Pharmaceutical;
(p) "Henan Furen Huaiqingtang Pharmaceutical Cash" means all cash on hand
or on deposit to the credit and all banks accounts of Henan Furen
Huaiqingtang Pharmaceutical on the Closing Date;
(q) "Henan Furen Huaiqingtang Pharmaceutical Debt to Related Parties"
means the debts owed by Henan Furen Huaiqingtang Pharmaceutical and
its subsidiaries to the Henan Furen Huaiqingtang Pharmaceutical
Shareholders or to any family member thereof, or to any affiliate,
director or officer of Henan Furen Huaiqingtang Pharmaceutical or the
Henan Furen Huaiqingtang Pharmaceutical Shareholders as described in
Schedule "N";
(r) "Henan Furen Huaiqingtang Pharmaceutical Equipment" means all
machinery, equipment, furniture, and furnishings used in the Henan
Furen Huaiqingtang Pharmaceutical Business, including, without
limitation, the items more particularly described in Schedule "O"
hereto;
(s) "Henan Furen Huaiqingtang Pharmaceutical Financial Statements" means
collectively, the audited consolidated financial statements of Henan
Furen Huaiqingtang Pharmaceutical for two year period ended December
31, 2005 plus 2006 until Jun30 2006, as the true signed approved
copies of which are attached as Schedule "J" hereto;
(t) "Henan Furen Huaiqingtang Pharmaceutical Goodwill" means the goodwill
of the Henan Furen Huaiqingtang Pharmaceutical Business together with
the exclusive right of China Health to represent itself as carrying on
the Henan Furen Huaiqingtang Pharmaceutical Business in succession of
Henan Furen Huaiqingtang Pharmaceutical subject to the terms hereof,
and the right to use any words indicating that the Henan Furen
Huaiqingtang Pharmaceutical Business is so carried on including the
right to use the name Henan Furen Huaiqingtang Pharmaceuticals or
"Henan Furen Huaiqingtang Pharmaceutical International" or any
variation thereof as part of the name of or in connection with the
Henan Furen Huaiqingtang Pharmaceutical Business or any part thereof
carried on or to be carried on by Henan Furen Huaiqingtang
Pharmaceutical, the right to all corporate, operating and trade names
associated with the Henan Furen Huaiqingtang Pharmaceutical Business,
or any variations of such names as part of or in connection with the
Henan Furen Huaiqingtang Pharmaceutical Business, all telephone
listings and telephone advertising contracts, all lists of customers,
books and records and other information relating to the Henan Furen
Huaiqingtang Pharmaceutical Business, all necessary licenses and
authorizations and any other rights used in connection with the Henan
Furen Huaiqingtang Pharmaceutical Business;
(u) "Henan Furen Huaiqingtang Pharmaceutical Insurance Policies" means the
public liability insurance and insurance against loss or damage to
Henan Furen Huaiqingtang Pharmaceutical Assets and the Henan Furen
Huaiqingtang Pharmaceutical Business as described in Schedule "P"
hereto;
3
(v) "Henan Furen Huaiqingtang Pharmaceutical Intangible Assets" means all
of the intangible assets of Henan Furen Huaiqingtang Pharmaceutical,
including, without limitation, Henan Furen Huaiqingtang Pharmaceutical
Goodwill, all trademarks, logos, copyrights, designs, and other
intellectual and industrial property of Henan Furen Huaiqingtang
Pharmaceutical and its subsidiaries;
(w) "Henan Furen Huaiqingtang Pharmaceutical Inventory" means all
inventory and supplies of the Henan Furen Huaiqingtang Pharmaceutical
Business as of December 31, 2005 as set forth in Schedule "Q" hereto;
(x) "Henan Furen Huaiqingtang Pharmaceutical Material Contracts" means the
burden and benefit of and the right, title and interest of Henan Furen
Huaiqingtang Pharmaceutical in, to and under all trade and non-trade
contracts, engagements or commitments, whether written or oral, to
which Henan Furen Huaiqingtang Pharmaceutical is entitled in
connection with the Henan Furen Huaiqingtang Pharmaceutical Business
whereunder Henan Furen Huaiqingtang Pharmaceutical is obligated to pay
or entitled to receive the sum of $10,000 or more including, without
limitation, any pension plans, profit sharing plans, bonus plans, loan
agreements, security agreements, indemnities and guarantees, any
agreements with employees, lessees, licensees, managers, accountants,
suppliers, agents, distributors, officers, directors, attorneys or
others which cannot be terminated without liability on not more than
one month's notice, and those contracts listed in Schedule "R" hereto;
(y) "Henan Furen Huaiqingtang Pharmaceutical Related Party Debts" means
the debts owed by the Henan Furen Huaiqingtang Pharmaceutical
Shareholders or by any family member thereof, or by any affiliate,
director or officer of Henan Furen Huaiqingtang Pharmaceutical or the
Henan Furen Huaiqingtang Pharmaceutical Shareholders, to Henan Furen
Huaiqingtang Pharmaceutical as described in Schedule "S"; and
(z) "Henan Furen Huaiqingtang Pharmaceutical Shares" means all of the
issued and outstanding shares of Henan Furen Huaiqingtang
Pharmaceutical's equity stock.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
Captions and Section Numbers
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
Section References and Schedules
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning China Health
Schedule "A" China Health Audited Financial Statements (2004, 2005, 1Q
2006)
4
Information concerning Henan Furen Huaiqingtang Pharmaceutical
Schedule "J" Henan Furen Huaiqingtang Pharmaceutical Financial
Statements
Schedule "K" Henan Furen Huaiqingtang Pharmaceutical Accounts Payable and
Liabilities
Schedule "L" Henan Furen Huaiqingtang Pharmaceutical Accounts Receivable
Schedule "M" Henan Furen Huaiqingtang Pharmaceutical Bank Accounts
Schedule "N" Henan Furen Huaiqingtang Pharmaceutical Debts to Related
Parties
Schedule "O" Henan Furen Huaiqingtang Pharmaceutical Equipment and
Schedules P Henan Furen Huaiqingtang Pharmaceutical Lists of All Assets
Schedules Q Henan Furen Huaiqingtang Pharmaceutical Due Diligent List
Schedule "P" Henan Furen Huaiqingtang Pharmaceutical Insurance Policies
Schedule "Q" Henan Furen Huaiqingtang Pharmaceutical Inventory
Schedule "R" Henan Furen Huaiqingtang Pharmaceutical Material Contracts
Schedule "S" Henan Furen Huaiqingtang Pharmaceutical Related Party Debts
Severability of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE ACQUISITION
Acquisitions Purchasing Prices
2.1 The Henan Furen Huaiqingtang Pharmaceutical Co. Ltd. and Shareholders
hereby agree to sell A Total 60% Authorized and Outstanding and Undivided
Shares and Interest of of Henan Furen Huaingtang Pharmaceutical Co. Ltd. to
China Health Holding, Inc. (CHHH: OTCBB NASDAQ USA) at a total price of
$95,000,000.RMB (the "Cash Value Payment") value which shall be equal to
about 13.1 times the net income ( and total annual gross revenue is
110,000,000 RMB approxiamtely) of Henan Furen Huaiqingtang Pharmaceutical ,
or which equals the total of $95,000,000.RMB (the "Cash Value Payment")
value which shall be equal to about 2.4 times the net assets ( and total
assets is 100,000,000 RMB approximately) ( of Henan Furen Huaiqingtang
Pharmaceutical , or as set forth in and according to Henan Furen
Pharmaceutical Co. Ltd.'s audited financial statements for the fiscal years
2004 and 2005, provided to China Health Holding, Inc. in July 2006, as USA
Accounting GAAP Rules and PR China Audited Accounting Rules and Regulations
. In exchange for the Acquisition Purchased 60% total authorized and
outstanding and undivided shares and interest of Henan Furen Huaiqingtang
pharmaceutical for the total Cash Payment of the purchasing prices. On the
Transaction Closing Date, the Henan Furen Huaiqingtang Pharmaceutical
Shareholders shall legally fully transfer to China Health Holding, Inc. (
CHHH : OTCBB NASDAQ USA) on the Transaction Closing Date with a total of
60% undivided interest and shares, and total authorized and total
outstanding shares, in and to and of Henan Furen Huaiqingtang
Pharmaceutical Co. Ltd.'s Shares free from all liens, mortgages, charges,
pledges, encumbrances or other burdens with all rights now or thereafter
attached thereto, to China Health Holding, Inc. ( CHHH :OTCBB NASD) legally
fully financially according the terms set forth in this Acquisitions
Agreement mutually legally agreed and signed/consented and sealed by both
China Health and Henan Furen Huaiqingtang Pharmaceutical Co Ltd. and
Shareholders.
Allocation and Schedules of Payments Consideration
2.2.1. After signing and agreeing and consenting this Acquisitions Definitive
Agreement legally mutually, immediately China Health's specialist team will
conduct for a full legal and financial Due Diligent Processing on Henan
Huaiqingtang Pharmaceutical Co. Ltd. as the terms set in this agreement.
5
2.2.2. Upon China Health's further completion and satisfactions of full legal
financial DUE DILLIGENT on Henan Furen Huaingtang Pharmaceutical, prior to final
transaction CLOSING DATE, both China Health and Henan Furen Huaiqingtang
Pharmaceutical and Shareholders legally agree to setup a LEGAL
TRUST(ESCROW)accounts with both China Health and Henan Furen Huaiqingtang
Pharmaceutical's attorneys law firms, according to both USA Laws and PR China
Laws for further legal acquisitions transactions. China Health Agree to transfer
for a 70% of the total acquisitions purchase prices as defined and agreed
mutually as above 2.1 (Acquisitions Purchasing Prices) for further legal
completion for exchange and transactions for the TOTAL OF 60% UNDIVIDED SHARES
AND INTERESTS AND assets and titles from Henan Furen Huaingtang Pharmaceutical
and Shareholders legally. At the mean time, China Health agree to pay for 10% of
the total purchasing prices as above 2.1 ( Acquisitions Purchasing Prices) as an
initial securities deposits to Henan Huaiqingtang Pharmaceutical Co. Ltd. as a
good faith to ensure further successful " Acquisitions legal and financial
transactions" CLOSING AND COMPLETION ON THE FINAL TRANSACTIONS CLOSING DATE.
However both China Health and Henan Furen Huaiqingtang Pharmaceutical and
Shareholders mutually agree to try its best efforts to complete THE FINAL
ACQUISITIONS TRANSACTIONS in approximately SIXTY (60) business day from the date
signing and agreeing/sealing/consenting this ACQUISITIONS DEFINITIVE AGREEMENT
mutually legally.
2.2.3. After the CLOSING DATE OF THE ACQUISITIONS TRANSACTIONS, China Health
agree that The balanced 30% of the total Acquisition Payments of the
acquisitions Purchasing Price: will paid to and transferred to Henan Furen
Huaiqingtang Pharmaceutical and Shareholders three (3) months later/ after the
legal transactions CLOSING DATE upon legal and financial transactions
satisfactions by China Health that the after the acquisitions transaction
closing date, that further Henan Huaiqingtang Pharmaceutical Co. Ltd.'s ongoing
successful operations/management and transitions period legally fully
successfully by China Health Holding, Inc. (CHHH: OTCBB NASDAQ USA) as 60% major
shareholders of Henan Huaiqingtang Pharmaceutical Co. Ltd.
2.2.4. Any further details and concerns, both China Health and Henan Furen
Huaingtang Pharmaceutical and Shareholders agree to set up AMENDMENTS PRIOR TO
THE TRANSACTION CLOSING DATE.
Adherence with Applicable Securities Laws
2.2 The Henan Furen Huaiqingtang Pharmaceutical Shareholders agree that they
are acquiring the Acquisition Shares for investment purposes and will not
offer, sell or otherwise transfer, pledge or hypothecate any of the
Acquisition Shares issued to them (other than pursuant to an effective
Registration Statement under the Securities Act of 1933, as amended)
directly or indirectly unless:
(a) the sale is to China Health;
(b) the sale is made pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Rule 144 thereunder;
or
(c) the Acquisition Shares are sold in a transaction that does not require
registration under the Securities Act of 1933, as amended, or any
applicable United States state laws and regulations governing the
offer and sale of securities, and the vendor has furnished to China
Health an opinion of counsel to that effect or such other written
opinion as may be reasonably required by China Health.
The Henan Furen Huaiqingtang Pharmaceutical Shareholders acknowledge that
the certificates representing the Acquisition Shares shall bear the following
legend:
"THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO
PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO
REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"). ACCORDINGLY, NONE OF THE SECURITIES TO
WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE
1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR,
DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN)
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH
CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN
ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT
BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT."
6
The Henan Furen Huaiqingtang Pharmaceutical Shareholders further represent
and acknowledge that:
(a) The Henan Furen Huaiqingtang Pharmaceutical Shareholders are located
outside the United States;
(b) The Henan Furen Huaiqingtang Pharmaceutical Shareholders are not aware
of any advertisement of any of the shares be issued hereunder;
(c) The Henan Furen Huaiqingtang Pharmaceutical Shareholders will not
acquire the shares as a result of, and will not itself engage in, any "directed
selling efforts" (as defined in Regulation S under the 0000 Xxx) in the United
States in respect of the shares which would include any activities undertaken
for the purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the resale of the shares;
provided, however, that the Henan Furen Huaiqingtang Pharmaceutical Shareholders
may sell or otherwise dispose of the shares pursuant to registration of the
shares pursuant to the 1933 Act and any applicable state and provincial
securities laws or under an exemption from such registration requirements and as
otherwise provided herein;
(d) The Henan Furen Huaiqingtang Pharmaceutical Shareholders agree that
China Health will refuse to register any transfer of the shares not made in
accordance with the provisions of Regulation S, pursuant to an effective
registration statement under the 1933 Act or pursuant to an available exemption
from the registration requirements of the 1933 Act and in accordance with
applicable state and provincial securities laws; and
(e) The Henan Furen Huaiqingtang Pharmaceutical Shareholders understand and
agree that offers and sales of any of the shares, prior to the expiration of a
period of one year after the date of transfer of the shares (the "Distribution
Compliance Period"), shall only be made in compliance with the safe harbor
provisions set forth in Regulation S, pursuant to the registration provisions of
the 1933 Act or an exemption there from, and that all offers and sales after the
Distribution Compliance Period shall be made only in compliance with the
registration provisions of the 1933 Act or an exemption there from and in each
case only in accordance with all applicable securities laws;
(f) The Henan Furen Huaiqingtang Pharmaceutical Shareholders understand and
agree not to engage in any hedging transactions involving the Acquisition Shares
prior to the end of the Distribution Compliance Period unless such transactions
are in compliance with the provisions of the 1933 Act;
(g) The Henan Furen Huaiqingtang Pharmaceutical Shareholders hereby
acknowledge and agree to China Health making a notation on its records or giving
instructions to the registrar and transfer agent of China Health in order to
implement the restrictions on transfer set forth and described herein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF CHINA HEALTH
Representations and Warranties
3.1 China Health hereby represents and warrants in all material respects to
Henan Furen Huaiqingtang Pharmaceutical and the Henan Furen Huaiqingtang
Pharmaceutical Shareholders, with the intent that Henan Furen Huaiqingtang
Pharmaceutical and the Henan Furen Huaiqingtang Pharmaceutical Shareholders
will rely thereon in entering into this Agreement and in approving and
completing the transactions contemplated hereby, that:
China Health - Corporate Status and Capacity
(a) Incorporation. China Health is a corporation duly incorporated and validly
subsisting under the laws of the State of Nevada, and is in good standing
with the office of the Secretary of State for the State of Nevada;
7
(b) Carrying on Business. China Health conducts the business described in its
filings with the Securities and Exchange Commission and does not conduct
any other business. China Health is duly authorized to carry on such
business in Nevada State, USA. The nature of the China Health Business does
not require China Health to register or otherwise be qualified to carry on
business in any other jurisdictions;
(c) Corporate Capacity. China Health has the corporate power, capacity and
authority to own the China Health Assets and to enter into and complete
this Agreement;
(d) Reporting Status; Listing. China Health is a reporting issuer under Section
15(d) of the Securities Exchange Act of 1934, the China Health Common
Shares are quoted on the NASD "Bulletin Board", and all reports required to
be filed by China Health with the Securities and Exchange Commission or
NASD have been timely filed;
China Health - Capitalization
Authorized Capital. The authorized capital of China Health consists of
320,000,000 of capital stock of which 300,000,000 are common shares, $0.001 par
value, of which 60,764,551 shares of China Health Common Shares are presently
issued and outstanding and 20,000,000 are preferred stock par value $.001 and a
total of 1,250,000 Series A Preferred Share are presently issued and outstanding
as ending of March31 2006;
(e) No Option, Warrant or Other Right. Except as disclosed in China Health's
filings with the Securities and Exchange Commission (the "China Health SEC
Filings"), no person, firm or corporation has any agreement, option,
warrant, preemptive right or any other right capable of becoming an
agreement, option, warrant or right for the acquisition of China Health
Common Shares or for the purchase, subscription or issuance of any of the
unissued shares in the capital of China Health;
China Health - Records and Financial Statements
(f) Charter Documents. The charter documents of China Health have not been
altered since its incorporation, except as filed in the record books of
China Health;
(g) Corporate Minute Books. The corporate records of China Health are complete
and each of the minutes accurately reflects the actions that were taken at
a duly called and held meeting or by consent without a meeting. All actions
by China Health which required director or shareholder approval are
reflected in the corporate records of China Health. China Health is not in
violation or breach of, or in default with respect to, any term of their
respective Certificates of Incorporation (or other charter documents) or
by-laws.
(h) China Health Financial Statements. The China Health Financial Statements
present fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of China Health, on a
consolidated basis, as of the respective dates thereof, and the sales and
earnings of the China Health Business during the periods covered thereby,
in all material respects and have been prepared in substantial accordance
with generally accepted accounting principles consistently applied;
(i) China Health Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of China Health which are not
disclosed in Schedule "B" hereto or reflected in the China Health Financial
Statements except those incurred in the ordinary course of business since
the date of the said schedule and the China Health Financial Statements,
and China Health has not guaranteed or agreed to guarantee any debt,
liability or other obligation of any person, firm or corporation. Without
limiting the generality of the foregoing, all accounts payable and
liabilities of China Health as of March31 2006, are described in Schedule
"B" hereto;
(j) China Health Accounts Receivable. All the China Health Accounts Receivable
result from bona fide business transactions and services actually rendered
without, to the knowledge and belief of China Health, any claim by the
obligor for set-off or counterclaim. Without limiting the generality of the
foregoing, all accounts receivable of China Health as of March31 2006, are
described in Schedule "C" hereto;
8
(k) No Debt to Related Parties. Except as disclosed in Schedule "E" hereto,
China Health is not, and on Closing will not be, indebted to any affiliate,
director or officer of China Health except accounts payable on account of
bona fide business transactions of China Health incurred in normal course
of the China Health Business, including employment agreements, none of
which are more than 30 days in arrears;
(l) No Related Party Debt to China Health. No director or officer or affiliate
of China Health is now indebted to or under any financial obligation to
China Health on any account whatsoever, except for advances on account of
travel and other expenses not exceeding $1,000 in total;
(m) Dividends. Except as disclosed in China Health SEC Filings, no dividends or
other distributions on any shares in the capital of China Health have been
made, declared or authorized since the date of China Health Financial
Statements;
(n) No Payments. No payments of any kind have been made or authorized since the
date of the China Health Financial Statements to or on behalf of officers,
directors, shareholders or employees of China Health or under any
management agreements with China Health, except payments made in the
ordinary course of business and at the regular rates of salary or other
remuneration payable to them;
(o) No Pension Plans. There are no pension, profit sharing, group insurance or
similar plans or other deferred compensation plans affecting China Health;
(p) No Adverse Events. Since the date of the China Health Financial Statements
(i) there has not been any material adverse change in the consolidated
financial position or condition of China Health, its liabilities or
the China Health Assets or any damage, loss or other change in
circumstances materially affecting China Health, the China Health
Business or the China Health Assets or China Health' right to carry on
the China Health Business, other than changes in the ordinary course
of business,
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and adversely
affecting China Health, the China Health Business or the China Health
Assets,
(iii) there has not been any material increase in the compensation payable
or to become payable by China Health to any of China Health' officers,
employees or agents or any bonus, payment or arrangement made to or
with any of them,
(iv) the China Health Business has been and continues to be carried on in
the ordinary course,
(v) China Health has not waived or surrendered any right of material
value,
(vi) China Health has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current liabilities
in the ordinary course of business, and
(vii) No capital expenditures in excess of $10,000 individually or $30,000
in total have been authorized or made.
China Health - Income Tax Matters
(q) Tax Returns. All tax returns and reports of China Health required by law to
be filed have been filed and are true, complete and correct, and any taxes
payable in accordance with any return filed by China Health or in
accordance with any notice of assessment or reassessment issued by any
taxing authority have been so paid;
(r) Current Taxes. Adequate provisions have been made for taxes payable for the
current period for which tax returns are not yet required to be filed and
there are no agreements, waivers, or other arrangements providing for an
extension of time with respect to the filing of any tax return by, or
payment of, any tax, governmental charge or deficiency by China Health.
China Health is not aware of any contingent tax liabilities or any grounds
which would prompt a reassessment including aggressive treatment of income
and expenses in filing earlier tax returns;
9
China Health - Applicable Laws and Legal Matters
(s) Licenses. China Health does not require any licenses for carrying on the
China Health Business in the manner in which it has heretofore been carried
on;
(t) Applicable Laws. China Health has not been charged with or received notice
of breach of any laws, ordinances, statutes, regulations, by-laws, orders
or decrees to which they are subject or which apply to them the violation
of which would have a material adverse effect on the China Health Business,
and to China Health' knowledge, China Health is not in breach of any laws,
ordinances, statutes, regulations, bylaws, orders or decrees the
contravention of which would result in a material adverse impact on the
China Health Business;
(u) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened against or
relating to China Health, the China Health Business, or any of the China
Health Assets nor does China Health have any knowledge of any deliberate
act or omission of China Health that would form any material basis for any
such action or proceeding;
(v) No Bankruptcy. China Health has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy and no
bankruptcy petition has been filed or presented against China Health and no
order has been made or a resolution passed for the winding-up, dissolution
or liquidation of China Health;
(w) Labor Matters. China Health is not party to any collective agreement
relating to the China Health Business with any labor union or other
association of employees and no part of the China Health Business has been
certified as a unit appropriate for collective bargaining or, to the
knowledge of China Health, has made any attempt in that regard;
(x) Finder's Fees. China Health is not party to any agreement which provides
for the payment of finder's fees, brokerage fees, commissions or other fees
or amounts which are or may become payable to any third party in connection
with the execution and delivery of this Agreement and the transactions
contemplated herein;
Execution and Performance of Agreement
(y) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated hereby, have
been duly and validly authorized by all necessary corporate action on the
part of China Health;
(z) No Violation or Breach. The execution and performance of this Agreement
will not:
(i) violate the charter documents of China Health or result in any breach
of, or default under, any loan agreement, mortgage, deed of trust, or
any other agreement to which China Health is party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the China Health Material Contracts, or
any right or rights enjoyed by China Health,
(iii) result in any alteration of China Health's obligations under any
agreement to which China Health is party including, without
limitation, the China Health Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favor of a third party upon or
against the China Health Assets,
(v) result in the imposition of any tax liability to China Health relating
to the China Health Assets, or
(vi) violate any court order or decree to which China Health is subject;
The China Health Assets - Ownership and Condition
(aa) Business Assets. The China Health Assets comprise all of the property and
assets of the China Health Business, and no other person, firm or
corporation owns any assets used by China Health in operating the China
Health Business, whether under a lease, rental agreement or other
arrangement, other than as disclosed in Schedules "F" or "I" hereto;
10
(bb) Title. China Health is the legal and beneficial owner of the China Health
Assets, free and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever, save and except as
disclosed in Schedules "F" or "I" hereto;
(cc) No Option. No person, firm or corporation has any agreement or option or a
right capable of becoming an agreement for the purchase of any of the China
Health Assets;
(dd) No Default. There has not been any default in any material obligation of
China Health or any other party to be performed under any of the China
Health Material Contracts, each of which is in good standing and in full
force and effect and unamended (except as disclosed in Schedule "I"
hereto), and China Health is not aware of any default in the obligations of
any other party to any of the China Health Material Contracts;
(ee) No Compensation on Termination. There are no agreements, commitments or
understandings relating to severance pay or separation allowances on
termination of employment of any employee of China Health. China Health is
not obliged to pay benefits or share profits with any employee after
termination of employment except as required by law;
China Health Assets - China Health Equipment
(ff) China Health Equipment. The China Health Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner and such
equipment is in good working condition;
China Health Assets - China Health Goodwill and Other Assets
(gg) China Health Goodwill. China Health does not carry on the China Health
Business under any other business or trade names. China Health does not
have any knowledge of any infringement by China Health of any patent,
trademarks, copyright or trade secret;
The China Health Business
(hh) Maintenance of Business. Since the date of the China Health Financial
Statements, China Health has not entered into any material agreement or
commitment except in the ordinary course and except as disclosed herein;
(ii) Subsidiaries. China Health currently has two subsidiaries, China Health
World Trade Corporation and China Health World Pharmaceutical Corporation
and does not otherwise own, directly or indirectly, any shares or interest
in any other corporation, partnership, joint venture or firm; and
China Health - Acquisition Shares
(jj) Acquisition Shares. The Acquisition Shares when delivered " upon
acquisition closing date" to the Henan Furen Huaiqingtang Pharmaceutical
Shareholders pursuant to the Acquisition shall be validly issued and
outstanding as fully paid and non-assessable shares and the Acquisition
Shares shall be transferable upon the books of China Health, in all cases
subject to the provisions and restrictions of all applicable securities
laws.
Non-Merger and Survival
3.2 The representations and warranties of China Health contained herein will be
true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding
the completion of the transactions contemplated hereby, the waiver of any
condition contained herein (unless such waiver expressly releases a party
from any such representation or warranty) or any investigation made by
Henan Furen Huaiqingtang Pharmaceutical or the Henan Furen Huaiqingtang
Pharmaceutical Shareholders, the representations and warranties of China
Health shall survive the Closing.
11
Indemnity
3.3 China Health agrees to indemnify and save harmless Henan Furen Huaiqingtang
Pharmaceutical and the Henan Furen Huaiqingtang Pharmaceutical Shareholders
from and against any and all claims, demands, actions, suits, proceedings,
assessments, judgments, damages, costs, losses and expenses, including any
payment made in good faith in settlement of any claim (subject to the right
of China Health to defend any such claim), resulting from the breach by it
of any representation or warranty made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by China Health to Henan Furen Huaiqingtang
Pharmaceutical or the Henan Furen Huaiqingtang Pharmaceutical Shareholders
hereunder.
ARTICLE 4
COVENANTS OF CHINA HEALTH
Covenants
4.1 China Health covenants and agrees with Henan Furen Huaiqingtang
Pharmaceutical and the Henan Furen Huaiqingtang Pharmaceutical Shareholders
that it will:
(a) Conduct of Business. Until the Closing, conduct the China Health
Business diligently and in the ordinary course consistent with the
manner in which the China Health Business generally has been operated
up to the date of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use its best efforts to
preserve the China Health Business and the China Health Assets and,
without limitation, preserve for Henan Furen Huaiqingtang
Pharmaceutical China Health's relationships with any third party
having business relations with them;
(c) Access. Until the Closing, give Henan Furen Huaiqingtang
Pharmaceutical, the Henan Furen Huaiqingtang Pharmaceutical
Shareholders, and their representatives full access to all of the
properties, books, contracts, commitments and records of China Health,
and furnish to Henan Furen Huaiqingtang Pharmaceutical, the Henan
Furen Huaiqingtang Pharmaceutical Shareholders and their
representatives all such information as they may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party consents
required to permit the Acquisition and to preserve and maintain the
China Health Assets notwithstanding the change in control of Henan
Furen Huaiqingtang Pharmaceutical arising from the Acquisition;
4.2 Except as otherwise expressly contemplated by this Agreement or with the
prior written consent of Henan Furen Huaiqingtang Pharmaceutical, China
Health shall not:
(a) Dividend; Changes in Stock. Declare, set aside, make or pay any
dividend or other distribution in respect of the capital stock of
China Health or repurchase,
Redeem or otherwise acquire any outstanding shares of the capital
stock or other securities of, or other ownership interests in China
Health;
(b) Issuance of Securities. Transfer, issue, sell or dispose of any shares
of capital stock or other securities of China Health or grant options,
warrants, calls or other rights to purchase or otherwise acquire
shares of the capital stock or other securities of China Health;
(c) Governing Documents. Amend the certificate of incorporation or by-laws
of the Company.
(d) Changes in Securities. Effect any recapitalization, reclassification,
stock split or like change in the capitalization of China Health;
12
(e) Compensation. (A) materially increase the annual level of compensation
of any employee of China Health, (B) increase the annual level of
compensation payable or to become payable by China Health to any of
its executive officers, (C) grant any unusual or extraordinary bonus,
benefit or other direct or indirect compensation to any employee,
director or consultant, (D) increase the coverage or benefits
available under any (or create any new) severance pay, termination
pay, vacation pay, company awards, salary continuation for disability,
sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan or
arrangement made to, for, or with any of the directors, officers,
employees, agents or representatives of China Health or otherwise
modify or amend or terminate any such plan or arrangement or (E) enter
into any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to
which China Health is a party or involving a director, officer or
employee of China Health in his or her capacity as a director, officer
or employee of China Health;
(f) Liens. Subject to any lien (except for leases that do not materially
impair the use of the property subject thereto in their respective
businesses as presently conducted), any of the properties or assets
(whether tangible or intangible) of China Health;
(g) Indebtedness. Incur any indebtedness for borrowed money or guarantee
any such indebtedness.
(h) Other Actions. Agree to do anything prohibited by this Section 6.2 or
anything which would make any of the representations and warranties of
China Health in this Agreement untrue or incorrect in any material
respect as of any time through and including the Closing.
Authorization
4.2 China Health hereby agrees to authorize and direct any and all federal,
state, municipal, foreign and international governments and regulatory
authorities having jurisdiction respecting China Health to release any and
all information in their possession respecting China Health to the Henan
Furen Huaiqingtang Pharmaceutical Shareholders. China Health shall promptly
execute and deliver to the Henan Furen Huaiqingtang Pharmaceutical
Shareholders any and all consents to the release of information and
specific authorizations which the Henan Furen Huaiqingtang Pharmaceutical
Shareholders reasonably requires to gain access to any and all such
information.
Survival
4.3 The covenants set forth in this Article shall survive the Closing for
thebenefit of Henan Furen Huaiqingtang Pharmaceutical and the Henan Furen
Huaiqingtang Pharmaceutical Shareholders.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
THE HENAN FUREN HUAIQINGTANG PHARMACEUTICAL AND ALL SHAREHOLDERS
Representations and Warranties
5.1 The Henan Furen Huaiqingtang Pharmaceutical and All Shareholders hereby
jointly and severally represent and warrant in all material respects to
China Health, with the intent that it will rely thereon in entering into
this Agreement and in approving and completing the transactions
contemplated hereby, that:
Henan Furen Huaiqingtang Pharmaceutical - Company Status and Capacity
(a) Formation. Henan Furen Huaiqingtang Pharmaceutical is a company duly
formed and validly subsisting under the laws of the People's Republic
of China;
13
(b) Carrying on Business. Henan Furen Huaiqingtang Pharmaceutical carries
on the Henan Furen Huaiqingtang Pharmaceutical Business primarily in
the People's Republic of China and does not carry on any material
business activity in any other jurisdiction. Henan Furen Huaiqingtang
Pharmaceutical is duly authorized to carry on the Henan Furen
Huaiqingtang Pharmaceutical Business in the People's Republic of
China. The nature of the Henan Furen Huaiqingtang Pharmaceutical
Business does not require Henan Furen Huaiqingtang Pharmaceutical to
register or otherwise be qualified to carry on business in any other
jurisdiction;
(c) Legal Capacity. Henan Furen Huaiqingtang Pharmaceutical has the legal
power, capacity and authority to own Henan Furen Huaiqingtang
Pharmaceutical Assets, to carry on the Business of Henan Furen
Huaiqingtang Pharmaceutical and to enter into and complete this
Agreement;
Henan Furen Huaiqingtang Pharmaceutical - Capitalization
(d) Authorized Capital. The total authorized capital of Henan Furen
Huaiqingtang Pharmaceutical consists of__________________ shares of
capital stock;
(e) Ownership of Henan Furen Huaiqingtang Pharmaceutical Shares. The
registered, issued and outstanding share capital of Henan Furen
Huaiqingtang Pharmaceutical will on Closing consist of total
100%_____________ capital shares (being the Henan Furen Huaiqingtang
Pharmaceutical Shares), which shares on Closing shall be validly
issued and outstanding as fully paid and non-assessable shares. The
Henan Furen Huaiqingtang Pharmaceutical Shareholders will be at
closing the registered and beneficial owners of the total of
100%____________ Henan Furen Huaiqingtang Pharmaceutical Shares. The
Henan Furen Huaiqingtang Pharmaceutical Shares owned by the Henan
Furen Huaiqingtang Pharmaceutical Shareholders are free and clear of
any and all liens, charges, pledges, encumbrances, restrictions on
transfer and adverse claims whatsoever;
(f) No Option, Warrant or Other Right. No person, firm or corporation has
any agreement, option, warrant, preemptive right or any other right
capable of becoming an agreement, option, warrant or right for the
acquisition of Henan Furen Huaiqingtang Pharmaceutical Shares held by
the Henan Furen Huaiqingtang Pharmaceutical Shareholders or for the
purchase, subscription or issuance of any of the unissued shares in
the capital of Henan Furen Huaiqingtang Pharmaceutical;
(g) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of Henan Furen Huaiqingtang Pharmaceutical Shares
contained in the charter documents of Henan Furen Huaiqingtang
Pharmaceutical or under any agreement;
Henan Furen Huaiqingtang Pharmaceutical - Records and Financial Statements
(h) Charter Documents. The charter documents of Henan Furen Huaiqingtang
Pharmaceutical have not been altered since its formation date, except
as filed in the record books of Henan Furen Huaiqingtang
Pharmaceutical;
(i) Minute Books. The minute books of Henan Furen Huaiqingtang
Pharmaceutical are complete and each of the minutes contained therein
accurately reflect the actions that were taken at a duly called and
held meeting or by consent without a meeting. All actions by Henan
Furen Huaiqingtang Pharmaceutical which required director or
shareholder approval are reflected on the corporate minute books of
Henan Furen Huaiqingtang Pharmaceutical. Henan Furen Huaiqingtang
Pharmaceutical is not in violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation (or other
charter documents) or by-laws.
(j) Henan Furen Huaiqingtang Pharmaceutical Financial Statements. The
Henan Furen Huaiqingtang Pharmaceutical Financial Statements present
fairly, in all material respects, the assets and liabilities (whether
accrued, absolute, contingent or otherwise) of Henan Furen
Huaiqingtang Pharmaceutical as of the date thereof, and the sales and
earnings of the Henan Furen Huaiqingtang Pharmaceutical Business
during the periods covered thereby, in all material respects, and have
been prepared in substantial accordance with generally accepted
accounting principles consistently applied;
14
(k) Henan Furen Huaiqingtang Pharmaceutical Accounts Payable and
Liabilities. There are no material liabilities, contingent or
otherwise, of Henan Furen Huaiqingtang Pharmaceutical which are not
disclosed in Schedule "K" hereto or reflected in the Henan Furen
Huaiqingtang Pharmaceutical Financial Statements except those incurred
in the ordinary course of business since the date of the said schedule
and the Henan Furen Huaiqingtang Pharmaceutical Financial Statements,
and Henan Furen Huaiqingtang Pharmaceutical has not guaranteed or
agreed to guarantee any debt, liability or other obligation of any
person, firm or corporation. Without limiting the generality of the
foregoing, all accounts payable and liabilities of Henan Furen
Huaiqingtang Pharmaceutical as of Jun30 2006, are described in
Schedule "K" hereto;
(l) Henan Furen Huaiqingtang Pharmaceutical Accounts Receivable. All the
Henan Furen Huaiqingtang Pharmaceutical Accounts Receivable result
from bona fide business transactions and services actually rendered
without, to the knowledge and belief of the Henan Furen Huaiqingtang
Pharmaceutical Shareholders, any claim by the obligor for set-off or
counterclaim. Without limiting the generality of the foregoing, all
accounts receivable of Henan Furen Huaiqingtang Pharmaceutical as of
June30 2006, are described in Schedule "L" hereto;
(m) Henan Furen Huaiqingtang Pharmaceutical Bank Accounts. All of the
Henan Furen Huaiqingtang Pharmaceutical Bank Accounts, their location,
numbers and the authorized signatories thereto are as set forth in
Schedule "M" hereto;
(n) No Debt to Related Parties. Except as disclosed in Schedule "N"
hereto, Henan Furen Huaiqingtang Pharmaceutical is not and on Closing
will not be, indebted to the Henan Furen Huaiqingtang Pharmaceutical
Shareholders nor to any family member thereof, nor to any affiliate,
director or officer of Henan Furen Huaiqingtang Pharmaceutical or the
Henan Furen Huaiqingtang Pharmaceutical Shareholders except accounts
payable on account of bona fide business transactions of Henan Furen
Huaiqingtang Pharmaceutical incurred in normal course of Henan Furen
Huaiqingtang Pharmaceutical Business, including employment agreements
with the Henan Furen Huaiqingtang Pharmaceutical Shareholders, none of
which are more than 30 days in arrears;
(o) No Related Party Debt to Henan Furen Huaiqingtang Pharmaceutical.
Except as set forth on Schedule "S" hereto, no Henan Furen
Huaiqingtang Pharmaceutical Shareholder nor any director, officer or
affiliate of Henan Furen Huaiqingtang Pharmaceutical is now indebted
to or under any financial obligation to Henan Furen Huaiqingtang
Pharmaceutical on any account whatsoever, except for advances on
account of travel and other expenses not exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in the
capital of Henan Furen Huaiqingtang Pharmaceutical have been made,
declared or authorized since the date of the Henan Furen Huaiqingtang
Pharmaceutical Financial Statements;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the Henan Furen Huaiqingtang Pharmaceutical
Financial Statements to or on behalf of the Henan Furen Huaiqingtang
Pharmaceutical Shareholders or to or on behalf of officers, directors,
shareholders or employees of Henan Furen Huaiqingtang Pharmaceutical
or under any management agreements with Henan Furen Huaiqingtang
Pharmaceutical, except payments made in the ordinary course of
business and at the regular rates of salary or other remuneration
payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting Henan Furen Huaiqingtang Pharmaceutical, except as set forth
in the Henan Furen Huaiqingtang Pharmaceutical Financial Statements;
(s) No Adverse Events. Since the date of the Henan Furen Huaiqingtang
Pharmaceutical Financial Statements:
15
(i) there has not been any material adverse change in the
consolidated financial position or condition of Henan Furen
Huaiqingtang Pharmaceutical, its liabilities or the Henan Furen
Huaiqingtang Pharmaceutical Assets or any damage, loss or other
change in circumstances materially affecting Henan Furen
Huaiqingtang Pharmaceutical, the Henan Furen Huaiqingtang
Pharmaceutical Business or the Henan Furen Huaiqingtang
Pharmaceutical Assets or Henan Furen Huaiqingtang
Pharmaceutical's right to carry on the Henan Furen Huaiqingtang
Pharmaceutical Business, other than changes in the ordinary
course of business,
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and adversely
affecting Henan Furen Huaiqingtang Pharmaceutical, the Henan
Furen Huaiqingtang Pharmaceutical Business or the Henan Furen
Huaiqingtang Pharmaceutical Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by Henan Furen Huaiqingtang
Pharmaceutical to the Henan Furen Huaiqingtang Pharmaceutical
Shareholders or to any of Henan Furen Huaiqingtang
Pharmaceutical's officers, employees or agents or any bonus,
payment or arrangement made to or with any of them,
(iv) the Henan Furen Huaiqingtang Pharmaceutical Business has been and
continues to be carried on in the ordinary course,
(v) Henan Furen Huaiqingtang Pharmaceutical has not waived or
surrendered any right of material value,
(vi) Henan Furen Huaiqingtang Pharmaceutical has not discharged or
satisfied or paid any lien or encumbrance or obligation or
liability other than current liabilities in the ordinary course
of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
Henan Furen Huaiqingtang Pharmaceutical - Income Tax Matters
(t) Tax Returns. All tax returns and reports of Henan Furen Huaiqingtang
Pharmaceutical required by law to be filed have been filed and are
true, complete and correct, and any taxes payable in accordance with
any return filed by Henan Furen Huaiqingtang Pharmaceutical or in
accordance with any notice of assessment or reassessment issued by any
taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by Henan Furen Huaiqingtang Pharmaceutical. Henan Furen
Huaiqingtang Pharmaceutical is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment including
aggressive treatment of income and expenses in filing earlier tax
returns;
Henan Furen Huaiqingtang Pharmaceutical - Applicable Laws and Legal Matters
(v) Licenses. Henan Furen Huaiqingtang Pharmaceutical holds all licenses
and permits as may be requisite for carrying on the Henan Furen
Huaiqingtang Pharmaceutical Business in the manner in which it has
heretofore been carried on, which licenses and permits have been
maintained and continue to be in good standing except where the
failure to obtain or maintain such licenses or permits would not have
a material adverse effect on the Henan Furen Huaiqingtang
Pharmaceutical Business;
(w) Applicable Laws. Henan Furen Huaiqingtang Pharmaceutical has not been
charged with or received notice of breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees to which they are
subject or which applies to them the violation of which would have a
material adverse effect on the Henan Furen Huaiqingtang Pharmaceutical
Business, and, to the knowledge of the Henan Furen Huaiqingtang
Pharmaceutical Shareholders, Henan Furen Huaiqingtang Pharmaceutical
is not in breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees the contravention of which would result in
a material adverse impact on the Henan Furen Huaiqingtang
Pharmaceutical Business;
16
(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened
against or relating to Henan Furen Huaiqingtang Pharmaceutical, the
Henan Furen Huaiqingtang Pharmaceutical Business, or any of the Henan
Furen Huaiqingtang Pharmaceutical Assets, nor do the Henan Furen
Huaiqingtang Pharmaceutical Shareholders have any knowledge of any
deliberate act or omission of Henan Furen Huaiqingtang Pharmaceutical
that would form any material basis for any such action or proceeding;
(y) No Bankruptcy. Henan Furen Huaiqingtang Pharmaceutical has not made
any voluntary assignment or proposal under applicable laws relating to
insolvency and bankruptcy and no bankruptcy petition has been filed or
presented against Henan Furen Huaiqingtang Pharmaceutical and no order
has been made or a resolution passed for the winding-up, dissolution
or liquidation of Henan Furen Huaiqingtang Pharmaceutical;
(z) Labor Matters. Henan Furen Huaiqingtang Pharmaceutical is not party to
any collective agreement relating to the Henan Furen Huaiqingtang
Pharmaceutical Business with any labor union or other association of
employees and no part of the Henan Furen Huaiqingtang Pharmaceutical
Business has been certified as a unit appropriate for collective
bargaining or, to the knowledge of the Henan Furen Huaiqingtang
Pharmaceutical Shareholders, has made any attempt in that regard;
(aa) Finder's Fees. Henan Furen Huaiqingtang Pharmaceutical is not a party
to any agreement which provides for the payment of finder's fees,
brokerage fees, commissions or other fees or amounts which are or may
become payable to any third party in connection with the execution and
delivery of this Agreement and the transactions contemplated herein;
Execution and Performance of Agreement
(bb) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate
action on the part of Henan Furen Huaiqingtang Pharmaceutical and the
Henan Furen Huaiqingtang Pharmaceutical Shareholders. Each of the
Henan Furen Huaiqingtang Pharmaceutical Shareholders has the
unqualified right to sell, assign and deliver the Henan Furen
Huaiqingtang Pharmaceutical Shares
(cc) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of Henan Furen Huaiqingtang
Pharmaceutical or result in any breach of, or default under, any
loan agreement, mortgage, deed of trust, or any other agreement
to which Henan Furen Huaiqingtang Pharmaceutical or each of the
Henan Furen Huaiqingtang Pharmaceutical is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, Henan Furen Huaiqingtang
Pharmaceutical Material Contracts, or any right or rights enjoyed
by Henan Furen Huaiqingtang Pharmaceutical,
(iii) result in any alteration of Henan Furen Huaiqingtang
Pharmaceutical's obligations under any agreement to which Henan
Furen Huaiqingtang Pharmaceutical is a party including, without
limitation, the Henan Furen Huaiqingtang Pharmaceutical Material
Contracts,
(iv) result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favor of a third party
upon or against the Henan Furen Huaiqingtang Pharmaceutical
Assets,
(v) result in the imposition of any tax liability to Henan Furen
Huaiqingtang Pharmaceutical relating to Henan Furen Huaiqingtang
Pharmaceutical Assets or the Henan Furen Huaiqingtang
Pharmaceutical Shares, or
(vi) violate any court order or decree to which either Henan Furen
Huaiqingtang Pharmaceutical is subject;
Henan Furen Huaiqingtang Pharmaceutical Assets - Ownership and Condition
17
(dd) Business Assets. The Henan Furen Huaiqingtang Pharmaceutical Assets,
comprise all of the property and assets of the Henan Furen
Huaiqingtang Pharmaceutical Business, and neither the Henan Furen
Huaiqingtang Pharmaceutical Shareholders nor any other person, firm or
corporation owns any assets used by Henan Furen Huaiqingtang
Pharmaceutical in operating the Henan Furen Huaiqingtang
Pharmaceutical Business, whether under a lease, rental agreement or
other arrangement, other than as disclosed in Schedules "O" or "R"
hereto;
(ee) Title. Henan Furen Huaiqingtang Pharmaceutical is the legal and
beneficial owner of the Henan Furen Huaiqingtang Pharmaceutical
Assets, free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances or other claims whatsoever, save and
except as disclosed in Schedules "O" or "R" hereto;
(ff) No Option. No person, firm or corporation has any agreement or option
or a right capable of becoming an agreement for the purchase of any of
the Henan Furen Huaiqingtang Pharmaceutical Assets;
(gg) Henan Furen Huaiqingtang Pharmaceutical Insurance Policies. Henan
Furen Huaiqingtang Pharmaceutical maintains the public liability
insurance and insurance against loss or damage to the Henan Furen
Huaiqingtang Pharmaceutical Assets and the Henan Furen Huaiqingtang
Pharmaceutical Business as described in Schedule "P" hereto;
(hh) Henan Furen Huaiqingtang Pharmaceutical Material Contracts. The Henan
Furen Huaiqingtang Pharmaceutical Material Contracts listed in
Schedule "R" constitute all of the material contracts of Henan Furen
Huaiqingtang Pharmaceutical;
(ii) No Default. There has not been any default in any material obligation
of Henan Furen Huaiqingtang Pharmaceutical or any other party to be
performed under any of Henan Furen Huaiqingtang Pharmaceutical
Material Contracts, each of which is in good standing and in full
force and effect and unamended (except as disclosed in Schedule "R"),
and Henan Furen Huaiqingtang Pharmaceutical is not aware of any
default in the obligations of any other party to any of the Henan
Furen Huaiqingtang Pharmaceutical Material Contracts;
(jj) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of Henan Furen
Huaiqingtang Pharmaceutical. Henan Furen Huaiqingtang Pharmaceutical
is not obliged to pay benefits or share profits with any employee
after termination of employment except as required by law;
Henan Furen Huaiqingtang Pharmaceutical Assets - Henan Furen Huaiqingtang
Pharmaceutical Equipment and Assets List and Full Due Diligent List
(kk) Henan Furen Huaiqingtang Pharmaceutical Equipment. The Henan Furen
Huaiqingtang Pharmaceutical Equipment, Total Assets List and Full Due
Diligent List has been maintained in a manner consistent with that of
a reasonably prudent owner and such equipment is in good working
condition;
Henan Furen Huaiqingtang Pharmaceutical Assets - Henan Furen Huaiqingtang
Pharmaceutical Goodwill and Other Assets
(ll) Henan Furen Huaiqingtang Pharmaceutical Goodwill. Henan Furen
Huaiqingtang Pharmaceutical carries on the Henan Furen Huaiqingtang
Pharmaceutical Business only under the name "Henan Furen Huaiqingtang
Pharmaceutical Co., Ltd." and variations thereof and under no other
business or trade names. The Henan Furen Huaiqingtang Pharmaceutical
Shareholders do not have any knowledge of any infringement by Henan
Furen Huaiqingtang Pharmaceutical of any patent, trademark, copyright
or trade secret;
The Business of Henan Furen Huaiqingtang Pharmaceutical
(mm) Maintenance of Business. Since the date of the Henan Furen
Huaiqingtang Pharmaceutical Financial Statements, the Henan Furen
Huaiqingtang Pharmaceutical Business has been carried on in the
ordinary course and Henan Furen Huaiqingtang Pharmaceutical has not
entered into any material agreement or commitment except in the
ordinary course; and
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(nn) Subsidiaries. Henan Furen Huaiqingtang Pharmaceutical does not own any
subsidiaries and does not otherwise own, directly or indirectly, any
shares or interest in any other corporation, partnership, joint
venture or firm.
Non-Merger and Survival
5.2 The representations and warranties of Henan Furen Huaiqingtang
Pharmaceutical contained herein will be true at and as of Closing in all
material respects as though such representations and warranties were made
as of such time. Notwithstanding the completion of the transactions
contemplated hereby, the waiver of any condition contained herein (unless
such waiver expressly releases a party from any such representation or
warranty) or any investigation made by China Health, the representations
and warranties of Henan Furen Huaiqingtang Pharmaceutical shall survive the
Closing.
Indemnity
5.3 The Henan Furen Huaiqingtang Pharmaceutical and All Shareholders agree to
indemnify and save harmless China Health from and against any and all
claims, demands, actions, suits, proceedings, assessments, judgments,
damages, costs, losses and expenses, including any payment made in good
faith in settlement of any claim (subject to the right of the Henan Furen
Huaiqingtang Pharmaceutical Shareholders to defend any such claim),
resulting from the breach by any of them of any representation or warranty
of such party made under this Agreement or from any misrepresentation in or
omission from any certificate or other instrument furnished or to be
furnished by Henan Furen Huaiqingtang Pharmaceutical or the Henan Furen
Huaiqingtang Pharmaceutical Shareholders to China Health hereunder.
ARTICLE 6
COVENANTS OF HENAN FUREN HUAIQINGTANG PHARMACEUTICAL AND
THE HENAN FUREN HUAIQINGTANG PHARMACEUTICAL SHAREHOLDERS
Covenants
6.1 Henan Furen Huaiqingtang Pharmaceutical and the Henan Furen Huaiqingtang
Pharmaceutical Shareholders covenant and agree with China Health that they
will:
(a) Conduct of Business. Until the Closing, conduct the Henan Furen
Huaiqingtang Pharmaceutical Business diligently and in the ordinary
course consistent with the manner in which the Henan Furen
Huaiqingtang Pharmaceutical Business generally has been operated up to
the date of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best efforts to
preserve the Henan Furen Huaiqingtang Pharmaceutical Business and the
Henan Furen Huaiqingtang Pharmaceutical Assets and, without
limitation, preserve for China Health Henan Furen Huaiqingtang
Pharmaceutical's relationships with their suppliers, customers and
others having business relations with them;
(c) Access. Until the Closing, give China Health and its representatives
full access to all of the properties, books, contracts, commitments
and records of Henan Furen Huaiqingtang Pharmaceutical relating to
Henan Furen Huaiqingtang Pharmaceutical, the Henan Furen Huaiqingtang
Pharmaceutical Business and the Henan Furen Huaiqingtang
Pharmaceutical Assets, and furnish to China Health and its
representatives all such information as they may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party consents
required to permit the Acquisition and to preserve and maintain the
Henan Furen Huaiqingtang Pharmaceutical Assets, including the Henan
Furen Huaiqingtang Pharmaceutical Material Contracts, notwithstanding
the change in control of Henan Furen Huaiqingtang Pharmaceutical
arising from the Acquisition;
19
(e) Reporting and Internal Controls. From and after the Closing, the Henan
Furen Huaiqingtang Pharmaceutical Shareholders shall forthwith take
all required actions to implement internal controls on the business of
Henan Furen Huaiqingtang Pharmaceutical to ensure that Henan Furen
Huaiqingtang Pharmaceutical and China Health comply with Section
13(b)(2) of the Securities and Exchange Act of 1934;
(f) 1934 Act Reports. From and after the Closing Date, take all such steps
as are necessary to discharge all reporting obligations imposed upon
them by the Securities Exchange Act of 1934.
6.2 Except as otherwise expressly contemplated by this Agreement or with the
prior written consent of China Health, Henan Furen Huaiqingtang
Pharmaceutical and the Henan Furen Huaiqingtang Pharmaceutical Shareholders
shall not, and shall cause Henan Furen Huaiqingtang Pharmaceutical not to:
(a) Board of Directors. Appoint new directors to Henan Furen Huaiqingtang
Pharmaceutical's Board of Directors or make any changes to Henan Furen
Huaiqingtang Pharmaceutical's Board of Directors;
(b) Dividend; Changes in Stock. Declare, set aside, make or pay any
dividend or other distribution in respect of the capital stock of
Henan Furen Huaiqingtang Pharmaceutical or repurchase, redeem or
otherwise acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in Henan Furen
Huaiqingtang Pharmaceutical;
(c) Issuance of Securities. Transfer, issue, sell or dispose of any shares
of capital stock or other securities of Henan Furen Huaiqingtang
Pharmaceutical or grant options, warrants, calls or other rights to
purchase or otherwise acquire shares of the capital stock or other
securities of Henan Furen Huaiqingtang Pharmaceutical;
(d) Governing Documents. Amend the certificate of incorporation or by-laws
of the Company.
(e) Changes in Securities. Effect any recapitalization, reclassification,
stock split or like change in the capitalization of Henan Furen
Huaiqingtang Pharmaceutical;
(f) Compensation. (A) materially increase the annual level of compensation
of any employee of Henan Furen Huaiqingtang Pharmaceutical, (B)
increase the annual level of compensation payable or to become payable
by Henan Furen Huaiqingtang Pharmaceutical to any of its executive
officers, (C) grant any unusual or extraordinary bonus, benefit or
other direct or indirect compensation to any employee, director or
consultant, (D) increase the coverage or benefits available under any
(or create any new) severance pay, termination pay, vacation pay,
company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation,
insurance, pension or other employee benefit plan or arrangement made
to, for, or with any of the directors, officers, employees, agents or
representatives of Henan Furen Huaiqingtang Pharmaceutical or
otherwise modify or amend or terminate any such plan or arrangement or
(E) enter into any employment, deferred compensation, severance,
consulting, non-competition or similar agreement (or amend any such
agreement) to which Henan Furen Huaiqingtang Pharmaceutical is a party
or involving a director, officer or employee of Henan Furen
Huaiqingtang Pharmaceutical in his or her capacity as a director,
officer or employee of Henan Furen Huaiqingtang Pharmaceutical;
(g) Liens. Subject to any lien (except for leases that do not materially
impair the use of the property subject thereto in their respective
businesses as presently conducted), any of the properties or assets
(whether tangible or intangible) of Henan Furen Huaiqingtang
Pharmaceutical;
(h) Indebtedness. Incur any indebtedness for borrowed money or guarantee
any such indebtedness.
20
(i) Other Actions. Agree to do anything prohibited by this Section 6.2 or
anything which would make any of the representations and warranties of
Henan Furen Huaiqingtang Pharmaceutical and the Henan Furen
Huaiqingtang Pharmaceutical Shareholders in this Agreement untrue or
incorrect in any material respect as of any time through and including
the Closing.
Authorization
6.3 Henan Furen Huaiqingtang Pharmaceutical hereby agrees to authorize and
direct any and all federal, state, municipal, foreign and international
governments and regulatory authorities having jurisdiction respecting Henan
Furen Huaiqingtang Pharmaceutical to release any and all information in
their possession respecting Henan Furen Huaiqingtang Pharmaceutical to
China Health. Henan Furen Huaiqingtang Pharmaceutical shall promptly
execute and deliver to China Health any and all consents to the release of
information and specific authorizations which China Health reasonably
require to gain access to any and all such information. Henan Furen
Huaiqingtang Pharmaceutical Shareholders hereby authorize Xx. Xxx WenChen
to execute all certificates or other representations required to complete
the transactions contemplated by this Agreement.
Survival
6.4 The covenants set forth in this Article shall survive the Closing for the
benefit of China Health.
ARTICLE 7
CONDITIONS PRECEDENT
Conditions Precedent in favor of China Health
7.1 China Health's obligations to carry out the transactions contemplated
hereby are subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to China Health hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Henan Furen Huaiqingtang Pharmaceutical
or the Henan Furen Huaiqingtang Pharmaceutical Shareholders at or
prior to the Closing will have been complied with or performed;
(c) title to the Henan Furen Huaiqingtang Pharmaceutical Shares held by
the Henan Furen Huaiqingtang Pharmaceutical Shareholders and to the
Henan Furen Huaiqingtang Pharmaceutical Assets will be free and clear
of all mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever, save and except as disclosed
herein, and the Henan Furen Huaiqingtang Pharmaceutical Shares shall
be duly transferred to China Health;
(d) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or condition of
Henan Furen Huaiqingtang Pharmaceutical, its liabilities or the Henan
Furen Huaiqingtang Pharmaceutical Assets or any damage, loss or other
change in circumstances materially and adversely affecting Henan Furen
Huaiqingtang Pharmaceutical, the Henan Furen Huaiqingtang
Pharmaceutical Business or the Henan Furen Huaiqingtang Pharmaceutical
Assets or Henan Furen Huaiqingtang Pharmaceutical's right to carry on
the Henan Furen Huaiqingtang Pharmaceutical Business, other than
changes in the ordinary course of business, none of which has been
materially adverse, or
(ii) any damage, destruction, loss or other event, including changes to any
laws or statutes applicable to Henan Furen Huaiqingtang Pharmaceutical
or the Henan Furen Huaiqingtang Pharmaceutical Business (whether or
not covered by insurance) materially and adversely affecting Henan
Furen Huaiqingtang Pharmaceutical, the Henan Furen Huaiqingtang
Pharmaceutical Business or the Henan Furen Huaiqingtang Pharmaceutical
Assets; and
21
(e) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any.
Waiver by China Health
7.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of China Health and any such condition may be waived
in whole or in part by China Health at or prior to the Closing by
delivering to Henan Furen Huaiqingtang Pharmaceutical a written waiver to
that effect signed by China Health. In the event that the conditions
precedent set out in the preceding section are not satisfied on or before
the Closing, China Health shall be released from all obligations under this
Agreement.
Conditions Precedent in Favor of Henan Furen Huaiqingtang Pharmaceutical and the
Henan Furen Huaiqingtang Pharmaceutical Shareholders
7.3 The obligations of Henan Furen Huaiqingtang Pharmaceutical and the Henan
Furen Huaiqingtang Pharmaceutical Shareholders to carry out the
transactions contemplated hereby are subject to the fulfillment of each of
the following conditions precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to Henan Furen Huaiqingtang Pharmaceutical hereunder will
have been so executed and delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by China Health at or prior to the Closing
will have been complied with or performed;
(c) China Health will have delivered the Acquisition Shares and the Cash
Payment to be issued pursuant to the terms of the Acquisition to Henan
Furen Huaiqingtang Pharmaceutical at the Closing and the Acquisition
Shares will be registered on the books of China Health in the name of
the Henan Furen Huaiqingtang Pharmaceutical Shareholders at the time
of Closing;
(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of China Health, its liabilities or the China Health
Assets or any damage, loss or other change in circumstances
materially and adversely affecting China Health, the China Health
Business or the China Health Assets or China Health' right to
carry on the China Health Business, other than changes in the
ordinary course of business, none of which has been materially
adverse, or
(ii) any damage, destruction, loss or other event, including changes
to any laws or statutes applicable to China Health or the China
Health Business (whether or not covered by insurance) materially
and adversely affecting China Health, the China Health Business
or the China Health Assets;
(f) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any;
22
Waiver by Henan Furen Huaiqingtang Pharmaceutical and the Henan Furen
Huaiqingtang Pharmaceutical Shareholders
7.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Henan Furen Huaiqingtang Pharmaceutical and the
Henan Furen Huaiqingtang Pharmaceutical Shareholders and any such condition
may be waived in whole or in part by Henan Furen Huaiqingtang
Pharmaceutical or the Henan Furen Huaiqingtang Pharmaceutical Shareholders
at or prior to the Closing by delivering to China Health a written waiver
to that effect signed by Henan Furen Huaiqingtang Pharmaceutical and the
Henan Furen Huaiqingtang Pharmaceutical Shareholders. In the event that the
conditions precedent set out in the preceding section are not satisfied on
or before the Closing, Henan Furen Huaiqingtang Pharmaceutical and the
Henan Furen Huaiqingtang Pharmaceutical Shareholders shall be released from
all obligations under this Agreement.
Nature of Conditions Precedent
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in
this Article.
Confidentiality
7.6 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and
that if this Agreement is terminated pursuant to Article 8, the parties
agree to return to one another any and all financial, technical and
business documents delivered to the other party or parties in connection
with the negotiation and execution of this Agreement and shall keep the
terms of this Agreement and all information and documents received from
Henan Furen Huaiqingtang Pharmaceutical and China Health and the contents
thereof confidential and not utilize nor reveal or release same, provided,
however, that China Health will be required to issue a news release
regarding the execution and consummation of this Agreement and file a
Current Report on Form 8-K with the Securities and Exchange Commission
respecting the proposed Acquisition contemplated hereby together with such
other documents as are required to maintain the currency of China Health's
filings with the Securities and Exchange Commission.
ARTICLE 8
TERMINATION
8.1 This Agreement may be terminated at any time prior to the Closing Date:
(a) by mutual consent of China Health and Henan Furen Huaiqingtang
Pharmaceutical;
(b) by either China Health or Henan Furen Huaiqingtang Pharmaceutical if
there has been a material breach of any representation, warranty,
covenant or agreement on the part of the other set forth in this
Agreement which breach has not been cured within five (5) business
days following receipt by the breaching party of notice of such
breach, or if any permanent injunction or other order of a court or
other competent authority preventing the consummation of the
Acquisition shall have become final and non-appealable; or
8.2 Effect of Termination. In the event of termination of this Agreement by
either Henan Furen Huaiqingtang Pharmaceutical or China Health as provided
in Section 8.1, this Agreement shall forthwith become void and there shall
be no liability or obligation on the part of any party hereto. In such
event, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
23
8.3 Amendment. This Agreement may be amended by mutual agreement of China
Health, Henan Furen Huaiqingtang Pharmaceutical and the Henan Furen
Huaiqingtang Pharmaceutical Shareholders, provided that in the case of
China Health and Henan Furen Huaiqingtang Pharmaceutical, any such
amendment must authorized by their respective Boards of Directors, and to
the extent required by law, approved by their respective shareholders. Any
such amendment must be by an instrument in writing signed on behalf of each
of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Closing Date, the parties
hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed
on behalf of such party.
ARTICLE 9
RISK
Material Change in the Business of Henan Furen Huaiqingtang Pharmaceutical
9.1 If any material loss or damage to the Henan Furen Huaiqingtang
Pharmaceutical Business occurs prior to Closing and such loss or damage, in
China Health' reasonable opinion, cannot be substantially repaired or
replaced within sixty (60) days, China Health shall, within ten (10) days
following any such loss or damage, by notice in writing to Henan Furen
Huaiqingtang Pharmaceutical, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to China Health' obligations to carry
out the transactions contemplated hereby, be vested in Henan Furen
Huaiqingtang Pharmaceutical or otherwise adequately secured to the
satisfaction of China Health on or before the Closing Date.
Material Change in the China Health Business
9.2 If any material loss or damage to the China Health Business occurs prior to
Closing and such loss or damage, in Henan Furen Huaiqingtang
Pharmaceutical's reasonable opinion, cannot be substantially repaired or
replaced within sixty (60) days, Henan Furen Huaiqingtang Pharmaceutical
shall, within ten (10) days following any such loss or damage, by notice in
writing to China Health, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to Henan Furen Huaiqingtang
Pharmaceutical's obligations to carry out the transactions
contemplated hereby, be vested in China Health or otherwise adequately
secured to the satisfaction of Henan Furen Huaiqingtang Pharmaceutical
on or before the Closing Date.
24
ARTICLE 10
CLOSING
Closing
10.1 The Acquisition and the other transactions contemplated by this Agreement
will be closed at the Place of Closing in accordance with the closing
procedure set out in this Article.
Documents to be Delivered by Henan Furen Huaiqingtang Pharmaceutical and All
Shareholders to China Health
10.2 On or before the Closing, Henan Furen Huaiqingtang Pharmaceutical and the
Henan Furen Huaiqingtang Pharmaceutical and All Shareholders will deliver
or cause to be delivered to China Health:
(a) the original or certified copies of the charter documents of Henan
Furen Huaiqingtang Pharmaceutical and all corporate records documents
and instruments of Henan Furen Huaiqingtang Pharmaceutical, the
corporate seal of Henan Furen Huaiqingtang Pharmaceutical and all
books and accounts of Henan Furen Huaiqingtang Pharmaceutical;
(b) all reasonable consents or approvals required to be obtained by Henan
Furen Huaiqingtang Pharmaceutical for the purposes of completing the
Acquisition and preserving and maintaining the interests of Henan
Furen Huaiqingtang Pharmaceutical under any and all Henan Furen
Huaiqingtang Pharmaceutical Material Contracts and in relation to
Henan Furen Huaiqingtang Pharmaceutical Assets;
(c) certified copies of such resolutions of the shareholders and directors
of Henan Furen Huaiqingtang Pharmaceutical as are required to be
passed to authorize the execution, delivery and implementation of this
Agreement;
(d) an acknowledgement from Henan Furen Huaiqingtang Pharmaceutical and
the Henan Furen Huaiqingtang Pharmaceutical Shareholders of the
satisfaction of the conditions precedent set forth in section 7.3
hereof;
(e) the certificates or other evidence of ownership of the Henan Furen
Huaiqingtang Pharmaceutical Shares, together with such other documents
or instruments required to effect transfer of ownership of the Henan
Furen Huaiqingtang Pharmaceutical Shares to China Health; and
(f) such other documents as China Health may reasonably require to give
effect to the terms and intention of this Agreement.
Documents to be Delivered by China Health
10.3 On or before the Closing, China Health shall deliver or cause to be
delivered to Henan Furen Huaiqingtang Pharmaceutical and the Henan Furen
Huaiqingtang Pharmaceutical Shareholders:
(a) share certificates representing the Acquisition Shares duly registered
in the names of the holders of shares of Henan Furen Huaiqingtang
Pharmaceutical Common Stock;
(b) certified copies of such resolutions of the directors of China Health
as are required to be passed to authorize the execution, delivery and
implementation of this Agreement;
(c) a certified copy of a resolution of the directors of China Health
dated as of the Closing Date appointing the nominees of Henan Furen
Huaiqingtang Pharmaceutical as officers of Henan Furen Huaiqingtang
Pharmaceutical and appointing the nominee of the Henan Furen
Huaiqingtang Pharmaceutical Shareholders to the board of directors of
China Health;
(d) an acknowledgement from China Health of the satisfaction of the
conditions precedent set forth in section 7.1 hereof;
(e) such other documents as Henan Furen Huaiqingtang Pharmaceutical may
reasonably require to give effect to the terms and intention of this
Agreement.
25
ARTICLE 11
POST-CLOSING MATTERS
Forthwith after the Closing, China Health, Henan Furen Huaiqingtang
Pharmaceutical and the Henan Furen Huaiqingtang Pharmaceutical Shareholders, as
the case may be, agree to use all their best efforts to:
(a) issue a news release reporting the Closing;
(b) file a Form 8-K with the Securities and Exchange Commission USA
disclosing the terms of this Agreement within 4 business days of the
Closing of this Acquisition Shares Purchase Agreement which includes
full Form 10 disclosure and the audited financial statements of Henan
Furen Huaiqingtang Pharmaceutical, as well as pro formal financial
information of Henan Furen Huaiqingtang Pharmaceutical and China
Health as required by Item 310 of Regulation SB as promulgated by the
Securities and Exchange Commission;
(c) file reports on Forms 13D and 3 with the Securities and Exchange
Commission USA disclosing the acquisition of the Acquisition Shares by
the Henan Furen Huaiqingtang Pharmaceutical Shareholders;
ARTICLE 12
NONCOMPETION; NONSOLICITATION
Noncompetition
12.1 For a period of three (3) years after the Closing Date, Henan Furen
Huaiqingtang Pharmaceutical shall not, anywhere across PR China and world
widely directly or indirectly invest in, own, manage, operate, finance,
control, advise, render services to or guarantee the obligations of any
person or entity engaged in or planning to become engaged in the
pharmaceutical business ("Competing Business"), provided, however, that
Henan Furen Huaiqingtang Pharmaceutical may purchase or otherwise acquire
up to (but not more than) five percent (5%) of any class of the securities
of any entity (but may not otherwise participate in the activities of such
entity) if such securities are listed on any national or regional
securities exchange or have been registered under Section 12(g) of the
Exchange Act.
Nonsolicitation
12.2 For a period of three (3) years after the Closing Date, Henan Furen
Huaiqingtang Pharmaceutical and the Henan Furen Huaiqingtang Pharmaceutical
Shareholders shall not, directly or indirectly:
(a) solicit the business of any person or entity that is a customer of
China Health;
(b) cause, induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee, employee, consultant or other business
relation of China Health to cease doing business with China Health, to
deal with any competitor of China Health or in any way interfere with
its relationship with China Health;
(c) cause, induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee, employee, consultant or other business
relation of Henan Furen Huaiqingtang Pharmaceutical and/or the Henan
Furen Huaiqingtang Pharmaceutical Shareholders on the Closing Date or
within the year preceding the Closing Date to cease doing business
with China Health, to deal with any competitor of China Health or in
any way interfere with its relationship with China Health; or
(d) hire, retain or attempt to hire or retain any employee or independent
contractor of China Health or in any way interfere with the
relationship between China Health and any of its employees or
independent contractors.
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Modification of Covenant
12.3 If a final judgment of a court or tribunal of competent jurisdiction
determines that any term or provision contained in this Article 12 is
invalid or unenforceable, then the parties agree that the court or tribunal
will have the power to reduce the scope, duration or geographic area of the
term or provision, to delete specific words or phrases or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision. This Article 12 will be
enforceable as so modified after the expiration of the time within which
the judgment may be appealed. This Article 12 is reasonable and necessary
to protect and preserve China Health's legitimate business interests and
the value of the Assets and to prevent any unfair advantage conferred on
Henan Furen Huaiqingtang Pharmaceutical and the Henan Furen Huaiqingtang
Pharmaceutical Shareholders.
ARTICLE 13
GENERAL PROVISIONS
Arbitration
13.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by
negotiation in good faith. If such good negotiation fails to resolve such
dispute, controversy, difference or claim within fifteen (15) days after
any party delivers to any other party a notice of its intent to submit such
matter to arbitration, then any party to such dispute, controversy,
difference or claim may submit such matter to arbitration in the City of
Nevada, USA and BeiJing, PR China.
Notice
13.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the
intended recipient by personal delivery, prepaid single certified or
registered mail, or telecopier. Any notice delivered by mail shall be
deemed to have been received on the fourth business day after and excluding
the date of mailing, except in the event of a disruption in regular postal
service in which event such notice shall be deemed to be delivered on the
actual date of receipt. Any notice delivered personally or by telecopier
shall be deemed to have been received on the actual date of delivery.
27
Addresses for Service
13.3 The address for service of notice of each of the parties hereto is as
follows:
(a) China Health:
China Health Holdings, Inc.
Business Address:
000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxxxxx Xx, President
Phone:
Tel: 0-000-000-0000
Mailing Address :
China Health Holding, Inc.
Park Place Suite 600
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX Xxxxxx X0X 0X0
Tel: 000-000-0000
Fax: 000-000-0000
Henan Furen Huaiqingtang Pharmaceutical and
Henan Furen Huaiqingtang Pharmaceutical Shareholders
Attn: Xx. Xxx, WenChen
Chairman of Board Director of Henan Furen Pharmaceutical
Group Co. Ltd.
Chairman of Henan Furen Huaiqingtang Pharmaceutical Co. Ltd.
Suke Building, 218 Dongming Road, Zhengzhou, P.R. China
(C) With a copy to: China Health Corporate Attorneys:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(b) With a copy to: Henan Furen Huaiqingtang Pharmaceutical's Corporate
Attorneys:
Change of Address
13.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for
notice whenever the existing address or notice ceases to be adequate for
delivery by hand. A post office box may not be used as an address for
service.
Further Assurances
13.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party
may reasonably require to carry out and give effect to the terms and
intention of this Agreement.
Time of the Essence
13.6 Time is expressly declared to be the essence of this Agreement.
Entire Agreement
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13.7 The provisions contained herein constitute the entire agreement among Henan
Furen Huaiqingtang Pharmaceutical, the Henan Furen Huaiqingtang
Pharmaceutical Shareholders and China Health respecting the subject matter
hereof and supersede all previous communications, representations and
agreements, whether verbal or written, among Henan Furen Huaiqingtang
Pharmaceutical, the Henan Furen Huaiqingtang Pharmaceutical Shareholders
and China Health with respect to the subject matter hereof.
Enurement
13.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors
and permitted assigns.
Assignment
13.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
Counterparts
13.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery
of executed copies of this Agreement by telecopier will constitute proper
delivery, provided that originally executed counterparts are delivered to
the parties within a reasonable time thereafter.
Applicable Law
13.11 This Agreement is subject to the laws of the State of Nevada, USA.
29
IN WITNESS WHEREOF the parties have executed this Agreement effective as of
the day and year first above written.
CHINA HEALTH HOLDING, INC. ( CHHH : OTCBB), at101 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx
000, Xxx Xxxxx, XX 00000-0000 XXX and mailing address at Suite 000-000 Xxxxxxx
Xx. Xxxx Xxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0.
Company Sealed Here
By: /s/ Xxxxxxxx Xx
-------------------
Xxxxxxxx Xx
The President/CEO
Date:August 7th, 2006
/s/ Li, D. H.
------------
Li, D. H. The Vice President/ Director
Date:August 7th, 2006
--------------------------------------------------------------------------------
HENAN FUREN PHARMACEUTICAL GROUP CO. LTD. AND HENAN FUREN HUAIQINGTANG
PHARMACEUTICAL CO. LTD. HENAN PROVINCE, PR CHINA,
Suke Building, 218 Dongming Road, Zhengzhou, P.R. China
Company Sealed Here:
By: /s/ Xx. Xxx, WenChen
-----------------------
Xx. Xxx, WenChen
CHAIRMAN OF BOARD OF DIRECTORS
Date: August 7th., 2006
/s/ Xx. Xxx, Y. J.
-------------------------------
Xx. Xxx, Y. J.
Executive Director
Date: August 7th., 2006
/s/ Xx. Xxx, WenChen
-------------------------------
Henan Furen Pharmaceutical Group Co. Ltd.
Xx. Xxx, WenChen, Chairman of Board
--------------------------------------------------------------------------------
The Shareholders of
HENAN FUREN HUAIQINGTANG PHARMACEUTICAL CO. LTD.
Suke Building, 218 Dongming Road, Zhengzhou, P.R. China
Date:August 7th, , 2006
30
