Exhibit 2.1
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (as further defined below, this
"AGREEMENT"), dated as of March 31, 2008, is made by and among Dalkeith
Investments, Inc., a Delaware corporation ("PUBCO"), Fountainhead Capital
Partners Limited, a entity registered in Jersey (C.I.) ("FHCP"), Yongchen
International Shipping Limited, a company incorporated in Hong Kong
("YONGCHEN"), Hengzhou International Shipping Limited, a company incorporated in
Hong Kong ("HENGZHOU"), Yongzheng International Marine Holdings Co., Ltd., a
British Virgin Islands company (the "PRINCIPAL SHAREHOLDER"), and each of the
other Persons listed on SCHEDULE I attached hereto (together with the Principal
Shareholder, the "SHAREHOLDERS"). Hengzhou and Yongchen each are sometimes
referred to herein as a "COMPANY" and collectively, as the "COMPANIES."
BACKGROUND
WHEREAS, the Principal Shareholder owns 22,786,000 shares of capital
stock of Yongchen (the "YONGCHEN SHARES") which constitute all of the issued and
outstanding shares of Yongchen capital stock;
WHEREAS, the Shareholders own 89,710,000 shares of capital stock of
Hengzhou (the "HENGZHOU SHARES" and, together with the Yongchen Shares, the
"SHARES") which constitute all of the issued and outstanding shares of Hengzhou
capital stock;
WHEREAS, the Shareholders desire to transfer the Shares to Pubco, and
Pubco desires to acquire the Shares from the Shareholders, in exchange for
24,525,994 fully paid, non-assessable shares (the "PUBCO SHARES") of Common
Stock (as defined below) to be issued by Pubco to the Shareholders (or their
designees), all on the terms and conditions set forth herein; and
WHEREAS, after giving effect to the transactions contemplated by this
Agreement, the Pubco Shares (excluding the Additional Shares (as defined below))
shall constitute approximately 95% of the issued and outstanding shares of
Common Stock.
NOW, THEREFORE, 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 I
DEFINITIONS
The terms defined below, whenever used in this Agreement (including in
the Schedules), shall have the respective meanings indicated below for all
purposes of this Agreement. All references herein to an Article, Section,
Exhibit or Schedule are to an Article, Section, Exhibit or Schedule of or to
this Agreement, unless otherwise indicated.
"ACCREDITED INVESTOR" has the meaning set forth in Regulation D under
the Securities Act.
"ADDITIONAL CONSIDERATION" has the meaning set forth in Section 2.2.
"ADDITIONAL SHARES" has the meaning set forth in Section 2.2.
"AFFILIATE" means, with respect to a particular Person (as defined
below), a Person that directly or indirectly, through one or more
intermediaries, Controls (as defined below), is controlled by, or is under
common control with, the first Person.
"AGREEMENT" means this Share Exchange Agreement, including all
Schedules and Exhibits hereto, as this Share Exchange Agreement may be from time
to time amended, modified or supplemented.
"BALANCE SHEET" has the meaning set forth in Section 6.12.
"BALANCE SHEET DATE" has the meaning set forth in Section 6.12.
"CLOSING" has the meaning set forth in Section 3.1.
"CLOSING DATE" has the meaning set forth in Section 3.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMERCIAL SOFTWARE" means packaged commercially available software
programs generally available to the public which (a) have been licensed to Pubco
pursuant to end-user licenses, (b) are used in the Pubco's business but are not
a component of or incorporated into any Pubco product, and (c) with respect to
each such end-user license agreement, have a cumulative cost or license fee for
all software and rights to use thereunder of less than $10,000.
"COMMON STOCK" means Pubco's common stock, par value $.0001 per share.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act.
"COMPANY" and "COMPANIES" have the respective meanings set forth in
the preamble.
"COMPANY BRINGDOWN" has the meaning set forth in Section 10.3.
"COMPANY CONSENTS" has the meaning set forth in Section 10.5.
"CONTROL" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract or credit arrangement,
as trustee or executor, or otherwise.
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"DISTRIBUTOR" means any underwriter, dealer or other Person who
participates, pursuant to a contractual arrangement, in the distribution of
securities offered or sold in reliance on Regulation S.
"DISTRIBUTION COMPLIANCE PERIOD" means the one-year period commencing
on the Closing Date; provided, however, if Pubco is a "reporting issuer" as
defined in Regulation S, it shall mean the six-month period commencing on the
Closing Date.
"ENVIRONMENTAL LAWS" means any Law or other requirement relating to the
environment, natural resources, or public or employee health and safety.
"ENVIRONMENTAL PERMIT" means any license, permit, authorization,
approval, franchise, or right required under any applicable Environmental Law or
Order.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"FHCP BRINGDOWN" has the meaning set forth in Section 11.3.
"FORM 8-K" means a current report on Form 8-K under the Exchange Act
relating to this Agreement and the transactions contemplated hereby and
announcing the Closing, which report (i) includes all information required to be
reported with respect to a "reverse merger" transaction with a public "shell
company" including, without limitation, the information required pursuant to
Item 5.06 of Form 8-K - Change in Shell Company Status, and (ii) is required to
be filed with the Commission within four business days after the Closing.
"GAAP" means, with respect to any Person, United States generally
accepted accounting principles applied on a consistent basis with such Person's
past practices.
"GOVERNMENTAL AUTHORITY" means any federal, national, state,
provincial, municipal or local government, governmental authority, regulatory or
administrative agency, governmental commission, department, board, bureau,
agency or instrumentality, political subdivision, commission, court, tribunal,
official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.
"HUISHENG SHIP CONTRIBUTION AGREEMENT" means the agreement between
Pubco, Hengzhou and Huisheng International Shipping Limited in substantially the
form attached hereto as EXHIBIT B.
"INDEPENDENT DIRECTORS" means Messrs. Hai Lei and Wenge Jiang, and each
other member of the Pubco Board, if any, who qualifies as an "independent
director" as defined in NASDAQ Rule 4200(a)(15).
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"INTELLECTUAL PROPERTY" means any and all U.S. and non-U.S.
intellectual property including, without limitation, patents, patent
applications, patent rights, trademarks, trademark applications, common law
trademarks, Internet domain names, trade names, service marks, service xxxx
applications, common law service marks, copyrights (in both published and
unpublished works, whether registered or unregistered), copyright applications,
franchises, licenses, know-how, trade secrets, technical data, designs, customer
lists, confidential and proprietary information, processes and formulae,
computer software programs or applications, layouts, inventions, development
tools, the goodwill associated with any or all of the above, and all
documentation and media constituting, describing or relating to any or all of
the above, including manuals, memoranda, and records, whether such intellectual
property has been created, applied for or obtained anywhere throughout the
world.
"INVESTOR RIGHTS AGREEMENT" means that certain investor rights
agreement, dated as of the Closing Date, by and between Pubco and FHCP, in
substantially the form attached hereto as EXHIBIT A.
"KNOWLEDGE," "KNOWN," "AWARE" or words of similar import used in this
Agreement shall mean, with respect to a particular Person, the actual knowledge
of such Person, provided that (a) if such Person is the Principal Shareholder or
a Company, it shall mean the actual knowledge of Xx. Xxxxx Xxxxx or Xx. Xxxxxx
Xxxxx, and (b) if such Person is Pubco or FHCP, it shall mean the actual
knowledge of the Managers of FHCP.
"LAW" means any constitution, treaty, statute, law (including common
law), rule, regulation, ordinance, code or Order of any Governmental Authority.
"LIABILITY" means any direct or indirect debt, liability or obligation,
whether known or unknown, absolute, accrued, contingent or otherwise, liquidated
or unliquidated, secured or unsecured, and whether due or to become due.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind, including, without limitation, any conditional sale or
other title retention agreement, any lease in the nature thereof and the filing
of or agreement to give any financing statement under the Uniform Commercial
Code of any jurisdiction, and including any lien or charge arising by Law.
"MATERIAL ADVERSE EFFECT" means, when used with respect to the
Companies or Pubco, as the case may be, any change, effect or circumstance
which, individually or in the aggregate, would reasonably be expected to (a)
have a material adverse effect on the business, assets, financial condition or
results of operations of the Companies (taken as a whole) or Pubco, as the case
may be, or (b) materially impair the ability of the Companies or Pubco, as the
case may be, to perform their obligations under this Agreement or the
Transaction Documents, excluding any change, effect or circumstance resulting
from (i) the announcement, pendency or consummation of the transactions
contemplated by this Agreement, (ii) changes in the United States securities
markets generally, or (iii) changes in general economic, currency exchange rate,
political or regulatory conditions in the industries in which the Companies or
Pubco, as the case may be, operate.
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"MATERIAL CONTRACT" means, with respect to a particular Person, any
contract, instrument, agreement, commitment, obligation, plan, arrangement or
the like, a copy of which would be required to be filed with the Commission as
an exhibit to a registration statement on Form S-1 if such Person was
registering the sale of securities under the Securities Act.
"ORDER" means any award, decision, injunction, judgment, order, decree,
ruling, subpoena, or verdict entered, issued, made, or rendered by any
Governmental Authority.
"ORGANIZATIONAL DOCUMENTS" means (a) the articles or certificate of
incorporation and the by-laws or code of regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the articles or certificate of formation and
operating agreement of a limited liability company; (e) any other document
performing a similar function to the documents specified in clauses (a), (b),
(c) and (d) adopted or filed in connection with the creation, formation or
organization of a Person; and (f) any and all amendments to any of the
foregoing.
"PERMITTED LIENS" means (a) Liens for Taxes not yet due or that are
being contested in good faith by appropriate proceedings, (b) statutory Liens of
landlords and Liens of carriers, warehousemen, mechanics, materialmen, laborers,
employees, suppliers and other Liens imposed by or arising by operation of Law
and created in the ordinary course of business, (c) Liens incurred or deposits
made in the ordinary course of business in connection with worker's
compensation, unemployment insurance or other types of social security, (d)
minor defects of title, easements, rights-of-way, restrictions and other similar
charges or encumbrances not materially detracting from the value of property or
interfering with the ordinary conduct of business, (e) Liens that will not have
a Material Adverse Effect, (f) Liens to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; (g) bonded judgment Liens created
by or resulting from any litigation or legal proceeding; (h) Liens created in
the ordinary course of business in connection with the leasing or financing of
equipment or supplies, and (i) as to leasehold interests, the ownership and
reversion rights of the asset owner.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, Governmental
Authority, other entity or group (as used in Section 13(d) of the Exchange Act).
"PROCEEDING" means an action, claim, demand, suit, proceeding, hearing,
litigation, audit, arbitration, grievance, citation, summons, subpoena, inquiry
or investigation of any nature, whether civil, criminal, regulatory,
investigative, or otherwise, in law or in equity (including actions or
proceedings seeking injunctive relief).
"PUBCO" has the meaning set forth in the preamble.
"PUBCO BOARD" means the Board of Directors of Pubco.
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"PUBCO CONSENTS" has the meaning set forth in Section 11.4.
"PUBCO FINANCIAL STATEMENTS" has the meaning set forth in Section 6.26.
"REGULATION S" means Regulation S under the Securities Act, as the same
may be amended from time to time.
"RULE 144" means Rule 144 under the Securities Act, as the same may be
amended from time to time, or any successor statute.
"SEC DOCUMENTS" has the meaning set forth in Section 6.26.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"SHARE EXCHANGE" has the meaning set forth in Section 2.1.
"SHAREHOLDER BRINGDOWN" has the meaning set forth in Section 10.4.
"SHAREHOLDER INDEMNIFIED PARTY" has the meaning set forth in Section
12.2(a).
"SHARES" has the meaning set forth in the preamble.
"SUBSIDIARY" has the meaning set forth in Section 6.2.
"TAX" or "TAXES" means any and all taxes, charges, fees, levies,
assessments, duties or other amounts payable to any federal, state, local or
foreign taxing authority or agency, including, without limitation, (a) income,
franchise, profits, gross receipts, minimum, alternative minimum, estimated, ad
valorem, value added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, disability, employment, social security,
workers compensation, unemployment compensation, utility, severance, excise,
stamp, windfall profits, transfer and gains taxes, (b) customs, duties, imposts,
charges, levies or other similar assessments of any kind, and (c) interest,
penalties and additions to tax imposed with respect thereto.
"TAX RETURN" means any return, declaration, report, claim for refund or
credit, information return, statement or other similar document filed with any
Governmental Authority with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TRANSACTION DOCUMENTS" means, collectively, the Investor Rights
Agreement, the Ship Contribution Agreements, and all other agreements,
instruments and other documents to be executed and delivered in connection with
the transactions contemplated by this Agreement.
"U.S." means the United States of America.
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"U.S. DOLLARS" or "US$" means the currency of the United States of
America.
"U.S. PERSON" has the meaning set forth in Regulation S under the
Securities Act.
"YONGZHENG SHIP CONTRIBUTION AGREEMENT" means the agreement between
Pubco, Hengzhou and Yongzheng International Shipping Limited in substantially
the form attached hereto as EXHIBIT C.
ARTICLE II
EXCHANGE OF SHARES, ETC.
2.1 SHARE EXCHANGE. At the Closing, each Shareholder shall transfer to
Pubco the Shares set forth opposite the name of such Shareholder on SCHEDULE I,
and Pubco shall issue to each Shareholder the number of Pubco Shares set forth
opposite the name of each Shareholder on SCHEDULE I (the "SHARE EXCHANGE").
2.2 ADDITIONAL CONSIDERATION. On the Closing Date, in consideration
for services rendered including facilitating the Share Exchange, the Principal
Shareholder shall (a) pay US$300,000 to FHCP (the "ADDITIONAL CONSIDERATION"),
and (b) direct the Company to issue to FHCP 939,502 of the Pubco Shares issuable
to the Principal Shareholder as part of the Share Exchange (the "ADDITIONAL
SHARES").
2.3 DIRECTORS OF PUBCO AT CLOSING DATE. On the Closing Date, Xxxxxx X.
Xxxxxxxx, the sole current member of the Pubco Board, shall appoint Xx. Xxxxx
Xxxxx as a member of Pubco Board.
2.4 OFFICERS OF PUBCO AT CLOSING DATE. On the Closing Date, Xxxxxx X.
Xxxxxxxx shall resign from each officer position held at Pubco, and the Pubco
Board shall appoint the following people to serve in the positions set forth
opposite their names below:
Xx. Xxxxx Xxxxx Chief Executive Officer and President
Xx. Xxxxxx Xxxxx Chief Financial Officer
Xx. Xxxxxx Xx Corporate Secretary
ARTICLE III
CLOSING
3.1 CLOSING. Unless this Agreement is terminated pursuant to Section
VIII hereof, the closing of the Share Exchange (the "CLOSING") will occur as
soon as practicable (but not more than five (5) business days) after the date on
which all of the closing conditions set forth in Articles X and XI have been
satisfied or waived (other than conditions with respect to actions the
respective parties will take at the Closing itself), or on such other date as
the Principal Shareholder and Pubco may agree. The date on which the Closing
actually occurs is referred to as the "CLOSING DATE."
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3.2 CLOSING DELIVERIES.
(a) At the Closing, each Shareholder shall deliver, or cause to be
delivered, to Pubco the share certificate(s) evidencing such Shareholder's
Shares, each of which shall be duly endorsed for transfer to Pubco by such
Shareholder or such Shareholder's duly authorized attorney-in-fact (or shall
have attached thereto a blank stock power signed by such Shareholder or such
Shareholder's duly authorized attorney-in-fact).
(b) At the Closing, the Principal Shareholder shall deliver, or
cause to be delivered, the following:
(i) to Pubco, originals, true copies, or written confirmations
of all Company Consents;
(ii) to Pubco, the Shareholder Bringdown;
(iii) intentionally omitted; and
(iv) to FHCP, the Additional Shares and the Additional
Consideration by wire transfer of immediately available funds to an
account or accounts designated by FHCP at least two (2) business days
prior to the Closing Date.
(c) At the Closing, each Company shall deliver, or cause to be
delivered, to Pubco a Company Bringdown with respect to such Company.
(d) At the Closing, Pubco shall deliver, or cause to be delivered,
the following:
(i) to each Shareholder (or its designee(s)), a certificate or
certificates evidencing, in the aggregate, that number of Pubco Shares
set forth opposite the name of such Shareholder on SCHEDULE I, duly
executed and registered in the name of such Shareholder or its
designee(s);
(ii) to the Principal Shareholder, a certificate (the
"SECRETARY'S CERTIFICATE") of the Secretary of Pubco (dated the Closing
Date and in form and substance reasonably satisfactory to the Principal
Shareholder) (A) attaching, and certifying as true, complete, and
correct, the Organizational Documents of Pubco, and (B) attaching (and
certifying as true, complete and correct) a copy of the resolutions
adopted by the Pubco Board authorizing the execution, delivery and
performance of this Agreement and the Transaction Documents to which
Pubco is a party;
(iii) to the Principal Shareholder, a certificate of good
standing for Pubco from the appropriate Governmental Authority dated
not more than five (5) business days prior to the Closing Date;
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(iv) to the Principal Shareholder, the written resignation of
Xxxxxx X. Xxxxxxxx as the sole officer of Pubco, such resignation to be
effective on the Closing Date;
(v) to the Principal Shareholder, Pubco Board resolutions (A)
appointing Xx. Xxxxx Xxxxx to serve as a member of the Pubco Board and
as Pubco's Chief Executive Officer and President, (B) appointing Xx.
Xxxxxx Xxxxx to serve as Chief Financial Officer of Pubco, and (C)
appointing Xx. Xxxxxx Xx to serve as Secretary of Pubco;
(vi) intentionally omitted;
(vii) to the Principal Shareholder, an opinion of Pubco's legal
counsel, which opinion shall be dated the Closing Date, addressed to
the Shareholders, and covering those matters set forth on SCHEDULE
3.2(D)(VII);
(viii) to the Principal Shareholder, a written statement from
Pubco's transfer agent, Corporate Stock Transfer, Inc., regarding the
number of shares of Common Stock issued and outstanding immediately
before and after the Closing;
(ix) to the Principal Shareholder, originals, true copies, or
written confirmations of all Pubco Consents;
(x) to the Principal Shareholder, such other documents and
instruments as the Principal Shareholder or its counsel reasonably
shall deem necessary to consummate the transactions contemplated
hereby; and
(xi) to FHCP, the Investor Rights Agreement duly executed by
Pubco.
(e) At the Closing, FHCP shall execute and deliver to the Principal
Shareholder the FHCP Bringdown.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER
Each Shareholder, severally and not jointly, hereby represents and
warrants to Pubco as follows:
4.1 AUTHORITY; BINDING OBLIGATION. Such Shareholder has the requisite
authority, capacity and power to execute and deliver this Agreement and each of
the Transaction Documents to which such Shareholder is a party, to consummate
the transactions contemplated hereby and thereby, and to perform such
Shareholder's obligations hereunder and thereunder. This Agreement has been, and
at the Closing each of the Transaction Documents to which such Shareholder is a
party will be, duly and validly authorized, executed and delivered by such
Shareholder. This Agreement is, and on the Closing Date each of the Transaction
Documents to
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which such Shareholder is a party will be, the legal, valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, except as such enforcement is limited by general
equitable principles, or by bankruptcy, insolvency and other similar Laws
affecting the enforcement of creditors rights generally.
4.2 NO CONFLICT. Neither the execution or delivery by such Shareholder
of this Agreement or any Transaction Document to which such Shareholder is a
party, nor the consummation or performance by such Shareholder of the
transactions contemplated hereby or thereby, will, directly or indirectly, (a)
contravene, conflict with, or result in a violation of any provision of the
Organizational Documents of such Shareholder (if such Shareholder is not a
natural Person); (b) contravene, conflict with, constitute a default (or an
event or condition which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination or acceleration of, any agreement
or instrument to which such Shareholder is a party or by which the properties or
assets of such Shareholder are bound; or (c) contravene, conflict with, or
result in a violation of, any Law or Order to which such Shareholder, or any of
the properties or assets of such Shareholder, may be subject.
4.3 OWNERSHIP OF SHARES. Such Shareholder owns, of record and
beneficially, has good, valid and indefeasible title to, and has the right to
transfer to Pubco pursuant to this Agreement, those Shares set forth opposite
the name of such Shareholder on SCHEDULE I, free and clear of all Liens. Except
for this Agreement, there are no options, rights, voting trusts, stockholder
agreements or any other contracts or understandings to which such Shareholder is
a party or by which such Shareholder or such Shares are bound with respect to
the issuance, sale, transfer, voting or registration of such Shares.
4.4 LITIGATION. There is no pending Proceeding against such Shareholder
that involves such Shareholder's Shares or that challenges, or would have the
effect of preventing, delaying or making illegal, or otherwise interfering with,
any of the transactions contemplated by this Agreement and, to the Knowledge of
such Shareholder, no such Proceeding has been threatened.
4.5 NO BROKERS OR FINDERS. No Person has or will have any right or
valid claim for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or behalf of such Shareholder, and such
Shareholder will indemnify and hold Pubco harmless against any Liability or
expense arising out of, or in connection with, any such claim.
4.6 INVESTMENT REPRESENTATIONS.
(a) Such Shareholder understands and agrees that the offer and sale
of the Pubco Shares have not been registered under the Securities Act or the
securities Laws of any state of the U.S., and that they are being offered and
sold in reliance upon an exemption from registration afforded under Regulation S
for offers and sales of securities outside the U.S.
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(b) Such Shareholder has sufficient knowledge and experience in
finance, securities, investments and other business matters to be able to
protect such Shareholder's interests in connection with the transactions
contemplated by this Agreement.
(c) Such Shareholder has consulted, to the extent that such
Shareholder has deemed necessary, with such Shareholder's tax, legal, accounting
and financial advisors concerning such Shareholder's investment in the Pubco
Shares.
(d) Such Shareholder understands the various risks of an investment
in the Pubco Shares, and can afford to bear such risks for an indefinite period
of time, including, without limitation, the risk of losing such Shareholder's
entire investment in the Pubco Shares.
(e) Such Shareholder has had access to Pubco's publicly filed
reports with the Commission, and such Shareholder has been afforded the
opportunity to ask questions of and receive answers from Pubco concerning Pubco
and the terms and conditions of the issuance of the Pubco Shares.
(f) Such Shareholder is not relying on any representations or
warranties concerning Pubco made by Pubco or any officer, employee or agent of
Pubco, other than those contained in this Agreement.
(g) Such Shareholder's address set forth on SCHEDULE I to this
Agreement is his principal residence address (or, if such Shareholder is not an
individual, its principal business address).
(h) Such Shareholder understands and acknowledges that the Pubco
Shares have not been recommended by any federal or state securities commission
or regulatory authority, that the foregoing authorities have not confirmed the
accuracy or determined the adequacy of any information concerning Pubco that has
been supplied to such Shareholder, and that any representation to the contrary
is a criminal offense.
(i) At the time of Pubco's offer of the Pubco Shares to such
Shareholder, and the acceptance of such offer, such Shareholder was outside the
United States, and no offer to acquire the Pubco Shares or otherwise to
participate in the transactions contemplated by this Agreement was made to such
Shareholder inside the United States.
(j) Such Shareholder (i) is an Accredited Investor, and (ii) is not
a U.S. Person and is not purchasing Pubco Shares for the account or benefit of
any U.S. Person or with a view towards distribution to any U.S. Person in
violation of the registration requirements of the Securities Act.
(k) Except as disclosed herein, such Shareholder has no present
plan or intention to sell the Pubco Shares in the U.S. or to a U.S. Person at
any predetermined time, has made no predetermined arrangements to sell the Pubco
Shares, and is not acting as a Distributor of the Pubco Shares.
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(l) Neither such Shareholder, nor such Shareholder's Affiliates,
nor any Person acting on behalf of such Shareholder has entered into, has the
intention of entering into, or will enter into any put option, short position or
other similar instrument or position in the U.S. with respect to the Pubco
Shares at any time during the Distribution Compliance Period except in
compliance with the Securities Act.
(m) Such Shareholder is not acquiring the Pubco Shares in a
transaction (or an element of a series of transactions) that is part of any plan
or scheme to evade the registration provisions of the Securities Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EACH COMPANY
Each Company, severally and not jointly, represents and warrants to
Pubco as follows:
5.1 ORGANIZATION AND QUALIFICATION. Such Company is duly organized,
validly existing and in good standing under the laws of Hong Kong, and has all
requisite authority and power (corporate and other) to carry on its business as
presently conducted and to own, hold and operate its properties and assets as
now owned, held and operated, except where the failure to be so organized,
existing and in good standing or to have such authority and power would not have
a Material Adverse Effect.
5.2 SUBSIDIARIES. Such Company does not own, directly or indirectly,
any equity or other ownership interest in any other Person.
5.3 ORGANIZATIONAL DOCUMENTS. A certified translated copy of the
Organizational Documents of such Company has been delivered to Pubco prior to
the execution of this Agreement, and no action has been taken to amend or repeal
such Organizational Documents. Such Company is not in violation or breach of any
of the provisions of its Organizational Documents, except for violations or
breaches that would not have a Material Adverse Effect.
5.4 AUTHORIZATION AND VALIDITY OF THIS AGREEMENT. Such Company has all
requisite authority and power (corporate and other) to execute and deliver this
Agreement and each of the Transaction Documents to which such Company is a
party, to consummate the transactions contemplated hereby and thereby, and to
perform its obligations hereunder and thereunder. The execution, delivery and
performance by such Company of this Agreement and each of the Transaction
Documents to which such Company is a party have been duly authorized by all
necessary corporate action of such Company, and do not require any consent or
approval from its Board of Directors or its shareholders that has not been
validly and lawfully obtained.
5.5 NO VIOLATION. The execution, delivery and performance by such
Company of this Agreement and each of the Transaction Documents to which it is a
party does not, and the consummation of the transactions contemplated hereby and
thereby will not (a) conflict with or violate the Organizational Documents of
such Company, (b) conflict with or violate any Law applicable to such Company or
by which any properties or assets of such Company are bound or
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subject, (c) result in any breach of or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
require payment under, or result in the creation of any Lien on any of the
properties or assets of such Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such Company is a party or by or to which such
Company or any of its properties or assets are bound or subject, or (d) require
such Company to obtain any consent, approval, authorization, waiver, permit,
license, exemption, order, registration, certificate, or declaration from, or
make any filing with, or give any report or notice to, any Person, including,
but not limited to, any Governmental Authority.
5.6 BINDING OBLIGATIONS. Such Company has duly executed and delivered
this Agreement, and at the Closing such Company will have duly executed and
delivered each of the Transaction Documents to which it is a party. This
Agreement is, and on the Closing Date each of the Transaction Documents to which
such Company is a party will be, the legal, valid, and binding obligation of
such Company, enforceable against such Company in accordance with its terms,
except as such enforcement is limited by general equitable principles, or by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors rights generally.
5.7 CAPITALIZATION. The authorized, issued, and outstanding capital
stock of such Company is set forth opposite the name of such Company on SCHEDULE
5.7. The record holder(s) of the outstanding capital stock of such Company is
set forth on SCHEDULE I. Except as set forth on SCHEDULE 5.7, such Company has
no shares of its capital stock or other securities of any class issued, reserved
for issuance, in treasury, or outstanding. There are no outstanding or
authorized options, warrants, purchase agreements, participation agreements,
subscription rights, conversion rights, exchange rights, commitments, or other
securities or contracts that could require such Company to issue, sell or
otherwise cause to become outstanding any of its capital stock or any securities
convertible into, exchangeable for or carrying a right or option to purchase
shares of its capital stock, or to create, authorize, issue, sell or otherwise
cause to become outstanding any new class of its capital stock. Such Company is
not a party to or bound by any stockholders' agreements, voting trusts or
arrangements, registration rights agreements, rights of first refusal or other
contracts pertaining to its capital stock. All issued and outstanding shares of
such Company's capital stock are duly authorized, were validly issued, are fully
paid and nonassessable, and have not been issued in violation of any preemptive
or similar rights. There are no outstanding contractual obligations (contingent
or otherwise) of such Company to retire, repurchase, redeem or otherwise acquire
any outstanding shares of capital stock of, or other ownership interests in,
such Company or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any other Person.
5.8 COMPLIANCE WITH LAWS. The business and operations of such Company
have been conducted, and are being conducted, in compliance with all Laws and
Orders applicable to such Company, except where the failure to so comply would
not have a Material Adverse Effect. Such Company has not received notice of any
violation (or any Proceeding involving an allegation of any violation) of any
applicable Law or Order by or affecting such Company (other than a violation
that would not have a Material Adverse Effect) and, to the Knowledge of such
Company, no Proceeding involving any such allegation of violation is threatened
or
13
contemplated. Such Company is not in violation of, or (with or without notice or
lapse of time or both) in default under, or in breach of, any term or provision
of its Organizational Documents or of any Material Contract of such Company,
except where such violation, default, or breach would not have a Material
Adverse Effect. To the Knowledge of such Company, no other party to any Material
Contract of such Company is (with or without notice or lapse of time or both) in
default thereunder or in breach of any term thereof.
5.9 LITIGATION. There is no pending Proceeding that has been commenced
against such Company that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the transactions
contemplated in this Agreement. To such Company's Knowledge, no such Proceeding
has been threatened.
5.10 NO BROKERS OR FINDERS. No Person has or will have any right or
valid claim for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of such Company.
5.11 TITLE TO AND CONDITION OF PROPERTIES. Such Company owns (with good
and marketable title in the case of real property), or holds under valid leases
or other rights to use, all real property, plants, machinery and equipment
necessary for the conduct of the business of such Company as presently
conducted, free and clear of all Liens, except Permitted Liens. To the Knowledge
of such Company, all material items of tangible personal property used in the
operation of its business are, in the aggregate, in satisfactory condition and
repair, ordinary wear and tear excepted, so as to operate such business in the
manner in which it is now operated by such Company.
5.12 FINANCIAL STATEMENTS. Such Company has furnished FHCP with true
and complete copies of its audited financial statements for the years ended
December 31, 2007 and 2006 (with respect to such Company, the "FINANCIAL
STATEMENTS"). The Financial Statements were prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto), and fairly present in all material respects the
financial position of such Company as at the dates thereof and the results of
its operations for the periods then ended. To such Company's Knowledge, the
Companies, taken as a whole, have not suffered a material adverse change in
their financial position or results of operations for the period commencing
January 1, 2008 and ending on the Closing Date.
5.13 INSURANCE. Such Company has delivered to Pubco true, complete, and
correct copies of all material insurance policies covering each vessel owned by
such Company. To such Company's Knowledge, all such policies are in full force
and effect, and all premiums due thereon have been paid.
5.14 MATERIAL CONTRACTS. Such Company has delivered to Pubco true,
complete, and correct copies of each time charter agreement currently in effect
pursuant to which it in-charters or out-charters a vessel. To such Company's
Knowledge, (a) each such agreement is valid, binding, and enforceable in
accordance with it terms, and (b) there exists no material breach or default
under any such agreement on the part of any party thereto.
14
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PUBCO
Pubco represents and warrants to the Shareholders and each Company as
follows:
6.1 ORGANIZATION AND QUALIFICATION. Pubco is duly organized, validly
existing and in good standing under the laws of Delaware, and has all requisite
corporate authority and power to carry on its business as presently conducted
and to own, hold and operate its properties and assets as now owned, held and
operated by it. Pubco is duly qualified, licensed or domesticated as a foreign
corporation and in good standing in each jurisdiction in which the nature of the
activities conducted by it or the properties owned, held or operated by it makes
such qualification, licensing or domestication necessary.
6.2 SUBSIDIARIES. Except for Applied Medical, Incorporated, a Texas
corporation that is wholly-owned by Pubco, has been inactive for more than ten
years, and whose charter was forfeited in 1988 (the "SUBSIDIARY"), Pubco does
not (a) own of record or beneficially, directly or indirectly (or have any
obligation, right or option to acquire) (i) any shares of capital stock or
securities exercisable for or convertible into capital stock of any other
Person, or (ii) any participating, proprietary, or equity interest in any
partnership, limited liability company, joint venture or other Person, or (b)
Control, directly or indirectly, any other Person. The Subsidiary has been
inactive for at least the six-year period immediately preceding the Closing
Date, and has no Liabilities.
6.3 ORGANIZATIONAL DOCUMENTS. True, correct and complete copies of the
Organizational Documents of Pubco have been delivered to the Principal
Shareholder prior to the execution of this Agreement, and no action has been
taken to amend or repeal such Organizational Documents since such date of
delivery. Pubco is not in violation or breach of any of the provisions of its
Organizational Documents.
6.4 AUTHORIZATION. Pubco has all requisite authority and power
(corporate and other) to execute and deliver this Agreement and each of the
Transaction Documents to which Pubco is a party, to consummate the transactions
contemplated hereby and thereby, and to perform its obligations hereunder and
thereunder. The execution, delivery and performance by Pubco of this Agreement
and each of the Transaction Documents to which Pubco is a party have been duly
authorized by all necessary Pubco corporate and shareholder action, and do not
require any Pubco Board or shareholder consent or approval that has not been
validly and lawfully obtained.
6.5 NO VIOLATION. The execution, delivery and performance by Pubco of
this Agreement and each of the Transaction Documents to which it is a party does
not, and the consummation of the transactions contemplated hereby and thereby
will not (a) conflict with or violate the Organizational Documents of Pubco, (b)
conflict with or violate any Law or Order applicable to Pubco or by which any
properties or assets of Pubco are bound or subject, (c) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment under, or result
in the creation of any Lien on any of the properties or assets of Pubco pursuant
to, any note, bond, mortgage, indenture, contract,
15
agreement, lease, license, permit, franchise or other instrument or obligation
to which Pubco is a party or by or to which Pubco or any of its properties or
assets are bound or subject, or (d) except as set forth on SCHEDULE 6.5, require
Pubco to obtain any consent, approval, authorization, waiver, permit, license,
exemption, order, registration, certificate, or declaration from, or make any
filing with, or give any report or notice to, any Person, including, but not
limited to, any Governmental Authority.
6.6 BINDING OBLIGATIONS. Pubco has duly executed and delivered this
Agreement, and at the Closing Pubco will have duly executed and delivered each
of the Transaction Documents to which it is a party. This Agreement is, and on
the Closing Date each of the Transaction Documents to which Pubco is a party
will be, the legal, valid, and binding obligation of Pubco, enforceable against
Pubco in accordance with its terms, except as such enforcement is limited by
general equitable principles, or by bankruptcy, insolvency and other similar
Laws affecting the enforcement of creditors rights generally.
6.7 SECURITIES LAWS. Assuming the accuracy of the representations and
warranties of each Shareholder contained in Section 4.6, the issuance of the
Pubco Shares pursuant to this Agreement will be in accordance with all
applicable securities Laws.
6.8 CAPITALIZATION.
(a) The authorized capital stock of Pubco consists of 100,000,000
shares of Common Stock, of which 107,208 shares are issued and outstanding, and
10,000,000 shares of blank share preferred stock, par value $0.0001 per share,
none of which is issued or outstanding. All issued and outstanding shares of
Common Stock are duly authorized, validly issued, fully paid and nonassessable,
and have not been issued in violation of any preemptive or similar rights. At
the Closing Date, Pubco will have sufficient authorized and unissued Common
Stock to consummate the transactions contemplated hereby. There are no
outstanding options, warrants, calls, purchase agreements, participation
agreements, subscription rights, conversion rights, exchange rights,
commitments, or other securities or contracts that could require Pubco to issue,
sell or otherwise cause to become outstanding any of its capital stock or any
securities convertible into, exchangeable for or carrying a right or option to
purchase shares of capital stock, or to create, authorize, issue, sell or
otherwise cause to become outstanding any new class of capital stock. Except for
the Investor Rights Agreement, Pubco is not a party to or bound by (and to
Pubco's Knowledge there does not exist) any stockholders' agreements, voting
trusts or arrangements, registration rights agreements, rights of first refusal
or other contracts pertaining to the capital stock of Pubco. All issued and
outstanding shares of Common Stock have been issued in compliance with all
applicable U.S. federal and state securities Laws.
(b) There are no outstanding contractual obligations (contingent or
otherwise) of Pubco to retire, repurchase, redeem or otherwise acquire any
outstanding shares of capital stock of, or other ownership interests in, Pubco,
or to provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any other Person.
(c) Upon issuance in accordance with the terms of this Agreement,
the Pubco Shares will have been validly issued and fully paid, will be
nonassessable, will be free of
16
preemptive rights, and will be free and clear of all Liens and restrictions,
other than Liens created by the Shareholders and restrictions on transfer
imposed by this Agreement and the Securities Act.
6.9 COMPLIANCE WITH LAWS. Pubco and its assets and operations currently
are, and to Pubco's Knowledge have at all times been, in compliance with all
Laws and Orders applicable to Pubco or by which or to which any of its assets
are bound or subject including, without limitation, the Xxxxxxxx-Xxxxx Act of
2002. Since August 18, 2006, Pubco has not received notification of any
violation (or any Proceeding involving an allegation of any violation) of any
Law or Order applicable to or affecting Pubco, its assets, or its operations,
and to Pubco's Knowledge, no such Proceeding is threatened or contemplated.
Pubco is not subject to any obligation or restriction of any kind or character
that prohibits Pubco from entering into this Agreement or would prevent or
restrict its performance under, or compliance, with all or any part of this
Agreement or the consummation of the transactions contemplated hereby.
6.10 LITIGATION. There is no Proceeding pending or, to the Knowledge of
Pubco, threatened against or affecting Pubco or any of Pubco's properties,
assets, business or employees. There is no Proceeding pending or, to the
Knowledge of Pubco, threatened against or affecting Pubco with respect to the
validity of this Agreement, or that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement. To the Knowledge of Pubco, there is
no fact that might result in or form the basis for any such Proceeding. Pubco is
not subject to any Orders.
6.11 NO BROKERS OR FINDERS. No Person has or will have any right or
valid claim for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of Pubco or FHCP.
6.12 ABSENCE OF UNDISCLOSED LIABILITIES. Pubco does not have any
Liabilities, except (a) Liabilities fully reflected in the most recent balance
sheet included in the Pubco Financial Statements filed with the Commission prior
to the date hereof (the "BALANCE SHEET"), and (b) Liabilities incurred in the
ordinary course of business and consistent with past practice since the date of
the Balance Sheet (the "BALANCE SHEET DATE"). All of the Liabilities referred to
in (a) and (b) above will have been indefeasibly satisfied or cancelled by Pubco
or FHCP prior to the Closing, so that at the Closing Pubco will have no
Liabilities.
6.13 ABSENCE OF CHANGES. Except as set forth on SCHEDULE 6.13 or in an
SEC Document filed with the Commission prior to the date hereof, since the
Balance Sheet Date Pubco has conducted its business in the usual and ordinary
course of business consistent with past practice and has not:
(a) suffered or experienced any change in or affecting its
condition (financial or otherwise), properties, assets, Liabilities, business,
operations, results of operations or prospects, other than changes, events or
conditions in the usual and ordinary course of its business, none of which,
individually or in the aggregate, were material;
17
(b) made any loans or advances to any Person, other than travel
advances and reimbursement of expenses made to employees, officers and directors
in the ordinary course of business;
(c) created or permitted to exist any Lien on any property or
asset of Pubco;
(d) issued any stock, bonds or other securities or any rights,
options or warrants with respect thereto;
(e) altered the term of any of its outstanding securities or made
any change in its outstanding shares of capital stock or its capitalization,
whether by reason of reclassification, recapitalization, stock split,
combination, exchange or readjustment of shares, stock dividend or otherwise;
(f) declared, set aside, made or paid any dividend or other
distribution to any of its stockholders;
(g) terminated or modified any Material Contract, except for
termination upon expiration in accordance with the terms thereof;
(h) released, waived or cancelled any claims or rights relating to
or affecting Pubco, or instituted or settled any Proceeding;
(i) paid, discharged or satisfied any claim or Liability, except
for Liabilities incurred in the ordinary course of business;
(j) created, incurred, assumed or otherwise become liable for any
Liabilities that individually, or in the aggregate, exceed $10,000 (all of which
shall have been indefeasibly paid or satisfied in full prior to the Closing);
(k) guaranteed or endorsed any obligation or net worth of any
Person;
(l) acquired the capital stock or other securities or any
ownership interest in, or substantially all of the assets of, any other Person;
(m) changed its method of accounting or the accounting principles
or practices utilized in the preparation of its financial statements, other than
as required by GAAP;
(n) made any Tax election inconsistent with past practice, settled
or compromised any material Tax Liability, or consented to any extension or
waiver of any limitation period with respect to Taxes;
(o) sold, leased, licensed, encumbered or otherwise disposed of
any properties or assets except in the ordinary course of business consistent
with past practice;
18
(p) adopted or amended any employee stock purchase or employee
stock option plan, or entered into any employment contract or collective
bargaining agreement, paid any special bonus or special remuneration to any
director or employee, or increased the salaries, wage rates, compensation or
other fringe benefits (including rights to severance or indemnification) of its
directors, officers, employees or consultants except, in each case, as may be
required by applicable Law;
(q) except as required by applicable Law, entered into, adopted or
amended any employee pension benefit plan or any employment or severance
agreement or arrangement, granted any severance or termination pay to any
officer or employee, or adopted any new severance plan;
(r) amended its Organizational Documents;
(s) purchased, redeemed, or otherwise acquired any shares of its
capital stock; or
(t) entered into any agreement, or otherwise obligated itself, to
do any of the foregoing.
6.14 MATERIAL CONTRACTS. SCHEDULE 6.14 contains a true, complete, and
correct list of all of Pubco's Material Contracts, true, complete and correct
copies of which (and written summaries of the material terms of each oral
Material Contract) have been provided by Pubco to the Principal Shareholder.
Each such Material Contract is a valid and binding agreement of Pubco, and is in
full force and effect. Pubco is not in breach or default of any such Material
Contract and, to the Knowledge of Pubco, no other party to any such Material
Contract is in breach or default thereof. No event has occurred or circumstance
exists that (with or without notice or lapse of time) would (a) contravene,
conflict with or result in a violation or breach of, or become a default or
event of default under, any provision of any such Material Contract, or (b)
permit Pubco or any other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify any such Material Contract. Pubco has not received notice of
the pending or threatened cancellation, revocation or termination of any such
Material Contract. There are no renegotiations of, or attempts to renegotiate,
or outstanding rights to renegotiate any material terms of any such Material
Contract.
6.15 EMPLOYEES. Other than Xxxxxx X. Xxxxxxxx, Pubco does not have any
officers, directors or employees. No director, officer or employee of Pubco is a
party to, or is otherwise bound by, any contract (including any confidentiality,
non-competition or proprietary rights agreement) with any other Person that in
any way adversely affects or will affect (a) the performance of his or her
duties as a director, officer or employee of Pubco or (b) the ability of Pubco
to conduct its business. Each employee of Pubco is employed on an at-will basis,
and Pubco does not have any contract with any of its employees which would
interfere with its ability to discharge its employees. Pubco is not a party to
any collective bargaining or other labor union contract, and no collective
bargaining agreement is being negotiated by Pubco.
6.16 TAXES.
19
(a) All Tax Returns which are required to be filed on or before
the Closing Date by Pubco have been duly and timely filed. All items required to
be included in each such Tax Return including, without limitation, items of
income, gain, loss, deduction and credit, have been so included, and all
information provided in each such Tax Return is true, complete, and correct. All
Taxes of Pubco which have become due with respect to the period covered by each
such Tax Return (whether or not shown on each such Tax Return) have been timely
paid in full. Adequate provision for unpaid Taxes of Pubco which are not yet due
and payable have been established on the Balance Sheet. All Taxes which Pubco
has been required to collect or withhold have been duly collected or withheld
and, to the extent required when due, have been or will be duly and timely paid
to the proper Taxing authority. No penalty, interest or other charge is due with
respect to the late filing of any Tax Return of Pubco or late payment of any
such Tax.
(b) There are no Tax Returns of Pubco with extended or waived
statutes of limitations that have not been audited by the applicable
Governmental Authority.
(c) There is not in force any extension of time with respect to
the due date for the filing of any Tax Return of Pubco, or any waiver or
agreement for any extension of time for the assessment, collection or payment of
any Tax of or with respect to Pubco.
(d) Pubco will not be required to include any amount in income for
any taxable period beginning after the Closing Date as a result of a change in
accounting method for any taxable period ending on or before the Closing Date or
pursuant to any agreement with any Tax authority with respect to any such
taxable period.
(e) There is no pending or, to Pubco's Knowledge, threatened
audit, examination, investigation, dispute, Proceeding or claim with respect to
or against Pubco for or with respect to any Taxes of Pubco, and Pubco has not
received notice of any such audit, examination, investigation, dispute,
Proceeding or claim. No assessment, deficiency or adjustment has been assessed
or proposed with respect to any Tax Return of Pubco; and there is no reasonable
basis on which any such claim for Taxes can be asserted against Pubco.
(f) Pubco has delivered to the Principal Shareholder true, correct
and complete copies of all Tax Returns and examination reports and statements of
deficiencies assessed or asserted against or agreed to by Pubco, if any, for
each of the last three years and any and all correspondence with respect to the
foregoing.
(g) Pubco is not, and has not been, a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code at any
time during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
(h) Pubco is not, and has not been, a party to any Tax allocation
or sharing agreement.
(i) Pubco is not a party to any agreement, contract or arrangement
for services that would result, individually or in the aggregate, in the payment
of any amount that would not be deductible by reason of Section 162(m), 280G or
404 of the Code. Pubco is not a "consenting
20
corporation" within the meaning of Section 341(f) of the Code. Pubco does not
have any "tax-exempt bond financed property" or "tax-exempt use property" within
the meaning of Section 168(g) or (h), respectively, of the Code. Pubco does not
have any outstanding closing agreement, ruling request, request for consent to
change a method of accounting, subpoena or request for information to or from a
Governmental Authority in connection with any Tax matter. During the last two
years, Pubco has not engaged in any exchange with a related party (within the
meaning of Section 1031(f) of the Code) under which gain realized was not
recognized by reason of Section 1031 of the Code. Pubco is not a party to any
reportable transaction within the meaning of Treasury Regulation Section
1.6011-4.
6.17 TITLE TO ASSETS. Except as set forth on SCHEDULE 6.17, Pubco does
not own any real or personal property or hold any leaseholds or other interests
in any real or personal property. Pubco has good and marketable title to, or a
valid leasehold interest in, as the case may be, all properties and assets set
forth on SCHEDULE 6.17, free and clear of all Liens.
6.18 ENVIRONMENTAL MATTERS. Pubco is, and has at all times been, in
compliance with all Environmental Laws applicable to Pubco. There are no
Proceedings pending or, to Pubco's Knowledge, threatened against Pubco alleging
the violation of any Environmental Law or Environmental Permit applicable to
Pubco or alleging that Pubco is a potentially responsible party for any
environmental site contamination. Neither this Agreement nor the consummation of
the transactions contemplated by this Agreement shall impose any obligations to
notify or obtain the consent of any Governmental Authority or third Persons
under any Environmental Laws applicable to Pubco.
6.19 LICENSES. Pubco possesses from the appropriate Governmental
Authorities all licenses, permits, authorizations, approvals, franchises and
rights that are necessary for Pubco to engage in its business as currently
conducted, and to permit Pubco to own and use its properties and assets in the
manner in which it currently owns and uses such properties and assets
(collectively, the "PUBCO PERMITS"). The Pubco Permits are valid and in full
force and effect. No event has occurred or circumstance exists that may (with or
without notice or lapse of time) (a) constitute or result, directly or
indirectly, in a violation of, or a failure to comply with, any Pubco Permit, or
(b) result, directly or indirectly, in the revocation, withdrawal, suspension,
cancellation or termination of, or any modification to, any Pubco Permit. Pubco
has not received notice from any Governmental Authority or any other Person
regarding (aa) any actual, alleged, possible or potential contravention of any
Pubco Permit, (bb) any actual, proposed, possible or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to, any
Pubco Permit, or (cc) the need to obtain any additional Pubco Permit. All
applications required to have been filed for the renewal of the Pubco Permits
have been duly filed on a timely basis with the appropriate Persons, and all
other filings required to have been made with respect to the Pubco Permits have
been duly made on a timely basis with the appropriate Persons. All Pubco Permits
are renewable by their terms in the ordinary course of business without the need
to comply with any special qualification procedures or to pay any amounts other
than routine fees or similar charges, all of which have, to the extent due, been
duly paid.
6.20 INTERESTED PARTY TRANSACTIONS. Except as set forth in SCHEDULE
6.20, no Pubco officer or director, and to Pubco's Knowledge, no Person Known to
Pubco to be the record or
21
beneficial owner in excess of 5% of the Common Stock (a "5% HOLDER") or any
Affiliate or "associate" (as such term is defined in Rule 405 under the
Securities Act) of any such officer, director, or 5% Holder (a) has, directly or
indirectly, an interest in any Person which (i) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by
Pubco, or (ii) purchases any goods or services from Pubco, or sells or furnishes
any goods or services to Pubco, (b) has, either directly or indirectly, a
beneficial interest in any contract or agreement to which Pubco is a party or by
which it may be bound or affected, or (c) is a party adverse to Pubco or has a
material interest adverse to Pubco in any pending legal proceeding.
6.21 GOVERNMENTAL INQUIRIES. Pubco has provided to the Principal
Shareholder a copy of each material written inspection report, questionnaire,
inquiry, demand or request for information received by Pubco from any
Governmental Authority since August 18, 2006, and Pubco's response thereto, and
each material written statement, report or other document filed by Pubco with
any Governmental Authority since August 18, 2006. Neither Pubco nor any of its
directors or officers currently is the subject of any investigation, inquiry or
Proceeding before the Commission or any state securities commission or
administrative agency.
6.22 BANK ACCOUNTS AND SAFE DEPOSIT BOXES. SCHEDULE 6.22 discloses the
title of each bank or other deposit or financial account, and each lock box and
safety deposit box used by Pubco, the financial institution at which that
account or box is maintained, and the names of the persons authorized to draw
against the account or otherwise have access to the account or box, as the case
may be. To Pubco's Knowledge, other than the bank accounts and safe deposit
boxes set forth in SCHEDULE 6.22, no other bank accounts or safe deposit boxes
exist.
6.23 INTELLECTUAL PROPERTY.
(a) Pubco (i) does not own or use any patented or registered
Intellectual Property, and has not filed any patent applications or other
applications for registration of Intellectual Property that are pending; (ii)
does not own or use any domain names; (iii) does not own or use any computer
software (other than Commercial Software); and (iv) is not a part to any
licenses or similar agreements or arrangements, either as licensee or licensor,
for Intellectual Property.
(b) No claim, demand, or notice by any Person has been made or
given (and there is no reasonable basis therefor) and no Proceeding is pending
or threatened (and there is no reasonable basis therefor) (i) asserting that
Pubco is infringing upon the Intellectual Property of any other Person
(including, without limitation, demanding or requesting that Pubco license
rights from a third party), or (ii) asserting that Pubco is required to pay any
royalty, license fee, charge or other amount with regard to any Intellectual
Property.
(c) Pubco has not infringed, misappropriated or otherwise
conflicted with any Intellectual Property of any third party, Pubco is not aware
of any infringement, misappropriation or conflict that shall occur as a result
of the continued operation of its business as currently conducted, and Pubco is
not aware of any infringement or misappropriation of any of its Intellectual
Property by any third party.
22
6.24 PUBLIC UTILITY HOLDING COMPANY ACT AND INVESTMENT COMPANY ACT
STATUS. Pubco is not a "holding company" or a "public utility company" as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
Pubco is not, and as a result of and immediately upon the Closing will not be,
an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
6.25 BOOKS AND RECORD INTERNAL ACCOUNTING CONTROLS. The books and
records of Pubco accurately reflect in all material respects the information
relating to the business of Pubco, the location and collection of its assets,
and the nature of all transactions giving rise to the obligations or accounts
receivable of Pubco. Pubco maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (a) transactions are executed in
accordance with management's general or specific authorizations, (b)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (c)
access to assets is permitted only in accordance with management's general or
specific authorization, and (d) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
6.26 SEC DOCUMENTS; FINANCIAL STATEMENTS. Pubco has filed all reports
required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the five (5) years preceding the date hereof (or
such shorter period as Pubco was required by Law to file such material)
(together with all such reports filed by Pubco after the date hereof but prior
to the Closing Date, the "SEC DOCUMENTS"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Documents, when filed,
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 statement
therein, in light of the circumstances under which they were made, not
misleading. All Material Contracts of Pubco have been appropriately filed as
exhibits to the SEC Documents as and to the extent required under the Exchange
Act. The financial statements of Pubco included in the SEC Documents (the "PUBCO
FINANCIAL STATEMENTS") comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing, were prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited statements as
permitted by Form 10-Q or Form 10-QSB, as the case may be, of the Commission),
and fairly present in all material respects (subject in the case of unaudited
statements, to normal, recurring audit adjustments) the financial position of
Pubco as at the dates thereof and the results of its operations and cash flows
for the periods then ended. No event or circumstance has occurred or exists with
respect to Pubco or its business, properties, prospects, operations or financial
condition which, under applicable Law, requires public disclosure or
announcement by Pubco but which has not been so publicly announced or disclosed.
6.27 STOCK OPTION PLANS; EMPLOYEE BENEFITS. Except as set forth on
SCHEDULE 6.27, (a) Pubco has no stock option plans providing for the grant by
Pubco of stock options to directors, officers, employees, consultants, or
others, (b) Pubco has no employee benefit plans or arrangements covering its
present or former employees or providing benefits to such persons in
23
respect of services provided to or for Pubco, (c) Pubco has not, through any
trade or business, whether or not incorporated, established or maintained, or
made any contributions to, an "employee pension benefit plan" (as defined in
Section 3 of ERISA), (d) neither the consummation of the transactions
contemplated hereby alone, nor in combination with another event, with respect
to each director, officer, employee and consultant of Pubco, will result in (i)
any payment (including, without limitation, severance, unemployment compensation
or bonus payments) becoming due from Pubco, (ii) any increase in the amount of
compensation or benefits payable to any such individual, or (iii) any
acceleration of the vesting or timing of payment of compensation payable to any
such individual, (e) no agreement, arrangement or other contract of Pubco
provides benefits or payments contingent upon, triggered by, or increased as a
result of a change in the ownership or effective control of Pubco, and (f) the
execution and delivery of this Agreement and the consummation of the Share
Exchange will not involve any transaction which is subject to the prohibitions
of Section 406 of ERISA, or in connection with which a tax could be imposed
pursuant to Section 4975 of the Code.
6.28 INVESTMENT ACQUISITION. Pubco is acquiring the Shares for
investment and not with a view to the sale or distribution thereof.
6.29 MONEY LAUNDERING LAWS. The operations of Pubco are, and have been
conducted at all times, in compliance with applicable financial recordkeeping
and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, the money laundering statutes of all U.S. and non-U.S.
jurisdictions, the rules and regulations thereunder and any related or similar
Laws issued, administered or enforced by any Governmental Authority
(collectively, the "MONEY LAUNDERING LAWS"), and no Proceeding involving Pubco
with respect to the Money Laundering Laws is pending or, to the Knowledge of
Pubco, threatened.
6.30 FOREIGN CORRUPT PRACTICES. Neither Pubco, nor to Pubco's
Knowledge, any director, officer, agent, employee or other Person acting on
behalf of Pubco has, in the course of its actions for, or on behalf of, Pubco
(a) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity, (b) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, (c) violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (d) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
6.31 QUOTATION AND MAINTENANCE STANDARDS. The Common Stock currently is
quoted on the OTC Bulletin Board ("OTCBB"), and Pubco has not, in the 12 months
preceding the date hereof, received any notice from the OTCBB or the Financial
Industry Regulatory Authority or any trading market on which the Common Stock is
or has been listed or quoted to the effect that Pubco is not in compliance with
the quoting, listing or maintenance requirements of the OTCBB or such other
trading market. Pubco is, and has no reason to believe that it will not continue
to be, in compliance with all such quoting, listing and maintenance
requirements.
6.32 ANTI-TAKEOVER PROVISIONS. Pubco has taken all necessary action, if
any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under Pubco's
24
Organizational Documents or applicable Laws that is or could become applicable
to the Shareholders as a result of the Shareholders and the Companies fulfilling
their obligations or exercising their rights under this Agreement, or the
issuance of the Pubco Shares to, or the ownership of the Pubco Shares by, the
Shareholders.
6.33 OFF BALANCE SHEET ARRANGEMENTS. There is no transaction,
arrangement, or other relationship between Pubco and an unconsolidated or other
off balance sheet entity that is required to be disclosed by Pubco in its SEC
Documents and is not so disclosed, or that otherwise would be reasonably likely
to have a Material Adverse Effect.
6.34 DISCLOSURE. Neither this Agreement nor the Schedules hereto nor
any other documents, certificates or instruments furnished to a Company or the
Principal Shareholder by or on behalf of Pubco or FHCP in connection with the
transactions contemplated by this Agreement contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made herein or therein, in the light of the circumstances under which
they were made, not misleading.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF FHCP
FHCP represents and warrants to the Shareholders and each Company as
follows:
7.1 AUTHORITY. FHCP has the right, power, and authority to execute and
deliver this Agreement and each of the Transaction Documents to which FHCP is a
party, to consummate the transactions contemplated hereby and thereby, and to
perform FHCP's obligations hereunder and thereunder. The execution, delivery and
performance by FHCP of this Agreement and each of the Transaction Documents to
which FHCP is a party have been duly authorized by all necessary company action
of FHCP, and do not require any authorization, consent, approval, license,
exemption of, or filing or registration with, any Governmental Authority or
other Person.
7.2 BINDING OBLIGATION. FHCP has duly executed and delivered this
Agreement, and at the Closing FHCP will have duly executed and delivered each of
the Transaction Documents to which it is a party. This Agreement is, and on the
Closing Date each of the Transaction Documents to which FHCP is a party will be,
the legal, valid, and binding obligation of FHCP, enforceable against FHCP in
accordance with its terms, except as such enforcement is limited by general
equitable principles, or by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors rights generally.
7.3 NO CONFLICT. Neither the execution or delivery by FHCP of this
Agreement or any Transaction Document to which FHCP is a party, nor the
consummation or performance by FHCP of the transactions contemplated hereby or
thereby will, directly or indirectly, (a) contravene, conflict with, or result
in a violation of any provision of the Organizational Documents of FHCP; (b)
contravene, conflict with, constitute a default (or an event or condition which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or acceleration of, or result in the imposition or
creation of any Lien under, any
25
agreement or instrument to which FHCP is a party or by which the properties or
assets of FHCP are bound; or (c) contravene, conflict with, or result in a
violation of, any Law or Order to which FHCP, or any of the properties or assets
of FHCP, may be subject.
7.4 NO BROKERS OF FINDERS. No Person has or will have any right or
valid claim for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of FHCP.
ARTICLE VIII
TERMINATION
8.1 RIGHT TO TERMINATE. This Agreement may be terminated at any time
prior to the Closing as provided below:
(a) The Principal Shareholder and Pubco may terminate this
Agreement by their mutual written agreement.
(b) The Principal Shareholder or Pubco may terminate this Agreement
by giving written notice to the other if the Share Exchange shall not have been
consummated for any reason by April 30, 2008; provided, however, the right to
terminate this Agreement under this Section 8.1(b) shall not be available to any
party whose action or failure to act was a primary cause of, or resulted in, the
failure of the Share Exchange to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement.
(c) The Principal Shareholder may terminate this Agreement by
giving written notice to Pubco at any time prior to Closing if Pubco or FHCP has
breached any material representation, warranty or covenant contained in this
Agreement, the Principal Shareholder has notified Pubco of the breach, and, if
of a type which can be cured, the breach has continued without cure for a period
of thirty (30) days after the notice of breach.
(d) Pubco may terminate this Agreement by giving written notice to
the Principal Shareholder at any time prior to Closing if a Shareholder or a
Company has breached any material representation, warranty or covenant contained
in this Agreement, Pubco has notified the Principal Shareholder of the breach,
and, if of a type which can be cured, the breach has continued without cure for
a period of thirty (30) days after the notice of breach.
8.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
this Agreement under Section 8.1 above will be effective immediately upon the
delivery of written notice of the terminating party as provided above (or, if
the termination is pursuant to Section 8.1(c) or Section 8.1(d) and the 30-day
cure period is applicable, immediately upon the expiration of such cure period
if no such cure has occurred). In the event of the termination of this Agreement
as provided in Section 8.1, all rights and obligations of the parties hereunder
shall terminate without any liability of any party; provided, however, Article
XIII and Section 9.9 shall survive any such termination; and provided, further,
nothing herein shall relieve any party from Liability for any
26
willful breach of this Agreement prior to such termination. All costs, fees and
expenses (including reasonable attorney's fees and expenses) incurred by the
non-breaching party in connection with enforcing its rights hereunder with
respect to a breach shall be paid by the breaching party.
ARTICLE IX
COVENANTS
9.1 RESTRICTIONS ON TRANSFER.
(a) Each Shareholder will make all subsequent offers and sales of
such Shareholder's Pubco Shares either (i) if during the Distribution Compliance
Period, outside of the United States in compliance with Regulation S, (ii)
pursuant to an effective and current registration statement under the Securities
Act, or (iii) pursuant to an available exemption from registration under the
Securities Act. Specifically, each Shareholder covenants and agrees any offer or
sale of its Pubco Shares prior to the expiration of the Distribution Compliance
Period shall be made only in accordance with the provisions of Rules 903 or 904
of Regulation S, as applicable, pursuant to registration under the Securities
Act, or pursuant to an exemption from registration under the Securities Act.
(b) Each Shareholder hereby agrees that the certificate(s)
evidencing such Shareholder's Pubco Shares, and each certificate issued in
transfer thereof, will bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
S PROMULGATED UNDER THE SECURITIES ACT, (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.
(c) Each Shareholder covenants and agrees that it will not transfer
any of such Shareholder's Pubco Shares (except pursuant to effective
registration statement under the Securities Act and applicable state securities
law covering the disposition of such Shareholder's Pubco Shares) without first
providing Pubco with an opinion of counsel (which counsel and opinion are
reasonably satisfactory to Pubco) to the effect that such transfer will be made
in compliance with Regulation S or will be exempt from the registration and the
prospectus
27
delivery requirements of the Securities Act and the registration or
qualification requirements of any applicable U.S. state securities laws.
(d) Each Shareholder understands and acknowledges that Pubco may
refuse to transfer such Shareholder's Pubco Shares unless such Shareholder
complies with this Section 9.1. Each Shareholder consents to Pubco making a
notation on its records or giving instructions to any transfer agent of the
Common Stock in order to implement the restrictions on transfer of such
Shareholder's Pubco Shares.
(e) Each Shareholder covenants that it will not engage in hedging
transactions with respect to its Pubco Shares prior to the expiration of the
Distribution Compliance Period unless in compliance with the Securities Act.
9.2 CONDUCT PENDING CLOSING. Prior to the Closing or earlier
termination of this Agreement, except with the written consent of the Principal
Shareholder (which consent shall not be unreasonably withheld, conditioned or
delayed) or as otherwise expressly permitted or contemplated by the terms of
this Agreement, Pubco shall not (and FHCP shall not permit Pubco to) take any
action or fail to take any action that would result in (a) any of the
representations and warranties of Pubco set forth in this Agreement becoming
untrue, or (b) any of the conditions to the Share Exchange set forth in this
Agreement not being satisfied.
9.3 FURTHER ASSURANCES. Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to use commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement, including: (a) causing the conditions precedent set forth in Article
X and Article XI to be satisfied; (b) obtaining all necessary actions or
non-actions, waivers, consents, approvals, orders and authorizations; (c) making
all necessary registrations, declarations and filings (including registrations,
declarations and filings with Governmental Authorities, if any); (d) avoiding
any suit, claim, action, investigation or Proceeding by any Governmental
Authority challenging the transactions contemplated by this Agreement; (e)
defending any suits, claims, actions, investigations or Proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Authority
vacated or reversed; and (f) executing or delivering any additional instruments
reasonably necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.
9.4 ACCESS TO INFORMATION.
(a) Prior to the Closing, each Company shall (i) afford to Pubco
and its Affiliates, officers, directors, employees, accountants, consultants,
legal counsel, agents and other representatives (collectively, the "PUBCO
REPRESENTATIVES") full access during normal business hours and in a manner that
minimizes disruption to the business operations of such Company, upon reasonable
prior notice, to the officers, employees, agents, properties, offices
28
and other facilities of such Company and to the books and records thereof, and
(ii) promptly furnish to Pubco and the Pubco Representatives such information
concerning the business, properties, contracts, records and personnel of such
Company (including, without limitation, financial, operating and other data and
information) as may be reasonably requested, from time to time, by Pubco or any
Pubco Representative.
(b) Prior to the Closing, Pubco shall (i) afford to the Principal
Shareholder and its Affiliates, officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively, the
"SHAREHOLDER REPRESENTATIVES") full access during normal business hours and in a
manner that minimizes disruption to the business operations of Pubco, upon
reasonable prior notice, to the officers, employees, agents, properties, offices
and other facilities of Pubco and to the books and records thereof, and (ii)
promptly furnish to the Principal Shareholder and the Shareholder
Representatives such information concerning the business, properties, contracts,
records and personnel of Pubco (including, without limitation, financial,
operating and other data and information) as may be reasonably requested, from
time to time, by the Principal Shareholder or any Shareholder Representative.
9.5 PUBLIC REPORTING. At least until the second anniversary of the
Closing Date, (a) Pubco shall use its commercially reasonable best efforts to
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by Pubco after the
date hereof pursuant to the Exchange Act, and (b) if Pubco is not required to
file reports pursuant to such Laws, it will prepare and furnish to FHCP and make
publicly available in accordance with Rule 144(c) such information as is
required for FHCP to sell its shares of Common Stock under Rule 144.
9.6 ASSISTANCE WITH POST-CLOSING COMMISSION REPORTS AND INQUIRIES.
After the Closing Date, upon the request of Pubco, FHCP shall use its reasonable
best efforts to provide such information available to it, including information,
filings, reports, financial statements or other circumstances of Pubco
occurring, reported or filed prior to the Closing, as may be necessary or
required by Pubco for the preparation of the post-Closing Date reports that
Pubco is required to file with the Commission to remain in compliance and
current with its reporting requirements under the Exchange Act, or filings
required to address and resolve matters as may relate to the period prior to the
Closing and any Commission comments relating thereto or any Commission inquiry
thereof.
9.7 INTENTIONALLY OMITTED.
9.8 FORM 8-K. Within four (4) business days after the Closing Date,
Pubco shall file the Form 8-K.
9.9 CONFIDENTIALITY.
(a) In connection with the negotiation of this Agreement and the
consummation of the transactions contemplated hereby, each party hereto will
have access to confidential information of or relating to the other parties.
Each party hereto shall (and shall cause their respective directors, officers,
employees, agents, and advisors to) treat such
29
information as confidential, preserve the confidentiality thereof and not
duplicate or use such information, except in connection with the transactions
contemplated hereby; provided that such obligations shall not apply to any
information (i) which at the time of disclosure, is available publicly, (ii)
which, after disclosure, becomes available publicly through no fault of the
receiving party, (iii) which the receiving party Knew (as evidenced by it prior
written records) prior to disclosure by the disclosing party, (iv) which is
required to be disclosed by Law or in connection with legal process, or (v) the
use or disclosure of which is necessary or appropriate in making any required
filing with the Commission, or obtaining any consent or approval required for
the consummation of the transactions contemplated by this Agreement. Upon
termination of this Agreement for any reason, each party then in possession of
confidential information of another party hereto shall return to such other
party (or at the request of such other party, destroy) all tangible embodiments
(and all copies) of such confidential information.
(b) In the event that any party is required to disclose any
information of another party pursuant to clauses (iv) or (v) of Section 9.9(a)
above, the party requested or required to make the disclosure (the "DISCLOSING
PARTY") shall provide the party that provided such information (the "PROVIDING
PARTY") with prompt notice of any such requirement so that the Providing Party
may seek a protective order or any other appropriate remedy. If, in the absence
of a protective order or other remedy, the Disclosing Party is, in the opinion
of counsel, legally compelled to disclose such information of the Providing
Party, the Disclosing Party may, without liability hereunder, disclose only that
portion of such information which such counsel advises is legally required to be
disclosed, provided that the Disclosing Party exercises its reasonable efforts
to preserve the confidentiality of the Providing Party's information, including,
without limitation, by cooperating with the Providing Party to obtain an
appropriate protective order or other relief, or assurance that confidential
treatment will be accorded the Providing Party's information.
9.10 NOTICE OF DEFAULT. From the date hereof through the Closing, each
party hereto shall give each of the other parties prompt written notice upon
becoming aware that any representation or warranty made by such notifying party
contained in this Agreement has become untrue or inaccurate, or of any failure
of such notifying party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in each
case, where the conditions set forth in Sections 10.1 or 10.2 (in the case of
the notifying party being a Shareholder or a Company) or Sections 11.1 or 11.2
(in the case of the notifying party being Pubco or FHCP) would not be satisfied
as a result thereof; provided, however, no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
9.11 BYLAWS. If necessary, prior to the Closing Pubco shall amend its
Bylaws to permit the election and/or appointment of Xx. Xxxxx Xxxxx to the Pubco
Board as set forth in Section 2.3.
9.12 MANAGEMENT. Within 90 days after the Closing Date, Pubco shall
appoint an English speaking senior member of management.
30
9.13 LEVERAGE RATIO. For the two-year period commencing on the Closing
Date, Pubco shall not borrow any funds from the Principal Shareholder, or borrow
any funds from a third party the repayment of which is guaranteed by the
Principal Shareholder, unless in each case Pubco's long term debt/equity ratio
following such borrowing equals or exceeds two, or such borrowing is approved by
a majority of the Independent Directors.
9.14 ASSET CONTRIBUTIONS. All vessels contributed into Pubco or the
Companies by the Principal Shareholder within the two-year period commencing on
the Closing Date shall be on the following basis: (a) for new-build vessels, the
lower of cost or net realizable value (as determined by a third party valuation
or as agreed upon by Pubco and FHCP), and (b) for existing vessels, the net
realizable value (as determined by a third party valuation or as agreed upon by
Pubco and FHCP).
9.15 AFFILIATE TRANSACTIONS. Except as contemplated by this Agreement,
and except for transactions in the ordinary course of business individually
involving less than US$50,000, for the two-year period commencing on the Closing
Date neither Pubco nor the Companies shall enter into any transaction with the
Principal Shareholder, any officer or director of the Principal Shareholder, or
any Person Controlled by the Principal Shareholder or any of such officers or
directors, unless such transaction is approved by a majority of the Independent
Directors.
9.16 EXCLUSIVITY.
(a) Until the Closing or earlier termination of this Agreement,
Pubco and FHCP will not (and will not permit any of their respective Affiliates,
directors, officers, employees, investment bankers, attorneys or other agents,
advisors or representatives to), directly or indirectly (a) (i) initiate the
submission of any proposal or offer from any Person for, or (ii) solicit or
encourage any inquiries or proposals for, or (iii) continue any discussions
relating to, the acquisition of equity securities of Pubco or all or
substantially all of the assets of Pubco (including any acquisition structured
as a merger, consolidation, share exchange, or otherwise); or (b) furnish or
permit to be furnished any non-public information concerning Pubco to any Person
(other than the Principal Shareholder, the Companies, and their respective
representatives and advisors), other than information furnished connection with
the transactions contemplated hereby or as required by Law. If either Pubco or
FHCP is contacted or solicited by any third party regarding any action
contemplated in this Section 9.16(a), such party promptly shall inform the
Principal Shareholder in writing.
(b) Until the Closing or earlier termination of this Agreement,
the Principal Shareholder and the Companies will not (and will not permit any of
their respective Affiliates, directors, officers, employees, investment bankers,
attorneys or other agents, advisors or representatives to), directly or
indirectly (a) (i) initiate the submission of any proposal or offer from any
Person for, or (ii) solicit or encourage any inquiries or proposals for, or
(iii) continue any discussions relating to, the acquisition of equity securities
of a Company or all or substantially all of the assets of a Company (including
any acquisition structured as a merger, consolidation, share exchange, or
otherwise); or (b) furnish or permit to be furnished any non-public information
concerning a Company to any Person (other than Pubco, FHCP, and their respective
representatives and advisors), other than information furnished in the ordinary
course
31
of business or in connection with the transactions contemplated hereby or as
required by Law. If the Principal Shareholder or a Company is contacted or
solicited by any third party regarding any action contemplated in this Section
9.16(b), such party promptly shall inform FHCP in writing.
ARTICLE X
CONDITIONS PRECEDENT OF PUBCO
Pubco's obligations hereunder are subject to the satisfaction, at or
prior to the Closing Date, of each of the following conditions (any of which may
be waived by Pubco, in whole or in part):
10.1 ACCURACY OF REPRESENTATIONS. The representations and warranties of
each of the Companies and each Shareholder contained in this Agreement that are
not qualified by materiality, Knowledge or Material Adverse Effect shall be true
and correct in all material respects, and the representations and warranties of
each of the Companies and each Shareholder contained in this Agreement that are
qualified by materiality, Knowledge or Material Adverse Effect shall be true and
correct in all respects at and as of the Closing Date as though made on and as
of the Closing Date.
10.2 PERFORMANCE BY THE COMPANIES AND EACH SHAREHOLDER. Each Company
and each Shareholder shall have performed or complied in all material respects
with all agreements, conditions, and covenants required by this Agreement to be
performed or complied with by such Company or such Shareholder, as the case may
be, on or prior to the Closing Date.
10.3 CERTIFICATE OF OFFICER. Each Company will have delivered to Pubco
a certificate executed by an officer of such Company certifying the satisfaction
of the conditions specified in Sections 10.1 and 10.2 relating to such Company
(each, a "COMPANY BRINGDOWN").
10.4 CERTIFICATE OF SHAREHOLDER. The Principal Shareholder will have
delivered to Pubco a certificate executed by an officer of the Principal
Shareholder certifying the satisfaction of the conditions specified in Sections
10.1 and 10.2 relating to the Principal Shareholder (the "SHAREHOLDER
BRINGDOWN").
10.5 CONSENTS. Each Company and each Shareholder shall have obtained or
made, and shall have delivered to Pubco copies of, all consents, waivers,
approvals, authorizations or orders required to be obtained by it or him, and
all filings required to be made by it or him, in order to consummate the
transactions contemplated hereby and by the Transaction Documents to which it or
he is a party (collectively, the "COMPANY CONSENTS").
10.6 DOCUMENTS. Pubco and FHCP each shall have received all of the
documents and other items to be delivered to each of them pursuant to Section
3.2(a), (b) and (c).
10.7 NO PROCEEDINGS. No Proceeding has been commenced or threatened
against any party hereto or against any Affiliate thereof (which Proceeding
remains unresolved as of the Closing Date) (a) involving any challenge to, or
seeking damages or other relief in connection
32
with, any of the transactions contemplated by this Agreement, or (b) that may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the transactions contemplated by this Agreement.
10.8 NO PROHIBITIVE CHANGE OF LAW. There shall have been no Law enacted
or promulgated which would prohibit or make illegal the consummation of the
transactions contemplated hereby.
10.9 ADDITIONAL VESSELS. Hengzhou and Huisheng International Shipping
Limited will have executed the Huisheng Ship Contribution Agreement, and
Hengzhou and Yongzheng International Shipping Limited will have executed the
Yongzheng Ship Contribution Agreement.
10.10 AUDITED FINANCIAL STATEMENTS. The audited financial statements of
each of the Companies that are required to be filed with the Commission as an
exhibit to the Form 8-K shall be available on or before the Closing Date.
ARTICLE XI
CONDITIONS PRECEDENT OF
THE SHAREHOLDERS
The obligations of the Shareholders hereunder are subject to the
satisfaction, at or prior to the Closing Date, of each of the following
conditions (any of which may be waived by the Principal Shareholder, in whole or
in part):
11.1 ACCURACY OF REPRESENTATIONS. The representations and warranties of
each of Pubco and FHCP contained in this Agreement that are not qualified by
materiality, Knowledge or Material Adverse Effect shall be true and correct in
all material respects, and the representations and warranties of each of Pubco
and FHCP contained in this Agreement that are qualified by materiality,
Knowledge or Material Adverse Effect shall be true and correct in all respects
at and as of the Closing Date as though made on and as of the Closing Date.
11.2 PERFORMANCE BY PUBCO AND FHCP. Pubco and FHCP each shall have
performed or complied in all material respects with all agreements, conditions,
and covenants required by this Agreement to be performed or complied with by it
on or prior to the Closing Date.
11.3 CERTIFICATE OF FHCP. FHCP will have delivered to the Principal
Shareholder a certificate, dated the Closing Date, executed by FHCP, certifying
the satisfaction of the conditions specified in Sections 11.1 and 11.2 relating
to each of Pubco and FHCP (the "FHCP BRINGDOWN").
11.4 CONSENTS. Pubco and FHCP each shall have obtained or made, and
shall have delivered to the Principal Shareholder copies of, all consents,
waivers, approvals, authorizations or orders required to be obtained it, and all
filings required to be made by it, in order to consummate the transactions
contemplated hereby and by the Transaction Documents to which it is a party
(collectively, the "PUBCO CONSENTS").
33
11.5 DOCUMENTS. The Companies and the Shareholders each shall have
received all of the documents and other items to be delivered to each of them
pursuant to Section 3.2(d) and (e).
11.6 NO PROCEEDINGS. No Proceeding has been commenced or threatened
against any party hereto or against any Affiliate thereof (which Proceeding
remains unresolved as of the date of this Agreement) (a) involving any challenge
to, or seeking damages or other relief in connection with, any of the
transactions contemplated hereby, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the transactions
contemplated hereby.
11.7 NO PROHIBITIVE CHANGE OF LAW. There shall have been no Law enacted
or promulgated which would prohibit or make illegal the consummation of the
transactions contemplated hereby.
11.8 NO LIENS. There are no Liens on, or with respect to, Pubco or its
assets.
11.9 NO LIABILITIES. At the Closing, Pubco shall have no Liabilities,
and no material changes to its business or financial condition shall have
occurred since the date of this Agreement.
11.10 SEC FILINGS. At the Closing, Pubco will be current in all
Commission filings required by it to have been filed.
11.11 OUTSTANDING COMMON STOCK. Pubco shall have at least 100,000,000
shares of Common Stock authorized, and shall have no more than 107,208 shares of
Common Stock issued and outstanding.
11.12 READINESS OF THE FORM 8-K. The Principal Shareholder and its
counsel shall have approved the Form 8-K to be filed with the Commission.
11.13 TRADING STATUS. At the Closing, the Common Stock will have the
status of being quoted on the OTCBB, and Pubco will not have received any notice
from the OTCBB or the Financial Industry Regulatory Authority to the effect that
Pubco is not in compliance with the quoting, listing or maintenance requirements
of the OTCBB.
11.14 SUBSIDIARY DISSOLUTION. Pubco shall have caused the liquidation
and dissolution of the Subsidiary without Pubco incurring or retaining any
Liability with respect to the Subsidiary or as a result of such liquidation or
dissolution.
ARTICLE XII
INDEMNIFICATION; REMEDIES
12.1 SURVIVAL. The representations and warranties contained in or made
pursuant to this Agreement shall expire on the Closing, except that (a) the
representations and warranties by
34
Pubco in Article VI (other than those set forth in Sections 6.1, 6.4, 6.5, 6.6,
and 6.8, collectively, the "EXCLUDED SECTIONS") shall expire 15 months after the
Closing Date, and (b) the representations and warranties by each Shareholder in
Sections 4.3 and 4.5, and the representations and warranties in the Excluded
Sections, shall survive indefinitely.
12.2 INDEMNIFICATION BY FHCP.
(a) From and after the Closing Date, FHCP will indemnify and hold
each Shareholder and their respective officers, directors, shareholders,
members, managers, Affiliates, employees, agents, estates, executors, personal
representatives, heirs, successors, and assigns (each, a "SHAREHOLDER
INDEMNIFIED PARTY") harmless from and against, for and in respect of, any and
all Liabilities, claims, contingencies, Taxes, fines, deficiencies, demands,
assessments, losses, damages, costs and expenses, including, without limitation,
all court costs and reasonable attorneys' fees, and all reasonable amounts paid
in investigation, defense, or settlement of the foregoing (collectively,
"LOSSES") that any Shareholder Indemnified Party may suffer or incur as a result
of or relating to:
(i) the breach of any representation or warranty made by Pubco
or FHCP herein, or any allegation by a third party that, if true, would
constitute such a breach;
(ii) the breach of any covenant or agreement of Pubco or FHCP
under this Agreement, or any allegation by a third party that, if true,
would constitute such a breach;
(iii) any right or claim for brokerage commissions, finders'
fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement
made by or behalf of Pubco of FHCP; or
(iv) any and all claims that may be asserted against Pubco by
a current or former officer, director or employee of Pubco by reason of
the fact that such person was a director, officer, employee, or agent
of Pubco prior to the Closing or was, prior to the Closing, serving
Pubco at Pubco's request as a partner, trustee, director, officer,
employee, or agent of another entity (whether such claim is for accrued
salary, compensation, indemnification, judgments, damages, penalties,
fines, costs, amounts paid in settlement, losses, expenses, or
otherwise, and whether such claim is pursuant to any statute, charter
document, bylaw, agreement, or otherwise).
(b) If a claim for indemnification is to be made by a Shareholder
Indemnified Party under this Article XII (a "CLAIM"), then such Shareholder
Indemnified Party shall give written notice of such Claim to FHCP promptly after
such Shareholder Indemnified Party becomes aware of the facts, conditions, or
events which gives rise to such Claim. If any third party claim solely for money
damages shall be brought against any Shareholder Indemnified Party in respect of
which indemnity is sought pursuant to this Agreement, such Shareholder
35
Indemnified Party shall promptly notify FHCP of such claim in writing, and FHCP
shall have the right to conduct, at its own expense, the negotiation, settlement
and defense thereof with counsel reasonably acceptable to such Shareholder
Indemnified Party, provided that (i) FHCP shall have first notified the
Shareholder Indemnified Party in writing of its unqualified undertaking to
indemnify the Shareholder Indemnified Party for all Losses attributable to such
claim; (ii) no settlement of such claim shall be undertaken or made without the
prior written approval of the Shareholder Indemnified Party unless such
settlement shall include an unconditional release of the Shareholder Indemnified
Party from any and all Liability with respect to such claim; and (iii) the
Shareholder Indemnified Party shall retain the right to withdraw its demand for
indemnification (whereupon FHCP shall be relieved of any Liability relating
thereto) at any time and to thereafter assume complete control of the defense
and settlement of the claim. Such Shareholder Indemnified Party shall have the
right to employ separate counsel with respect to any such claim and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Shareholder Indemnified Party except to the extent that the
employment thereof has been specifically authorized by FHCP in writing, FHCP has
failed after a reasonable period of time (but not more than 30 days) to assume
such defense and to employ counsel, or with respect to such claim there is, in
the reasonable opinion of such separate counsel, a material conflict on any
material issue between the position of FHCP and the position of such Shareholder
Indemnified Party. FHCP shall have no obligation to indemnify or hold harmless a
Shareholder Indemnified Party for any settlement with respect to a claim solely
for money damages entered into by such Shareholder Indemnified Party without
FHCP's prior written consent, which consent shall not be unreasonably withheld,
delayed, or conditioned.
12.3 SOLE REMEDY. From and after the Closing, absent fraud, the
remedies provided for in this Article XII shall be the sole and exclusive
remedies of the Shareholder Indemnified Parties for the recovery of money
damages for claims based on a breach of this Agreement.
12.4 OFFSET. Any Loss that any Shareholder Indemnified Party suffers,
sustains or becomes subject to and with respect to which such Shareholder
Indemnified Party is entitled to indemnification from FHCP pursuant to this
Article XII may, at the sole option of such Shareholder Indemnified Party, be
satisfied (to the extent of such offset) by setting off all or any portion of
such Losses against any amounts that such Shareholder Indemnified Party owes to
FHCP or to any of its Affiliates at such time.
12.5 INVESTIGATIONS AND WAIVERS. The right to indemnification or any
other remedy based on representations, warranties, covenants, and obligations in
this Agreement will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement, with
respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification or any other remedy based on such representations, warranties,
covenants, and obligations.
12.6 LIMITATIONS. Except for Losses resulting from or relating to
criminal or quasi-criminal activity (including, without limitation, fraud), and
except for breaches of the
36
representations and warranties contained in any of the Excluded Sections, FHCP
shall have no liability (for indemnification or otherwise) with respect to
Losses covered by Section 12(a)(i) (a) unless and until the aggregate amount of
all such Losses exceeds $10,000, in which case FHCP shall be liable for the full
amount of such Losses, or (b) to the extent the aggregate amount of all such
Losses indemnified by FHCP exceeds $725,000, provided that any Losses exceeding
$300,000 in the aggregate shall only be recoverable by offset against monies to
be remitted to FHCP upon the exercise of its put right under the Investor Rights
Agreement.
12.7 CONSEQUENTIAL DAMAGES. Anything herein to the contrary
notwithstanding, no party shall be liable to any other party hereunder or in
connection with this Agreement or any of the transactions contemplated hereby
for any consequential, incidental, indirect, punitive, exemplary, remote,
corrective, remedial, speculative, special, or not reasonably foreseeable
damages of any kind, nature, or description whatsoever, other than any of the
foregoing damages to the extent payable by a Shareholder Indemnified Party to a
third party pursuant to a third party Claim.
ARTICLE XIII
MISCELLANEOUS
13.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants. In the
event of termination of this Agreement, the obligation of each party to pay its
own expenses will be subject to any rights of such party arising from a breach
of this Agreement by another party. At the Closing, Pubco shall issue to the
Principal Shareholder's legal counsel, in payment for legal services rendered to
the Principal Shareholder in connection with the Share Exchange, a warrant to
purchase 366,798 shares of Common Stock, exercisable at $0.25 per share (subject
to adjustment for stock splits, stock dividends, and the like), it being agreed
and acknowledged that, absent the issuance of such warrant, the aggregate number
of Pubco Shares would have been increased by the number of shares underlying
such warrant (and all of such additional Pubco Shares would have been issued to
the Principal Shareholder).
13.2 PUBLIC ANNOUNCEMENTS. Except to the extent previously disclosed or
to the extent a party reasonably believes it is required by applicable Law to
make disclosure, no party shall issue any statement or communication to the
public regarding the transactions contemplated herein without the consent of the
other parties, which consent shall not be unreasonably withheld. To the extent a
party hereto believes it is required by Law to make disclosure regarding the
transactions contemplated herein, it shall, if possible, immediately notify the
other parties prior to such disclosure.
13.3 NOTICES. All notices, demands, consents, requests, instructions
and other communications to be given or delivered or permitted under or by
reason of the provisions of this Agreement or in connection with the
transactions contemplated hereby shall be in writing and shall be deemed to be
delivered and received by the intended recipient as follows: (a) if
37
personally delivered, on the business day of such delivery (as evidenced by the
receipt of the personal delivery service), (b) if mailed certified or registered
mail return receipt requested, five (5) business days after being mailed, (c) if
delivered by overnight courier (with all charges having been prepaid), on the
business day of such delivery (as evidenced by the receipt of the overnight
courier service), or (d) if delivered by facsimile transmission, on the business
day of such delivery if sent by 5:00 p.m. in the time zone of the recipient, or
if sent after that time, on the next succeeding business day (as evidenced by
the printed confirmation of delivery generated by the sending party's telecopier
machine). If any notice, demand, consent, request, instruction or other
communication cannot be delivered because of a changed address of which no
notice was given (in accordance with this Section 13.3), or the refusal to
accept the same, the notice, demand, consent, request, instruction or other
communication shall be deemed received on the second business day after the
notice is sent (as evidenced by a sworn affidavit of the sender). All such
notices, demands, consents, requests, instructions and other communications will
be sent to the following addresses or facsimile numbers as applicable:
If to FHCP or, prior to the
Closing, to Pubco, to: Fountainhead Capital Partners Limited
X.X. Xxx 000
Xxxxxxx Xxxxx, Xxx Xxxxxx
Xx. Xxxxxx, Xxxxxx XX0 0XX
Facsimile: (000) 000-0000
With a copy (which shall not
constitute Notice) to: Xxxxxx & Xxxxxx, LLP
000 Xxxxx 0 Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to a Shareholder,
either Company or, after
the Closing, to Pubco, to: x/x Xxxxxxxxx Xxxxxxxxxxxxx Marine
Holdings Co., Ltd.
Xx. 000 Xxxxxx Xxxx
Xx-Xxxxxxxx 0xx Xxxxxxxx, 0Xx.
Xxxxxxxx, Xxxxx
Attn: Xx. Xxxxx Xxxxx, President
Facsimile: 00-00-0000-0000
With a copy (which shall not
constitute Notice) to: Xxxxxxx & Xxxxxx, LLP
000 Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
38
13.4 WAIVER. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable Law, (a) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given, and (b) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement.
13.5 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party against whom the
enforcement of such amendment is sought.
13.6 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No party may
assign any of such party's rights under this Agreement without the prior consent
of the other parties. This Agreement shall not confer any rights or remedies
upon any Person other than the parties and their respective successors, heirs,
executors, personal representatives, and permitted assigns; provided, however,
the provisions in Article XII are intended for the benefit of the Shareholder
Indemnified Parties and their respective successors, heirs, executors, personal
representatives, and permitted assigns.
13.7 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
13.8 SECTION HEADINGS, CONSTRUCTION. The Article and Section headings
in this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Article", "Articles",
"Section" or "Sections" refer to the corresponding Article, Articles, Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
13.9 GOVERNING LAW. This Agreement will be governed by the Laws of the
State of York without regard to conflicts of laws principles.
13.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
13.11 SPECIFIC PERFORMANCE. Each party shall have the right, in
addition to any other rights and remedies existing in its favor, to enforce such
party's rights and each other party's
39
obligations hereunder by an action or actions for specific performance,
injunctive and/or other equitable relief. If any such action is brought by a
party to enforce this Agreement, such other party hereby waives the defense that
there is an adequate remedy at Law.
[SIGNATURES FOLLOW ON NEXT PAGE]
40
IN WITNESS WHEREOF, the parties have executed and delivered this Share
Exchange Agreement as of the date first written above.
Dalkeith Investments, Inc.
By:
------------------------------------
Xxxxxx X. Xxxxxxxx, CEO
Fountainhead Capital Partners Limited
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Yongzheng International Marine
Holdings Co., Ltd.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Yongchen International Shipping Limited
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Hengzhou International Shipping Limited
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
*By: *
-------------------------- ---------------------------------------
Xxxxx Xxxxx, Xxxxxxx Xxxx
Attorney-in-fact
*
---------------------------------------
Xxxxxx Xx
*
---------------------------------------
Xxxxxx Xxx
*
---------------------------------------
Xxxx Xxxx
*
---------------------------------------
Xxxxxxxx Xxxx
*
---------------------------------------
Xxxxxxx Xx (formerly Xxxxxx Xx)
SCHEDULES
Schedule I Shareholders
Schedule 3.2(d)(vii) Opinion
Schedule 5.7 Capitalization
Schedule 6.5 No Violation
Schedule 6.13 Absence of Changes
Schedule 6.14 Material Contracts
Schedule 6.17 Title to Assets
Schedule 6.20 Interested Party Transactions
Schedule 6.22 Bank Accounts and Safe Deposit Boxes
Schedule 6.27 Stock Option Plan and Employee Benefits
EXHIBITS
Exhibit A Investor Rights Agreement
Exhibit B Huisheng Ship Contribution Agreement
Exhibit C Yongzheng Ship Contribution Agreement
SCHEDULE I
--------------------------------------------------------------------------------------------------------------------
Number of
Yongchen Shares Number of Hengzhou Number of Pubco Shares
Name and Address of Each Shareholder Owned Shares Owned Issuable at Closing
--------------------------------------------------------------------------------------------------------------------
Yongzheng International Marine
Holdings Co., Ltd.
Xx. 000 Xxxxxx Xxxx
Xx-Xxxxxxxx 0xx Xxxxxxxx, 0Xx.
Xxxxxxxx, Xxxxx
Attn: Xx. Xxxxx Xxxxx, President 22,786,000 62,397,287 19,975,494(1)
--------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxx
Zizhu Apartment, Building Xx. 00,
Xx. 00
Xxxx #000
Xxxxxxxx, Xxxxx 0 7,202,560 1,200,000
--------------------------------------------------------------------------------------------------------------------
Xxxxxx Xx
0X 000 Xxxxx Xxxx Xx Xxxx
Xxxxxxxx, Xxxxx 0 6,002,133 1,000,000
--------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxx
000 Xxxx Xxxx Xxx Xxx
Xxxx #0000
Xxxxxxxx, Xxxxx 0 4,232,406 705,150
--------------------------------------------------------------------------------------------------------------------
Xxxx Xxxx
000 Xxx Xxxx Xxxx
Xxxx #000
Xxxxxxxx, Xxxxx 0 4,232,406 705,150
--------------------------------------------------------------------------------------------------------------------
Xxxxxxxx Xxxx
144 Xx Xxxx Road, Building Xx. 0,
Xxxx 0
Xxxx #000
Xxxxx, Xxxxx 0 4,232,406 705,150
--------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xx
Lane 458 South Xxx Xxx Xxxx,
Xx. 00
Xxxx #000
Xxxxxxxx, Xxxxx 0 1,410,802 235,050
--------------------------------------------------------------------------------------------------------------------
---------------
(1) Includes the Additional Shares.
