SECURITIES EXCHANGE AGREEMENT
Exhibit
10.1
This
Securities Exchange Agreement (the “Agreement”)
is
entered into as of March 22, 2006 by and among China-Biotics, Inc., a Delaware
corporation (“China-Biotics”),
Sinosmart Group Inc., a British Virgin Islands corporation (the “Company”),
and
the persons and entities listed on Exhibit
A
hereto
(“Company
Shareholders”).
RECITALS
A. The
Company has authorized share capital consisting of $50,000, divided into 50,000
ordinary shares, $1.00 par value (the “Ordinary
Shares”),
of
which 14,287 Ordinary Shares are issued and outstanding as of the date of this
Agreement (the “Company
Shares”).
The
Company Shareholders currently own all of the issued and outstanding Ordinary
Shares.
B. The
Company Shareholders wish to sell, and China-Biotics wishes to acquire, all
of
the issued and outstanding Company Shares in exchange for China-Biotics’
issuance of a total of 15,980,000 shares (the “Exchange
Shares”)
of
common stock of China-Biotics (“Common
Stock”)
to the
Company Shareholders and their designees, subject to and upon the terms and
conditions hereinafter set forth (the “Reorganization”).
INTENDING
TO BE LEGALLY BOUND, and in consideration of the premises and the mutual
representations, warranties, covenants, and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE
1
SHARE
EXCHANGE
1.1 Agreement
to Exchange Securities.
Subject
to the terms and upon the conditions set forth herein, each Company Shareholder
agrees to sell, assign, transfer and deliver to China-Biotics, and China-Biotics
agrees to purchase from each Company Shareholder, at the Closing, all of the
Company Shares owned by such Company Shareholder, in exchange for the issuance
by China-Biotics, at the Closing, to each such Company Shareholder the number
of
Exchange Shares set forth next to each Company Shareholder’s name on
Exhibit
B
hereto;
provided that certain of such Company Shareholders have directed that a portion
of the Exchange Shares to be received by such Company Shareholders at Closing
be
issued to their designees as set forth on Exhibit
B,
and
each such Company Shareholder hereby instructs China-Biotics to issue the amount
of Exchange Shares set forth beside each such designee’s name set forth on
Exhibit
B
to such
designee.
1.2 Closing.
The
closing of the Reorganization (the “Closing”)
shall
take place at the offices of Xxxxxxx Xxxxx & Xxxxx LLP., located at 000
Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000, at 10:00 a.m., local time, on
March 22, 2006, or at such other time and place as may be agreed to by the
Company and China-Biotics (“Closing
Date”).
1.3 Closing
Deliveries.
At the
Closing, the following deliveries shall be made:
(a) Company
Shares.
Each
Company Shareholder shall deliver to China-Biotics any certificate(s) evidencing
the Company Shares owned by such Company Shareholder (“Company
Certificates”),
along
with duly executed assignments of such Company Certificates, in order to
effectively vest in China-Biotics all right, title and interest in and to the
Company Shares owned by such Company Shareholder. From time to time after the
Closing Date, and without further consideration, each Company Shareholder shall
execute and deliver such other instruments of transfer and take such other
actions as China-Biotics may reasonably request in order to more effectively
transfer to China-Biotics the securities intended to be transferred
hereunder.
(b) Exchange
Shares.
China-Biotics shall issue to the Company Shareholders (and their designees,
as
contemplated by Section 1.1) the Exchange Shares and deliver original
certificates evidencing the Exchange Shares, in form and substance satisfactory
to the Company Shareholders, in order to effectively vest in each Company
Shareholder and each such designee its respective right, title and interest
in
and to the Exchange Shares, or deliver a letter, in form and substance
acceptable to the company, instructing China-Biotics’s transfer agent to take
such actions.
(c)
Other
Documents.
Each of
the Company, China-Biotics and each Company Shareholder shall receive, in a
form
and substance reasonably satisfactory to it, all certificates and other
documents, instruments and writings to evidence the transactions contemplated
by
this Agreement from any other party hereto as it may reasonably
request.
ARTICLE
2
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to China-Biotics that the following
are
correct and complete as of the date hereof, except insofar as the
representations and warranties relate expressly and solely to a particular
date
or period, in which case the Company represents and warrants to China-Biotics
that such representations and warranties were true, correct and complete with
respect to such date or period:
2.1 Disclosure
Schedule.
Attached hereto as Exhibit C is a draft of a registration statement on Form
SB-2
prepared by the Company dated March 22, 2006 (the “Registration
Statement”),
which
is anticipated to be filed with the Securities and Exchange Commission
(“SEC”)
after
the Closing. All of the representations and warranties of the Company set forth
in this Article 2 are subject to (a) the disclosure contained in the
Registration Statement, provided that the information set forth in the
Registration Statement is not intended to constitute, and shall not be construed
as constituting, any representations or warranties by the Company hereunder,
except as and to the extent expressly provided herein, and (b) any documents
or
transactions entered into in connection with or contemplated by this Agreement
or the Company’s issuance of shares in a private placement pursuant to a
Subscription Agreement, dated as of the date hereof, which was consummated
immediately prior to the execution and delivery of this Agreement.
2.2 Corporate
Organization, Standing, Power.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the British Virgin Islands with the requisite corporate power
and authority to carry on its business as it is now being conducted and to
own,
operate and lease its properties and assets, is duly qualified or licensed
to do
business as a foreign corporation in good standing in every other jurisdiction
in which the character or location of the properties and assets owned, leased
or
operated by it or the conduct of its business requires such qualification or
licensing, except in such jurisdictions in which the failure to be so qualified
or licensed and in good standing would not, individually or in the aggregate,
have a Material Adverse Effect (as defined in Section 9.12) on the Company.
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2.3 Capitalization;
Subsidiaries.
(a) The
Company has authorized share capital consisting of $50,000, divided into 50,000
ordinary shares, $1.00 par value, of which 14,287 Ordinary Shares are issued
and
outstanding as of the date of this Agreement. All Company Shares have been
duly
authorized and are validly issued, fully paid and nonassessable and are without
preemptive rights. Other than as contemplated by this Agreement, there is no
subscription, option, warrant, call, right, contract, agreement, commitment,
understanding or arrangement to which the Company is a party, or by which it
is
bound, with respect to the future issuance, sale, delivery or transfer of the
capital securities of the Company, including any right of conversion or exchange
under any security or other instrument.
(b) The
Company does not own, and has never owned, directly or indirectly, any equity
interest in any person, other than (i) the Company owns 100% of the equity
interests of Growing State Limited, a British Virgin Islands corporation and
(ii) the Company owns 100% of the equity interests in Shanghai Shining
Biotechnology Co., Ltd., a Chinese corporation (together, the “Subsidiaries”).
There
is no subscription, option, warrant, call, right, contract, agreement,
commitment, understanding or arrangement to which either Subsidiary is a party,
or by which it is bound, with respect to the issuance, sale, delivery or
transfer of the capital securities of such Subsidiary, including any right
of
conversion or exchange under any security or other instrument.
2.4 Authorization.
The
Company has all requisite corporate power and authority to enter into, execute,
deliver, and perform its obligations under this Agreement. This Agreement has
been duly and validly executed and delivered by the Company and is the valid
and
binding legal obligation of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy, moratorium, principles of
equity and other limitations limiting the rights of creditors
generally.
2.5 Non-Contravention.
Neither
the execution, delivery and performance of this Agreement, nor the consummation
of the transactions contemplated herein, in each case by the Company,
will:
(a) violate,
contravene or be in conflict with any provision of the articles of association
or memorandum of association of the Company or the similar governing documents
of any Subsidiary;
(b) be
in
conflict with, or constitute a default, however defined (or an event which,
with
the giving of due notice or lapse of time, or both, would constitute such a
default), under, or cause or permit the acceleration of the maturity of, or
give
rise to any right of termination, cancellation, imposition of fees or penalties
under any debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other agreement or
obligation to which the Company or either Subsidiary is a party or by which
the
Company or either Subsidiary or any of the Company’s properties or assets or the
properties or assets of either Subsidiary are or may be bound;
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(c) result
in
the creation or imposition of any pledge, lien, security interest, restriction,
option, claim or charge of any kind whatsoever (“Encumbrances”)
upon
any property or assets of the Company or either Subsidiary under any debt,
obligation, contract, agreement or commitment to which the Company or either
Subsidiary is a party or by which the Company or either Subsidiary or any of
the
Company’s or any Subsidiary’s assets or properties are bound; or
(d) materially
violate any statute, treaty, law, judgment, writ, injunction, decision, decree,
order, regulation, ordinance or other similar authoritative matters (referred
to
herein individually as a “Law”
and
collectively as “Laws”)
of any
foreign, federal, state or local governmental or quasi-governmental,
administrative, regulatory or judicial court, department, commission, agency,
board, bureau, instrumentality or other authority (referred to herein
individually as an “Authority”
and
collectively as “Authorities”).
2.6 Consents
and Approvals.
No
consent, approval, order or authorization of or from, or registration,
notification, declaration or filing with (“Consent”)
any
individual or entity, including any Authority, is required in connection with
the execution, delivery or performance of this Agreement by the Company or
the
consummation by the Company of the transactions contemplated herein, other
than
any Consent which, if not made or obtained, will not, individually or in the
aggregate, have a Material Adverse Effect on the Company and other than any
Consents which have been obtained.
2.7 Compliance
With Law; Permits and Other Operating Rights.
The
assets, properties, business and operations of the Company and each Subsidiary
are and have been in compliance in all respects with all Laws applicable to
their respective assets, properties, business and operations, except where
the
failure to comply would not have a Material Adverse Effect. The Company and
each
Subsidiary possesses all material permits, licenses and other authorizations
from all Authorities necessary to permit it to operate its business in the
manner in which it presently is conducted and the consummation of the
transactions contemplated by this Agreement will not prevent the Company or
any
Subsidiary from being able to continue to use such permits and operating rights.
Neither the Company nor any Subsidiary has received notice of any violation
of
any such applicable Law or is in default with respect to any order, writ,
judgment, award, injunction or decree of any Authority.
2.8 Issuance
of Common Stock.
To the
Company’s knowledge, as of the date of this Agreement and as of the Closing
Date, no facts or circumstances exist or will exist that could cause the
issuance of Common Stock pursuant to the Reorganization to fail to meet an
exemption from the registration requirements of Section 4(2) of the
Securities Act and Rule 506 of Regulation D under of the Securities
Act or Regulation S under the Securities Act.
2.9 Books
and Records.
The
books of account, minute books, stock record books, and other material records
of the Company and each Subsidiary are complete and correct in all material
respects and have been maintained in accordance with reasonable business
practices. The minute books of the Company and each Subsidiary contain accurate
and complete records of all formal meetings held of, and corporate action taken
by, the members, the managers and committees of the managers of the Company
and
each Subsidiary.
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2.10 Financial
Statements.
The
Company has furnished or made available to China-Biotics the Company’s
consolidated audited financial statements for the fiscal years ended March
31,
2005 and 2004 and unaudited financial statements at and for the nine month
period ended December 31, 2005. Such financial statements (i) were prepared
in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes to such financial statements) and (ii) fairly present, in all
material respects, the consolidated financial position of the Company and its
consolidated subsidiaries as of the respective dates thereof and the results
of
operations of the Company and its consolidated subsidiaries for the periods
covered thereby. All adjustments considered necessary for a fair presentation
of
such financial statements have been included.
2.11
Real
Property; Leases.
Neither
the Company nor any Subsidiary owns any real property or is party to any lease
or sublease for any real property or personal property.
2.12 Litigation.
There
is no legal, administrative, arbitration, or other proceeding, suit, claim
or
action of any nature or investigation, review or audit of any kind, or any
judgment, decree, decision, injunction, writ or order pending, noticed,
scheduled, or, to the knowledge of Company, threatened or contemplated by or
against or involving Company, its assets, properties or business or its
directors, officers, agents or employees (but only in their capacity as such),
whether at law or in equity, before or by any person or entity or Authority,
or
which questions or challenges the validity of this Agreement or any action
taken
or to be taken by the parties hereto pursuant to this Agreement or in connection
with the transactions contemplated herein.
2.13 Contracts
and Commitments; No Default.
Neither
the Company nor any Subsidiary is a party to, nor are any of its assets bound
by, any material contract, oral or written (each, an “Company
Contract”).
None
of the Company Contracts contains a provision requiring the consent of any
party
with respect to the consummation of the transactions contemplated by this
Agreement. Neither the Company nor any Subsidiary is in breach, violation or
default, however defined, in the performance of any of its obligations under
any
of the Company Contracts, and no facts and circumstances exist which, whether
with the giving of due notice, lapse of time, or both, would constitute such
breach, violation or default thereunder or thereof, and, to the knowledge of
the
Company, no other parties thereto are in a breach, violation or default, however
defined, thereunder or thereof, and no facts or circumstances exist which,
whether with the giving of due notice, lapse of time, or both, would constitute
such a breach, violation or default thereunder or thereof.
2.14 No
Adverse Changes.
There
has been no Material Adverse Effect with respect to the Company since December
31, 2005.
2.15 Accuracy
of Information.
No
representation or warranty made by the Company in this Agreement or in any
agreement or certificate furnished or to be furnished to China-Biotics at the
Closing by or on behalf of the Company in connection with any of the
transactions contemplated by this Agreement contains or will contain any untrue
statement of material fact or omit any material fact necessary in order to
make
the statements herein or therein not misleading in light of the circumstances
in
which they are made, and all of the foregoing completely and correctly present
the information required or purported to be set forth herein or therein.
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ARTICLE
3
REPRESENTATIONS
AND WARRANTIES
OF
THE COMPANY SHAREHOLDERS
Each
Company Shareholder, severally and not jointly, represents, warrants and
covenants to China-Biotics with respect to itself that the following are correct
and complete as of the date hereof, except insofar as the representations and
warranties relate expressly and solely to a particular date or period, in which
case each Company Shareholder, severally and not jointly, represents, warrants
and covenants to China-Biotics that such representations and warranties were
true, correct and complete with respect to such date or period:
3.1 Power
and Authority.
The
Company Shareholder has all requisite power and authority, or legal capacity,
as
the case may be, to enter into and to carry out all of the terms of this
Agreement and all other documents executed and delivered in connection herewith
(collectively, the “Documents”).
Any
action on the part of the Company Shareholder necessary for the authorization,
execution, delivery and performance of the Documents by the Company Shareholder
has been taken and no further authorization on the part of the Company
Shareholder is required to consummate the transactions provided for in the
Documents. When executed and delivered by the Company Shareholder, the Documents
shall constitute the valid and legally binding obligation of the Company
Shareholder enforceable in accordance with their respective terms, subject
to
bankruptcy, moratorium, principles of equity and other limitations limiting
the
rights of creditors generally. Each Company Shareholder who is a natural person
is over the age of 21, has not been declared incompetent, and has the right
to
execute, deliver and perform this Agreement without the consent or joinder
of
any other person or entity.
3.2 Ownership
of and Title To Securities.
Exhibit A
to this
Agreement accurately and completely sets forth all of the Company Shares owned
of record by the Company Shareholder as of the date hereof. The Company
Shareholder will transfer to China-Biotics good and marketable title to the
Company Shares which it owns or will own, free and clear of all pledges,
security interests, mortgages, liens, claims, charges, restrictions or
encumbrances, except for any restrictions imposed by United States federal
or
state securities Laws.
3.3 Investment
and Related Representations.
(a) Securities
Laws Compliance.
The
Company Shareholder is aware that neither the Exchange Shares nor the offer
or
sale thereof to the Company Shareholder has been registered under the U.S.
Securities Act of 1933 (the “Securities
Act”),
or
under any state securities Laws. The Company Shareholder understands that the
Exchange Shares will be characterized as “restricted” securities under federal
securities Laws inasmuch as they are being acquired in a transaction not
involving a public offering and that under such Laws and applicable regulations
such securities may be resold without registration under the Securities Act
only
in certain limited circumstances. The Company Shareholder agrees that the
Company Shareholder will not sell all or any portion of Exchange Shares except
pursuant to Regulation S under the Securities Act, pursuant to registration
under the Securities Act or pursuant to an available exemption from registration
under the Securities Act, and will not engage in hedging transactions with
regard to the Exchange Shares unless in compliance with the Securities Act.
The
Company Shareholder understands that each certificate for Exchange Shares issued
to the Company Shareholder or to any subsequent transferee shall bear a legend
substantially as set forth below, and that China-Biotics shall refuse to
transfer the Exchange Shares except in accordance with such
restrictions:
6
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “1933 ACT”) OR ANY STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT WITH RESPECT TO SUCH SHARES, OR WITH
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS BEING MADE IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS; AND
HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS
IN
COMPLIANCE WITH THE 1933 ACT.
(b) Investment
Representation.
This
Agreement is made with the Company Shareholder in reliance upon the Company
Shareholder’s representation, which by the Company Shareholder’s execution of
this Agreement the Company Shareholder hereby confirms, that the Exchange Shares
to be received by the Company Shareholder are being acquired pursuant to this
Agreement for its own account, for investment, and not with a view to the resale
or distribution thereof (i) such that the Company Shareholder would be
considered an “underwriter” as such term is defined in the Securities Act, and
(ii) unless pursuant to an effective registration statement or exemption under
the Securities Act.
(c) No
Public Solicitation.
The
Company Shareholder is acquiring the Exchange Shares after private negotiation
and has not been attracted to the acquisition of the Exchange Shares by any
press release, advertising, publication, or other general solicitation or
through any directed selling efforts (as such term is defined in Regulation
S
promulgated under the Securities Act) made in the United States.
(d) Access
to Information.
The
Company Shareholder acknowledges that the reports (collectively the
“SEC
Reports”)
filed
by China-Biotics with the SEC are publicly available, and that the Company
Shareholder has reviewed the SEC Reports to the extent that the Company
Shareholder deemed necessary and appropriate in making an investment decision
hereunder.
(e) Investor
Solicitation and Ability to Bear Risk to Loss.
The
Company Shareholder, if a corporation or a partnership, has not been organized
for the purpose of acquiring the Exchange Shares or, if so organized, all of
its
equity owners are accredited investors as defined in Regulation D
promulgated under the Securities Act. The Company Shareholder acknowledges
that
it is able to protect its interests in connection with the acquisition of the
Exchange Shares and can bear the economic risk of investment in such securities
without producing a material adverse change in the Company Shareholder’s
financial condition. The Company Shareholder otherwise has such knowledge and
experience in financial or business matters that the Company Shareholder is
capable of evaluating the merits and risks of the investment in the Exchange
Shares.
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(f) Accredited
Investor/Non-U.S. Person Status.
The
Company Shareholder is at least one of the following: (i) an “accredited
investor” as that term is defined in Regulation D promulgated under the
Securities Act or (ii) not a U.S. Person, and is not acquiring the Exchange
Shares for the account or benefit of any U.S. Person, and is acquiring the
Exchange Shares in an offshore transaction (as “U.S. Person” and “offshore
transaction” are defined in Regulation S promulgated under the Securities
Act).
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF CHINA-BIOTICS
China-Biotics
hereby represents and warrants to the Company and the Company Shareholders
that
the following are correct and complete as of the date hereof, except insofar
as
the representations and warranties relate expressly and solely to a particular
date or period, in which case China-Biotics represents and warrants to the
Company and the Company Shareholders that such representations and warranties
were true, correct and complete with respect to such date or
period:
4.1 [Intentionally
omitted]
4.2 Corporate
Organization, Standing and Power.
China-Biotics is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware with the requisite corporate
power and authority to carry on its business as it is now being conducted and
to
own, operate and lease its properties and assets, is duly qualified or licensed
to do business as a foreign corporation in good standing in every other
jurisdiction in which the character or location of the properties and assets
owned, leased or operated by it or the conduct of its business requires such
qualification or licensing, except in such jurisdictions in which the failure
to
be so qualified or licensed and in good standing would not, individually or
in
the aggregate, have a Material Adverse Effect on China-Biotics. Complete and
correct copies of China-Biotics’ certificate of incorporation and bylaws have
previously been made available to the Company.
4.3 Capitalization;
Subsidiaries.
(a) China-Biotics
has 110,000,000 shares of capital stock authorized, of which 100,000,000 shares
are designated common stock and 10,000,000 shares are designated preferred
stock. China-Biotics has 21,100,000 shares of common stock issued and
outstanding (the “China-Biotics
Shares”)
and no
other shares of any class or series of capital stock issued and outstanding.
All
of the China-Biotics Shares have been duly authorized and are validly issued,
fully paid and nonassessable and are without, and were not issued in violation
of, preemptive rights. Other than as contemplated by this Agreement, there
is no
subscription, option, warrant, call, right, contract, agreement, commitment,
understanding or arrangement to which China-Biotics is a party, or by which
it
is bound, with respect to the issuance, sale, delivery or transfer of the
capital securities of China-Biotics, including any right of conversion or
exchange under any security or other instrument, other than pursuant to the
Xxxx
Xxxx Agreement.
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(b) China-Biotics
does not own, and has never owned, directly or indirectly, any equity interest
in any person other than the 726 shares of stock of Diadem Resources Ltd. to
be
transferred pursuant to the Xxxx Xxxx Agreement.
4.4 Authorization.
China-Biotics has all requisite corporate power and authority to enter into,
execute, deliver, and perform its obligations under this Agreement. The Board
of
Directors of China-Biotics has taken all action required by Law, China-Biotics’
certificate of incorporation and bylaws or otherwise to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein. This Agreement has been duly and validly
executed and delivered by China-Biotics and is the valid and binding legal
obligation of China-Biotics enforceable against China-Biotics in accordance
with
its terms, subject to bankruptcy, moratorium, principles of equity and other
limitations limiting the rights of creditors generally.
4.5 Non-Contravention.
Neither
the execution, delivery and performance of this Agreement, nor the consummation
of the transactions contemplated herein will:
(a) violate
any provision of the certificate of incorporation or bylaws of China-Biotics;
or
(b) be
in
conflict with, or constitute a default, however defined (or an event which,
with
the giving of due notice or lapse of time, or both, would constitute such a
default), under, or cause or permit the acceleration of the maturity of, or
give
rise to, any right of termination, cancellation, imposition of fees or penalties
under, any debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other agreement or
obligation to which China-Biotics is a party or by which China-Biotics or any
of
its properties or assets is or may be bound;
(c) result
in
the creation or imposition of any Encumbrance upon any property or assets of
China-Biotics under any debt, obligation, contract, agreement or commitment
to
which China-Biotics is a party or by which China-Biotics or any of their
respective assets or properties is or may be bound; or
(d) materially
violate any Law of any Authority.
4.6 Consents
and Approvals.
No
Consent is required by any person or entity, including any Authority, in
connection with the execution, delivery and performance of this Agreement by
China-Biotics or the consummation of the transactions contemplated herein,
other
than any Consent which, if not made or obtained, will not, individually or
in
the aggregate, have a Material Adverse Effect on the business of China-Biotics,
and other than any Consents which have been obtained or are required pursuant
to
applicable securities Laws.
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4.7 Valid
Issuance.
The
Exchange Shares to be issued in connection with this Agreement have been duly
authorized and, when issued and delivered and upon the delivery of the
consideration therefor as provided in this Agreement, will be validly issued,
fully paid and non-assessable.
4.8 SEC
Filings; Financial Statements.
(a) All
statements, reports, schedules, forms and other documents required to have
been
filed by China-Biotics with the SEC have been so filed on a timely basis. As
of
the time it was filed with the SEC (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing):
(i) each of the SEC Reports complied in all material respects with the
applicable requirements of the Securities Act or the Securities Exchange Act
of
1934 (the “Exchange
Act”);
and
(ii) none of the SEC Reports contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The
financial statements contained in the SEC Reports: (i) complied as to form
in all material respects with the published rules and regulations of the SEC
applicable thereto; (ii) were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered (except as may be indicated
in
the notes to such financial statements and, in the case of unaudited statements,
as permitted by Form 10-QSB of the SEC); and (iii) fairly present, in all
material respects, the financial position of China-Biotics as of the respective
dates thereof and the results of operations of China-Biotics for the periods
covered thereby. All adjustments considered necessary for a fair presentation
of
such financial statements have been included.
4.9 No
Liabilities.
China-Biotics has no liabilities, obligations, or contingencies (whether
absolute, accrued, or contingent) (each a “Liability”
and
collectively, “Liabilities”)
except
for (i) Liabilities expressly stated in the most recent balance sheet included
in the SEC Reports or the notes thereto and (ii) Liabilities which do not exceed
US$1,000 in the aggregate.
4.10 Assets.
The
sole assets of China-Biotics are (a) 726 shares of Diadem Resources Ltd which
will be transferred to Xxxx Xxxx under the Xxxx Xxxx Agreement and (b) any
cash
in any bank account of China-Biotics. All mining claims previously owned by
China-Biotics related to the Lac Laparre property have been relinquished prior
to the date of this Agreement, and China-Biotics has no further Liabilities
with
respect to such mining claims.
4.11 Real
Property; Leases.
China-Biotics owns no real property and is not party to any lease or sublease
for any real property or personal property. China-Biotics has terminated all
agreements, arrangements and understandings with respect to its previous lease
of office space from Xxxx Xxxx and has no further Liabilities with respect
thereto.
4.12 Litigation.
There
is no legal, administrative, arbitration, or other proceeding, suit, claim
or
action of any nature or investigation, review or audit of any kind, or any
judgment, decree, decision, injunction, writ or order pending, noticed,
scheduled, or, to the knowledge of China-Biotics, threatened or contemplated
by
or against or involving China-Biotics, its assets, properties or business or
its
directors, officers, agents or employees (but only in their capacity as such),
whether at law or in equity, before or by any person or entity or Authority,
or
which questions or challenges the validity of this Agreement or any action
taken
or to be taken by the parties hereto pursuant to this Agreement or in connection
with the transactions contemplated herein.
10
4.13 Contracts
and Commitments; No Default.
China-Biotics is not a party to, nor are any of its assets bound by, any
contract, oral or written (each, an “China-Biotics
Contract”),
that
is not disclosed in the SEC Reports, except for (a) the Xxxx Xxxx Agreement
and
(b) that certain agreement between China-Biotics and Xxxx Xxxxxx dated as of
February 6, 2006 related to the redemption of 1,000,000 shares of Common Stock
owned by Xx. Xxxxxx (the “Xxxx
Xxxxxx Agreement”).
None
of the China-Biotics Contracts contains a provision requiring the consent of
any
party with respect to the consummation of the transactions contemplated by
this
Agreement. China-Biotics is not in breach, violation or default, however
defined, in the performance of any of its obligations under any of the
China-Biotics Contracts, and no facts and circumstances exist which, whether
with the giving of due notice, lapse of time, or both, would constitute such
breach, violation or default thereunder or thereof, and, to the knowledge of
China-Biotics, no other parties thereto are in a breach, violation or default,
however defined, thereunder or thereof, and no facts or circumstances exist
which, whether with the giving of due notice, lapse of time, or both, would
constitute such a breach, violation or default thereunder or
thereof.
4.14 No
Broker or Finder.
No
broker, finder or investment banker is entitled to any brokerage, finders or
other fee or commission in connection with any of the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of China-Biotics.
4.15 Intercompany
and Affiliate Transactions; Insider Interests.
There
are, and during the last three years there have been, no transactions,
agreements or arrangements of any kind, direct or indirect, between
China-Biotics, on the one hand, and any director, officer, employee,
stockholder, or affiliate of China-Biotics, on the other hand, including loans,
guarantees or pledges to, by or for China-Biotics or from, to, by or for any
of
such persons, that are currently in effect, other than the Xxxx Xxxxxx Agreement
and the Xxxx Xxxx Agreement.
4.16 No
Adverse Changes.
There
has been no material adverse change in the business, financial condition,
prospects, assets or operations of China-Biotics since November 30,
2005.
4.17 Compliance
With Law; Permits and Other Operating Rights.
The
assets, properties, business and operations of China-Biotics are and have been
in compliance in all respects with all Laws applicable to China-Biotics’ assets,
properties, business and operations, except where the failure to comply would
not have a Material Adverse Effect. China-Biotics possesses all material
permits, licenses and other authorizations from all Authorities necessary to
permit it to operate its business in the manner in which it presently is
conducted and the consummation of the transactions contemplated by this
Agreement will not prevent China-Biotics from being able to continue to use
such
permits and operating rights. China-Biotics has not received notice of any
violation of any such applicable Law, and is not in default with respect to
any
order, writ, judgment, award, injunction or decree of any
Authority.
4.18 Taxes.
China-Biotics has duly filed when due all tax reports and returns in connection
with and in respect of its business, assets and employees, and has timely paid
and discharged all amounts shown as due thereon. China-Biotics has not received
any notice of any tax deficiency outstanding, proposed or assessed against
or
allocable to it, and has not executed any waiver of any statute of limitations
on the assessment or collection of any tax or executed or filed with any
Authority any agreement now in effect extending the period for assessment or
collection of any taxes against it.
11
4.19 Accuracy
of Information.
No
representation or warranty made by China-Biotics in this Agreement or in any
agreement or certificate furnished or to be furnished to the Company at the
Closing by or on behalf of China-Biotics in connection with any of the
transactions contemplated by this Agreement contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary in order to make the statements herein or therein not misleading
in
light of the circumstances in which they are made, and all of the foregoing
completely and correctly present the information required or purported to be
set
forth herein or therein.
ARTICLE
5
COVENANTS
OF THE PARTIES
5.1 Conduct
of Business.
Except
as contemplated by this Agreement, during the period from the date of this
Agreement to the Closing Date, the Company and China-Biotics shall each conduct
their respective businesses and operations according to their ordinary and
usual
course of business consistent with past practices. Without limiting the
generality of the foregoing, and, except as otherwise expressly provided in
this
Agreement, prior to the Closing Date, without the prior written consent of
the
other party, neither China-Biotics nor the Company shall:
(a) amend
its
certificate of incorporation, articles of association, bylaws or memorandum
of
association, as the case may be, except that China-Biotics may amend and restate
its Certificate of Incorporation in the form previously provided to the
Company;
(b) issue,
reissue, sell, deliver, or pledge, or authorize or propose the issuance,
reissuance, sale, delivery or pledge of shares of capital stock of any class,
or
securities convertible into capital stock of any class, or any rights, warrants
or options to acquire any convertible securities, or capital stock;
(c) adjust,
split, combine, subdivide, reclassify or redeem, purchase or otherwise acquire,
or propose to redeem or purchase or otherwise acquire, any shares of its capital
stock, or any of its other securities, other than, with respect to
China-Biotics, entry into the Xxxx Xxxx Agreement;
(d) declare,
set aside or pay any dividend or distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock, redeem
or
otherwise acquire any shares of its capital stock or other securities, or alter
any term of any of its outstanding securities;
(e) (i) except
as required under any employment agreement existing on the date hereof, increase
in any manner the compensation of any of its directors, officers or other
employees; (ii) pay or agree to pay any pension, retirement allowance or
other employee benefit not required or permitted by any existing plan, agreement
or arrangement to any such director, officer or employee, whether past or
present; or (iii) commit itself to any additional pension, profit-sharing,
bonus, incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other employee
benefit plan, agreement or arrangement, or to any employment agreement or
consulting agreement (arising out of prior employment ) with or for the benefit
of any person, or, except to the extent required to comply with applicable
law,
amend any of such plans or any of such agreements in existence on the date
of
this Agreement;
12
(f) incur,
assume, suffer or become subject to, whether directly or by way of guarantee
or
otherwise, any Liabilities which, individually or in the aggregate, exceed
US$1,000 in the case of China-Biotics or US$300,000 in the case of the
Company;
(g) make
or
enter into any commitment for capital expenditures which, individually or in
the
aggregate, exceed US$1,000 in the case of China-Biotics or US$300,000 in the
case of the Company;
(h) pay,
lend
or advance any amount to, or sell, transfer or lease any properties or assets
(real, personal or mixed, tangible or intangible) to, or enter into any
agreement or arrangement with, any of its officers or directors or any affiliate
or associate of any of its officers or directors; provided that the Company
may
enter into the Xxxx Xxxx Agreement;
(i) terminate,
enter into or amend in any material respect any contract, agreement, lease,
license or commitment, or take any action or omit to take any action which
will
cause a breach, violation or default (however defined) under any contract,
except in the ordinary course of business and consistent with past
practice;
(j) acquire
any of the business or assets of any other person or entity;
(k) permit
any of its current insurance (or reinsurance) policies to be cancelled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than coverage remaining under those cancelled,
terminated or lapsed are in full force and effect;
(l) enter
into other material agreements, commitments or contracts not in the ordinary
course of business or in excess of current requirements;
(m) settle
or
compromise any suit, claim or dispute or threatened suit, claim or dispute;
or
(n) agree
in
writing or otherwise to take any of the foregoing actions or any action which
would make any representation or warranty in this Agreement untrue or incorrect
in any material respect.
5.2 Full
Access.
Throughout the period prior to the Closing, each party shall afford to the
other
and its directors, officers, employees, counsel, accountants, investment
advisors and other authorized representatives and agents, reasonable access
to
the facilities, properties, books and records of the party in order that the
other may have full opportunity to make such investigations as it shall desire
to make of the affairs of the disclosing party. Each party shall furnish such
additional financial and operating data and other information as the other
shall, from time to time, reasonably request, including access to the working
papers of its independent certified public accountants; provided,
however,
that
any such investigation shall not affect or otherwise diminish or obviate in
any
respect any of the representations and warranties of the disclosing
party.
13
5.3 Confidentiality.
Each of
the parties hereto agrees that it shall not use, or permit the use of, any
of
the information relating to any other party hereto furnished to it in connection
with the transactions contemplated herein (“Information”)
in a
manner or for a purpose detrimental to such other party or otherwise than in
connection with the transaction, and that they shall not disclose, divulge,
provide or make accessible (collectively, “Disclose”),
or
permit the Disclosure of, any of the Information to any person or entity, other
than their respective directors, officers, employees, investment advisors,
accountants, sources of financing, counsel and other authorized representatives
and agents, except as may be required by judicial or administrative process
or,
in the opinion of such party’s counsel, by other requirements of Law;
provided,
however,
that
prior to any Disclosure of any Information permitted hereunder, the disclosing
party will first obtain the recipients’ agreement to comply with the provisions
of this Section 5.3 with respect to such information. Notwithstanding the
foregoing, the confidentiality obligations of this Section 5.3 will not apply
after the Closing to any Information furnished to the Company or the Company
Shareholders regarding China-Biotics or its business. The term “Information”
does
not include any information relating to a party that the party disclosing such
information can show: (i) to have been in its possession prior to its
receipt from another party hereto; (ii) to be now or to later become
generally available to the public through no fault of the disclosing party;
(iii) to have been available to the public at the time of its receipt by
the disclosing party; (iv) to have been received separately by the
disclosing party in an unrestricted manner from a person entitled to disclose
such information; or (v) to have been developed independently by the
disclosing party without regard to any information received in connection with
this transaction. Each party hereto agrees to promptly return to the party
from
whom it originally received such information all original and duplicate copies
of written materials containing Information if the Reorganization does not
occur. A party hereto shall be deemed to have satisfied its obligations to
hold
the Information confidential if it exercises the same care as it takes with
respect to its own similar information.
5.4 Filings;
Consents; Removal of Objections.
Subject
to the terms and conditions herein provided, the parties hereto shall use their
best efforts to take or cause to be taken all actions and do or cause to be
done
all things necessary, proper or advisable under applicable Laws to consummate
and make effective, as soon as reasonably practicable, the transactions
contemplated hereby, including without limitation obtaining all Consents of
any
person or entity, whether private or governmental, required in connection with
the consummation of the transactions contemplated herein. In furtherance, and
not in limitation of the foregoing, it is the intent of the parties to
consummate the transactions contemplated herein at the earliest practicable
time, and they respectively agree to exert commercially reasonable efforts
to
that end, including without limitation: (i) the removal or satisfaction, if
possible, of any objections to the validity or legality of the transactions
contemplated herein; and (ii) the satisfaction of the conditions to
consummation of the transactions contemplated hereby.
14
5.5 Further
Assurances; Cooperation; Notification.
(a) Each
party hereto shall, before, at and after Closing, execute and deliver such
instruments and take such other actions as the other party or parties, as the
case may be, may reasonably require in order to carry out the intent of this
Agreement. Without limiting the generality of the foregoing, at any time after
the Closing, at the reasonable request of China-Biotics and without further
consideration, the Company shall execute and deliver such instruments of sale,
transfer, conveyance, assignment and confirmation and take such action as
China-Biotics may reasonably deem necessary or desirable in order to more
effectively consummate the transactions contemplated hereby.
(b) At
all
times from the date hereof until the Closing, each party shall promptly notify
the other in writing of the occurrence of any event which it reasonably believes
will or may result in a failure by such party to satisfy the conditions
specified in this Article 5.
5.6 Public
Announcements.
None of
the parties hereto shall make any public announcement with respect to the
transactions contemplated herein without the prior written consent of
China-Biotics and the Company, which consent shall not be unreasonably withheld
or delayed; provided,
however,
that
any of the parties hereto may at any time make any announcements that are
required by applicable Law so long as the party so required to make an
announcement promptly upon learning of such requirement notifies the other
parties of such requirement and discusses with the other parties in good faith
the exact proposed wording of any such announcement.
5.7 Satisfaction
of Conditions Precedent.
Each
party shall use commercially reasonable efforts to satisfy or cause to be
satisfied all the conditions precedent that are applicable to them, and to
cause
the transactions contemplated by this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all material consents and
authorizations of third parties and to make filings with, and give all notices
to, third parties that may be necessary or reasonably required on its part
in
order to effect the transactions contemplated hereby.
ARTICLE
6
CONDITIONS
TO THE OBLIGATIONS OF CHINA-BIOTICS
Notwithstanding
any other provision of this Agreement to the contrary, the obligation of
China-Biotics to effect the transactions contemplated herein will be subject
to
the satisfaction at or prior to the Closing, or waiver by China-Biotics, of
each
of the following conditions:
6.1 Representations
and Warranties True.
The
representations and warranties of the Company and the Company Shareholders
contained in this Agreement shall be true, complete and accurate in all material
respects as of the date when made and at and as of the Closing Date as though
such representations and warranties were made at and as of such time, except
for
changes specifically permitted or contemplated by this Agreement, and except
insofar as the representations and warranties relate expressly and solely to
a
particular date or period, in which case they shall be true and correct at
the
Closing with respect to such date or period.
15
6.2 Performance.
The
Company shall have performed and complied in all material respects with all
agreements, covenants, obligations and conditions required by this Agreement
to
be performed or complied with by the Company on or prior to the
Closing.
6.3 Required
Approvals and Consents.
(a) All
action required by Law and otherwise to be taken by the directors and
shareholders of the Company to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
shall have been duly and validly taken.
(b) All
Consents of or from all Authorities required hereunder to consummate the
transactions contemplated herein shall have been delivered, made or obtained,
and China-Biotics shall have received copies thereof.
6.4 Agreements
and Documents.
China-Biotics shall have received a certificate of good standing of the Company
from the British Virgin Islands and any other states where the Company is
qualified to do business, as of the most recent practicable date.
6.5 Adverse
Changes.
No
Material Adverse Effect shall have occurred with respect to the Company since
December 31, 2005, except as expressly permitted or contemplated by this
Agreement.
6.6 No
Proceeding or Litigation.
No
suit, action, investigation, inquiry or other proceeding by any Authority or
other person or entity shall have been instituted or threatened which delays
or
questions the validity or legality of the transactions contemplated hereby
or
which, if successfully asserted, would, in the reasonable judgment of
China-Biotics, individually or in the aggregate, otherwise have a Material
Adverse Effect on the Company’s business, financial condition, prospects, assets
or operations or prevent or delay the consummation of the transactions
contemplated by this Agreement.
6.7 Legislation.
No Law
shall have been enacted which prohibits, restricts or delays the consummation
of
the transactions contemplated hereby or any of the conditions to the
consummation of such transaction.
ARTICLE
7
CONDITIONS
TO OBLIGATIONS OF THE COMPANY AND COMPANY SHAREHOLDERS
Notwithstanding
anything in this Agreement to the contrary, the obligations of the Company
and
Company Shareholders to effect the transactions contemplated herein will be
subject to the satisfaction at or prior to the Closing, or waiver by the
Company, of each of the following conditions:
7.1 Representations
and Warranties True.
The
representations and warranties of China-Biotics contained in this Agreement
shall be true, complete and accurate in all material respects as of the date
when made and at and as of the Closing, as though such representations and
warranties were made at and as of such time, except for changes permitted or
contemplated in this Agreement, and except insofar as the representations and
warranties relate expressly and solely to a particular date or period, in which
case they shall be true and correct at the Closing with respect to such date
or
period.
7.2 Performance.
China-Biotics shall have performed and complied in all material respects with
all agreements, covenants, obligations and conditions required by this Agreement
to be performed or complied with by China-Biotics at or prior to the
Closing.
16
7.3 Required
Approvals and Consents.
(a) All
action required by law and otherwise to be taken by the directors and
stockholders of China-Biotics to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken.
(b) All
Consents of or from all Authorities required hereunder to consummate the
transactions contemplated herein, shall have been delivered, made or obtained,
and the Company shall have received copies thereof.
7.4 Agreements
and Documents.
The
Company shall have received the following agreements and documents, each of
which shall be in full force and effect:
(a) a
copy of
the written consent of the board of directors of China-Biotics, executed by
all
such directors, approving the transactions contemplated by this Agreement,
including the issuance of the Exchange Shares and the matters referred to in
Section 7.4(f) of this Agreement;
(c) a
certified list of the record holders of capital stock of China-Biotics as of
the
most recent practicable date evidencing all of the shares of China-Biotics
capital stock issued and outstanding;
(d) a
certificate of good standing of China-Biotics from the State of Delaware and
any
other states where China-Biotics is qualified to do business, as of the most
recent practicable date;
(e) written
resignations of the officers and directors of China-Biotics, effective as of
the
Closing, and evidence that prior to their resignations, the pre-Closing
directors of China-Biotics appointed to the board of directors of China-Biotics
the persons designated by the Company Shareholders, to be effective as of the
Closing;
(f) a
written
agreement between Xxxx Xxxx and China-Biotics (the “Xxxx
Xxxx Agreement”),
in
form and substance satisfactory to the Company, whereby China-Biotics agrees
to
transfer to Xx. Xxxx (i) all of its right, title and interest in and to the
726
shares of stock of Diadem Resources Ltd. that it holds, and (ii) US$5,000,
in
exchange for the assumption by Xx. Xxxx of any and all liabilities associated
therewith and the delivery by Xx. Xxxx to China-Biotics for cancellation of
the
20,000,000 shares of common stock of China-Biotics owned by Xx. Xxxx, the
consummation of which shall be conditioned solely upon, and occur immediately
after, the Closing;
17
(g) a
copy of
a written consent of the board of directors of China-Biotics regarding the
change of the list of authorized banking signatories for all bank accounts
of
China-Biotics to persons nominated by the Company, or evidence reasonably
satisfactory to the Company that all bank accounts of China-Biotics have been
closed with no further Liability thereunder; and
(h) all
books
and records of China-Biotics.
7.5 Adverse
Changes.
No
Material Adverse Effect shall have occurred with respect to China-Biotics since
November 30, 2005, except as expressly permitted or contemplated by this
Agreement.
7.7 No
Proceeding or Litigation.
No
suit, action, investigation, inquiry or other proceeding by any Authority or
other person or entity shall have been instituted or threatened which delays
or
questions the validity or legality of the transactions contemplated hereby
or
which, if successfully asserted, would, in the reasonable judgment of the
Company, individually or in the aggregate, otherwise have a Material Adverse
Effect on China-Biotics’ business, financial condition, prospects, assets or
operations or prevent or delay the consummation of the transactions contemplated
by this Agreement.
7.8 Legislation.
No Law
shall have been enacted which prohibits, restricts or delays the consummation
of
the transactions contemplated hereby or any of the conditions to the
consummation of such transaction.
7.9 No
Assets and Liabilities.
China-Biotics shall have no material Liabilities, assets or operations, other
than any Liabilities or assets, other than those that will be transferred to
Xxxx Xxxx immediately after the Closing as set forth in Section
7.4(f).
7.10 Filings;
Press Releases.
China-Biotics shall have made such filings and press releases, in form and
substance satisfactory to the Company, as may be requested by the Company to
comply with any disclosure requirements under the U.S. securities
regulations.
7.11 Appropriate
Documentation.
The
Company shall have received, in a form and substance reasonably satisfactory
to
Company, dated the Closing Date, copies of all documents, instruments and
writings to evidence the fulfillment of the conditions set forth in this
Article 7 as the Company may reasonably request.
ARTICLE
8
TERMINATION
AND ABANDONMENT
8.1 Termination
by Mutual Consent.
This
Agreement may be terminated at any time prior to the Closing by the written
consent of the Company and China-Biotics.
8.2 Termination
by Either the Company or China-Biotics.
This
Agreement may be terminated by either the Company or China-Biotics if the
Closing is not consummated by March 31, 2006 (provided that the right to
terminate this Agreement under this Section 8.2 shall not be available to
any party whose failure to fulfill any obligation under this Agreement has
been
the cause of or resulted in the failure of the Closing to occur on or before
such date).
18
8.3 Procedure
and Effect of Termination.
In the
event of termination of this Agreement and abandonment of the transactions
contemplated hereby by the Company or China-Biotics pursuant to this
Article 8, written notice thereof shall be given to all other parties and
this Agreement shall terminate and the transactions contemplated hereby shall
be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
(a) Each
of
the parties shall, upon request, redeliver all documents, work papers and other
material of the other parties relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing
the same;
(b) No
party
shall have any liability for a breach of any representation, warranty,
agreement, covenant or the provision of this Agreement, unless such breach
was
due to a willful or bad faith action or omission of such party or any
representative, agent, employee or independent contractor thereof;
and
(c) All
filings, applications and other submissions made pursuant to the terms of this
Agreement shall, to the extent practicable, be withdrawn from the agency or
other person to which made.
ARTICLE
9
MISCELLANEOUS
PROVISIONS
9.1 Expenses.
China-Biotics and the Company shall each bear their own costs and expenses
relating to the transactions contemplated hereby, including fees and expenses
of
legal counsel, accountants, investment bankers, brokers or finders, printers,
copiers, consultants or other representatives for the services used, hired
or
connected with the transactions contemplated hereby.
9.2 Amendment
and Modification.
Subject
to applicable Law, this Agreement may be amended, supplemented or modified
only
in a writing duly executed by all of the parties hereto.
9.3 Waiver
of Compliance; Consents.
Any
failure of a party to comply with any obligation, covenant, agreement or
condition herein may be expressly waived in writing by China-Biotics, on the
one
hand, and the Company and the Company Shareholders, on the other, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No single or partial exercise
of a right or remedy shall preclude any other or further exercise thereof or
of
any other right or remedy hereunder. Whenever this Agreement requires or permits
the consent by or on behalf of a party, such consent shall be given in writing
in the same manner as for waivers of compliance.
9.4 No
Third Party Beneficiaries.
Nothing
in this Agreement shall entitle any person or entity (other than a party hereto
and his, her or its respective successors and assigns permitted hereby) to
any
claim, cause of action, remedy or right of any kind.
19
9.5 Notices.
All
notices, requests, demands and other communications required or permitted
hereunder shall be made in writing and shall be deemed to have been duly given
and effective: (i) on the date of delivery, if delivered personally;
(ii) on the date of transmission, if sent by facsimile, telecopy, telex or
other similar telegraphic communications equipment; (iii) one business day
after
delivery to an overnight delivery courier service for next-business day
delivery; or (iv) on the fifth business day following the date of mailing,
if
sent by registered mail, return receipt requested, postage prepaid, and in
each
case addressed to such party at the following address:
|
If
to the Company or, following the Closing, to
China-Biotics:
Sinosmart
Group Inc.
No.
000 Xxxxxxxx Xxxx
Jinqiao
Export Processing Zone
Pudong,
Shanghai 201206
People’s
Republic of China
Attn:
President
Fax:
00-00-0000-0000
|
With
a copy (which shall not constitute notice) to:
Xxxxxxx
Xxxxx & Xxxxx LLP
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attn:
Xxxx Xxxxxxxx
Fax:
(000) 000-0000
And
to:
Xxxxxxx
Xxxxx & Xxxxx LLP
35/F,
Two International Finance Centre
0
Xxxxxxx Xxxxxx, Xxxxxxx
Xxxx
Xxxx
Attn:
Xx. Xxxxxxxx Xx/ Ms. Xxxxxxx Xxx
Fax:
(000) 0000-0000
|
|
If
to China-Biotics prior to the Closing:
c/o
Chinamerica Fund, LP
0000
Xx. Xxxxxxx Xxxxx
Xxxxxxxxxx,
XX 00000
Attn:
Xx. Xxxx Xxxxxxx
Telephone
No.: 000-000-0000
Facsimile:
000-000-0000
And
to:
Xxxx
Xxxx
1000
000 Xxxxxxx Xxxxxx
Xxxxxxxxx,
XX X0X 0X0
Telephone
No.: 000-000-0000
Facsimile:
604-608-6163
|
With
a copy (which shall not constitute notice) to:
Xxxxxx
& Xxxxxx, LLP
00000
Xxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Attn:
Xx. Xxxx Xxxxxx Xxxxxx
Telephone
No.: 000-000-0000
Facsimile:
000-000-0000
And
to:
Xxxxxxx
& Xxxxxxx
000
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx,
XX 00000
Attn:
Xx. Xxxx Xxxxxxx
Telephone
No.: 000-000-0000
Facsimile:
000-000-0000
|
or
to
such other person or address as such party shall furnish to the other parties
hereto in writing in accordance with this Section 9.5.
If
to a
Company Shareholder, to the appropriate address set forth on the signature
page
hereto or at such other address as such Company Shareholder shall furnish to
the
other parties hereto in writing in accordance with this Section
9.5.
20
9.6 Assignment.
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned (whether voluntarily, involuntarily,
by
operation of law or otherwise) by any of the parties hereto without the prior
written consent of the other parties.
9.7 Governing
Law.
This
Agreement and the legal relations among the parties hereto shall be governed
by
and construed in accordance with the internal substantive laws of Delaware
(without regard to the laws of conflict that might otherwise apply) as to all
matters, including matters of validity, construction, effect, performance and
remedies.
9.8 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
9.9 Headings.
The
table of contents and the headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not constitute a part
hereof.
9.10 Entire
Agreement.
This
Agreement, and any schedules and exhibits hereto and other writings referred
to
in this Agreement or any such exhibit or other writing are part of this
Agreement, together they embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this Agreement
and
together they are referred to as this “Agreement” or the “Agreement.” There are
no restrictions, promises, warranties, agreements, covenants or undertakings,
other than those expressly set forth or referred to in this Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to the transaction or transactions contemplated by this Agreement.
9.11 Remedies
and Injunctive Relief.
It is
expressly agreed among the parties hereto that monetary damages would be
inadequate to compensate a party hereto for any breach by any other party of
its
covenants in Article 5 hereof. Accordingly, the parties agree and
acknowledge that any such violation or threatened violation shall cause
irreparable injury to the other and that, in addition to any other remedies
which may be available, such party shall be entitled to injunctive relief
against the threatened breach of Article 5 hereof or the continuation of
any such breach without the necessity of proving actual damages and may seek
to
specifically enforce the terms thereof.
9.12 Definition
of Material Adverse Effect.
“Material
Adverse Effect”
with
respect to a party means a material adverse change in or effect on the business,
operations, financial condition, properties or liabilities of the party taken
as
a whole; provided, however, that a Material Adverse Effect shall not be deemed
to include (i) changes as a result of the announcement of this transaction,
(ii) events or conditions arising from changes in general business or
economic conditions or (iii) changes in generally accepted accounting
principles.
9.13 Severability.
The
provisions of this Agreement will be deemed severable and the invalidity or
unenforceability of any provision will not affect the validity or enforceability
of the other provisions hereof; provided that if any provision of this
Agreement, as applied to any party hereto or to any circumstance, is adjudged
by
an Authority, arbitrator, or mediator not to be enforceable in accordance with
its terms, the parties hereto agree that the Authority, arbitrator, or mediator
making such determination will have the power to modify the provision in a
manner consistent with its objectives such that it is enforceable, and/or to
delete specific words or phrases, and in its reduced form, such provision will
then be enforceable and will be enforced.
21
9.14 Construction.
The
parties hereto have participated jointly in the negotiation and drafting of
this
Agreement. If an ambiguity or question of intent or interpretation arises,
this
Agreement will be construed as if drafted jointly by the parties hereto and
no
presumption or burden of proof will arise favoring or disfavoring any party
hereto because of the authorship of any provision of this Agreement. The words
“include,” “includes,” and “including” will be deemed to be followed by “without
limitation.” Pronouns in masculine, feminine, and neuter genders will be
construed to include any other gender, and words in the singular form will
be
construed to include the plural and vice versa, unless the context otherwise
requires.
(remainder
of page left intentionally blank)
22
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
| SINOSMART GROUP INC. | CHINA-BIOTICS, INC. | ||
| /s/ Song Jinan | /s/ Xxxx Xxxx | ||
|
Name:
SONG JINAN
Title:
Director
|
Name: XXXX XXXX Title:
President
|
| COMPANY SHAREHOLDERS: | |||
| Song Jinan | Xxx Xxxxxx | ||
| /s/ Song Jinan | /s/ Xxx Xxxxxx | ||
|
Address:
Ningqiao Road, Jingqiao Export Processing Zone,
Pudong, Shanghai 201206, People’s Republic of China Facsimile
No: 00-00-0000-0000
|
Address:
Ningqiao Road, Jingqiao Export Processing Zone,
Pudong, Shanghai 201206, People’s Republic of China Facsimile
No: 00-00-0000-0000
|
| Xxx Xx | Xxxx Xxx Xxxx | ||
| /s/ Xxx Xx | /s/ Xxxx Xxx Xxxx | ||
|
Address:
Ningqiao Road, Jingqiao Export Processing Zone,
Pudong, Shanghai 201206, People’s Republic of China Facsimile
No: 00-00-0000-0000
|
Address:
Xxxx X, 0/X., Xxxxx 0, Xxxxxxxxx Xxxxx, Xxxx Xxxxx,
New Territories, Hong Kong Facsimile
No: 000-0000-0000
|
| Xxxxx Xxxxx | Charming Leader Group Limited | ||
| /s/ Xxxxx Xxxxx | /s/ XXX Xxxx Xxxxx, Xxxxxxxxx | ||
|
Address:
Ningqiao Road, Jingqiao Export Processing Zone,
Pudong, Shanghai 201206, People’s Republic of China Facsimile
No: 00-00-0000-0000
|
Name:
XXX Xxxx Xxxxx, Xxxxxxxxx
Title:
Director
Address:
20F., Xxxxxxx Xxxxxxxx Xxxxxxxx, 0-00 Xxxxxxx Xxxxxx, Xxxx
Xxxx
Facsimile
No: 000-0000-0000
|
| Chinamerica Fund, L.P. | Chinamerica Sino-biotics Acquisition, LLC | ||
|
By:
Chinamerica Partners, LP
Its
General
Partner
By:
Chinamerica Holdings, LLC
Its
General
Partner
|
By:
Chinamerica Holdings, LLC
Its
Manager
|
||
| /s/ Xxxx Xxxxxxx | /s/ Xxxx Xxxxxxx | ||
|
Name:
Xxxx Xxxxxxx
Title:
Manager
Address:
0000 Xx. Xxxxxxx Xxxxx
Xxxxxxxxxx,
Xxxxx 00000
Facsimile
No: (000)
000-0000
|
Name:
Xxxx Xxxxxxx
Title:
Manager
Address:
0000 Xx. Xxxxxxx Xxxxx
Xxxxxxxxxx,
Xxxxx 00000
Facsimile
No: (000)
000-0000
|
| Xxxx Investments LLC | Halter/Xxxx USX China Fund | ||
| Xxxx Asset Managment, LLC, Manager | |||
| /s/ Xxxxxxx X. Xxxxx | /s/ Xxxxxxx Xxxx | ||
|
Name:
Xxxxxxx X. Xxxxx
Title:
Member
Address:5100
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Facsimile
No: 000-000-0000
|
Name:
Xxxxxxx Xxxx
Title: President
Address:
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Facsimile
No:
000-000-0000
|
| BFS US Special Opportunities Trust PLC | Renaissance US Growth Investment Trust PLC | ||
|
By:
XXXX Capital Group, Inc.
Its
Investment Adviser
|
By: XXXX
Capital Group, Inc.
Its Investment Manager
|
||
| /s/ Xxxxxxx Xxxxxxxxx | /s/ Xxxxxxx Xxxxxxxxx | ||
|
Name:
Xxxxxxx Xxxxxxxxx
Title:
President
Address:
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000
Facsimile
No: 000-000-0000
|
Name:
Xxxxxxx Xxxxxxxxx
Title:
President
Address:
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000
Facsimile
No: 000-000-0000
|
| Xxxx Xxxxxx | |||
| /s/ Xxxx Xxxxxx | |||
|
Address:1298
Xxxxxxxx Xxxxxx, Xxxxx X
XxXxxxx,
XX 00000
Phone/Facsimile
No: 000-000-0000
|
EXHIBIT
A
COMPANY
SHAREHOLDERS
|
Company
Shareholder
|
Shares
|
|||
|
Song
Jinan
|
4,545
|
|||
|
Xxx
Xx
|
2,655
|
|||
|
Xxxxx
Xxxxx
|
1,350
|
|||
|
Xxx
Xxxxxx
|
450
|
|||
|
Xxxx
Xxx Xxxx
|
1,000
|
|||
|
Charming
Leader Group Limited
|
1,429
|
|||
|
Chinamerica
Fund, LP
|
423
|
|||
|
Chinamerica
Sino-biotics Acquisition LLC
|
705
|
|||
|
Xxxx
Investments LLC
|
1,307
|
|||
|
Halter/Xxxx
USX China Fund
|
56
|
|||
|
Xxxx
Xxxxxx
|
85
|
|||
|
BFS
US Special Opportunities Trust PLC
|
141
|
|||
|
Renaissance
US Growth Investment Trust PLC
|
141
|
|||
|
Total
|
14,287
|
EXHIBIT
B
EXCHANGE
SHARES
|
Company
Shareholder / Designee
|
Shares
|
|||
|
Song
Jinan
|
5,084,037
|
|||
|
Xxx
Xx
|
2,969,883
|
|||
|
Xxxxx
Xxxxx
|
1,510,110
|
|||
|
Xxx
Xxxxxx
|
503,370
|
|||
|
Xxxx
Xxx Xxxx
To
be issued to Bright Treasure Group Ltd.
|
1,118,600
|
|||
|
Charming
Leader Group Limited
To
be issued as follows:
Charming
Leader Group Limited
Fascinating
Gain Investments Limited
Sharpsville
Investments Limited
Xxx
Xxxx Fai
Po
Ka Xxxx Xxxxxxx
Master
Talent Group Ltd.
Bright
Boom Group Ltd.
|
734,850
734,850
500,650
290,650
221,000
221,000
221,000
|
|||
|
Total
|
2,924,000
|
|||
|
Chinamerica
Fund, LP
|
276,752
|
|||
|
Chinamerica
Sino-biotics Acquisition LLC
|
461,255
|
|||
|
Xxxx
Investments LLC
|
855,240
|
|||
|
Halter/Xxxx
USX China Fund
|
36,900
|
|||
|
Xxxx
Xxxxxx
|
55,351
|
|||
|
BFS
US Special Opportunities Trust PLC
|
92,251
|
|||
|
Renaissance
US Growth Investment Trust PLC
|
92,251
|
|||
|
Total
|
15,980,000
|
|||
