INDEBTEDNESS CONVERSION AGREEMENT
Exhibit
10.2
This Indebtedness Conversion Agreement
(this “Agreement”) is entered into and dated as of
August 27, 2010 by and
between Intellect Goal
Investments Limited
(“Intellect
Goal”) and New Oriental Energy & Chemical
Corp., a Delaware corporation, with headquarters located at Xicheng Industrial
Zone of Luoshan, Xinyang Henan Province, The People’s Republic of China (the “Company”), with reference to the
following:
WHEREAS, Intellect Goal is a former
shareholder of the Company;
WHEREAS, from time to time until October
2008, Intellect Goal paid certain expenses on behalf of the Company (the
“Advances”);
WHEREAS, the aggregate value of such
Advances is $739,899 and has been recorded by the Company as
a related party loan under “Current Liabilities Due to related
parties” on the
Company’s balance sheet;
WHEREAS, the Advances are unsecured,
interest free, and do not
have fixed repayment terms; and
WHEREAS, in lieu of cash payment of the
Advances by the Company to Intellect Goal, the Company desires to issue to
Intellect Goal and Intellect Goal desires to accept 739,899 shares of common stock of the
Company, par value $0.001
(the “Converted
Shares”) for the Advances,
on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, for and in consideration
of the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to
be derived here from, and intending to be legally bound, it is hereby agreed as
follows:
1. Purchase. Subject to the terms and
conditions set forth in this Agreement, the Company hereby agrees to issue and
deliver to Intellect Goal at the Closing (as defined in Paragraph 4 below), and
Intellect Goal hereby agrees to purchase and accept from the Company the
Converted Shares.
2. Consideration. In full consideration for
the Converted Shares, at Closing, Intellect Goal shall cancel in full the
Advances.
3. Representations
And Warranties. The parties represent and
warrant to the other as set forth below. All such representations and
warranties shall survive the Closing.
A. Representations
and Warranties of the Company. The Company represents and
warrants to Intellect Goal
and indemnifies Intellect Goal as follows:
(i)
Organization. The Company is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware, and has the requisite corporate power and
authorization to own its
properties and to carry on its business as now being
conducted.
(ii) Authorization;
Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to issue the Converted Shares in
accordance with the terms hereof. This Agreement has been duly
executed and delivered by the Company, and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’ rights and
remedies.
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(iii)
Issuance of
Securities. The
Converted Shares are duly authorized and, upon issuance in accordance with the
terms hereof, shall be validly issued and free from all taxes, liens and charges
and shall be fully paid and nonassessable with the holders being
entitled to all rights accorded to a holder of common stock of the Company. The
issuance by the Company of the Converted Shares is exempt from registration
under the 1933 Act.
(iv) Disclosures. No representation or
warranty by the Company
contained in this Agreement or any exhibits referenced herein and no document or
certificate furnished or to be furnished to Intellect Goal in connection
herewith, or with the transactions contemplated hereby, contain, or on the
Closing Date will contain, an untrue statement of
a material fact, or omit, or on the Closing Date will omit, to state a material
fact necessary to make the statements of fact contained herein or therein not
misleading.
(vii) The execution and delivery of this
Agreement by the Company
does not, and the performance of this Agreement by the Company will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any governmental body or any other person.
B. Representations, Warranties
and Indemnification of Intellect Goal. Intellect Goal represents
and warrants to the Company and indemnifies the Company as
follows:
(i)
Intellect Goal
is duly organized and validly existing and in good standing under the laws of
the jurisdiction of its
formation.
(ii)
Intellect
Goal has all necessary power and authority to enter into and perform this
Agreement.
(iii) Intellect Goal will acquire the
Converted Shares for its own account for investment and not with a view toward
any resale or distribution
thereof.
(iv) Intellect Goal understands and agrees
that the Converted Shares have not been registered under the Securities Act of
1933, as amended, or under any applicable state securities laws and may not be
offered, sold, transferred, assigned, or hypothecated unless there is an
effective registration statement under such Act or laws covering such units or
the undersigned receives an opinion of counsel, satisfactory to the Company that
such offer, sale, transfer, assignment, or hypothecation is exempt from the registration under
applicable state law.
(v) In entering into this Agreement and the
transactions contemplated herein, Intellect Goal is relying on their own due
diligence investigation and assessment of the Company and not upon any
statements, comments,
representations, or remarks made by the Company. Intellect Goal
acknowledges that the Company has made no statement, comment, representation, or
remark concerning the Company or its business or the advisability of an
investment in the Company.
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(vi) This Agreement constitutes a valid and
binding obligation of Intellect Goal in accordance with the terms hereof, and
the same will not violate any provisions of its organizational
documents.
(vii) The execution of this Agreement and the
consummation of the
transactions contemplated hereby will not result in the breach of any term or
provision of, or constitute a default under, any contract, agreement,
instrument, understanding, judgment or decree to which Intellect Goal is a party
or by which it is bound.
(viii) No representation or warranty by
Intellect Goal contained in this Agreement or any exhibits referenced herein and
no document or certificate furnished or to be furnished to the Company in
connection herewith, or with the transactions contemplated hereby, contain, or on the
Closing Date will contain, an untrue statement of a material fact, or omit, or
on the Closing Date will omit, to state a material fact necessary to make the
statements of fact contained herein or therein not misleading.
(ix) The execution and delivery of this
Agreement by Intellect Goal does not, and the performance of this Agreement by
Intellect Goal will not require any consent, approval, authorization or other
action by, or filing with or notification to, any governmental body or any other
person.
4. Closing.
A.
Closing. The Closing shall take
place on August 27, 2010 (the “Closing Date”) at the offices of the Company, or at
such other time and place as the parties may mutually agree
upon.
B.
Deliveries
by the Company. Within five (5) days of the
later of (i) the Closing Date, or (ii) receipt by the Company of approval of the
proposed issuance of the Converted Shares contemplated in this Agreement from
the Nasdaq Stock Market, the Company shall submit a letter to Corporate Stock Transfer, the
Company’s transfer agent (the “Transfer Agent”), instructing the Transfer Agent to
deliver to Intellect Goal the certificates representing the Converted
Shares.
C.
Deliveries
by Intellect Goal. At the Closing, Intellect
Goal shall deliver to the
Company a written certificate evidencing the irrevocable cancellation of all
indebtedness owed to Intellect Goal under the Advances, including all principal
and interest, if any, accrued and owing thereon.
5. Release of
Liability. Intellect Goal releases the Company,
its successors and assigns, and each of their respective officers, directors,
employees and agents, from any and all claims, liability, losses and damages
whatsoever with respect to any and all payment or other obligations, covenants or commitments of the
Company to or in favor of Intellect Goal arising under or in relation to the
Advances. INTELLECT GOAL HEREBY ACKNOWLEDGES AND AGREES THAT THE
COMPANY’S SUCCESSORS AND ASSIGNS, AND EACH OF
THE COMPANY’S AND ITS SUCCESSORS AND ASSIGNS’ RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS SHALL BE DEEMED TO BE THIRD PARTY BENEFICIARIES OF THE
RELEASE SET FORTH ABOVE IN THIS PARAGRAPH.
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6. Miscellaneous.
A.
Further
Assurances. Each of
Intellect Goal and the Company hereby acknowledges, agrees and covenants
that it shall promptly execute and deliver to any other party hereto any and all
instruments, agreements or other documents that shall be prepared and reasonably
request to be so executed and delivered by such other party, and to take all other action
reasonably requested by any other party hereto that is consistent with the
cancellation and discharge of the Advances and all other express purposes of
this Agreement.
B.
Governing
Law; Attorneys’
Fees. This Agreement
shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law. If any suit, action, or proceeding is brought
to enforce any term or provision of this Agreement, the prevailing
party shall be entitled to recover reasonable
attorneys’ fees, costs, and expenses incurred, in
addition to any other relief to which such party may be legally
entitled.
C.
Construction. The captions and headings
contained herein are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement. Notwithstanding any rule
or maxim of construction to the contrary, any ambiguity or uncertainty in this
Agreement shall not be construed against either party based upon authorship of any of the provisions
hereof.
D.
Entire
Agreement. This Agreement
constitutes the only agreement or understanding between the parties with respect
to the subject mater hereof, and supersedes and is controlling over any and all
prior existing agreements
or communications between the parties. All negotiations, commitments, and
understandings acceptable to both parties have been incorporated into this
Agreement.
E.
Amendment or
Waiver. This
Agreement may by amended by a writing signed by all parties hereto, with respect to any of
the terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance may be extended by a writing signed by the
party or parties for whose benefit the provision is intended.
F.
Counterparts. This instrument may be executed in
counterparts, each of which shall constitute an original but all of which shall
constitute but one and the same instrument. One or more counterparts of this
instrument may be delivered via facsimile, with the intention that they shall have
the same effect as an original counterpart hereof.
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IN WITNESS WHEREOF, the parties to this
Agreement have executed the same as of the date first above
written.
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NEW ORIENTAL ENERGY & CHEMICAL
CORP.
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By:
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/s/ Chen Si
Qiang
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Name: Chen Si
Qiang
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Title: Chairman and
CEO
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INTELLECT GOAL INVESTMENTS
LIMITED
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By:
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/s/ Zeng
Lingpingi
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Name: Zeng
Lingpingi
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Title: Sole Director,
President
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