Exhibit 2.1
SECURITIES EXCHANGE AGREEMENT
THIS SECURITIES EXCHANGE AGREEMENT (the "Agreement"), dated as of October
19, 2005 (the "Effective Date"), is entered into by and among ONNY INVESTMENT
LIMITED, a company incorporated in the British Virgin Islands with limited
liability ("Onny"), and TS ELECTRONICS, INC., a Delaware corporation (the
"COMPANY"), the individuals whose names appear on the signature page hereof,
each being a shareholder of Onny (collectively, the "Shareholders"), and Halter
Financial Group, Inc. ("the HFG"), solely as to Section 7.2(e), hereof. Certain
capitalized terms used in this Agreement are defined in Section 8.3 hereof.
W I T N E S S E T H:
WHEREAS, as of the Effective Date, there are 39,700 issued and outstanding
shares of the ordinary shares of Onny (the "Onny Stock"), of which all of the
shares of Onny Stock are beneficially owned and/or controlled by the
Shareholders.
WHEREAS, COMPANY proposes to acquire all of the outstanding shares of Onny
in exchange for the issuance of an aggregate of 32,222,996 shares of common
stock, par value $0.001, of COMPANY (the "Exchange");
WHEREAS, the Exchange shall constitute a reorganization within the meaning
of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and/or
any other "tax free" exemptions thereunder that may be available for the
Exchange; and
WHEREAS, the Boards of Directors of COMPANY and Onny have determined that
it is desirable to effect such a plan of reorganization and stock exchange.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants, agreements, representations and warranties contained herein, the
parties hereto agree as follows:
ARTICLE I.
ISSUANCE AND EXCHANGE OF SHARES
1.1 Issuance and Exchange.
At the Closing (as defined in Section 2.1 below), to be held in accordance
with the provisions of Article II below and subject to the terms and agreements
set forth herein, the COMPANY shall authorize its transfer agent to issue to the
Shareholders an aggregate of 27,499,940 shares of its common stock, par value
$0.001, (the "COMPANY Stock"), not including the "Post Closing Shares" (as
hereinafter defined), to the Shareholders as set forth in Section 1.2 below in
exchange for the Onny Stock. The Shareholders shall have delivered to King and
Wood, LLP certificates evidencing their Onny Stock, together with duly executed
stock powers to effectuate the transfer. King and Wood, LLP shall release the
Onny Stock, over which it has custody, to COMPANY in accordance with the written
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instruction of COMPANY, assuming satisfaction by the Shareholders and Onny of
all applicable conditions set forth in this Agreement.
1.2 Exchange Ratio.
(a) At the Closing and as provided for in Section 7.2(f) below, COMPANY
shall exchange the Company Stock, excluding the Post Closing Shares, for all of
the issued and outstanding shares of Onny Stock as full consideration for the
Onny Stock. All the parties of this Agreement agree that the capitalization of
COMPANY immediately prior to and immediately following the Closing is set forth
on Exhibit 1.2(a) hereto.
(b) No fractional shares of COMPANY Stock will be issued to any Shareholder
entitled to receive said shares. Accordingly, Shareholders who would otherwise
be entitled to receive fractional shares of COMPANY Stock will, upon surrender
of their certificate representing the fractional shares of Onny Stock, receive a
full share if the fractional share exceeds fifty percent (50%) and if the
fractional share is less than fifty percent (50%) the fractional share shall be
cancelled.
ARTICLE II.
CLOSING
2.1 Closing.
The consummation of the Exchange by COMPANY, Onny and the Shareholders (the
"Closing") shall occur on the Effective Date at the offices of King and Wood,
LLP, the counsel of Onny, subject to the satisfaction or waiver of all of the
conditions to Closing, or at such other place as the parties may agree upon.
2.2 Deliveries by COMPANY.
COMPANY shall deliver, or cause to be delivered, to the Shareholders:
(a) As soon as practicable after the Closing, certificates for the shares
of COMPANY Stock being exchanged for their respective accounts, in form and
substance reasonably satisfactory to the Shareholders and their counsel, it
being understood that the certificates will be prepared by COMPANY's transfer
agent and delivered to King and Wood, LLP for the benefit of the Shareholders;
(b) At the Closing, the items specified in Article VII below; and
(c) At the Closing, all of the books and records of COMPANY.
2.3 Deliveries by Shareholders and Onny.
At the Closing, the Shareholders and Onny, as applicable, shall deliver to
COMPANY the items specified in Article VII below.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder, hereby severally represents and warrants to COMPANY as
follows (it being acknowledged that COMPANY is entering into this Agreement in
material reliance upon each of the following representations and warranties, and
that the truth and accuracy of each, as evidenced by their signature set forth
on the signature page, constitutes a condition precedent to the obligations of
COMPANY hereunder):
3.1 Ownership of Stock.
Each Shareholder is the lawful owner of his/her Onny Stock to be
transferred to COMPANY free and clear of all preemptive or similar rights and
Liens, and the delivery to COMPANY of the Onny Stock pursuant to the provisions
of this Agreement will transfer to COMPANY valid title thereto, free and clear
of all Liens. To the knowledge of each Shareholder, the Onny Stock to be
exchanged herein has been duly authorized and validly issued and is fully paid
and nonassessable.
3.2 Authority to Execute and Perform Agreement; No Breach.
Each Shareholder has the full legal right and power and all authority and
approval required to enter into, execute and deliver this Agreement, and to
sell, assign, transfer and convey the Onny Stock and to perform fully his
respective obligations hereunder. This Agreement has been duly executed and
delivered by each Shareholder and, assuming due execution and delivery by, and
enforceability against COMPANY, constitutes the valid and binding obligation of
each Shareholder enforceable in accordance with its terms, subject to the
qualifications that enforcement of the rights and remedies created hereby is
subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors, and (b) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). No approval or consent of, or filing with, any Governmental Entity,
and no approval or consent of, or filing, with any other Person is required to
be obtained by the Shareholders or in connection with the execution and delivery
by the Shareholders of this Agreement and consummation and performance by them
of the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by each
Shareholder and the consummation of the transactions contemplated hereby in
accordance with the terms and conditions hereof by each Shareholder will not:
(a) violate, conflict with or result in the breach of any of the terms of,
or constitute (or with notice or lapse of time or both would constitute) a
default under, any contract, lease, agreement or other instrument or obligation
to which a Shareholder is a party or by or to which any of the properties and
assets of any of the Shareholders may be bound or subject;
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(b) violate any order, judgment, injunction, award or decree of any court,
arbitrator, governmental or regulatory body, by which a Shareholder or the
securities, assets, properties or business of any of them is bound; or
(c) violate any statute, law or regulation to which any Shareholder is
subject.
3.3 Securities Matters.
The Shareholders hereby represent, warrant and covenant to COMPANY, as
follows:
(a) The Shareholders have been advised that COMPANY Stock has not been
registered under the Securities Act, or any state securities act in reliance on
exemptions therefrom.
(b) COMPANY Stock is being acquired solely for each Shareholder's own
account, for investment and are not being acquired with a view to or for the
resale, distribution, subdivision or fractionalization thereof. The Shareholders
have no present plans to enter into any such contract, undertaking, agreement or
arrangement and the Shareholders further understand that the COMPANY Stock may
only be resold pursuant to a registration statement under the Securities Act, or
pursuant to some other available exemption.
(c) The Shareholders agree that the certificate or certificates
representing the COMPANY Stock will be inscribed with substantially the
following legend:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933. The securities have been acquired for
investment and may not be sold, transferred or assigned in the absence of an
effective registration statement for these securities under the Securities Act
of 1933 or an opinion of counsel that registration is not required under said
Act."
(d) The Shareholders acknowledge that an investment in COMPANY is subject
to a high degree of risk and that, even though the COMPANY's common stock is
quoted on the NASD Over-the-Counter Bulletin Board, there exists no established
trading market for the COMPANY Stock.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ONNY
Onny hereby represents and warrants to COMPANY as follows (it being
acknowledged that COMPANY is entering into this Agreement in material reliance
upon each of the following representations and warranties, and that the truth
and accuracy of each, as evidenced by the execution of this Agreement by a duly
authorized officer of Onny, constitutes a condition precedent to the obligations
of the COMPANY hereunder):
4.1 Organization, Standing and Corporate Power
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Each of Onny and Hainan Helpson Medicine & Biotechnique Co. Ltd., Onny's
wholly-owned subsidiary (the "Helpson"), is a company with limited liability
duly organized, validly existing and in good standing under the laws of the
British Virgin Islands ("BVI") and the People's Republic of China (the "PRC"),
respectively, and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business substantially as now
conducted, except where the failure to do so would not have, individually or in
the aggregate, a Onny Material Adverse Effect. Furthermore, Onny has all
requisite Permits necessary to own and operate Helpson as a wholly owned
subsidiary. For purposes of this Agreement, the term "Onny Material Adverse
Effect" means any Material Adverse Effect with respect to Onny and Helpson,
taken as a whole, or any change of effect that adversely, or is reasonably
expected to adversely, affect the ability of Onny to consummate the transactions
contemplated by this Agreement in any material respect or materially impair or
delay Onny's ability to perform its obligations hereunder.
4.2 Authority; Non-contravention.
Onny has the requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance by Onny of this Agreement and the
consummation of the transactions contemplated hereby by Onny have been duly
authorized by all necessary corporate action on the part of Onny. This Agreement
has been duly executed and delivered by Onny and, assuming this Agreement
constitutes the valid and binding agreement of COMPANY, constitutes a valid and
binding obligation of Onny, enforceable against Onny in accordance with its
terms, subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors, and (b) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement, will not (x) conflict with any provisions
of the charter or other organizational or governing documents of Onny, (y)
subject to the governmental filings and other matters referred to in the
following sentence, conflict with, result in a breach of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
first refusal, termination, cancellation or acceleration of any obligation
(including to pay any sum of money) or loss of a material benefit under, or
require the consent of any Person under, any indenture, or other material
agreement, Permit, concession, ground lease or similar instrument or undertaking
to which Onny is a party or by which COMPANY or any of its assets are bound or
affected, result in the creation or imposition of a Lien against any material
asset of Onny, which singly or in the aggregate would have a Onny Material
Adverse Effect, or (z) subject to the governmental filings and other matters
referred to in the following sentence, contravene any law, rule or regulation,
or any order, writ, judgment, injunction, decree, determination or award binding
on or applicable to Onny or Helpson and currently in effect, which, in the case
of clauses (y) and (z) above, singly or in the aggregate, would have a Onny
Material Adverse Effect. No consent, approval or authorization of, or
declaration or filing with, or notice to, any Governmental Entity or any third
party which has not been received or made is required by or with respect to Onny
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in connection with the execution and delivery of this Agreement by Onny or the
consummation by Onny of the transactions contemplated hereby, except for
consents, approvals, authorizations, declarations, filings and notices that, if
not obtained or made, will not, individually or in the aggregate, result in a
Onny Material Adverse Effect.
4.3 Financial Statements.
The financial statements of Onny and Helpson have been audited by the
chartered accounting firm of Xxxxx Xxxxx for the periods ended as of December
31, 2003 and 2004, and May 31, 2005, respectively, each in conformity with U.S.
Generally Accepted Accounting Principles ("GAAP").
4.4 Capital Structure.
As of the Effective Date, 39,700 outstanding shares of the ordinary shares
of Onny were issued and outstanding and no shares of Onny Stock were held by
Onny in its treasury. All outstanding shares of capital stock of Onny are duly
authorized and validly issued, and are fully paid and nonassessable and not
subject to preemptive or similar rights. No bonds, debentures, notes or other
indebtedness of Onny having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
the Shareholders may vote are issued or outstanding. Except for this Agreement,
Onny does not have and, at or after Closing will not have, any outstanding
options, warrants, call, subscriptions or other rights, agreements or
commitments which either (a) obligates Onny to issue, sell or transfer,
repurchase, redeem or otherwise acquire or vote any shares of the capital stock
of Onny, or (b) restricts the voting, disposition or transfer of shares of
capital stock of Onny. There are no outstanding stock appreciation rights or
similar derivative securities or rights of Onny.
4.5 Subsidiaries.
Other than as provided on Schedule 4.5, neither Onny nor Helpson owns,
directly or indirectly, any of the capital stock of any other corporation or any
equity, profit sharing, participation or other interest in any corporation,
partnership, joint venture or other entity.
4.6 Intellectual Property.
Schedule 4.6 lists the trademarks, trade names, service marks, patents,
copyrights used by Onny and Helpson and any applications with respect thereto.
Neither Onny nor Helpson has any knowledge of any claim that, or inquiry as to
whether, any product, activity or operation of Onny or Helpson infringes upon or
involves, or has resulted in the infringement of, any trademarks, trade names,
service marks, patents, copyrights or other proprietary rights of any other
Person, corporation or other entity; and no proceedings have been Instituted,
are pending or are threatened with respect thereto.
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4.7 Absence of Certain Changes or Events; No Undisclosed Material
Liabilities.
(a) Each of Onny and Helpson has conducted its business only in the
ordinary course, and, there has not been (i) any change, destruction, damage,
loss or event which has had or could reasonably be expected to have,
individually or in the aggregate a Onny Material Adverse Effect; (ii) any
declaration, setting aside or payment of any dividend or other distribution in
respect of shares of Onny or Helpson's capital stock, or any repurchase,
redemption or other acquisition by Onny or Helpson of any shares of their
respective capital stock or equity interests, as applicable; (iii) any increase
in the rate or terms of compensation payable or to become payable by Onny or
Helpson to its directors, officers or key employees; (iv) any entry into, or
increase in the rate or terms of, any bonus, insurance, severance, pension or
other employee or retiree benefit plan, payment or arrangement made to, for or
with any such directors, officers or employees; (v) any entry into any
agreement, commitment or transaction by Onny or Helpson, or waiver, termination,
amendment or modification to any agreement, commitment or transaction, which is
material to Onny or Helpson taken as a whole; (vi) any material labor dispute
involving the employees of Onny or Helpson; (vii) any change by Onny or Helpson
in accounting methods, principles or practices except as required or permitted
by GAAP; (viii) any write-off or write-down of, or any determination to
write-off or write-down, any asset of Onny or Helpson or any portion thereof;
(ix) any split, combination or reclassification of any of Onny or Helpson's
capital stock or issuance or authorization relating to the issuance of any other
securities in respect of, in lieu of or in substitution for shares of Onny or
Helpson's capital stock; (x) any amendment of any material term of any
outstanding security of Onny or Helpson; (xi) any loans, advances or capital
contributions to or investments in, any other Person in existence on the
Effective Date made by Onny or Helpson; (xii) any sale or transfer by Onny or
Helpson of any of the assets of Onny or Helpson, as applicable; (xiii)
cancellation of any material debts or claims or waiver of any material rights by
Onny or Helpson; or (xiv) any agreements by Onny or Helpson to (a) do any of the
things described in the preceding clauses (i) through (xiii) other than as
expressly contemplated or provided for herein or (b) take, whether in writing or
otherwise, any action which, if taken prior to the Effective Date, would have
made any representation or warranty of Onny in this Agreement untrue or
incorrect in any material respect.
(b) Helpson has no liabilities, except as set forth in its financial
statements for the period ended May 31, 2005 or otherwise incurred in the
ordinary course of business.
4.8 Books and Records.
The books of account and other financial records of Onny and Helpson, all
of which have been made available to COMPANY, are complete and correct and
represent actual, bona fide transactions and have been maintained in accordance
with sound business practices.
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4.9 Employees.
Neither Onny nor Helpson has any labor disputes with its respective
employees. There are no loans or other obligations payable or owing by Onny or
Helpson to any stockholder, officer, director or employee of Onny or Helpson, as
applicable, nor are there any loans or debts payable or owing by any of such
persons to Onny or Helpson or any guarantees by Onny or Helpson of any loan or
obligation of any nature to which any such Person is a party.
4.10 Employee Benefit Plans.
All employee benefit plans provided by Helpson to its employees are
operated under and in accordance with applicable laws of PRC.
4.11 Compliance with Applicable Laws.
Each of Onny and Helpson has and after giving effect to the transactions
contemplated hereby will have in effect all Permits necessary for it to own,
lease or operate its properties and assets and to carry on its business as now
conducted, and to the knowledge of Onny there has occurred no default under any
such Permit, except for the lack of Permits and for defaults under Permits which
individually or in the aggregate would not have a Onny Material Adverse Effect.
To Onny's Knowledge, each of Onny and Helpson is in compliance with, and has no
liability or obligation under, any applicable statute, law, ordinance, rule,
order or regulation of any Governmental Entity, including any liability or
obligation to undertake any remedial action under Hazardous Substances Laws (as
hereinafter defined), except for instances of non-compliance, liabilities or
obligations, which individually or in the aggregate would not have a Onny
Material Adverse Effect.
4.12 Insurance
Except as disclosed on Schedule 4.12, neither Onny nor Helpson has any
insurance policies in effect.
4.13 Litigation, etc.
As of the Effective Date, (a) there is no suit, claim, action or proceeding
(at law or in equity) pending or, to the knowledge of Onny, threatened against
Onny or Helpson (including, without limitation, any product liability claims)
before any court or governmental or regulatory authority or body, and (b)
neither Onny nor Helpson is subject to any outstanding order, writ, judgment,
injunction, order, decree or arbitration order that, in any such case described
in clauses (a) and (b), (i) could reasonably be expected to have, individually
or in the aggregate, a Onny Material Adverse Effect or (ii) involves an
allegation of criminal misconduct or a violation of the Racketeer and Influenced
Corrupt Practices Act. As of the Closing, there are no suits, actions, claims or
proceedings pending or, to Onny's Knowledge, threatened, seeking to prevent,
hinder, modify or challenge the transactions contemplated by this Agreement.
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4.14 Contracts.
Schedule 4.14 lists all material contracts, leases, arrangements or
commitments (whether oral or written) of either Onny or Helpson relating to: (a)
the employment of any Person; (b) collective bargaining with, or any
representation of any employees by, any labor union or association; (c) the
acquisition of services, supplies, equipment or other personal property; (d) the
purchase or sale of real property; (e) distribution, agency or construction; (f)
lease of real or personal property as lessor or lessee or sublessor or
sublessee; (g) lending or advancing of funds; (h) borrowing of funds or receipt
of credit; (i) incurring any obligation or liability; or (j) the sale of
personal property.
4.15 Real Property.
Onny and Helpson have good and marketable title to all properties and
assets, real and personal, proprietary or otherwise, reflected in their
respective balance sheets.
4.16 Environmental Matters.
The operations of each of Onny and Helpson comply with all applicable local
and national environmental laws.
4.17 Solicitation.
None of Onny, Helpson, or the officers, directors, Affiliates or agents of
Onny or Helpson, or any other Person acting on behalf of Onny or Helpson has
solicited, directly or indirectly, any Person to enter into a merger or similar
business combination transaction with Onny or Helpson by any form of general
solicitation, including, without limitation, any advertisement, article, notice
or other communication published in any newspaper, magazine or similar media or
broadcast over television or radio or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
4.18 Disclosure.
The representations and warranties and statements of fact made by Onny in
this Agreement are, as applicable, accurate, correct and complete and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained herein
not false or misleading.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF COMPANY
COMPANY hereby represents and warrants to Onny and the Shareholders as
follows (it being acknowledged that Onny and the Shareholders are entering into
this Agreement in material reliance upon each of the following representations
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and warranties, and that the truth and accuracy of each, as evidenced by the
execution of this Agreement by a duly authorized officer of COMPANY, constitutes
a condition precedent to the obligations of Onny and the Shareholders
hereunder):
5.1 Organization, Standing and Power.
COMPANY is duly organized, validly existing and in good standing under the
laws of Delaware and has the requisite corporate power and authority to carry on
its business as now being conducted. COMPANY is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not have a
COMPANY Material Adverse Effect. For purposes of this Agreement, the term
"COMPANY Material Adverse Effect" means any Material Adverse Effect with respect
to COMPANY, taken as a whole, or any change or effect that adversely, or is
reasonably expected to adversely, affect the ability of COMPANY to consummate
the transactions contemplated by this Agreement in any material respect or
materially impairs or delays COMPANY' ability to perform its obligations
hereunder. COMPANY has made available to Onny complete and correct copies of its
charter documents and bylaws.
5.2 Capital Structure.
As of the Effective Date, the authorized capital stock of COMPANY consists
of 30,000,000 shares of Company Stock. Immediately following the Closing, there
will be 30,000,000 shares of common stock of COMPANY issued and outstanding. All
outstanding shares of capital stock of COMPANY will have been duly authorized
and validly issued, and will be fully paid and nonassessable and not subject to
preemptive or similar rights. No bonds, debentures, notes or other indebtedness
of COMPANY having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which the stockholders of
COMPANY may vote are issued or outstanding. Except for this Agreement, COMPANY
does not have, and at or after Closing will not have, any outstanding option,
warrant, call, subscription or other right, agreement or commitment which either
(a) obligates COMPANY to issue, sell or transfer, repurchase, redeem or
otherwise acquire or vote any shares of the capital stock of COMPANY, or (b)
restricts the voting, disposition or transfer of shares of capital stock of
COMPANY. There are no outstanding stock appreciation rights or similar
derivative securities or rights of COMPANY.
5.3 Authority: Non-contravention.
COMPANY has the requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement by COMPANY and the
consummation by COMPANY of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of COMPANY. This
Agreement has been duly executed and delivered by COMPANY and, assuming this
Agreement constitutes the valid and binding agreement of Onny and the
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Shareholders, constitutes a valid and binding obligation of COMPANY, enforceable
against COMPANY in accordance with its terms, subject to (a) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws of general application affecting the rights and remedies of
creditors, and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity). The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions hereof, will
not, (x) conflict with any of the provisions of the charter documents or bylaws
of COMPANY, (y) subject to the governmental filings and other matters referred
to in the following sentence, conflict with, result in a breach of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of first refusal, termination, cancellation or acceleration of any
obligation (including to pay any sum of money) or loss of a benefit under, or
require the consent of any Person under, any indenture or other agreement,
Permit, concession, ground lease or similar instrument or undertaking to which
COMPANY is a party or by which COMPANY or any of its assets are bound or
affected, result in the creation or imposition of a Lien against any material
asset of COMPANY, which, singly or in the aggregate, would have a COMPANY
Material Adverse Effect, or (z) subject to the governmental filings and other
matters referred to in the following sentence, contravene any law, rule or
regulation, or any order, writ, judgment, injunction, decree, determination or
award binding on COMPANY currently in effect, which in the case of clauses (y)
and (z) above, singly or in the aggregate, would have a COMPANY Material Adverse
Effect. Except as required by applicable federal securities law, no consent,
approval or authorization of, or declaration or filing with, or notice to, any
Governmental Entity or any third party which has not been received or made is
required by or with respect to COMPANY in connection with the execution and
delivery of this Agreement by COMPANY or the consummation by COMPANY of the
transactions contemplated hereby, except for consents, approvals,
authorizations, declarations, filings and notices that, if not obtained or made,
will not, individually or in the aggregate, result in a COMPANY Material Adverse
Effect.
5.4 Subsidiaries.
COMPANY does not own, directly or indirectly, any of the capital stock of
any other corporation or any equity, profit sharing, participation or other
interest in any corporation, partnership, joint venture or other entity.
5.5 Intellectual Property.
COMPANY does not own or use any trademarks, trade names, service marks,
patents, copyrights or any applications with respect thereto. COMPANY has no
knowledge of any claim that, or inquiry as to whether, any product, activity or
operation of COMPANY infringes upon or involves, or has resulted in the
infringement of, any trademarks, trade names, service marks, patents, copyrights
or other proprietary rights of any other Person, corporation or other entity;
and no proceedings have been instituted, are pending or are threatened with
respect thereto.
5.6 Absence of Certain Changes or Events; No Undisclosed Material
Liabilities.
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(a) The Shareholders have been provided with the audited financial
statements of COMPANY as of June 30, 2004 and June 30, 2005 (collectively, the
"Financial Statements"). Except as otherwise disclosed in its filings or public
record with the Securities and Exchange Commission, COMPANY has conducted its
business only in the ordinary course, and there has not been (i) any change,
destruction, damage, loss or event which has had or could reasonably be expected
to have, individually or in the aggregate a COMPANY Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or other
distribution in respect of shares of COMPANY' capital stock, or any repurchase,
redemption or other acquisition by COMPANY of any shares of their respective
capital stock or equity interests, as applicable; (iii) any increase in the rate
or terms of compensation payable or to become payable by COMPANY to its
directors, officers or key employees; (iv) any entry into, or increase in the
rate or terms of, any bonus, insurance, severance, pension or other employee or
retiree benefit plan, payment or arrangement made to, for or with any such
directors, officers or employees; (v) any entry into any agreement, commitment
or transaction by COMPANY, or waiver, termination, amendment or modification to
any agreement, commitment or transaction, which is material to COMPANY taken as
a whole; (vi) any material labor dispute involving the employees of COMPANY;
(vii) any change by COMPANY in accounting methods, principles or practices
except as required or permitted by GAAP; (viii) any write-off or write-down of,
or any determination to write-off or write-down, any asset of COMPANY or any
portion thereof; (ix) any split, combination or reclassification of any of
COMPANY' capital stock or issuance or authorization relating to the issuance of
any other securities in respect of, in lieu of or in substitution for shares of
COMPANY' capital stock; (x) any amendment of any material term of any
outstanding security of COMPANY; (xi) any loans, advances or capital
contributions to or investments in, any other Person in existence on the
Effective Date made by COMPANY; (xii) any sale or transfer by COMPANY of any of
the assets of COMPANY; (xiii) cancellation of any material debts or claims or
waiver of any material rights by COMPANY; or (xiv) any agreements by COMPANY to
(a) do any of the things described in the preceding clauses (i) through (xiii)
other than as expressly contemplated or provided for herein or (b) take, whether
in writing or otherwise, any action which, if taken prior to the Effective Date,
would have made any representation or warranty of COMPANY in this Agreement
untrue or incorrect in any material respect.
(b) Except as otherwise set forth in Schedule 5.6(b) hereof, COMPANY has
no Liabilities as of the Effective date that in the aggregate shall
exceed $10,000. Halter agrees that such liabilities shall be paid off
by it within 30 days after the closing.
5.7 Books and Records.
The books of account and other financial Records of COMPANY, all of which
have been made available to Onny, are complete and correct and represent actual,
bona fide transactions and have been maintained in accordance with sound
business practices and the requirements of Section 13(b)(2) of the Exchange Act.
12
5.8 Employees.
Except with regard to Xxxxxxx X. Xxxxxx, COMPANY's sole officer and
director, COMPANY (a) has no employees, (b) does not owe any compensation of any
kind, deferred or otherwise, to any current or previous employees, (c) has no
written or oral employment agreements with any officer or director of COMPANY or
(d) is not a party to or bound by any collective bargaining agreement. There are
no loans or other obligations payable or owing by COMPANY to any stockholder,
officer, director or employee of COMPANY, nor are there any loans or debts
payable or owing by any of such persons to COMPANY or any guarantees by COMPANY
of any loan or obligation of any nature to which any such Person is a party.
5.9 Employee Benefit Plans.
COMPANY has no (a) non-qualified deferred or incentive compensation or
retirement plans or arrangements, (b) qualified retirement plans or
arrangements, (c) other employee compensation, severance or termination pay or
welfare benefit plans, programs or arrangements or (d) any related trusts,
insurance contracts or other funding arrangements maintained, established or
contributed to by COMPANY.
5.10 Compliance with Applicable Laws.
COMPANY has and after giving effect to the transactions contemplated hereby
will have in effect all Permits necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and to the
Knowledge of COMPANY there has occurred no default under any such Permit, except
for the lack of Permits and for defaults under Permits which individually or in
the aggregate would not have a COMPANY Material Adverse Effect. To COMPANY'
Knowledge, COMPANY is in compliance with, and has no liability or obligation
under, any applicable statute, law, ordinance, rule, order or regulation of any
Governmental Entity, including any liability or obligation to undertake any
remedial action under Hazardous Substances Laws (as hereinafter defined), except
for instances of non-compliance, liabilities or obligations, which individually
or in the aggregate would not have a COMPANY Material Adverse Effect.
5.11 Insurance.
COMPANY has no insurance policies in effect.
5.12 Litigation, etc.
As of the Effective Date, (a) there is no suit, claim, action or proceeding
(at law or in equity) pending or, to the Knowledge of COMPANY, threatened
against COMPANY (including, without limitation, any product liability claims)
before any court or governmental or regulatory authority or body, and (b)
COMPANY is not subject to any outstanding order, writ, judgment, injunction,
order, decree or arbitration order that, in any such case described in clauses
(a) and (b), (i) could reasonably be expected to have, individually or in the
13
aggregate, a COMPANY Material Adverse Effect or (ii) involves an allegation of
criminal misconduct or a violation of the Racketeer and Influenced Corrupt
Practices Act. As of the Closing, there are no suits, actions, claims or
proceedings pending or, to COMPANY' Knowledge, threatened, seeking to prevent,
hinder, modify or challenge the transactions contemplated by this Agreement.
5.13 Contracts.
Except for its contract with Securities Transfer Corporation, a Texas
corporation ("STC"), pursuant to which STC acts as COMPANY' stock transfer
agent, COMPANY has no material contracts, leases, arrangements or commitments
(whether oral or written) and is not a party to or bound by or affected by any
contract, lease, arrangement or commitment (whether oral or written) relating
to: (a) the employment of any Person; (b) collective bargaining with, or any
representation of any employees by, any labor union or association; (c) the
acquisition of services, supplies, equipment or other personal property; (d) the
purchase or sale of real property; (e) distribution, agency or construction; (f)
lease of real or personal property as lessor or lessee or sublessor or
sublessee; (g) lending or advancing of funds; (h) borrowing of funds or receipt
of credit; (i) incurring any obligation or liability; or (j) the sale of
personal property.
5.14 Real Property.
COMPANY does not own or lease any real property.
5.15 Quotation.
As of the Effective Date, the COMPANY Stock will remain eligible for
quotation on the NASD Over-the-Counter Bulletin-Board.
5.16 Filings.
Prior to the Effective Date, COMPANY has filed all reports required to be
filed by it under the Securities Exchange Act.
5.17 Environmental Matters.
COMPANY has not received any written notice from any Governmental Entity
that there exists any violation of any Hazardous Substances Law (as hereinafter
defined). COMPANY has no Knowledge (a) of any Hazardous Substances (as
hereinafter defined) present on, under or about any COMPANY asset, and to
COMPANY' Knowledge no discharge, spillage, uncontrolled loss, seepage or
filtration of Hazardous Substances has occurred on, under or about any COMPANY
asset, (b) that any COMPANY assets violates, or has at any time violated, any
Hazardous Substance Laws, and (c) that there is a condition on any asset for
which COMPANY has an obligation to undertake any remedial action pursuant to
Hazardous Substance Laws. For purposes hereof, "Hazardous Substances" means,
without limitation (i) those substances included within definitions of any one
or more of the terms "Hazardous Substance," and "Hazardous Waste," "Toxic
Substance" and "Hazardous Material" in the Comprehensive Environmental Response
14
Compensation and Liability Act, 42 U.S.C. ss. 90,601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq., the Toxic Substances
Control Act, 15 U.S.C. ss. 2601, et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801 et seq., the Occupational Safety and Health Act, 29
U.S.C. ss. 651, et seq., (insofar as it relates to employee health and safety in
relation to exposure to Hazardous Substances) and any other local, state,
federal or foreign laws or regulations related to the protection of public
health or the environment (collectively, "Hazardous Substances Laws"); (ii) such
other substances, materials or wastes as are or become regulated under, or as
are classified as hazardous or toxic under Hazardous Substance Laws; and (iii)
any materials, wastes or substances that can be defined as (v) petroleum
products or wastes; (w) asbestos; (x) polychlorinated biphenyl; (y) flammable or
explosive; or (z) radioactive.
5.18 Anti-takeover Plan: State Takeover Statutes.
COMPANY does not have in effect any plan, scheme, device or arrangement,
commonly or colloquially known as a "poison pill" or "anti-takeover" plan or any
similar plan, scheme, device or arrangement. The Board of Directors of COMPANY
has approved this Agreement. No other state takeover statute or similar statute
or regulation applies or purports to apply to the Exchange, this Agreement or
any of the transactions contemplated by this Agreement.
5.19 Solicitation.
None of COMPANY, its officers, directors, Affiliates or agents, or any
other Person acting on its behalf has solicited, directly or indirectly, any
Person to enter into a merger or similar business combination transaction with
COMPANY by any form of general solicitation, including, without limitation, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
5.20 Disclosure.
The representations and warranties and statements of fact made by COMPANY
in this Agreement are, as applicable, accurate, correct and complete and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained herein
not false or misleading.
ARTICLE VI.
INDEMNIFICATION
6.1 Indemnification of Onny and Shareholders.
(a) COMPANY shall, from and after the Closing, indemnify, defend and hold
harmless the Shareholders, Onny, and Onny's officers, directors, Affiliates or
agents, and any other Person acting on its behalf (the "Onny Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities or judgments or amounts
15
that are paid in settlement with the approval of the indemnifying party (the
"COMPANY Indemnified Liabilities") based on, or arising out of, or pertaining to
this Agreement or the transactions contemplated hereby, in each case, to the
fullest extent permitted under the laws of the State of Delaware.
(b) The Onny Indemnified Parties shall have the right to conduct the
defense of any action giving rise to a claim for indemnity under this Agreement
with counsel of their own choosing. Onny, the Shareholders and COMPANY agree
that all rights to indemnification, including provisions relating to advances of
expenses incurred in defense of any action or suit, existing in favor of the
Onny Indemnified Parties with respect to matters occurring through the Closing,
shall survive the Exchange and shall continue in full force and effect for a
period of not less than two years from the Closing; provided, however, that all
rights to indemnification in respect of any Onny Indemnified Liabilities
asserted or made within such period shall continue until the disposition of such
Onny Indemnified Liabilities.
(c) The provisions of this Section 6.1 are intended to be for the benefit
of, and shall be enforceable by, each Onny Indemnified Party, his or her heirs
and his or her personal representatives and shall be binding upon all successors
and assigns of COMPANY and Onny.
6.2 Indemnification of COMPANY.
(a) Onny shall, from and after the Closing, indemnify, defend and hold
harmless COMPANY and COMPANY's officers, directors, Affiliates or agents, and
any other Person acting on its behalf (the "COMPANY Indemnified Parties")
against all losses, claims, damages, costs, expenses (including reasonable
attorneys' fees and expenses), liabilities or judgments or amounts that are paid
in settlement with the approval of the indemnifying party (the "COMPANY
Indemnified Liabilities") based on, or arising out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case, to the fullest
extent permitted under the laws of the State of Delaware and the British Virgin
Islands.
(b) COMPANY Indemnified Parties shall have the right to conduct the defense
of any action giving rise to a claim for indemnity under this Agreement with
counsel of their own choosing. Onny, the Shareholders and COMPANY agree that all
rights to indemnification, including provisions relating to advances of expenses
incurred in defense of any action or suit, existing in favor of the COMPANY
Indemnified Parties with respect to matters occurring through the Closing, shall
survive the Exchange and shall continue in full force and effect for a period of
not less than two years from the Closing; provided, however, that all rights to
indemnification in respect of any COMPANY Indemnified Liabilities asserted or
made within such period shall continue until the disposition of such COMPANY
Indemnified Liabilities.
(c) The provisions of this Section 6.2 are intended to be for the benefit
of, and shall be enforceable by, each COMPANY Indemnified Party, his or her
heirs and his or her personal representatives and shall be binding upon all
successors and assigns of COMPANY and Onny.
16
ARTICLE VII.
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Exchange.
The respective obligations of each party to effect the Exchange are subject
to the satisfaction or written waiver of the following conditions:
(a) No Injunctions or Restraints. No statute, rule, regulation, temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Exchange shall be in effect; provided,
however, that the party invoking this condition shall use its best efforts to
have any such temporary restraining order, injunction, order, restraint or
prohibition vacated.
(b) Governmental and Regulatory Consents. All material filings required to
be made prior to the Closing with, and all material consents, approvals, permits
and authorizations required to be obtained prior to the Closing from,
Governmental Entities, in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by Onny
and COMPANY will have been made or obtained (as the case may be).
7.2 Conditions to Obligations of Onny and the Shareholders.
The obligations of Onny and the Shareholders to effect the Exchange are
further subject to the satisfaction or written waiver on or prior to the Closing
of the following conditions:
(a) Representations and Warranties. The representations and warranties of
COMPANY set forth in Article V that are qualified as to materiality or Material
Adverse Effect shall be true and correct and the representations and warranties
of COMPANY set forth in Article V that are not so qualified shall be true and
correct in all material respects, in each case as of the Closing, except to the
extent such representations and warranties speak as of an earlier date. In
addition, all such representations and warranties shall be true and correct as
of the Closing, except to the extent such representation or warranty speaks of
an earlier date (without regard to any qualifications for materiality or
Material Adverse Effect) except to the extent that any such failure to be true
and correct (other than any such failure the effect of which is immaterial)
individually and in the aggregate with all such other failures would not have a
Material Adverse Effect.
(b) Performance of Obligations of COMPANY. COMPANY shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing.
(c) Board Representation. At the Closing and pursuant to a written consent
to action of the Board of Directors of COMPANY, the Board of Directors (i) shall
17
appoint Xx. Xxxxx Xxx Xxxx as a member of the Board of Directors, and (ii) all
existing officers shall resign as officers of COMPANY.
(d) Current Report and Registration Statement. Immediately following the
Closing, COMPANY shall file with the Securities and Exchange Commission (i) a
Current Report on Form 8-K to report the transaction contemplated hereunder and
(ii) a registration statement to register those shares of COMPANY Stock issued
to those Shareholders who participated in Onny's private offering of securities
deemed consummated on the Effective Date, which registration statement shall be
kept current by the Company for a period of 12 months from the date the
registration statement is declared effective by the U. S. Securities and
Exchange Commission.
(e) HFG Lockup. HFG agrees that it will not sell, transfer or otherwise
dispose of, except to Affiliates, 914,085 shares of the COMPANY's common stock
currently held by it until the earlier of the date the COMPANY completes an
equity based financing or the date which is nine months following the Effective
Date without the express written consent of the COMPANY.
(f) Amendment to Certificate of Incorporation. Immediately following the
Closing, COMPANY shall file an Information Statement in accordance with Section
14 of the Securities Exchange Act for the purpose of increasing the COMPANY's
authorized common capital stock to 100,000,000 shares. Upon the effectiveness of
the amendment to the COMPANY's certificate of incorporation, filed to effect the
increase in its common capital stock, the COMPANY shall issue to Xxxxx Xxx Xxxx
the 4,723,056 shares of COMPANY Stock (the "Post Closing Shares") to which she
would otherwise have been entitled if the Company had enough authorized shares
as of the Closing so as to increase her ownership in the COMPANY to 25,278,384
shares or approximately 72.8% of the issued and outstanding common capital stock
of the COMPANY following the issuance of the Post Closing Shares. The
Information Statement shall also provide for the changing of the COMPANY's name
and authorize the board of directors to effect up to a 2.89 for 1 reverse stock
split.
7.3 Conditions to Obligations of COMPANY.
The obligation of COMPANY to effect the Exchange is further subject to the
satisfaction or written waiver on or prior to Closing of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
Onny set forth in Article IV and the Shareholders set forth in Article III that
are qualified as to materiality or Material Adverse Effect shall be true and
correct and the representations and warranties of Onny set forth in Article IV
and the Shareholders set forth in Article III that are not so qualified shall be
true and correct in all material respects, in each case as of the Closing. In
addition, all such representations and warranties shall be true and correct as
of the Closing, except to the extent such representation or warranty speaks of
an earlier date (without regard to any qualifications for materiality or
Material Adverse Effect) except to the extent that any such failure to be true
and correct (other than any such failure the effect of which is immaterial)
individually and in the aggregate with all such other failures would not have a
Material Adverse Effect, and COMPANY shall have received a certificate signed on
18
behalf of Onny by the president of Onny to the effect set forth in this
paragraph;
(b) Performance of Obligations of Onny and the Shareholders. Onny and the
Shareholders shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing.
7.4 Frustration of Closing Conditions.
None of COMPANY, the Shareholders or Onny may rely on the failure of any
condition set forth in Sections 7.1, 7.2,or 7.3, as the case may be, to be
satisfied if such failure was caused by such party's failure to use reasonable
efforts to commence or complete the Exchange and the other transactions
contemplated by this Agreement.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties.
Except as otherwise contemplated herein, the representations and warranties
in this Agreement and in any instrument delivered pursuant to this Agreement
shall survive the Closing for a period of two years.
8.2 Fees and Expenses.
Each party hereto shall pay its own expenses incident to preparing for,
entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
8.3 Definitions.
For purposes of this Agreement, and except as otherwise defined in this
Agreement:
(a) "Affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "Governmental Entity" means any domestic or foreign governmental
agency or regulatory authority;
(c) "Knowledge" means actual knowledge. In order for an individual to have
Knowledge of a fact or matter, the individual must be actually aware of that
fact or matter. A Person (other than an individual) will be deemed to have
Knowledge of a particular fact or matter if any individual who is serving, or
who has at any time served, as a director, officer, partner, executor or trustee
of that Person (or in any similar capacity) has, or at any time had, Knowledge
of that fact or matter.
19
(d) "Liens" means, collectively, all material pledges, claims, liens,
charges, mortgages, conditional sale or title retention agreements,
hypothecations, collateral assignments, security interests, easements and other
encumbrances of any kind or nature whatsoever;
(e) "Material Adverse Effect" with respect to any Person means an event
that has had or would reasonably be expected to have a material adverse effect
on the business, financial condition or results of operations of such Person and
its subsidiaries taken as a whole;
(f) "Permits" means federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits an rights; and
(g) "Person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
(h) "Record" means information that is inscribed on a tangible medium or
that is stored in an electronic or other medium and is retrievable in
perceivable form.
(i) "Securities Act" means the Securities Act of 1933, as amended.
(j) "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
8.4 Usage.
In this Agreement, unless a clear contrary intention appears:
(a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person's successors and assigns
but, if applicable, only if such successors and assigns are not prohibited by
this Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually;
(c) reference to any gender includes each other gender or, in the case of
an entity, the neuter;
(d) reference to any agreement, document or instrument means such
agreement, document or instrument as amended or modified and in effect from time
to time in accordance with the terms thereof, and shall be deemed to refer as
well to all addenda, exhibits and schedules;
(e) reference to a Section or Schedule, such reference shall be to a
Section of, or a Schedule to, this Agreement unless otherwise indicated
(f) reference to any law means such law as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder and reference to any
section or other provision of any law means that provision of such law from time
20
to time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other provision;
(g) the table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) "hereunder", "hereof", "hereto" and words of similar import shall be
deemed references to this Agreement as a whole and not to any particular
Article, Section or other provision thereof;
(i) "including" (and with correlative meaning "include") means including
without limiting the generality of any description preceding such term;
(j) "or" is used in the inclusive sense of "and/or;" and
(k) with respect to the determination of any period of time, "from" means
"from and including" and "to" means "to but excluding."
8.5 Notices.
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to COMPANY prior to the Closing to:
Xxxxxxx X. Xxxxxx
00000 Xxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Tel: (000) 000-0000
(b) if to Onny and to COMPANY after the Closing to
Xxxxxxx Law
King and Wood LLP
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000 , USA
Tel: (000) 000-0000
Fax: (000) 000-0000
8.6 Counterparts.
This Agreement may be executed in two or more counterparts.
21
8.7 Entire Agreement; Third-Party Beneficiaries.
This Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement. This Agreement is not intended
to confer upon any Person other than the parties hereto and the third party
beneficiaries referred to in the following sentence, any rights or remedies. The
parties hereto expressly intend the provisions of Sections 6.1 and 6.2 to confer
a benefit upon and be enforceable by, as third party beneficiaries of this
Agreement, the third Persons referred to in, or intended to be benefited by,
such provisions.
8.8 Governing Law.
This agreement shall be governed by, and construed in accordance with, the
laws of the state of Delaware regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
8.9 Assignment.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of law
or otherwise by any of the parties without the prior written consent of the
other parties, and any such assignment that is not consented to shall be null
and void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
8.10 Enforcement.
The parties agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of Delaware,
this being in addition to any other remedy to which they are entitled at law or
in equity.
8.11 Severability.
Whenever possible, each provision or portion of any provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party, such invalidity, illegality or unenforceability
will not affect any other provision or portion of any provision in such
jurisdiction, and this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision or
portion of any provision had never been contained herein.
22
IN WITNESS WHEREOF, COMPANY, Onny, the Shareholders and HFG have executed this
Agreement to be effective as of the Effective Date.
TS ELECTRONICS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx, Chief Executive Officer
ONNY INVESTMENT LTD.
By: /s/ Xxxxx Xxx XXXX
------------------------------------------
Xxxxx Xxx XXXX, CEO
Halter Financial Group, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx, President
SHAREHOLDERS
By: /s/ Xxxxx Xxx XXXX
------------------------------------------
By: /s/ Xxxx X. Xxxxx
By: /s/ Liu Hainan
By: /s/ Nie Xinyong
By: /s/ Jiao Xueqian
By: /s/ Ma Fengdi
By: /s/ Xxxx Xxx
By: /s/ Peng Yuguo
23
By: /s/ He Shengping
By: Baslow Technology Limited
By: /s/ Xxxxx Xxxxxxx
By: /s/ Xx Xxxxxxx
By: /s/ Xx Xxx
By: /s/ Wang Guimin
By: /s/ Xx Xx
By: /s/ Qiu Kun
By: /s/ Wang Xinlu
By: /s/ Dai Xianshu
By: /s/ Long Yuqi
By: /s/ Jin Shuzhi
By: Clear View Investment Fund, LP
By: /s/ Zhou Huaizu
By: /s/ Liang Yinwen
By: /s/ Xxx Xxxxxxx
By: /s/ Zheng Min
By: /s/ Xxx Xxxxxx
By: /s/ Xxxx Xxxxxxxx
By: /s/ Zhang Jianye
By: /s/ Shang Liying
By: /s/ Xxxxx Xxxxxxx
By: /s/ Xxx Xx
24
By: /s/ Xxxx Xxxxx
By: /s/ Xxxx Xxx
By: /s/ Zhao Kai
By: /s/ Wang Tianan
By: /s/ Lv Ping
By: /s/ Mu Chuanquan
By: /s/ Xxxx Xxxxxxxx
By: /s/ Ma Yong
By: SICAV Placeuro-global China Fund
By: /s/ Xx Xxxxxx
By: /s/ Xxxx Xxxxxxx
By: /s/ Xxxx Xxxxxxxx
By: /s/ Dou Qilv
By: /s/ Xxx Xx
By: Pinncale China Fund, LP
By: /s/ Xxxxx Xxxxxxx
25
Exhibit 1.2 (a)
---------------------------------------------------------------- ---------------
Shares issued and outstanding immediately prior to 6,944,611
Closing
---------------------------------------------------------------- ---------------
Shares issued and outstanding immediately 30,000,000
following the Closing
---------------------------------------------------------------- ---------------
26
Schedule 4.5
Subsidiary
The only subsidiary of Onny is Helpson.
27
Schedule 4.6
As of the Effective Date, Helpson owns following trademarks:
--------------- ---------------- --------------------------- --------------------------------------------------------
Number Certificate Trade Xxxx Expiration Date
No.
--------------- ---------------- --------------------------- --------------------------------------------------------
1. 1271759 Funalin From May 14, 1999 to May 13, 2009
(Chinese characters)
--------------- ---------------- --------------------------- --------------------------------------------------------
2. 1272760 Fukexing From May 14, 1999 to May 13, 2009
(Chinese characters)
--------------- ---------------- --------------------------- --------------------------------------------------------
3. 1272792 Huipusen (Chinese From May 14, 1999 to May 13, 2009
characters)
HELPSON
--------------- ---------------- --------------------------- --------------------------------------------------------
4. 1280259 Symbol From June 7, 1999 to June 6, 2009
--------------- ---------------- --------------------------- --------------------------------------------------------
5. 1327731 Beisha From October 28, 1999 to October 27, 2009
(Chinese characters)
--------------- ---------------- --------------------------- --------------------------------------------------------
6. 1330294 Shiduotai From November 7, 1999 to November 6, 2009
(Chinese characters)
--------------- ---------------- --------------------------- --------------------------------------------------------
7. 1330295 Xinuo From November 7, 1999 to November 6, 2009
(Chinese characters)
--------------- ---------------- --------------------------- --------------------------------------------------------
8. 1476339 Symbol From November 21, 2000 to November 20, 2010
--------------- ---------------- --------------------------- --------------------------------------------------------
9. 1500459 HPS symbol From January 7, 2001 to January 6, 2011
--------------- ---------------- --------------------------- --------------------------------------------------------
10. 1511770 Symbol From January 21, 2001 to January 20, 2011
--------------- ---------------- --------------------------- --------------------------------------------------------
11. 1535420 Huipusen (Chinese From March 7, 2001 to March 6, 2011
characters)
HELPSON
--------------- ---------------- --------------------------- --------------------------------------------------------
12. 1535416 Symbol From March 7, 2001 to March 6, 2011
--------------- ---------------- --------------------------- --------------------------------------------------------
13. 1537828 Symbol From March 14, 2001 to March 13, 2010
--------------- ---------------- --------------------------- --------------------------------------------------------
28
Schedule 4.12
Insurance Policy
Helpson purchased only one insurance as summarized below:
----------------------- --------------------------------------------------------
Insurance Company Ping An Property & Casualty Insurance Company of China,
Ltd.
----------------------- --------------------------------------------------------
Policy No. 21500000740100030001
----------------------- --------------------------------------------------------
Date of Purchase August 6, 2003
----------------------- --------------------------------------------------------
Insured Items machinery and equipment of Helpson
----------------------- --------------------------------------------------------
Coverage Amount RMB 6,254,120 (approximately $781,765)
----------------------- --------------------------------------------------------
Deduction 5% of the property loss or RMB1,000 (approximately $125)
per Accident, whichever is higher.
----------------------- --------------------------------------------------------
Expiration Date August 6, 2005
----------------------- --------------------------------------------------------
29
Schedule 4.14
Material Contracts
30
Sales Contracts (Top-10 Distributors)(1)
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
Series Buyer Contract Date of Subject Matter Sales Volume Liabilities for
No. No. Execution Breach of
Contract
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
1 Hainan Liang Bi September Helpson granted the nationwide exclusive In the event that the If one party
Shi Cosmetics Co., 10th, 2002 distribution rights of aFGF products to LBS, monthly quantity of breaches
Ltd.("LBS") commencing from Oct 30th, 2002 to Oct products LBS buys contract, the
30th,2007. from Company has other is
been below 1000mg in entitled to
three consecutive terminate the
months, Helpson is contract.
entitled to choose
other distributors.
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
2 Hainan Xingling September Helpson granted the nationwide exclusive After five months of The breaching
Medical Co., 8th,2004 distribution rights of market starting period, party shall be
Ltd.("Xingling") Neurotrophicpeptide(2ml),Neurotrophicpeptide the monthly minimum liable for the
(5ml),Buflomedil sales for each kind of compensation
Hyfrochloride(5ml),Buflomedil product shall be as of losses
Hyfrochloride(0.15g)Cefaclor follows: incurred by the
Dispersible,and Roxithromycin products to Neurotrophicpeptide other party and
Xingling, commencing from September, (50,000 boxes), the matters
2004 to September,2007. Buflomedil concerning
Hyfrochloride (30,000 penalty and
boxes), Cefaclor liability for
Dispersible(20,000 breach of
boxes), Roxithromycin contract shall
(100,000 boxes). In the be governed by
event that the sales "Contract
(1) This list only reflects all the contracts between the top 10 distributors/
suppliers and the Company as provided by the Company.
31
quantity fails to meet Law".
the monthly minimum
requirement, Helpson is
entitled to terminate
the contract.
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
3 Hainan Helpson The Company can not provide the contract thereof.
Medical Co., Ltd.
------ ------------------ ----------------------------------------------------------------- ----------------------- ----------------
4 Shanxi Yida
Medical
Technology and The Company can not provide the contract thereof.
Trade Co., Ltd.
------ ------------------ ----------------------------------------------------------------- ----------------------- ----------------
0 Xxxxxxxx Xxxxxx XXX00000 March Sell 1000 boxes of Neurotrophicpeptide RMB143,475 Governed by
Medical Co., Ltd. 12th, 2004 "Contract Law"
and
"Regulations on
Purchase and
Sales Contracts
of Industrial
and Mineral
Products"
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HPS04006 April 3rd, Sell 200 boxes of Andrographolide Tablets RMB 2,608 ibid
2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HPS07007 July Sell 720 boxes of Buflomedil Hyfrochloride RMB 66,016.8 ibid
8th,2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HPS08005 August Sell 1000 boxes of Neurotrophicpeptide and RMB 179,359 ibid
6th, 2004 600 boxes of Buflomedil Hyfrochloride
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HPS08015 August Sell 300 boxes of Buflomedil Hyfrochloride RMB 43,042.5 ibid
26th,2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
6 Xxxxxxxx Xxxx XXX00000 February Sell 10800 boxes of Roxithromycin RMB 75,600 ibid
Dongjiang 27th, 2004
Medical Co., Ltd.
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
32
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HPS04007 April 3rd, Sell 6000 boxes of Roxithromycin RMB 35,100 ibid
2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HPS04017 April 16th, Sell 3000 boxes of Roxithromycin RMB 31,800 ibid
2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HPS04019 April 19th, Sell 3000 boxes of Roxithromycin RMB 31,800 ibid
2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
7 Hebei Province HPS02021 February Sell 2000 pieces of NGP RMB 4,000 ibid
Medical Co., Ltd. 26th, 2004
Medical
Distribution
Branch
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
8 Jinan Zhongxin HPS08042 August Sell 400 boxes of Neurotrophicpeptide RMB 44,840 ibid
Medical Co., Ltd. 2nd,2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HPS12034 December Sell 400 boxes of Neurotrophicpeptide RMB 44,840 ibid
20th, 2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
9 Qianjiang City The Company can not provide the contract thereof.
Yimin
Commercial and
Trade Co., Ltd.
------ ------------------ ----------------------------------------------------------------- ----------------------- ----------------
10 Shandong HT001 May Sell 1000 boxes of Neurotrophicpeptide RMB130,000 ibid
Province Jinan 18th,2004
Medical Purchase
and Supply
Station
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HT002 May 21st, Sell 651 boxes of Buflomedil Hyfrochloride RMB37,758 ibid
2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
HPS06005 June 17th, Sell 200 boxes of Neurotrophicpeptide RMB 23,000 ibid
2004
------ ------------------ -------- ----------- -------------------------------------------- ----------------------- ----------------
33
Purchase Contracts (Top-10 Suppliers)
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
Series Supplier Execution Date Subject Matter Purchase Volume Liabilities for Breach of
No. Contract
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
1 Hainan Xinxin Bio- March 1ST, 2004 Purchase 193.45g of RMB4,062,450 Governed by "Contract Law" and "General
technology Co, Ltd. Jieganzhi Principles of Civil Law"
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
Purchase 2000kg of RMB 4,400,000 Not provided
2 Chengdu Xing Xxxx Xx July 30th, 2004 Buflomedil
Medical Co, Ltd. Hydrochloride (raw
materials)
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
3 Chengdu Wangji February 1st, 2005 Xxxxxxxx 0000 xxxxxxx XXX 1,520,000 Not provided
Medical Instant of "101Cellulose
Prescription Co, Ltd. Microcrystallisate"
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
March 25th, 2005 Purchase 600kg of RMB 1,380,000 Not Provided
Clarithromycin(raw
materials)
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
First quarter of Purchase Yu Jiao Hua RMB 513,350 Not provided
2005 Dian Fen
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
4 Zhejiang Zhenyuan January 5th, 2005 Purchase 300kg of RMB 390,000 Governed by "Contract Law"
Pharmacy Co, Ltd. Roxithromycin,
effective from January
1st 2004 to June 30th,
2004
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
5 Jiangsu Province July 5th, 2004 Purchase 50kg of RMB150,000 Not provided
Xinnuo Medical Cefaclor Dispersible
foreign Trade Co, Ltd.
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
October 25th, 2004 Purchase 50kg of RMB 144,000 Governed by "Economic Contract Law"(2)
Cefaclor Dispersible
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
6 Zhejiang Huayi August 24th, 2004 Purchase 60kg of RMB 113,400 Governed by "Contract Law"
Medical Co,.Ltd. Clarithromycin,
effective from August
24th, 2004 to August
23, 2005
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
(2) The Economic Contract Law has been abolished on October 1st, 1999 and
replaced by Contract Law.
34
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
7 Hainan Sanye Printing The Company can not provide the contract thereof.
Industrial Co., Ltd.
------ ---------------------- ------------------- ---------------------- -----------------------------------------------------------
8 China Medical foreign February 16th, 2004 Purchase 50kg of RMB 159,000 If the purchaser defers to pay the
Trade Co, Ltd. Cefaclor Dispersible contract price, it shall pay penalty to
the supplier in accordance with
the regulations on deferred
payment of the People's Bank of
China; if the goods are not
consistent with the contract or has
there is quality problem, the
purchaser has right to refuse to pay
part of the contract price, however,
it has the obligation of take
delivery and notify the supplier
immediately.
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
9 Hebei Changtian The Company can not provide the contract thereof.
Medical and Economic
Trade Co., Ltd.
Wholesale Department
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
10 Hangzhou Ouhua January 15th, 2004 Purchase 100kg of RMB 125,090 If the quantity, the qualifications
Medical and Chemical or package is not in consistent
Co, Ltd. with the contract, or the supplier
fails to deliver goods as provided
in the contract, the supplier shall
pay 10% of contract price to the
purchaser as penalty and undertake
all the economic losses of the
purchaser incurred thereof; if the
purchaser fails to take deli every
of the goods, it shall pay 5%
of contract price as penalty.
------ ---------------------- ------------------- ---------------------- --------------- -------------------------------------------
35
