SHARE PURCHASE AGREEMENT
SHARE
PURCHASE AGREEMENT (this “Agreement”), dated June 19, 2007, among Xxxxxxxx
Xxxxxx Enterprises, Inc., a Nevada corporation (the "Buyer"), Chongqing Qiluo
Textile Co. Ltd., a limited liability company organized under the laws of the
People’s Republic of China (the "Company"), Xinshengxiang Industrial Development
Co., Ltd., a limited liability company organized under the laws of the People’s
Republic of China (“Xinshengxiang”), Xx. Xxxxxxxxx Xxxxx, a individual residing
at Group 0, Xxxxxxxx Xxxx, Xxxxxx Xxxxxxxx, Xxxxxxxxx Xxxx, Xxxxx (“Dingliang”),
and Xx. Xxx Xxxxx, an individual residing at Xx.00, Xxxxxx Xxxxxxxx Xxxx, Xxxxxx
Xxxxxxxx, Xxxxxxxxx Xxxx, Xxxxx (“Yue,” and together with Xinshengxiang and
Dingliang, the "Sellers").
R
E C
I T A L S :
A.
Sellers
in the aggregate own one hundred percent (100%) of the shares of the registered
capital stock of the Company (the “Shares”).
B.
The
parties hereto desire that the Buyer acquire the Company by purchasing from
Sellers all of the Shares upon the terms and subject to the conditions of this
Agreement.
NOW
THEREFORE, in consideration of the mutual covenants and agreements herein,
and
the other good and valuable consideration, the adequacy, sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
DEFINITIONS
AND USAGE
1.1
DEFINITIONS
Certain
capitalized terms used in this Agreement are defined in Exhibit
1.1
attached
hereto.
1.2
USAGE
(a) Interpretation.
In this
Agreement, unless a clear contrary intention appears: (i) the singular number
includes the plural number and vice versa; (ii) 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;
(iii) reference to any gender includes each other gender; (iv) 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; (v) reference to any Legal Requirement means such Legal
Requirement 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
Legal Requirement means that provision of such Legal Requirement from time
to
time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other provision;
(vi) "hereunder," "hereof," "hereto," and words
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of
similar import shall be deemed references to this Agreement as a whole and
not
to any particular Article, Section or other provision hereof; (vii) "including"
(and with correlative meaning "include") means including without limiting the
generality of any description preceding such term; (viii) "or" is used in the
inclusive sense of "and/or"; (ix) with respect to the determination of any
period of time, "from" means "from and including" and "to" means "to but
excluding"; and (x) references to documents, instruments or agreements shall
be
deemed to refer as well to all addenda, exhibits, schedules or amendments
thereto.
(b) Accounting
Terms and Determinations.
Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP.
(c) Legal
Representation of the Parties.
The
parties agree that each party was either represented by its own separate and
independent counsel or had an opportunity to be so represented in connection
with this Agreement and the transactions contemplated hereby. This Agreement
was
negotiated by the parties with the benefit of legal representation, and any
rule
of construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any construction
or interpretation hereof.
ARTICLE
II
SALE
OF
SHARES; CONSIDERATION; CLOSING
2.1
THE
SALE
Upon
the
terms and subject to the conditions of this Agreement, at the
Closing:
(a)
Each
Seller shall sell, transfer and assign to the Buyer, and the Buyer shall
purchase from each Seller, such Seller’s respective Shares and any and all
rights in the Shares to which such Seller is entitled, and by doing so Sellers
shall be deemed to have assigned all of the right, title and interest in and
to
the Shares to Buyer. Such sale of the Shares shall be evidenced by stock
certificates, duly endorsed in blank or accompanied by stock powers duly
executed in blank, or other instruments of transfer in form and substance
satisfactory to the Buyer.
(b)
In
consideration therefor, the Buyer shall issue to an aggregate of 5,000,000
shares (the “Consideration Shares”) of Series A Convertible Preferred Stock, par
value $0.001 per share, of the Buyer, which shall be allocated between Sellers
as follows: ---4,750,000
Consideration Shares to Xinshengxiang; 125,000 Consideration Shares to
Dingliang; and 125,000 Consideration Shares to Yue. The Consideration Shares
shall be payable at the Closing by the issuance and delivery by Buyer to Sellers
of stock certificates dated as of the Closing Date registered in the names
and
in such amounts as aforementioned.
2.2
CLOSING
The
purchase and sale provided for in this Agreement (the "Closing") will take
place
at the offices of Xxxxx Xxxxx & Associates, PLLC, 00 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxx Xxxxxx, Xxx Xxxx 00000, commencing at 10:00 a.m. (local time) on June
19,
2007. Subject to the provisions of
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Article
9, failure to consummate the purchase and sale provided for in this Agreement
on
the date and time and at the place determined pursuant to this Section 2.2
will
not result in the termination of this Agreement and will not relieve any party
of any obligation under this Agreement. In such a situation, the Closing will
occur as soon as practicable, subject to Article 9.
2.3
CLOSING OBLIGATIONS
In
addition to any other documents to be delivered under other provisions of this
Agreement, at the Closing:
(a) Sellers
or Company, as the case may be, shall deliver to Buyer:
(i)
stock
certificates evidencing the Shares, duly endorsed in blank or accompanied by
stock powers duly executed in blank, with signatures guaranteed by a commercial
bank, or other instruments of transfer in form and substance reasonably
satisfactory to Buyer;
(ii)
the
stock books, stock ledgers, minute books, and corporate seals of
Company;
(iii)
the
financial statements referred to in Section 3.4 hereof and other information
required to be filed pursuant to the Exchange Act with the SEC by Buyer on
its
Current Report on Form 8-K in connection with the Closing;
(iv)
a
certificate executed by each Seller representing and warranting to Buyer that
each of Seller’s representations and warranties in this Agreement was accurate
in all respects as of the date of this Agreement and is accurate in all respects
as of the Closing Date as if made on the Closing Date (giving full effect to
any
supplements to the Schedules that were delivered by Seller to Buyer prior to
the
Closing Date in accordance with Section 5.5);
(v)
an
opinion of counsel to the Company and Sellers in the form annexed hereto as
Exhibit
2.3(a)(v);
and
(vi)
such
other documents and other instruments of transfer and conveyance as may be
requested by Buyer, each in form and substance satisfactory to Buyer and its
legal counsel and executed by Seller, if necessary.
(b) Buyer
shall deliver to the Seller:
(i) stock
certificates evidencing the Consideration Shares; and
(ii) a
certificate executed by Buyer as to the accuracy of its representations and
warranties as of the date of this Agreement and as of the Closing and as to
its
compliance with and performance of its covenants and obligations to be performed
or complied with at or before the Closing.
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ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Each
of
Sellers and the Company, jointly and severally, represent and warrant to Buyer,
as of the date hereof and as of the Closing Date, as follows:
3.1
ORGANIZATION AND GOOD STANDING
(a) Schedule
3.1(a)
contains
a complete and accurate list of Company's jurisdiction of organization and
any
other jurisdictions in which it is qualified to do business as a foreign entity.
Company is a limited liability company duly organized, validly existing and
in
good standing under the laws of its jurisdiction of organization, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own
or
use, and to perform all its obligations under the Company Contracts. Company
is
duly qualified to do business as a foreign entity and is in good standing under
the laws of each state or other jurisdiction in which either the ownership
or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification.
(b) Complete
and accurate copies of English translations of the Governing Documents of
Company, as currently in effect, are attached to Schedule
3.1(b)
hereto.
(c) Company
has no subsidiaries and does not own any shares of capital stock or other
securities of any other Person.
3.2
ENFORCEABILITY; AUTHORITY; NO CONFLICT
(a) This
Agreement constitutes the legal, valid and binding obligation of each Seller
and
the Company, enforceable against each of them in accordance with its terms.
Upon
the execution and delivery by each Seller and the Company of this Agreement
and
each other agreement to be executed or delivered by Sellers at the Closing,
including the Xxxxx Fan Stock Purchase Agreement (collectively, the “Sellers’
Closing Documents”), the Sellers’ Closing Documents will constitute the legal,
valid and binding obligation of each of Seller and the Company, enforceable
against each of them in accordance with its terms. Each
Seller and the Company has the absolute and unrestricted right, power and
authority to execute and deliver this Agreement and the Sellers’ Closing
Documents to which it is a party and to perform its obligations under this
Agreement and the Sellers’ Closing Documents, and such action has been duly
authorized by all necessary action by Sellers and the Company. Each Seller
and
the Company has all necessary legal capacity to enter into this Agreement and
the Sellers’ Closing Documents to which it is a party and to perform such its
obligations hereunder and thereunder.
(b) Neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or indirectly (with
or
without notice or lapse of time):
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(i) Breach
(A) any provision of any of the Governing Documents of Company or (B) any
resolution adopted by the board of directors or the shareholders of Company;
(ii) Breach
or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under
any Legal Requirement or any Order to which Company or any of Seller, or any
of
the Assets, may be subject;
(iii) contravene,
conflict with or result in a violation or breach of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental Authorization that is
held by Company or that otherwise relates to the Assets or to the business
of
Company;
(iv) Breach
any provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or payment
under, or to cancel, terminate or modify, any Company Contract; or
(v) result
in
the imposition or creation of any Encumbrance upon or with respect to any of
the
Assets or the Shares.
(c) Neither
Company nor any of Seller is required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
(d)
Xinshengxiang
is the sole record and beneficial owner of 95% of the Shares. Dingliang is
the
sole record and beneficial owner of 2.5% of the Shares. Yue is the sole record
and beneficial owner of 2.5% of the Shares. Each Seller has good and marketable
title to the Shares, free and clear of any Encumbrance. Upon the execution
and
delivery of this Agreement and issuance of the Consideration Shares to the
Sellers, Buyer shall be the lawful record and beneficial owner of the Shares,
free and clear of all Encumbrances.
There
are no stockholders’ agreements, voting trust, proxies, options, rights of first
refusal or any other Contracts, agreements or understandings with respect to
the
Shares.
3.3
CAPITALIZATION
(a)
Schedule
3.3(a)
correctly and completely sets forth: (i) the authorized capitalization of the
Company; and (ii) the percentage of each class of registered capital stock
of
the Company issued and outstanding. Sellers are and will be on the Closing
Date
the sole shareholders of the Company. Each Seller is and will be on the Closing
Date the record and beneficial owner of such Seller’s respective Shares, free
and clear of all Encumbrances. The Shares constitute one hundred (100%) percent
of the issued and outstanding shares of the registered capital stock of the
Company. The Shares have been duly authorized and validly issued and are fully
paid and non-assessable. Neither Seller has any obligation to the Company for
the Shares. The Shares were issued in compliance with all Legal
Requirements.
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(b)
There
are no Contracts relating to the issuance, sale or transfer of any equity
securities or other securities of Company, including any of the following:
options, warrants, agreements, or other rights for the acquisition of shares
of
the Company's capital stock; securities or other obligations of the Company
which are convertible into shares of the Company's capital stock; or sale
agreements, shareholder agreements, pledges, proxies, voting trusts, powers
of
attorney, restrictions on transfer or other agreements or instruments that
are
binding on Seller or the Company, including without limitation, any such
agreements or instruments that relate to the ownership, voting or transfer
of
any shares of the Company's capital stock.
3.4
FINANCIAL STATEMENTS
Prior
to
Closing, Company will have delivered to Buyer certain following financial
statements, including an audited balance sheet of Company as at December 31,
2006 (including the notes thereto, the "Balance Sheet"), and the related audited
statements of income, changes in stockholders' equity, and cash flows, together
with the report of the independent certified public accountants, and an
unaudited balance sheet of Company as at March 31, 2007 (the "Interim Balance
Sheet") and the related unaudited statements of income, changes in Sellers'
equity, and cash flows for the months then ended, including in each case the
notes thereto certified by Company's chief financial officer. Such financial
statements fairly present (and the financial statements delivered pursuant
to
Section 5.8 will fairly present) the financial condition and the results of
operations, changes in Shareholders' equity and cash flows of Company as at
the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP. The financial statements referred
to in
this Section 3.4 and delivered pursuant to Section 5.8 reflect and will reflect
the consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such financial statements. The
financial statements have been and will be prepared from and are in accordance
with the accounting Records of Company.
3.5
BOOKS
AND RECORDS
The
books
of account and other financial and other Records of Company, all of which have
been made available to Buyer, are complete and correct and represent actual,
bona fide transactions and have been maintained in accordance with sound
business practices. The minute books of Company, all of which have been made
available to Buyer, contain accurate and complete Records of all meetings held
of, and corporate action taken by, the shareholders, the board of directors
and
committees of the board of directors of Company, and no meeting of any such
shareholders, board of directors or committee has been held for which minutes
have not been prepared or are not contained in such minute books.
3.6
TANGIBLE PERSONAL PROPERTY; SUFFICIENCY OF ASSETS
(a)
Schedule
3.6(a)
is a
complete and accurate schedule describing, and specifying the location of,
all
Tangible Personal Property. Company owns good and marketable title to all of
the
Tangible Personal Property, free and clear of any Encumbrances, and none of
the
Tangible Personal Property is held under any lease, security agreement,
conditional sales contract, license, or other title retention or security
arrangement, or is located other than in the possession of
Company.
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(b)
The
Assets (i) constitute all of the assets, tangible and intangible, of any nature
whatsoever, necessary to operate Company's business in the manner presently
operated by Company and (ii) include all of the operating assets of
Company.
3.7
DESCRIPTION OF OWNED REAL PROPERTY
Schedule
3.7
contains
a correct legal description, street address and tax parcel identification number
of all tracts, parcels and subdivided lots in which Company has an ownership
interest.
3.8
DESCRIPTION OF LEASED REAL PROPERTY
Schedule
3.8
contains
a correct legal description, street address and tax parcel identification number
of all tracts, parcels and subdivided lots in which Company has a leasehold
interest and an accurate description (by location, name of lessor, date of
Lease
and term expiry date) of all real property leases.
3.9
TITLE
TO REAL PROPERTY
Company
owns good and marketable title to its respective estates in the Real Property,
free and clear of any Encumbrances, other than: (i) liens for Taxes for the
current tax year which are not yet due and payable; and (ii) those described
in
Schedule
3.9(a)
("Real
Estate Encumbrances").True and complete copies of (A) all deeds, existing title
insurance policies and surveys of or pertaining to the Real Property and (B)
all
instruments, agreements and other documents evidencing, creating or constituting
any Real Estate Encumbrances have been delivered to Buyer. At the time of
Closing, the Real Estate shall be free and clear of all Real Estate
Encumbrances.
3.10
CONDITION OF FACILITIES
(a) Use
of
the Real Property for the various purposes for which it is presently being
used
is permitted as of right under all applicable zoning legal requirements and
is
not subject to "permitted nonconforming" use or structure classifications.
All
Improvements are in compliance with all applicable Legal Requirements, including
those pertaining to zoning, building and the disabled, are in good repair and
in
good condition, ordinary wear and tear excepted, and are free from latent and
patent defects. No part of any Improvement encroaches on any real property
not
included in the Real Property, and there are no buildings, structures, fixtures
or other Improvements primarily situated on adjoining property which encroach
on
any part of the Land. The Land for each owned Facility abuts on and has direct
vehicular access to a public road or has access to a public road via a
permanent, irrevocable, appurtenant easement benefiting such Land and comprising
a part of the Real Property, is supplied with public or quasi-public utilities
and other services appropriate for the operation of the Facilities located
thereon and is not located within any flood plain or area subject to wetlands
regulation or any similar restriction. There is no existing or proposed plan
to
modify or realign any street or highway or any existing or proposed eminent
domain proceeding that would result in the taking of all or any part of any
Facility or that would prevent or hinder the continued use of any Facility
as
heretofore used in the conduct of the business of Seller.
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(b) Each
item
of Tangible Personal Property is in good repair and good operating condition,
ordinary wear and tear excepted, is suitable for immediate use in the Ordinary
Course of Business and is free from latent and patent defects. No item of
Tangible Personal Property is in need of repair or replacement other than as
part of routine maintenance in the Ordinary Course of Business. All Tangible
Personal Property used in Company's business is in the possession of
Company.
3.11
ACCOUNTS RECEIVABLE
All
Accounts Receivable that are reflected on the Balance Sheet or the Interim
Balance Sheet or on the accounting Records of Company as of the Closing Date
represent or will represent valid obligations arising from sales actually made
or services actually performed by Company in the Ordinary Course of Business.
Except to the extent paid prior to the Closing Date, such Accounts Receivable
are or will be as of the Closing Date current and collectible net of the
respective reserves shown on the Balance Sheet or the Interim Balance Sheet
(which reserves are adequate and calculated consistent with past practice).
Subject to such reserves, each of such Accounts Receivable either has been
or
will be collected in full, without any setoff, within ninety (90) days after
the
day on which it first becomes due and payable. There is no contest, claim,
defense or right of setoff, other than returns in the Ordinary Course of
Business of Company, under any Contract with any account debtor of an Account
Receivable relating to the amount or validity of such Account Receivable.
3.12
NO
UNDISCLOSED LIABILITIES
Except
as
expressly disclosed herein, the Company has no Liabilities.
3.13
TAXES
(a) Tax
Returns Filed and Taxes Paid.
Company
has filed or caused to be filed on a timely basis all Tax Returns and all
reports with respect to Taxes that are or were required to be filed pursuant
to
applicable Legal Requirements. All Tax Returns and reports filed by Company
are
true, correct and complete. Company has paid, or made provision for the payment
of, all Taxes that have or may have become due for all periods covered by the
Tax Returns or otherwise, or pursuant to any assessment received by Company,
except such Taxes, if any, as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Balance Sheet and the Interim
Balance Sheet. Company currently is not the beneficiary of any extension of
time
within which to file any Tax Return. No claim has ever been made or is expected
to be made by any Governmental Body in a jurisdiction where Company does not
file Tax Returns that it is or may be subject to taxation by that jurisdiction.
There are no Encumbrances on any of the Assets that arose in connection with
any
failure (or alleged failure) to pay any Tax, and Company has no Knowledge of
any
basis for assertion of any claims attributable to Taxes which, if adversely
determined, would result in any such Encumbrance.
(b) Delivery
of Tax Returns and Information Regarding Audits and Potential
Audits.
Company
has delivered or made available to Buyer or Buyer’s representatives copies of
all Tax Returns filed by the Company. There are no deficiencies or similar
items
with respect to the Tax Returns or any
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Taxes
paid and no dispute or claim concerning any Taxes of Company either (i) claimed
or raised by any Governmental Body in writing or (ii) as to which Company has
Knowledge.
(c) Proper
Accrual.
The
charges, accruals and reserves with respect to Taxes on the Records of Company
are adequate (determined in accordance with GAAP) and are at least equal to
Company's liability for Taxes. There exists no proposed tax assessment or
deficiency against Company.
(d) Specific
Potential Tax Liabilities and Tax Situations.
(i) Withholding.
All
Taxes that Company is or was required by Legal Requirements to withhold, deduct
or collect have been duly withheld, deducted and collected and, to the extent
required, have been paid to the proper Governmental Body or other
Person.
(ii) Tax
Sharing or Similar Agreements.
There
is no tax sharing agreement, tax allocation agreement, tax indemnity obligation
or similar written or unwritten agreement, arrangement, understanding or
practice with respect to Taxes (including any advance pricing agreement, closing
agreement or other arrangement relating to Taxes) that will require any payment
by Company.
3.14
NO
MATERIAL ADVERSE CHANGE
Since
the
date of the Balance Sheet, there has not been any material adverse change in
the
business, operations, prospects, assets, results of operations or condition
(financial or other) of Company, and no event has occurred or circumstance
exists that may result in such a material adverse change. Since the date of
the
Balance Sheet, the Company has conducted its business only in the Ordinary
Course of Business and there has not been any:
(a) change
in
Company's authorized or issued capital stock, grant of any stock option or
right
to purchase shares of capital stock of Company or issuance of any security
convertible into such capital stock;
(b) amendment
to the Governing Documents of Company;
(c) payment
(except in the Ordinary Course of Business) or increase by Company of any
bonuses, salaries or other compensation to any Seller, director, officer or
employee or entry into any employment, severance or similar Contract with any
director, officer or employee;
(d) adoption
of, amendment to or increase in the payments to or benefits under, any Employee
Plan;
(e) damage
to
or destruction or loss of any Asset, whether or not covered by
insurance;
(f) entry
into, termination of or receipt of notice of termination of (i) any license,
distributorship, dealer, sales representative, joint venture, credit or similar
Contract to which Company is a party, or (ii) any Contract or transaction
involving a total remaining commitment by Company of at least
$10,000;
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(g) sale
(other than sales of Inventories in the Ordinary Course of Business), lease
or
other disposition of any Asset or property of Company (including the
Intellectual Property Assets) or the creation of any Encumbrance on any
Asset;
(h) cancellation
or waiver of any claims or rights with a value to Company in excess of
$10,000;
(i) indication
by any customer or supplier of an intention to discontinue or change the terms
of its relationship with Company;
(j) material
change in the accounting methods used by Company; or
(k) Contract
by Company to do any of the foregoing.
3.15
PERSONNEL MATTERS
(a)
Schedule
3.15(a)
sets
forth a correct and complete list of each director, officer, employee,
independent contractor, consultant and agent of Company, including but not
limited to, each employee on leave of absence or layoff status. No retired
employee, director, of officer of Company is receiving benefits or scheduled
to
receive benefits in the future.
(b)
The
Company is not a party to any employment, consulting or similar agreement,
written or oral, with any Person.
(c)
No
employees of the Company are represented by any labor union or similar
organization. The Company is not party to any collective bargaining or similar
agreement covering any of its employees. No labor union or similar organization
or group of employees has made a demand for recognition, filed a petition
seeking a representation proceeding or given the Company notice of any intention
to hold an election of a collective bargaining representative at any time during
the past three years.
(d) The
Company does not, and never has had, any "employee benefit plans" as defined
by
Section 3(3) of the Employee Retirement Income Security Act of 1974, pension,
retirement, bonus, profit-sharing, stock option, or other such arrangements
providing for employee remuneration or benefits (the “Employee
Plans”).
(e)
The
Company has complied in all respects with all Legal Requirements relating to
employment practices, terms and conditions of employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar Taxes and occupational
safety and health. The Company is not liable for the payment of any Taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
(f) No
officer, director, agent, employee, consultant, or contractor of Company is
bound by any Contract that purports to limit the ability of such officer,
director, agent, employee, consultant, or
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contractor
to engage in or continue or perform any conduct, activity, duties or practice
relating to the business of Company. No former or current employee of Company
is
a party to, or is otherwise bound by, any Contract that in any way adversely
affected, affects, or will affect the ability of Company or Buyer to conduct
the
business as heretofore carried on by Company.
3.16
COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Company
is, and at all times has been, in full compliance with each Legal Requirement
that is or was applicable to it or to the conduct or operation of its business
or the ownership or use of any of its Assets. No event has occurred or
circumstance exists that (with or without notice or lapse of time) may
constitute or result in a violation by Company of, or a failure on the part of
Company to comply with, any Legal Requirement or may give rise to any obligation
on the part of Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature. Company has not received any notice
or
other communication (whether oral or written) from any Governmental Body or
any
other Person regarding any actual, alleged, possible or potential violation
of,
or failure to comply with, any Legal Requirement or any actual, alleged,
possible or potential obligation on the part of Company to undertake, or to
bear
all or any portion of the cost of, any remedial action of any
nature.
(b) Schedule
3.16(b) contains a complete and accurate list of each Governmental Authorization
that is held by Company or that otherwise relates to Company's business or
the
Assets. Each Governmental Authorization listed or required to be listed in
Schedule 3.16(b) is valid and in full force and effect. Except as set forth
in
Schedule 3.16(b):
(i) Company
is, and has been, in full compliance with all of the terms and requirements
of
each Governmental Authorization identified or required to be identified in
Schedule 3.16(b);
(ii) 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 term or requirement of any Governmental Authorization
listed or required to be listed in Schedule 3.16(b) or (B) result directly
or
indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization listed
or
required to be listed in Schedule 3.16(b);
(iii) Company
has not received any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of or failure to comply with any term
or requirement of any Governmental Authorization or (B) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation,
termination of or modification to any Governmental Authorization;
and
(iv) all
applications required to have been filed for the renewal of the Governmental
Authorizations listed or required to be listed in Schedule 3.16(b) have been
duly filed on a timely basis with the appropriate Governmental Bodies, and
all
other filings required to have been made
-11-
with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
(v) The
Governmental Authorizations listed in Schedule 3.16(b) collectively constitute
all of the Governmental Authorizations necessary to permit Company to lawfully
conduct and operate its business in the manner in which it currently conducts
and operates such business and to permit Company to own and use its Assets
in
the manner in which it currently owns and uses such Assets.
3.17
LEGAL PROCEEDINGS; ORDERS
(a) There
is
no pending or threatened Proceeding: (i) by or against Company or that otherwise
relates to or may affect the business of, or any of the Assets owned or used
by,
Company; or (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Contemplated
Transactions. To the Knowledge of Company or any Seller, no event has occurred
or circumstance exists that is reasonably likely to give rise to or serve as
a
basis for the commencement of any such Proceeding.
(b) There
is
no Order to which Company, its business or any of the Assets is subject. To
the
Knowledge of Company or any Seller, no officer, director, agent or employee
of
Company is subject to any Order that prohibits such officer, director, agent
or
employee from engaging in or continuing any conduct, activity or practice
relating to the business of Company.
(c) Company
is and has at all times been in compliance with all of the terms and
requirements of each Order to which it or any of the Assets is or has been
subject. No event has occurred or circumstance exists that is reasonably likely
to constitute or result in (with or without notice or lapse of time) a violation
of or failure to comply with any term or requirement of any Order to which
Company or any of the Assets is subject; and
(d) Company
has not received any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any actual, alleged,
possible or potential violation of, or failure to comply with, any term or
requirement of any Order to which Company or any of the Assets is or has been
subject.
3.18
CONTRACTS; NO DEFAULTS
(a) Schedule
3.18(a)
contains
an accurate and complete list, and Company has delivered to Buyer, accurate
and
complete copies of each Company Contract. Schedule
3.18(a)
sets
forth reasonably complete details concerning such Contracts, including
the
parties to the Contracts and the amount of the remaining commitment of Company
under the Contracts.
(b) Seller
has not and may not acquire any rights under, and Seller has not or may not
become subject to any obligation or liability under, any Contract that relates
to the business of Company or any of the Assets.
-12-
(c) (i)
each
Contract identified or required to be identified in Schedule
3.18(a)
is in
full force and effect and is valid and enforceable in accordance with its terms;
(ii) to the Knowledge of Company or any Seller, no Contract identified or
required to be identified in Schedule
3.18(a)
will
upon completion or performance thereof have a material adverse affect on the
business, assets or condition of Company or the business to be conducted by
Buyer with the Assets.
(d) (i)
Company is, and at all times has been, in compliance with all applicable terms
and requirements of each Company Contract which is being assumed by Buyer;
(ii)
each other Person that has or had any obligation or liability under any Company
Contract is, and at all times has been, in full compliance with all applicable
terms and requirements of such Contract; (iii)
no
event has occurred or circumstance exists that (with or without notice or lapse
of time) may contravene, conflict with or result in a Breach of, or give Company
or other Person the right to declare a default or exercise any remedy under,
or
to accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any Company Contract that is being assigned to or assumed
by Buyer; (iv)
no
event has occurred or circumstance exists under or by virtue of any Contract
that (with or without notice or lapse of time) would cause the creation of
any
Encumbrance affecting any of the Assets; and (v) Company has not given to or
received from any other Person any notice or other communication (whether oral
or written) regarding any actual, alleged, possible or potential violation
or
Breach of, or default under, any Contract which is being assigned to or assumed
by Buyer.
(e) There
are
no renegotiations of, attempts to renegotiate or outstanding rights to
renegotiate any material amounts paid or payable to Company under current or
completed Contracts with any Person having the contractual or statutory right
to
demand or require such renegotiation and no such Person has made written demand
for such renegotiation.
(f) Each
Contract relating to the sale, design, manufacture or provision of products
or
services by Company has been entered into in the Ordinary Course of Business
of
Company and has been entered into without the commission of any act alone or
in
concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal
Requirement.
3.19
INSURANCE
(a) Company
has delivered to Buyer accurate and complete copies of all policies of insurance
(and correspondence relating to coverage thereunder) to which Company is a
party.
(b) Schedule
3.19(b)
describes all obligations of Company to provide insurance coverage to Third
Parties (for example, under Leases or service agreements) and identifies the
policy under which such coverage is provided.
(c) All
policies of insurance to which Company is a party or that provide coverage
to
Company: (i) are valid, outstanding and enforceable; (ii) are issued by an
insurer that is financially sound and reputable; (iii) taken together, provide
adequate insurance coverage for the Assets and the operations of Company for
all
risks normally insured against by a Person carrying on the same business or
businesses as Company in the same location or locations and for all risks to
which
-13-
Company
is normally subject; and (iv) are sufficient for compliance with all Legal
Requirements and Company Contracts;
(d)
Company
has not received (i) any refusal of coverage or any notice that a defense will
be afforded with reservation of rights or (ii) any notice of cancellation or
any
other indication that any policy of insurance is no longer in full force or
effect or that the issuer of any policy of insurance is not willing or able
to
perform its obligations thereunder. Company has paid all insurance premiums
as,
and when due, and has otherwise performed all of its obligations under each
policy of insurance to which it is a party or that lists Company as a
beneficiary. Company has given notice to all insurers of any claims that may
be
submitted under said policies of insurance.
3.20
ENVIRONMENTAL MATTERS
(a) Company
is, and at all times has been, in full compliance with, and has not been and
is
not in violation of or liable under, any Environmental Law. None of Company
nor
any Seller has any basis to expect, nor has any of them or any other Person
for
whose conduct they are or may be held to be responsible received, any actual
or
threatened order, notice or other communication from (i) any Governmental Body
or private citizen acting in the public interest or (ii) the current or prior
owner or operator of any Facilities, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or threatened
obligation to undertake or bear the cost of any Environmental, Health and Safety
Liabilities with respect to any Facility or other property or asset (whether
real, personal or mixed) in which Company has or had an interest, or with
respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used or processed
by
Company or any other Person for whose conduct it is or may be held responsible,
or from which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled or received.
(b) There
are
no pending or, to the Knowledge of Company or any Seller, threatened claims,
Encumbrances, or other restrictions of any nature resulting from any
Environmental, Health and Safety Liabilities or arising under or pursuant to
any
Environmental Law with respect to or affecting any Facility or any other
property or asset (whether real, personal or mixed) in which Company has or
had
an interest.
(c) None
of
Company nor any Seller has any Knowledge of or any basis to expect, nor has
any
of them, or any other Person for whose conduct they are or may be held
responsible, received, any citation, directive, inquiry, notice, Order, summons,
warning or other communication that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation or failure to comply
with any Environmental Law, or of any alleged, actual, or potential obligation
to undertake or bear the cost of any Environmental, Health and Safety
Liabilities with respect to any Facility or property or asset (whether real,
personal or mixed) in which Company has or had an interest, or with respect
to
any property or facility to which Hazardous Materials generated, manufactured,
refined, transferred, imported, used or processed by Company or any other Person
for whose conduct it is or may be held responsible, have been transported,
treated, stored, handled, transferred, disposed, recycled or
received.
-14-
(d) Neither
Company nor any other Person for whose conduct it is or may be held responsible
has any Environmental, Health and Safety Liabilities with respect to any
Facility or, to the Knowledge of Company, with respect to any other property
or
asset (whether real, personal or mixed) in which Company (or any predecessor)
has or had an interest or at any property geologically or hydrologically
adjoining any Facility or any such other property or asset.
(e) There
are
no Hazardous Materials present on or in the Environment at any Facility or
at
any geologically or hydrologically adjoining property, including any Hazardous
Materials contained in barrels, aboveground or underground storage tanks,
landfills, land deposits, dumps, equipment (whether movable or fixed) or other
containers, either temporary or permanent, and deposited or located in land,
water, sumps, or any other part of the Facility or such adjoining property,
or
incorporated into any structure therein or thereon. Neither Company nor any
Person for whose conduct it is or may be held responsible, or to the Knowledge
of Company, any other Person, has permitted or conducted, or is aware of, any
Hazardous Activity conducted with respect to any Facility or any other property
or assets (whether real, personal or mixed) in which Company has or had an
interest except in full compliance with all applicable Environmental
Laws.
(f) There
has
been no Release or, to the Knowledge of Company, Threat of Release, of any
Hazardous Materials at or from any Facility or at any other location where
any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by any Facility, or from any
other property or asset (whether real, personal or mixed) in which Company
has
or had an interest, or to the Knowledge of Company any geologically or
hydrologically adjoining property, whether by Company or any other
Person.
(g) Company
has delivered to Buyer true and complete copies and results of any reports,
studies, analyses, tests, or monitoring possessed or initiated by Company
pertaining to Hazardous Materials or Hazardous Activities in, on, or under
the
Facilities, or concerning compliance, by Company or any other Person for whose
conduct it is or may be held responsible, with Environmental Laws.
3.21
INTELLECTUAL PROPERTY ASSETS
(a) The
term
"Intellectual Property Assets" means all intellectual property owned or licensed
(as licensor or licensee) by Company in which Company has a proprietary
interest, including: (i) Company's name, all assumed fictional business names,
trade names, registered and unregistered trademarks, service marks and
applications (collectively, "Marks"); (ii) all patents, patent applications
and
inventions and discoveries that may be patentable (collectively, "Patents");
(iii) all registered and unregistered copyrights in both published works and
unpublished works (collectively, "Copyrights"); (iv) all rights in mask works;
(v) all know-how, trade secrets, confidential or proprietary information,
customer lists, Software, technical information, data, process technology,
plans, drawings and blue prints (collectively, "Trade Secrets"); and (vi) all
rights in internet web sites and internet domain names presently used by Company
(collectively "Net Names").
-15-
(b) Schedule
3.21(b)
contains
a complete and accurate list and summary description, including any royalties
paid or received by Company, and Company has delivered to Buyer accurate and
complete copies, of all Company Contracts relating to the Intellectual Property
Assets. There are no outstanding and no threatened disputes or disagreements
with respect to any such Contract.
(c)
The
Intellectual Property Assets are all those necessary for the operation of
Company's business as it is currently conducted. Company is the owner or
licensee of all right, title and interest in and to each of the Intellectual
Property Assets, free and clear of all Encumbrances, and has the right to use
without payment to a Third Party all of the Intellectual Property Assets, other
than in respect of licenses listed in Schedule
3.21(c).
(d)
All
former and current employees of Company have executed written Contracts with
Company that assign to Company all rights to any inventions, improvements,
discoveries or information relating to the business of Company.
(e)
Schedule
3.21(e)
contains
a complete and accurate list and summary description of all Patents. All of
the
issued Patents are currently in compliance with formal legal requirements
(including payment of filing, examination and maintenance fees and proofs of
working or use), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the Closing Date. No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition Proceeding. There is no potentially
interfering patent or patent application of any Third Party.
(f) Except
as
set forth in Schedule
3.21(e),
(A) no
Patent is infringed or, to the Knowledge of Company or any Seller, has been
challenged or threatened in any way and (B) none of the products manufactured
or
sold, nor any process or know-how used, by Company infringes or is alleged
to
infringe any patent or other proprietary right of any other Person.
(g) All
products made, used or sold under the Patents have been marked with the proper
patent notice.
(h) Schedule
3.21(h)
contains
a complete and accurate list and summary description of all Marks. All Marks
are
currently in compliance with all formal Legal Requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable and are not subject to any maintenance
fees or taxes or actions falling due within ninety (90) days after the Closing
Date. No Xxxx has been or is now involved in any opposition, invalidation or
cancellation Proceeding and, to the Knowledge of Company or any Seller, no
such
action is threatened with respect to any of the Marks. To the Knowledge of
Company or any Seller, there is no potentially interfering trademark or
trademark application of any other Person. No Xxxx is infringed or, to Company's
Knowledge, has been challenged or threatened in any way. None of the Marks
used
by Company infringes or is alleged to infringe any trade name, trademark or
service xxxx of any other Person. All products and materials containing a Xxxx
xxxx the proper federal registration notice where permitted by law.
-16-
(i)
Schedule
3.21(i)
contains
a complete and accurate list and summary description of all Copyrights. All
of
the registered Copyrights are currently in compliance with formal Legal
Requirements, are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety (90) days after the date
of
Closing. No Copyright is infringed or, to the Knowledge of Company or any
Seller, has been challenged or threatened in any way. None of the subject matter
of any of the Copyrights infringes or is alleged to infringe any copyright
of
any Third Party or is a derivative work based upon the work of any other Person.
All works encompassed by the Copyrights have been marked with the proper
copyright notice.
(j) With
respect to each Trade Secret, the documentation relating to such Trade Secret
is
current, accurate and sufficient in detail and content to identify and explain
it and to allow its full and proper use without reliance on the knowledge or
memory of any individual. Company has taken all reasonable precautions to
protect the secrecy, confidentiality and value of all Trade Secrets (including
the enforcement by Company of a policy requiring each employee or contractor
to
execute proprietary information and confidentiality agreements substantially
in
Company's standard form, and all current and former employees and contractors
of
Company have executed such an agreement). Company has good title to and an
absolute right to use the Trade Secrets. The Trade Secrets are not part of
the
public knowledge or literature and, to the Knowledge of Company or any Seller,
have not been used, divulged or appropriated either for the benefit of any
Person (other than Company) or to the detriment of Company. No Trade Secret
is
subject to any adverse claim or has been challenged or threatened in any way
or
infringes any intellectual property right of any other Person.
(k)
Schedule
3.21(k)
contains
a complete and accurate list and summary description of all Net Names.
3.22
RELATIONSHIPS WITH RELATED PERSONS
Except
as
disclosed in Schedule
3.22,
neither
Company nor any of Seller nor any Related Person of any of them has any interest
in any property (whether real, personal or mixed and whether tangible or
intangible) used in or pertaining to Company's business. Neither Company nor
any
of Seller nor any Related Person of any of them owns, or since January 1, 2005,
has owned, of record or as a beneficial owner, an equity interest or any other
financial or profit interest in any Person that has (a) had business dealings
or
a material financial interest in any transaction with Company other than
business dealings or transactions disclosed in Schedule
3.22,
each of
which has been conducted in the Ordinary Course of Business with Company at
substantially prevailing market prices and on substantially prevailing market
terms or (b) engaged in competition with Company with respect to any line of
the
products or services of Company (a "Competing Business") in any market presently
served by Company, except for ownership of less than one percent (1%) of the
outstanding capital stock of any Competing Business that is publicly traded
on
any recognized exchange or in the over-the-counter market. Except as set forth
in Schedule
3.22,
neither
Company nor any of Seller nor any Related Person of any of them is a party
to
any Contract with, or has any claim or right against, Company.
-17-
3.23
BROKERS OR FINDERS
None
of
Company, any of Seller, nor any of its Representatives have incurred any
obligation or liability, contingent or otherwise, for brokerage or finders'
fees
or agents' commissions or other similar payments in connection with the sale
of
the Shares or the Company's business or the Assets or the Contemplated
Transactions.
3.24
SECURITIES LAW MATTERS
(a) Each
Seller understands that the Consideration Shares are being offered and made
in
reliance on Regulation S promulgated under the Securities Act, or one or more
exemptions from the registration requirements of United States federal and
state
securities laws and that the Buyer is relying upon the truth and accuracy of
the
representations, warranties, agreements, acknowledgments and understandings
of
the Sellers set forth herein in order to determine the applicability of such
exemptions and the suitability of the Sellers to acquire the Consideration
Shares.
(b)
Each
Seller represents, warrants and agrees that:
(1)
Seller
is
not a U.S. Person (as defined below) and is not an affiliate (as defined in
Rule
501(b) under the Securities Act) of the Company and is not acquiring the Shares
for the account or benefit of a U.S. Person. A U.S. Person means any one of
the
following:
(A)
any
natural person resident in the United States of America;
(B)
any
partnership or corporation organized or incorporated under the laws of the
United States of America;
|
(C)
|
any
estate of which any executor or administrator is a U.S.
person;
|
|
(D)
|
any
trust of which any trustee is a U.S.
person;
|
(E)
any
agency or branch of a foreign entity located in the United States of
America;
(F)
any
non-discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S.
person;
(G)
any
discretionary account or similar account (other than an estate or trust) held
by
a dealer or other fiduciary organized, incorporated or (if an individual)
resident in the United States of America; and
|
(H)
|
any
partnership or corporation if:
|
(i)
organized or incorporated under the laws of any foreign jurisdiction;
and
(ii)
formed
by
a U.S. person principally for the purpose of investing in securities not
registered under the Securities Act, unless it is organized or incorporated,
and
owned,
-18-
by
accredited investors (as
defined in Rule 501(a) under the Securities Act) who are not natural persons,
estates or trusts.
(2)
At
the
time of the origination of contact concerning this Agreement and the date of
the
execution and delivery of this Agreement, Seller was outside of the United
States.
(3) Seller
will not, during the period commencing on the date of issuance of the Shares
and
ending on the first anniversary of such date, or such shorter period as may
be
permitted by Regulation S or other applicable securities law (the “Restricted
Period”), offer, sell, pledge or otherwise transfer the Shares in the United
States, or to a U.S. Person for the account or for the benefit of a U.S. Person,
or otherwise in a manner that is not in compliance with Regulation S.
(4) Seller
will, after expiration of the Restricted Period, offer, sell, pledge or
otherwise transfer the Shares only pursuant to registration under the Securities
Act or an available exemption therefrom and, in accordance with all applicable
state and foreign securities laws.
(5) Seller
was not in the United States, engaged in, and prior to the expiration of the
Restricted Period will not engage in, any short selling of or any hedging
transaction with respect to the Shares, including without limitation, any put,
call or other option transaction, option writing or equity swap.
(6) Neither
Seller nor or any person acting on his behalf has engaged, nor will engage,
in
any directed selling efforts to a U.S. Person with respect to the Shares and
Seller and any person acting on his behalf have complied and will comply with
the “offering restrictions” requirements of Regulation S under the Securities
Act.
(7) The
transactions contemplated by this Agreement have not been pre-arranged with
a
purchaser located in the United States or with a U.S. Person, and are not part
of a plan or scheme to evade the registration requirements of the Securities
Act.
(8) Neither
Seller nor any person acting on his behalf has undertaken or carried out any
activity for the purpose of, or that could reasonably be expected to have the
effect of, conditioning the market in the United States, its territories or
possessions, for any of the Shares. Seller agrees not to cause any advertisement
of the Shares to be published in any newspaper or periodical or posted in any
public place and not to issue any circular relating to the Shares, except such
advertisements that include the statements required by Regulation S under the
Securities Act, and only offshore and not in the U.S. or its territories, and
only in compliance with any local applicable securities laws.
(c)
Each
Seller is acquiring the Consideration Shares for Seller’s own account and not
with a view to its distribution within the meaning of Section 2(11) of the
Securities Act. Each Seller is an “accredited investor” (as that term is defined
in Rule 501 of the General Rules and Regulations under the Securities Act,
and
each Seller is (i) experienced in making investments of the kind described
in
this Agreement and the related documents, (ii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by Buyer or
any
of its affiliates or selling agents), to protect its
-19-
own
interests in connection with the transactions described in this Agreement,
and
the related documents, and (iii) able to afford the entire loss of the
investment in the Consideration Shares. Each Seller has been provided an
opportunity for a reasonable period of time prior to the date hereof to obtain
additional information concerning the Consideration Shares, the Buyer and all
other information to the extent the Buyer possesses such information or can
acquire it without unreasonable effort or expense.
(d)
Each
Seller understands that the Consideration Shares shall be “restricted” (as that
term is defined in Rule 144 promulgated under the Securities Act), and each
certificate representing the Consideration Shares shall be endorsed with one
or
more of the following restrictive legends, in addition to any other legend
required to be placed thereon by applicable federal or state securities
laws:
“THE
SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED
IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES
ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED
UNDER THE SECURITIES ACT. TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT
IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER
THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.
HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.”
3.25
DISCLOSURE
(a) No
representation or warranty or other statement made by Company or any of Seller
in this Agreement, the Schedules, any supplement to the Schedules, the
certificates delivered pursuant to Section 2.3(a) or otherwise in connection
with the Contemplated Transactions contains any untrue statement or omits to
state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
(b) None
of
any of Seller nor the Company has Knowledge of any fact that has specific
application to Company (other than general economic or industry conditions)
or
the Shares and that may materially adversely affect the Shares or the assets,
business, prospects, financial condition or results of operations of Company
that has not been set forth in this Agreement. There does not now exist any
event, condition, or other matter, or any series of events, conditions or other
matters, individually or in the aggregate, adversely affecting the Shares or
the
Company's assets, business, prospects, financial condition or results of its
operations that has not been specifically disclosed to Buyer in writing by
Company.
-20-
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to Company and Sellers, as of the date hereof and as
of
the Closing Date, as follows:
4.1
ORGANIZATION AND GOOD STANDING
Buyer
is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, with full corporate power and authority to conduct
its business as it is now conducted.
4.2
AUTHORITY; NO CONFLICT
(a) This
Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Upon the execution
and
delivery by Buyer of the other agreements to be executed or delivered by Buyer
at Closing (collectively, the "Buyer's Closing Documents"), each of the Buyer's
Closing Documents will constitute the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its respective terms. Buyer
has the absolute and unrestricted right, power and authority to execute and
deliver this Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents, and such
action has been duly authorized by all necessary corporate action.
(b) Neither
the execution and delivery of this Agreement by Buyer nor the consummation
or
performance of any of the Contemplated Transactions by Buyer will give any
Person the right to prevent, delay or otherwise interfere with any of the
Contemplated Transactions pursuant to: (i)any provision of Buyer's Governing
Documents; (ii) any resolution adopted by the board of directors of Buyer;
(iii)
any Legal Requirement or Order to which Buyer may be subject; or (iv) any
Contract to which Buyer is a party or by which Buyer may be bound. Buyer is
not
and will not be required to obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
4.3 FILINGS
WITH THE SEC
To
the
best of Company's knowledge, the Company has not provided to Seller any
information that, according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Company, but which
has
not been so disclosed. As of their respective dates, the documents filed by
the
Company with the SEC (the “SEC Documents”) complied in all material respects
with the requirements of the Securities Act of or the Exchange Act, as the
case
may be, and other federal, state and local laws, rules and regulations
applicable to such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents comply as
to
form and substance in all material respects with applicable accounting
requirements and the published rules and regulations
-21-
of
the
SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such financial statements or the
notes thereto or (b) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company
as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
4.4 VALID
ISSUANCE
The
issuance of the Consideration Shares, in accordance with the terms and on the
bases of the representations and warranties of the Seller set forth herein,
may
and shall be properly issued by the Company to Seller pursuant to applicable
federal law. When issued and paid for as herein provided, the Consideration
Shares shall be duly and validly issued, fully paid, and
nonassessable.
4.5
CERTAIN PROCEEDINGS
There
is
no pending Proceeding that has been commenced against Buyer and that challenges,
or may have the effect of preventing, delaying, making illegal or otherwise
interfering with, any of the Contemplated Transactions. To Buyer's Knowledge,
no
such Proceeding has been threatened.
4.6
BROKERS OR FINDERS
Neither
Buyer nor any of its Representatives have incurred any obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with the Contemplated
Transactions.
ARITCLE
V
COVENANTS
PRIOR TO CLOSING
5.1
ACCESS AND INVESTIGATION
Between
the date of this Agreement and the Closing Date, and upon reasonable advance
notice, Sellers and Company, on the one hand, and Buyer on the other hand,
shall
(a) afford the other party and its Representatives and prospective lenders
and
their Representatives full and free access, during regular business hours,
to
its personnel, properties, Contracts, Governmental Authorizations, books and
Records and other documents and data, such rights of access to be exercised
in a
manner that does not unreasonably interfere with its operations; (b) furnish
the
other party with copies of all such Contracts, Governmental Authorizations,
books and Records and other existing documents and data as the other party
may
reasonably request; (c) furnish the other party with such additional financial,
operating and other relevant data and information as the other party may
reasonably request; and (d) otherwise cooperate and assist, to the extent
reasonably requested by the other party, with the other party's investigation
of
the properties, assets and financial condition related to it. In addition,
the
other party shall have the right to have the real property and Tangible
Personal
-22-
Property
inspected by it, at the other party's sole cost and expense, for purposes of
determining the physical condition and legal characteristics of the real
property and Tangible Personal Property.
5.2
OPERATION OF THE BUSINESS AND CONDUCT OF SELLERS PRIOR TO CLOSING
(a)
Between the date of this Agreement and the Closing, Company shall (and Sellers
shall cause Company to):
(i) conduct
its business only in the Ordinary Course of Business;
(ii) except
as
otherwise directed by Buyer in writing, and without making any commitment on
Buyer's behalf, use its Best Efforts to preserve intact its current business
organization, keep available the services of its officers, employees and agents
and maintain its relations and good will with suppliers, customers, landlords,
creditors, employees, agents and others having business relationships with
it;
(iii) confer
with Buyer prior to implementing operational decisions of a material
nature;
(iv) otherwise
report periodically to Buyer concerning the status of its business, operations
and finances;
(v) make
no
material changes in management personnel without prior consultation with
Buyer;
(vi) maintain
the Assets in a state of repair and condition that complies with Legal
Requirements and is consistent with the requirements and normal conduct of
Company's business;
(vii) keep
in
full force and effect, without amendment, all material rights relating to
Company's business;
(viii) comply
with all Legal Requirements and contractual obligations applicable to the
operations of Company's business;
(ix) continue
in full force and effect the insurance coverage under the policies set forth
in
Schedule 3.19 or substantially equivalent policies;
(x) cooperate
with Buyer and assist Buyer in identifying the Governmental Authorizations
required by Buyer to operate the business from and after the Closing Date and
either transferring existing Governmental Authorizations of Company to Buyer,
where permissible, or obtaining new Governmental Authorizations for
Buyer;
(xi) upon
request from time to time, execute and deliver all documents, make all truthful
oaths, testify in any Proceedings and do all other acts that may be reasonably
necessary or desirable in the opinion of Buyer to consummate the Contemplated
Transactions, all without further consideration; and
-23-
(xii) maintain
all books and Records of Company relating to Company's business in the Ordinary
Course of Business.
(b)
Between
the date of this Agreement and the Closing, each Seller shall:
(i)
not
sell, transfer or otherwise dispose of any of the Shares or any interest in
the
Shares and not agree to do any of the foregoing;
(ii)
not
accept any dividend or other distribution in respect of any of the
Shares;
(iii)
not
incur, make, assume or suffer to exist any Encumbrance or other matter affecting
title to any of the Shares;
(iv)
not
enter into any shareholder agreements, voting trusts, restrictions on transfer
or other agreements or instruments that would be binding on the Buyer as the
owner of the Shares; and
(v)
take
no action, and use their best efforts to prevent the occurrence of any event
or
the existence of any condition, that would result in any of the Seller’s
representations and warranties in this Agreement not being true and
correct.
5.3
NEGATIVE COVENANT
Except
as
otherwise expressly permitted herein, between the date of this Agreement and
the
Closing Date, Company shall not, and Seller shall not permit Company to, without
the prior written Consent of Buyer, (a) take any affirmative action, or fail
to
take any reasonable action within its control, as a result of which any of
the
changes or events listed in Section 3.14 would be likely to occur; (b) make
any
modification to any material Contract or Governmental Authorization; (c) allow
the levels of raw materials, supplies or other materials included in the
Inventories to vary materially from the levels customarily maintained; or (d)
enter into any compromise or settlement of any litigation, proceeding or
governmental investigation relating to Company, its Assets, or its
business.
5.4
REQUIRED APPROVALS
As
promptly as practicable after the date of this Agreement, Company shall make
all
filings required by Legal Requirements to be made by it in order to consummate
the Contemplated Transactions. Company and Seller also shall cooperate with
Buyer and its Representatives with respect to all filings that Buyer elects
to
make or, pursuant to Legal Requirements, shall be required to make in connection
with the Contemplated Transactions. Company and Seller also shall cooperate
with
Buyer and its Representatives in obtaining all Material Consents. In China
there’s no requirement of filing
5.5
NOTIFICATION
Between
the date of this Agreement and the Closing, any of Seller or the Company shall
promptly notify Buyer in writing upon becoming aware of (a) any fact or
condition that causes or constitutes
-24-
a
Breach
of any of Company's representations and warranties made as of the date of this
Agreement or (b) the occurrence after the date of this Agreement of any fact
or
condition that would or be reasonably likely to (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had that representation or warranty been made as
of
the time of the occurrence of, or Company's or Seller's discovery of, such
fact
or condition. Should any such fact or condition require any change to the
representations an warranties made herein, the Company and Sellers shall
promptly deliver to Buyer a supplement to the Schedules attached hereto
specifying such change. Such delivery shall not affect any rights of Buyer
under
Section 9.2 and Article 11. During the same period, Company and Sellers also
shall promptly notify Buyer of the occurrence of any Breach of any covenant
of
Company or Seller in this Article 5 or of the occurrence of any event that
may
make the satisfaction of the conditions in Article 7 impossible or
unlikely.
5.6
NO
NEGOTIATION
Until
such time as this Agreement shall be terminated pursuant to Section 9.1, none
of
Company nor any of Seller shall directly or indirectly solicit, initiate,
encourage or entertain any inquiries or proposals from, discuss or negotiate
with, provide any nonpublic information to or consider the merits of any
inquiries or proposals from any Person (other than Buyer) relating to any
business combination transaction involving Company, including the sale by any
Seller of Company's stock, the merger or consolidation of Company or the sale
of
Company's business or any of the Assets (other than in the Ordinary Course
of
Business). Company and Sellers shall notify Buyer of any such inquiry or
proposal within twenty-four (24) hours of receipt or awareness of the same
by
Company or Seller.
5.7
BEST
EFFORTS
Company
and Sellers shall use their Best Efforts to cause the conditions in Article
7
and Section 8.3 to be satisfied.
5.8
PAYMENT OF LIABILITIES
Company
shall pay or otherwise satisfy in the Ordinary Course of Business all of its
Liabilities and obligations.
5.9
COOPERATION WITH RESPECT TO FINANCIAL REPORTING
After
the
date of this Agreement, Sellers and Company shall reasonably cooperate with
Buyer in connection with Buyer's preparation of financial statements and other
information as required for Buyer’s filings with the SEC under the Exchange Act,
including Buyer’s Current Report on Form 8-K that is to be filed with the SEC
pursuant to the Exchange Act in connection with the Closing.
ARTICLE
VI
COVENANTS
OF BUYER PRIOR TO CLOSING
6.1
BEST
EFFORTS
Buyer
shall use its Best Efforts to cause the conditions in Article 8 and Section
7.3
to be satisfied.
-25-
ARTICLE
VII
CONDITIONS
PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
Buyer's
obligation to purchase the Shares and to take the other actions required to
be
taken by Buyer at the Closing is subject to the satisfaction, at or prior to
the
Closing, of each of the following conditions (any of which may be waived by
Buyer, in whole or in part):
7.1
ACCURACY OF REPRESENTATIONS
All
of
Sellers’ and Company’s representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), shall have been accurate in all material respects
as
of the date of this Agreement, and shall be accurate in all material respects
as
of the time of the Closing as if then made, without giving effect to any
supplement to the Schedules.
7.2
COMPANY'S PERFORMANCE
All
of
the covenants and obligations that Company and Seller are required to perform
or
to comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), shall have been duly performed and complied with in all material
respects.
7.3
CONSENTS
Each
of
the Consents identified in Schedule
7.3
(the
"Consents") shall have been obtained and shall be in full force and effect.
7.4
ADDITIONAL DOCUMENTS
Company
and Seller shall have caused the documents and instruments required by Section
2.3(a) and the following documents to be delivered (or tendered subject only
to
Closing) to Buyer:
(a) The
charter and all amendments thereto of Company, duly certified as of a recent
date by the Secretary of State of the jurisdiction of Company's organization;
(b) If
requested by Buyer, any Consents or other instruments that may be required
to
permit Buyer's qualification in each jurisdiction in which Company is licensed
or qualified to do business as a foreign entity;
(c) Certificates
dated as of a date not earlier than the third business day prior to the Closing
as to the good standing of Company, executed by the appropriate officials in
each jurisdiction in which Company is licensed or qualified to do business
as a
foreign entity as specified in Schedule
3.1(a);
and
-26-
(d) Such
other documents as Buyer may request for the purpose of: (i) evidencing the
accuracy of any of Company's representations and warranties; (ii) evidencing
the
performance by Company or Seller of, or the compliance by Company or Seller
with, any covenant or obligation required to be performed or complied with
by
Company or such Seller; (iii) evidencing the satisfaction of any condition
referred to in this Article 7; or (iv) otherwise facilitating the consummation
or performance of any of the Contemplated Transactions.
7.5
NO
PROCEEDINGS
Since
the
date of this Agreement, there shall not have been commenced or threatened
against Buyer, or against any Related Person of Buyer, any Proceeding (a)
involving any challenge to, or seeking Damages or other relief in connection
with, any of the Contemplated Transactions or (b) that may have the effect
of
preventing, delaying, making illegal, imposing limitations or conditions on
or
otherwise interfering with any of the Contemplated Transactions.
7.6
NO
CONFLICT
Neither
the consummation nor the performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of time),
contravene or conflict with or result in a violation of or cause Buyer or any
Related Person of Buyer to suffer any adverse consequence under (a) any
applicable Legal Requirement or Order or (b) any Legal Requirement or Order
that
has been published, introduced or otherwise proposed by or before any
Governmental Body, excluding Bulk Sales Laws.
7.7
GOVERNMENTAL AUTHORIZATIONS
Buyer
shall have received such Governmental Authorizations as are necessary or
desirable to allow Buyer to operate the Company’s businesses from and after the
Closing.
7.8
SATISFACTION WITH DUE DILIGENCE
Buyer’s
due diligence investigation shall not have indicated that any of the information
provided for in the Agreement or in any of the information provided by any
of
Seller or the Company is inaccurate, incomplete or untrue in any way, and
Buyer’s due diligence investigation shall not have revealed any facts,
circumstances, liabilities or conditions that, in Buyer’s sole discretion, may
adversely affect the value or prospects of the Shares, the Assets, or the
Company or that may expose the Company to any liability not heretofore fully
disclosed to Buyer.
7.9
FINANCIAL INFORMATION
Company
shall have prepared and delivered to Buyer the financial statements referred
to
in Sections 3.4 and 5.8 hereto and other information required to be filed
pursuant to the Exchange Act with the SEC by Buyer on its Current Report on
Form
8-K in connection with the Closing.
-27-
ARTICLE
VIII
CONDITIONS
PRECEDENT TO SELLERS’ OBLIGATION TO CLOSE
Sellers’
obligation to sell the Shares and to take the other actions required to be
taken
by Company at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Company in whole or in part):
8.1
ACCURACY OF REPRESENTATIONS
All
of
Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), shall have been accurate in all material respects as of the
date
of this Agreement and shall be accurate in all material respects as of the
time
of the Closing as if then made.
8.2
BUYER'S PERFORMANCE
All
of
the covenants and obligations that Buyer is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), shall have been performed and complied with in all material
respects.
8.3
CONSENTS
Each
of
the Consents identified in Schedule
8.3
shall
have been obtained and shall be in full force and effect.
8.4
ADDITIONAL DOCUMENTS
Buyer
shall have caused the documents and instruments required by Section 2.3(b)
and
the following documents to be delivered (or tendered subject only to Closing)
to
Company and Seller such other documents as Company may reasonably request for
the purpose of (i) evidencing the accuracy of any representation or warranty
of
Buyer, (ii) evidencing the performance by Buyer of, or the compliance by Buyer
with, any covenant or obligation required to be performed or complied with
by
Buyer or (iii) evidencing the satisfaction of any condition referred to in
this
Article 8.
8.5
NO
INJUNCTION
There
shall not be in effect any Legal Requirement or any injunction or other Order
that (a) prohibits the consummation of the Contemplated Transactions and (b)
has
been adopted or issued, or has otherwise become effective, since the date of
this Agreement.
8.6
SALE
OF SHARES HELD BY BUYER’S EXECUTIVE OFFICER
Xxxxx
Fan, who is the President, Chief Executive Officer, Treasurer, and Director
of
Buyer, shall have sold to the Sellers, for no additional consideration,
18,000,000 shares of the common stock of Buyer which are issued and outstanding
and held by Ms. Fan, pursuant to and in accordance with the terms of the Stock
Purchase Agreement annexed hereto as Exhibit 8.6 (the “Xxxxx Fan
Stock
-28-
Purchase
Agreement”). Such shares shall have been allocated between the Sellers as
follows: 17,100,000 shares to Xinshengxiang; 450,000 shares to Dingliang; and
450,000 shares to Yue.
ARTICLE
IX
TERMINATION
9.1
TERMINATION EVENTS
By
notice
given prior to or at the Closing, subject to Section 9.2, this Agreement may
be
terminated as follows:
(a) by
Buyer,
if a material Breach of any provision of this Agreement has been committed
by
Company or Seller and such Breach has not been waived by Buyer;
(b)
by
Buyer,
if its due diligence investigation indicates that any of the information
provided for in the Agreement or in any of the information provided by the
Seller or the Company is inaccurate, incomplete or untrue in any way, or if
such
due diligence investigation reveals any facts, circumstances, liabilities or
conditions that, in Buyer’s sole discretion, may adversely affect the value or
prospects of the Shares, the Assets, or the Company or that may expose the
Company to any liability not heretofore fully disclosed to Buyer;
or
(c) by
the
unanimous agreement of Sellers, if a material Breach of any provision of this
Agreement has been committed by Buyer and such Breach has not been waived by
Sellers or the Company;
(d) by
Buyer,
if any condition in Article 7 has not been satisfied as of the date specified
for Closing in the first sentence of Section 2.2 or if satisfaction of such
a
condition by such date is or becomes impossible (other than through the failure
of Buyer to comply with its obligations under this Agreement), and Buyer has
not
waived such condition on or before such date;
(e) by
the
Sellers, if any condition in Article 8 has not been satisfied as of the date
specified for Closing in the first sentence of Section 2.2 or if satisfaction
of
such a condition by such date is or becomes impossible (other than through
the
failure of Company or the Seller to comply with their obligations under this
Agreement), and Company has not waived such condition on or before such
date;
(f) by
mutual
consent of Buyer, the Sellers, and Company;
(g) by
Buyer,
if the Closing has not occurred on or before ninety (90) days after the date
hereof, or such later date as the parties may agree upon, unless the Buyer
is in
material Breach of this Agreement; or
(h) by
the
unanimous agreement of Sellers, if the Closing has not occurred on or before
ninety (90) days after the date hereof, or such later date as the parties may
agree upon, unless any of Seller or the Company is in material Breach of this
Agreement.
-29-
9.2
EFFECT OF TERMINATION
Each
party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of such
right of termination will not be an election of remedies. If this Agreement
is
terminated pursuant to Section 9.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 9.2 and Articles 12 and 13 will survive, provided, however, that, if
this Agreement is terminated because of a Breach of this Agreement by the
non-terminating party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the non-terminating party's failure to comply with its obligations
under this Agreement, the terminating party's right to pursue all legal remedies
will survive such termination unimpaired.
ARTICLE
X
ADDITIONAL
COVENANTS
10.1
CUSTOMER AND OTHER BUSINESS RELATIONSHIPS
After
the
Closing, Sellers shall cooperate with Buyer in its efforts to continue and
maintain for the benefit of Buyer those business relationships of Company
existing prior to the Closing and relating to the business to be operated by
Buyer after the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers and others. Sellers
will
refer to Buyer all inquiries relating to such business. Sellers shall not take
any action that would tend to diminish the value of, or interfere with, the
Company’s business after the Closing, including disparaging the name or business
of Buyer.
10.2
FURTHER ASSURANCES
From
and
after the date hereof, and continuing after the Closing, the parties shall
cooperate reasonably with each other and with their respective Representatives
in connection with any steps required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish upon request to each
other such further information; (b) execute and deliver to each other such
other
documents; and (c) do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the Contemplated Transactions.
10.3
POST-CLOSING SEC FILINGS
As
soon
as practicable following the Closing, Buyer shall cause the transactions
contemplated hereunder to be memorialized and disclosed by making all filings
or
recordings required under applicable law. Sellers hereby covenant and agree
to
aid Buyer, as specifically requested by Buyer, in preparing and making such
filings or recordings.
ARTICLE
XI
INDEMNIFICATION;
REMEDIES
11.1
SURVIVAL
(a)
All
representations, warranties, covenants and obligations in this Agreement, the
Schedules, any supplements to the Schedules, the certificates delivered pursuant
to Section 2.3, and any other certificate or document delivered pursuant to
this
Agreement shall survive the Closing and the consummation of the Contemplated
Transactions until the expiration of their respective statutes of limitations.
-30-
(b)
The
right to indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and obligations shall not be affected
by
any investigation (including any environmental investigation or assessment)
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 or the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with any such representation, warranty, covenant or obligation.
The waiver of any condition based upon 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, reimbursement or
other
remedy based upon such representations, warranties, covenants and
obligations.
11.2
INDEMNIFICATION AND REIMBURSEMENT BY SELLERS
Sellers
and the Company shall, jointly and severally, indemnify and hold harmless Buyer,
and its representatives, shareholders, directors, officers, employees, agents,
subsidiaries, and affiliates (collectively, the "Buyer Indemnified Persons"),
and shall reimburse the Buyer Indemnified Persons for any loss, liability,
claim, damage, expense (including costs of investigation and defense and
reasonable attorneys' fees and expenses) or diminution of value, whether or
not
involving a Third-Party Claim (collectively, "Damages"), arising from or in
connection with:
(a)
any
Breach of any representation or warranty made by any Seller or the Company
in
this Agreement and any other certificate, document, writing or instrument
delivered by any Seller or the Compay pursuant to this Agreement;
(b)
any
Breach of any covenant or obligation of any Seller or the Company in this
Agreement or in any other certificate, document, writing or instrument delivered
by any Seller or the Company pursuant to this Agreement;
(c)
any
Liability arising out of the operation of the Company or its business or Assets
prior to the Closing Date;
(d)
any
product or any services sold, included in Inventory, or otherwise provided
by,
the Company, in whole or in part, prior to the Closing Date, including claims
for breach of warranty or product liability;
(e)
any
Liability under any Company Contract entered into prior to the Closing Date,
including any Liability arising out of or relating to Seller's credit facilities
or any security interest related thereto;
-31-
(f)
any
Liability for Taxes, including (1) any Taxes arising as a result of the
Company's operation of its Business or ownership of its Assets prior to the
Closing Date, and (2) any Taxes that will arise as a result of the sale of
the
Shares pursuant to this Agreement;
(g)
any
Liability relating to payroll, vacation, sick leave, workers' compensation,
unemployment benefits, pension benefits, employee stock option or profit-sharing
plans, health care plans or benefits or any other employee plans or benefits
of
any kind for the Company's employees or former employees or both;
(h)
any
Liability relating to the payment of all wages and other remuneration due to
any
Company’s employees with respect to their services as employees of Company
through the close of business on the Closing Date, including pro rata bonus
payments and all vacation pay earned prior to the Closing Date and the payment
of any termination or severance payments and the provision of health plan
continuation coverage;
(i)
any
Liability arising out of any Proceeding commenced after the Closing Date and
arising out of or relating to any occurrence or event happening prior to the
Closing Date, and any Liability under any Company Contract that arises after
the
Closing but that arises out of or relates to any Breach that occurred prior
to
the Closing, and any such other Liability;
(j)
any
Liability arising out of or resulting from the Company's compliance or
noncompliance with any Legal Requirement or Order of any Governmental Body;
(k)
any
Liability of the Company under this Agreement or any other document executed
in
connection with the Contemplated Transactions; and
(l)
any
Liability of the Company based upon any Seller’s acts or omissions occurring
after the Closing Date.
11.3
INDEMNIFICATION AND REIMBURSEMENT BY BUYER
Buyer
will indemnify and hold harmless Sellers and the Company, and will reimburse
Sellers and the Company, for any Damages arising from or in connection
with:
(a) any
Breach of any representation or warranty made by Buyer in this Agreement or
in
any certificate, document, writing or instrument delivered by Buyer pursuant
to
this Agreement;
(b) any
Breach of any covenant or obligation of Buyer in this Agreement or in any other
certificate, document, writing or instrument delivered by Buyer pursuant to
this
Agreement; and
(c) any
claim
by any Person for brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by such
Person with Buyer (or any Person acting on Buyer's behalf) in connection with
any of the Contemplated Transactions.
-32-
11.4
THIRD-PARTY CLAIMS
(a) Promptly
after receipt by a Person entitled to indemnity under Section 11.2 or 11.3
(an
"Indemnified Person") of notice of the assertion of a Third-Party Claim against
it, such Indemnified Person shall give notice to the Person obligated to
indemnify under such Section (an "Indemnifying Person") of the assertion of
such
Third-Party Claim, provided that the failure to notify the Indemnifying Person
will not relieve the Indemnifying Person of any liability that it may have
to
any Indemnified Person, except to the extent that the Indemnifying Person
demonstrates that the defense of such Third-Party Claim is prejudiced by the
Indemnified Person's failure to give such notice.
(b) If
an
Indemnified Person gives notice to the Indemnifying Person pursuant to Section
11.4(a) of the assertion of a Third-Party Claim, the Indemnifying Person shall
be entitled to participate in the defense of such Third-Party Claim and, to
the
extent that it wishes (unless (i) the Indemnifying Person is also a Person
against whom the Third-Party Claim is made and the Indemnified Person determines
in good faith that joint representation would be inappropriate or (ii) the
Indemnifying Person fails to provide reasonable assurance to the Indemnified
Person of its financial capacity to defend such Third-Party Claim and provide
indemnification with respect to such Third-Party Claim), to assume the defense
of such Third-Party Claim with counsel satisfactory to the Indemnified Person.
After notice from the Indemnifying Person to the Indemnified Person of its
election to assume the defense of such Third-Party Claim, the Indemnifying
Person shall not, so long as it diligently conducts such defense, be liable
to
the Indemnified Person under this Article 11 for any fees of other counsel
or
any other expenses with respect to the defense of such Third-Party Claim, in
each case subsequently incurred by the Indemnified Person in connection with
the
defense of such Third-Party Claim, other than reasonable costs of investigation.
If the Indemnifying Person assumes the defense of a Third-Party Claim, (i)
such
assumption will conclusively establish for purposes of this Agreement that
the
claims made in that Third-Party Claim are within the scope of and subject to
indemnification, and (ii) no compromise or settlement of such Third-Party Claims
may be effected by the Indemnifying Person without the Indemnified Person's
Consent unless (A) there is no finding or admission of any violation of Legal
Requirement or any violation of the rights of any Person; (B) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Person;
and (C) the Indemnified Person shall have no liability with respect to any
compromise or settlement of such Third-Party Claims effected without its
Consent. If notice is given to an Indemnifying Person of the assertion of any
Third-Party Claim and the Indemnifying Person does not, within ten (10) days
after the Indemnified Person's notice is given, give notice to the Indemnified
Person of its election to assume the defense of such Third-Party Claim, the
Indemnifying Person will be bound by any determination made in such Third-Party
Claim or any compromise or settlement effected by the Indemnified
Person.
(c) Notwithstanding
the foregoing, if an Indemnified Person determines in good faith that there
is a
reasonable probability that a Third-Party Claim may adversely affect it or
its
Related Persons other than as a result of monetary damages for which it would
be
entitled to indemnification under this Agreement, the Indemnified Person may,
by
notice to the Indemnifying Person, assume the exclusive right to defend,
compromise or settle such Third-Party Claim, but the Indemnifying Person will
not be bound by any determination of any Third-Party Claim so defended for
the
purposes of this Agreement or any compromise or settlement effected without
its
Consent (which may not be unreasonably withheld).
-33-
(d) Notwithstanding
the provisions of Section 13.4, Company and Seller hereby consent to the
nonexclusive jurisdiction of any court in which a Proceeding in respect of
a
Third-Party Claim is brought against any Buyer Indemnified Person for purposes
of any claim that a Buyer Indemnified Person may have under this Agreement
with
respect to such Proceeding or the matters alleged therein and agree that process
may be served on Company and Seller with respect to such a claim anywhere in
the
world.
(e) With
respect to any Third-Party Claim subject to indemnification under this Article
11: (i) both the Indemnified Person and the Indemnifying Person, as the case
may
be, shall keep the other Person fully informed of the status of such Third-Party
Claim and any related Proceedings at all stages thereof where such Person is
not
represented by its own counsel, and (ii) the parties agree (each at its own
expense) to render to each other such assistance as they may reasonably require
of each other and to cooperate in good faith with each other in order to ensure
the proper and adequate defense of any Third-Party Claim.
(f) With
respect to any Third-Party Claim subject to indemnification under this Article
11, the parties agree to cooperate in such a manner as to preserve in full
(to
the extent possible) the confidentiality of all Confidential Information and
the
attorney-client and work-product privileges. In connection therewith, each
party
agrees that: (i) it will use its Best Efforts, in respect of any Third-Party
Claim in which it has assumed or participated in the defense, to avoid
production of Confidential Information (consistent with applicable law and
rules
of procedure), and (ii) all communications between any party hereto and counsel
responsible for or participating in the defense of any Third-Party Claim shall,
to the extent possible, be made so as to preserve any applicable attorney-client
or work-product privilege.
11.5
OTHER CLAIMS
A
claim
for indemnification for any matter not involving a Third-Party Claim may be
asserted by notice to the party from whom indemnification is sought and shall
be
paid promptly after such notice.
11.6
INDEMNIFICATION IN CASE OF STRICT LIABILITY OR INDEMNITEE
NEGLIGENCE
THE
INDEMNIFICATION PROVISIONS IN THIS ARTICLE 11 SHALL BE ENFORCEABLE REGARDLESS
OF
WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR
LEGAL REQUIREMENTS (INCLUDING ANY PAST, PRESENT OR FUTURE ENVIRONMENTAL LAW,
FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS
LIABILITY, SECURITIES OR OTHER LEGAL REQUIREMENT) AND REGARDLESS OF WHETHER
ANY
PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR
PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE
PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY
IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.
-34-
ARTICLE
XII
CONFIDENTIALITY
12.1
CONFIDENTIAL INFORMATION
Each
party agrees that, unless and until the Closing has been consummated, each
party
will hold in strict confidence, and will not use to the detriment of any other
party hereto, any data and information obtained in connection with this
Agreement or the Contemplated Transactions, except insofar as this data and
information may be required by law to be included in documents required to
be
filed by Buyer with the SEC under the Exchange Act and the rules and regulations
promulgated thereunder.
ARTICLE
XIII
GENERAL
PROVISIONS
13.1
EXPENSES
Except
as
otherwise expressly provided in this Agreement, each party to this Agreement
will bear its respective fees and expenses incurred in connection with the
preparation, negotiation, execution and performance of this Agreement and the
Contemplated Transactions, including all fees and expense of its
Representatives. If this Agreement is terminated, the obligation of each party
to pay its own fees and expenses will be subject to any rights of such party
arising from a Breach of this Agreement by another party.
13.2
PUBLIC ANNOUNCEMENTS
Any
public announcement, press release or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer determines. Except with the prior consent
of
Buyer or as permitted by this Agreement, neither Company, Seller nor any of
their Representatives shall disclose to any Person (a) the fact that any
confidential information of Company or Seller has been disclosed to Buyer or
its
Representatives, that Buyer or its Representatives have inspected any portion
of
the confidential information of Company or Seller, that any confidential
information of Buyer has been disclosed to Company, Seller or their
Representatives or that Company, Seller or their Representatives have inspected
any portion of the confidential information of Buyer or (b) any information
about the Contemplated Transactions, including the status of such discussions
or
negotiations, the execution of any documents (including this Agreement) or
any
of the terms of the Contemplated Transactions or the related documents
(including this Agreement). Seller and Buyer will consult with each other
concerning the means by which Company's employees, customers, suppliers and
others having dealings with Company will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
13.3
NOTICES
All
notices, Consents, waivers and other communications required or permitted by
this Agreement shall be in writing and shall be deemed given to a party when
(a)
delivered to the appropriate
-35-
address
by hand or by nationally recognized overnight courier service (costs prepaid);
(b) sent by facsimile with confirmation of transmission by the transmitting
equipment; or (c) received or rejected by the addressee, if sent by certified
mail, return receipt requested, in each case to the following addresses and
facsimile numbers and marked to the attention of the person (by name or title)
designated below (or to such other address, facsimile number, e-mail address
or
person as a party may designate by notice to the other parties):
(i)
Company:
Chongqing
Qiluo Textile Co. Ltd.
00
Xxxxxx
Xxxx
Lidu
Economic Development Zone
Fulin,
Chongqing
China.
Attention:
Dingliang Kuang, CEO
Facsimile:
72231011
(ii)
Sellers:
(1)
Xinshengxiang
Industrial Development Co., Ltd.
2
River ,
Chongqing Fulin , Bai Sheng County, China
Attention:
Shouqing Xxxxx, Chairman
Facsimile:
72234659
(2)
Xx.
Xxxxxxxxx Xxxxx
88
Julong
Road Lidu Economic Development Zone Fulin, Chongqing, China
Facsimile:
72231011
(3)
Xx.
Xxx
Xxxxx
No.22,
Dunren Wangzhou Road, Fuling Districtô
Chongqing City,China
Facsimile:
72231011
(iii)
Buyer:
Xxxxxxxx
Xxxxxx Enterprises, Inc.
0
Xxx
Xxxxx
Xxxxxx
Xxxxxxxxx, XX 00000
XXX
Attention:
Xxxxx Fan, CEO
Facsimile:
000-000-0000
with
a
mandatory copy to:
Xxxxx
Xxxxx & Associates, PLLC
00
Xxxx
Xxxxxxxxx Xxxxxx
Xxxxxx
Xxxxxx, XX 00000
-36-
Attention: Xxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
13.4
JURISDICTION; SERVICE OF PROCESS
Any
Proceeding arising out of or relating to this Agreement or any Contemplated
Transaction may be brought in the state or federal courts located within the
County of New York of the State of New York, and each of the parties irrevocably
submits to the exclusive jurisdiction of each such court in any such Proceeding,
waives any objection it may now or hereafter have to venue or to convenience
of
forum, agrees that all claims in respect of the Proceeding shall be heard and
determined only in any such court and agrees not to bring any Proceeding arising
out of or relating to this Agreement or any Contemplated Transaction in any
other court. The parties agree that either or both of them may file a copy
of
this paragraph with any court as written evidence of the knowing, voluntary
and
bargained agreement between the parties irrevocably to waive any objections
to
venue or to convenience of forum. Process in any Proceeding referred to in
the
first sentence of this section may be served on any party anywhere in the
world.
13.5
ENFORCEMENT OF AGREEMENT
Each
Seller acknowledges and agrees that Buyer would be irreparably damaged if any
of
the provisions of this Agreement are not performed in accordance with their
specific terms and that any Breach of this Agreement by Company or Sellers
could
not be adequately compensated in all cases by monetary damages alone.
Accordingly, in addition to any other right or remedy to which Buyer may be
entitled, at law or in equity, it shall be entitled to enforce any provision
of
this Agreement by a decree of specific performance and to temporary, preliminary
and permanent injunctive relief to prevent Breaches or threatened Breaches
of
any of the provisions of this Agreement, without posting any bond or other
undertaking.
13.6
WAIVER; REMEDIES CUMULATIVE
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither any failure nor any delay by any party in exercising any
right, power or privilege under this Agreement or any of the documents referred
to in 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 claim or right arising out of this Agreement or any
of
the documents referred to in this Agreement can be discharged by one party,
in
whole or in part, by a waiver or renunciation of the claim or right unless
in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of that 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 or the documents referred to in this Agreement.
-37-
13.7
ENTIRE AGREEMENT AND MODIFICATION
This
Agreement supersedes all prior agreements, whether written or oral, between
the
parties with respect to its subject matter (including any letter of intent
and
any confidentiality agreement between Buyer, on the one hand, and Seller or
Company, on the other hand) and constitutes (along with the Schedules, Exhibits
and other documents delivered pursuant to this Agreement) 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, supplemented,
or otherwise modified except by a written agreement executed by the party to
be
charged with the amendment.
13.8
SCHEDULES
(a) The
information in the Schedules constitutes (i) exceptions to particular
representations, warranties, covenants and obligations of Sellers as set forth
in this Agreement or (ii) descriptions or lists of assets and liabilities and
other items referred to in this Agreement. If there is any inconsistency between
the statements in this Agreement and those in the Schedules (other than an
exception expressly set forth as such in the Schedules with respect to a
specifically identified representation or warranty), the statements in this
Agreement will control.
(b) The
statements in the Schedules, and those in any supplement thereto, relate only
to
the provisions in the Section of this Agreement to which they expressly relate
and not to any other provision in this Agreement.
13.9
ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS
Neither
the Company nor the Sellers may assign any of its rights or delegate any of
its
obligations under this Agreement without the prior written consent of the Buyer,
and any such attempted assignment shall be null and void and of no force or
effect. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon and inure to the benefit of the successors and
permitted assigns of the parties and their representatives and heirs. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy
or
claim under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 13.9.
13.10
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.
13.11
CONSTRUCTION
The
headings of Articles and Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references
to
"Articles," "Sections," “Exhibits,” and "Schedules" refer to the corresponding
Articles, Sections, Exhibits, and Schedules of this Agreement.
-38-
13.12
TIME OF ESSENCE
With
regard to all dates and time periods set forth or referred to in this Agreement,
time is of the essence.
13.13
GOVERNING LAW
This
Agreement will be governed by and construed under the laws of the State of
New
York, without regard to conflicts-of-laws principles that would require the
application of any other law.
13.14
EXECUTION OF AGREEMENT
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. The exchange
of copies of this Agreement and of signature pages by facsimile transmission
shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all purposes.
Signatures of the parties transmitted by facsimile shall be deemed to be their
original signatures for all purposes.
13.15
SELLER AND COMPANY LIABILITY; SELLERS’ RELEASE
(a)
The
liability of each Seller hereunder shall be joint and several with the other
Sellers. Where in this Agreement provision is made for any action to be taken
or
not taken by Company, Sellers jointly and severally undertake to cause Company
to take or not take such action, as the case may be. Without limiting the
generality of the foregoing, Sellers shall be jointly and severally liable
for
the indemnities set forth in Article 11.
(b)
The
liability of Company prior to Closing shall be joint and several with the
Sellers. Upon Closing, Company shall be forever discharged and released from
all
liability hereunder, including any claims from the Sellers. In addition, in
consideration for the transactions contemplated hereby, as of the Closing,
Sellers and their respective heirs, executors, successors and assigns (the
"Waiving Parties"), release, waive and forever discharge, in all capacities,
including as stockholders of Company, from and after the Closing any and all
claims, known or unknown, that the Waiving Parties ever had, now have or may
have against Company and its officers, directors, employees or agents in
connection with or arising out of any act or omission of Company or its
officers, directors, employees, advisers or agents, in such capacity, at or
prior to the Closing.
13.16
WAIVER
OF
TRIAL BY JURY
THE
PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT
OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH
WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND
-39-
BARGAINED-FOR
AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY
PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
[Remainder
of Page Intentionally Omitted; Signature Pages to Follow]
-40-
IN
WITNESS WHEREOF, the parties have executed this Share Purchase Agreement as
of
the date first written above.
BUYER:
XXXXXXXX
XXXXXX ENTERPRISES, INC.
By:
/s/
Xxxxx
Fan
Name:
Xxxxx
Fan
Title:
President,
Chief Executive Officer, Treasurer,
and Director
SELLERS:
XINSHENGXIANG
INDUSTRIAL
DEVELOPMENT
CO., LTD.
By:
/s/
Shouqing Xxxxx
Name:
Shouqing Xxxxx
Title:
Chairman
/s/
Dingliang Xxxxx
XXXXXXXXX
XXXXX
/s/
Xxx
Xxxxx
XXX
XXXXX
THE
COMPANY:
CHONGQING
QILUO TEXTILE CO. LTD.
By:
/s/
Dingliang Kuang
Name:
Dingliang Kuang
Title:
Chief
Executive Officer
-41-
LIST
OF
EXHIBITS
Exhibit
1.1 Definitions
Exhibit
2.3(a)(v): Seller’s Legal Opinion
Exhibit
8.6: Xxxxx Fan Stock Purchase Agreement
-42-
LIST
OF
SCHEDULES
Schedule
3.1(a): Jurisdictions of Company
Schedule
3.1(b): Governing Documents of Company
Schedule
3.3(a): Company’s Capitalization
Schedule
3.6(a): Company’s Assets
Schedule
3.7: Real Estate Owned by Company
Schedule
3.7: Real Estate Leased by Company
Schedule
3.9(a): Encumbrances on Real Estate of Company
Schedule
3.15(a): Company Personnel Matters
Schedule
3.16(b): Company Governmental Authorizations
Schedule
3.18(a): Company Contracts
Schedule
3.19(b): Third Party Obligations of Company to Provide Insurance
Coverage
Schedule
3.21(b): Company Intellectual Property Matters
Schedule
3.21(c): Intellectual Property Licenses
Schedule
3.21(e): Company Patents
Schedule
3.21(h): Company Marks
Schedule
3.21(i): Company Copyrights
Schedule
3.21(k): Company Net Names
Schedule
3.22: Company Related Persons
Schedule
3.23: Company Brokers
Schedule
4.7: Buyer Brokers
Schedule
7.3: Company Material Consents
Schedule
8.3: Buyer Material Consents
-43-
EXHIBITS
-44-
EXHIBIT
1.1
DEFINITIONS
For
purposes of this Agreement, the following terms and variations thereof have
the
meanings specified or referred to in this Section 1.1:
"Accounts
Receivable"--(a) all trade accounts receivable and other rights to payment
from
customers of the Company and the full benefit of all security for such accounts
or rights to payment, including all trade accounts receivable representing
amounts receivable in respect of goods shipped or products sold or services
rendered to customers of the Company, (b) all other accounts or notes receivable
of the Company and the full benefit of all security for such accounts or notes
and (c) any claim, remedy or other right related to any of the
foregoing.
"Assets"--
all real property; all Tangible Personal Property; all Inventories; all Accounts
Receivable; all Company Contracts; all data and Records related to the
operations of Company; and all of the intangible rights and property of Company,
including Intellectual Property Assets, going concern value, goodwill,
telephone, facsimile and e-mail addresses.
"Balance
Sheet"--as defined in Section 3.4.
"Best
Efforts"--the efforts that a prudent Person desirous of achieving a result
would
use in similar circumstances to achieve that result as expeditiously as
possible, provided, however, that a Person required to use Best Efforts under
this Agreement will not be thereby required to take actions that would result
in
a material adverse change in the benefits to such Person of this Agreement
and
the Contemplated Transactions or to dispose of or make any change to its
business, expend any material funds or incur any other material
burden.
"Breach"--any
breach of, or any inaccuracy in, any representation or warranty or any breach
of, or failure to perform or comply with, any covenant or obligation, in or
of
this Agreement or any other Contract, or any event which with the passing of
time or the giving of notice, or both, would constitute such a breach,
inaccuracy or failure.
"Business
Day"--any day other than (a) Saturday or Sunday or (b) any other day on which
banks in New York are permitted or required to be closed.
"Buyer"--as
defined in the first paragraph of this Agreement.
"Buyer
Indemnified Persons"--as defined in Section 11.2.
"Closing"--as
defined in Section 2.2.
"Closing
Date"--the date on which the Closing actually takes place.
"Company"--as
defined in the first paragraph of this Agreement.
-45-
"Company
Contract"--any Contract (a) under which Company has or may acquire any rights
or
benefits; (b) under which Company has or may become subject to any obligation
or
liability; or (c) by which Company or any of the assets owned or used by Company
is or may become bound.
"Confidential
Information"--as defined in Section 12.1.
"Consent"--any
approval, consent, ratification, waiver or other authorization.
“Consideration
Shares”--as defined in Section 2.1
"Contemplated
Transactions"--all of the transactions contemplated by this
Agreement.
"Contract"--any
agreement, contract, Lease, consensual obligation, promise or undertaking
(whether written or oral and whether express or implied), whether or not legally
binding.
"Damages"--as
defined in Section 11.2.
"Encumbrance"--any
charge, claim, community or other marital property interest, condition,
equitable interest, lien, option, pledge, security interest, mortgage, right
of
way, easement, encroachment, servitude, right of first option, right of first
refusal or similar restriction, including any restriction on use, voting (in
the
case of any security or equity interest), transfer, receipt of income or
exercise of any other attribute of ownership.
"Environment"--soil,
land surface or subsurface strata, surface waters (including navigable waters
and ocean waters), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life and any other
environmental medium or natural resource.
"Environmental,
Health and Safety Liabilities"--any cost, damages, expense, liability,
obligation or other responsibility arising from or under any Environmental
Law
or Occupational Safety and Health Law, including those consisting of or relating
to:
(a) any
environmental, health or safety matter or condition (including on-site or
off-site contamination, occupational safety and health and regulation of any
chemical substance or product);
(b) any
fine,
penalty, judgment, award, settlement, legal or administrative proceeding,
damages, loss, claim, demand or response, remedial or inspection cost or expense
arising under any Environmental Law or Occupational Safety and Health
Law;
(c) financial
responsibility under any Environmental Law or Occupational Safety and Health
Law
for cleanup costs or corrective action, including any cleanup, removal,
containment or other remediation or response actions ("Cleanup") required by
any
Environmental Law or Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or
-46-
(d) any
other
compliance, corrective or remedial measure required under any Environmental
Law
or Occupational Safety and Health Law.
The
terms
"removal," "remedial" and "response action" include the types of activities
covered by the United States Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (CERCLA).
"Environmental
Law"--any Legal Requirement that requires or relates to:
(a) advising
appropriate authorities, employees or the public of intended or actual Releases
of pollutants or hazardous substances or materials, violations of discharge
limits or other prohibitions and the commencement of activities, such as
resource extraction or construction, that could have significant impact on
the
Environment;
(b) preventing
or reducing to acceptable levels the Release of pollutants or hazardous
substances or materials into the Environment;
(c) reducing
the quantities, preventing the Release or minimizing the hazardous
characteristics of wastes that are generated;
(d) assuring
that products are designed, formulated, packaged and used so that they do not
present unreasonable risks to human health or the Environment when used or
disposed of;
(e) protecting
resources, species or ecological amenities;
(f) reducing
to acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil or other potentially harmful
substances;
(g) cleaning
up pollutants that have been Released, preventing the Threat of Release or
paying the costs of such clean up or prevention; or
(h) making
responsible parties pay private parties, or groups of them, for damages done
to
their health or the Environment or permitting self-appointed representatives
of
the public interest to recover for injuries done to public assets.
"Exchange
Act"--the Securities Exchange Act of 1934.
"Facilities"--any
real property, leasehold or other interest in real property currently owned
or
operated by Company, including the Tangible Personal Property used or operated
by Company at the respective locations of the Real Property specified herein.
Notwithstanding the foregoing, for purposes of the definitions of "Hazardous
Activity" and "Remedial Action", "Facilities" shall mean any real property,
leasehold or other interest in real property currently or formerly owned or
operated by Company, including the Tangible Personal Property used or operated
by Company at the respective locations of the Real Property specified herein.
-47-
"GAAP"--generally
accepted accounting principles for financial reporting in the United States,
applied on a basis consistent with the basis on which the Balance Sheet and
the
other financial statements referred to in Section 3.4 were
prepared.
"Governing
Documents"--with respect to any particular entity, (a) if a U.S. corporation,
the articles or certificate of incorporation and the bylaws; (b) if a U.S.
general partnership, the partnership agreement and any statement of partnership;
(c) if a U.S. limited partnership, the limited partnership agreement and the
certificate of limited partnership; (d) if a U.S. limited liability company,
the
articles of organization and operating agreement; (e) if another type of Person,
any other charter or similar document adopted or filed in connection with the
creation, formation or organization of the Person; (f) all equityholders'
agreements, voting agreements, voting trust agreements, joint venture
agreements, registration rights agreements or other agreements or documents
relating to the organization, management or operation of any Person or relating
to the rights, duties and obligations of the equityholders of any Person; and
(g) any amendment or supplement to any of the foregoing.
"Governmental
Authorization"--any Consent, license, registration or permit issued, granted,
given or otherwise made available by or under the authority of any Governmental
Body or pursuant to any Legal Requirement.
"Governmental
Body"--any: (a) nation, state, county, city, town, borough, village, district
or
other jurisdiction; (b) federal,
state, local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any agency, branch,
department, board, commission, court, tribunal or other entity exercising
governmental or quasi-governmental powers); (d) multinational organization
or
body; (e) body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power; or (f) official of any of the foregoing.
"Ground
Lease"--any long-term lease of land in which most of the rights and benefits
comprising ownership of the land and the improvements thereon or to be
constructed thereon, if any, are transferred to the tenant for the term
thereof.
"Ground
Lease Property"--any land, improvements and appurtenances subject to a Ground
Lease in favor of Company.
"Hazardous
Activity"--the distribution, generation, handling, importing, management,
manufacturing, processing, production, refinement, Release, storage, transfer,
transportation, treatment or use (including any withdrawal or other use of
groundwater) of Hazardous Material in, on, under, about or from any of the
Facilities or any part thereof into the Environment and any other act, business,
operation or thing that increases the danger, or risk of danger, or poses an
unreasonable risk of harm, to persons or property on or off the
Facilities.
"Hazardous
Material"--any substance, material or waste which is or will foreseeably be
regulated by any Governmental Body, including any material, substance or waste
which is defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision
-48-
of
Environmental Law, and including petroleum, petroleum products, asbestos,
presumed asbestos-containing material or asbestos-containing material, urea
formaldehyde and polychlorinated biphenyls.
"Improvements"--all
buildings, structures, fixtures and improvements located on the Land or included
in the Assets, including those under construction.
"Interim
Balance Sheet"--as defined in Section 3.4.
"Inventories"--all
inventories of Company, wherever located, including all finished goods, work
in
process, raw materials, spare parts and all other materials and supplies to
be
used or consumed by Company in the production of finished goods.
“Xxxxx
Fan Stock Purchase Agreement”--as defined in Section 8.6.
"Knowledge"--an
individual will be deemed to have Knowledge of a particular fact or other matter
if: (a) that
individual is actually aware of that fact or matter; or (b) a prudent individual
could be expected to discover or otherwise become aware of that fact or matter
in the course of conducting a reasonably comprehensive investigation regarding
the accuracy of any representation or warranty contained in this Agreement.
A
Person (other than an individual) will be deemed to have Knowledge of a
particular fact or other 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 other matter (as set forth in (a) and (b) above), and any such
individual (and any individual party to this Agreement) will be deemed to have
conducted a reasonably comprehensive investigation regarding the accuracy of
the
representations and warranties made herein by that Person or
individual.
"Land"--all
parcels and tracts of land in which Company has an ownership
interest.
"Lease"--any
Real Property Lease or any lease or rental agreement, license, right to use
or
installment and conditional sale agreement to which Company is a party and
any
other Company Contract pertaining to the leasing or use of any Tangible Personal
Property.
"Legal
Requirement"--any federal, state, local, municipal, foreign, international,
multinational or other constitution, law, ordinance, principle of common law,
code, regulation, statute or treaty.
"Liability"--with
respect to any Person, any liability or obligation of such Person of any kind,
character or description, whether known or unknown, absolute or contingent,
accrued or unaccrued, disputed or undisputed, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise, and whether or
not
the same is required to be accrued on the financial statements of such
Person.
"Order"--any
order, injunction, judgment, decree, ruling, assessment or arbitration award
of
any Governmental Body or arbitrator.
-49-
"Ordinary
Course of Business"--an action taken by a Person will be deemed to have been
taken in the Ordinary Course of Business only if that action:
(a) is
consistent in nature, scope and magnitude with the past practices of such Person
and is taken in the ordinary course of the normal, day-to-day operations of
such
Person;
(b) does
not
require authorization by the board of directors or shareholders of such Person
(or by any Person or group of Persons exercising similar authority) and does
not
require any other separate or special authorization of any nature;
and
(c) is
similar in nature, scope and magnitude to actions customarily taken, without
any
separate or special authorization, in the ordinary course of the normal,
day-to-day operations of other Persons that are in the same line of business
as
such Person.
"Person"--an
individual, partnership, corporation, business trust, limited liability company,
limited liability partnership, joint stock company, trust, unincorporated
association, joint venture or other entity or a Governmental Body.
"Proceeding"--any
action, arbitration, audit, hearing, investigation, litigation or suit (whether
civil, criminal, administrative, judicial or investigative, whether formal
or
informal, whether public or private) commenced, brought, conducted or heard
by
or before, or otherwise involving, any Governmental Body or
arbitrator.
"Real
Property"--the Land and Improvements and all Appurtenances thereto and any
Ground Lease Property.
"Real
Property Lease"--any Ground Lease or Space Lease.
"Record"--information
that is inscribed on a tangible medium or that is stored in an electronic or
other medium and is retrievable in perceivable form.
"Related
Person":
With
respect to a particular individual: (a) each other member of such individual's
Family; (b) any Person that is directly or indirectly controlled by any one
or
more members of such individual's Family; (c) any Person in which members of
such individual's Family hold (individually or in the aggregate) a Material
Interest; and (d) any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, executor or trustee
(or in a similar capacity).
With
respect to a specified Person other than an individual: (a) any Person that
directly or indirectly controls, is directly or indirectly controlled by or
is
directly or indirectly under common control with such specified Person; (b)
any
Person that holds a Material Interest in such specified Person; (c) each Person
that serves as a director, officer, partner, executor or trustee of such
specified Person (or in a similar capacity); (d) any Person in which such
specified Person holds a
-50-
Material
Interest; and (e) any Person with respect to which such specified Person serves
as a general partner or a trustee (or in a similar capacity).
For
purposes of this definition, (a) "control" (including "controlling," "controlled
by," and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies
of
a Person, whether through the ownership of voting securities, by contract or
otherwise, and shall be construed as such term is used in the rules promulgated
under the Securities Act; (b) the "Family" of an individual includes (i) the
individual, (ii) the individual's spouse, (iii) any other natural person who
is
related to the individual or the individual's spouse within the second degree
and (iv) any other natural person who resides with such individual; and (c)
"Material Interest" means direct or indirect beneficial ownership (as defined
in
Rule 13d-3 under the Exchange Act) of voting securities or other voting
interests representing at least ten percent (10%) of the outstanding voting
power of a Person or equity securities or other equity interests representing
at
least ten percent (10%) of the outstanding equity securities or equity interests
in a Person.
"Release"--any
release, spill, emission, leaking, pumping, pouring, dumping, emptying,
injection, deposit, disposal, discharge, dispersal, leaching or migration on
or
into the Environment or into or out of any property.
"Remedial
Action"--all actions, including any capital expenditures, required or
voluntarily undertaken (a) to clean up, remove, treat or in any other way
address any Hazardous Material or other substance; (b) to prevent the Release
or
Threat of Release or to minimize the further Release of any Hazardous Material
or other substance so it does not migrate or endanger or threaten to endanger
public health or welfare or the Environment; (c) to perform pre-remedial studies
and investigations or post-remedial monitoring and care; or (d) to bring all
Facilities and the operations conducted thereon into compliance with
Environmental Laws and environmental Governmental Authorizations.
"Representative"--with
respect to a particular Person, any director, officer, manager, employee, agent,
consultant, advisor, accountant, financial advisor, legal counsel or other
representative of that Person.
"SEC"--the
United States Securities and Exchange Commission.
"Securities
Act"—Securities Act of 1933, as amended.
"Seller"--as
defined in the first paragraph of this Agreement.
"Tangible
Personal Property"--all machinery, equipment, tools, furniture, office
equipment, computer hardware, supplies, materials, vehicles and other items
of
tangible personal property (other than Inventories) of every kind owned or
leased by Company (wherever located and whether or not carried on Company's
books).
"Tax"--any
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental, windfall profit, customs, vehicle,
airplane, boat,
-51-
vessel
or
other title or registration, capital stock, franchise, employees' income
withholding, foreign or domestic withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer, value added,
alternative, add-on minimum and other tax, fee, assessment, levy, tariff, charge
or duty of any kind whatsoever and any interest, penalty, addition or additional
amount thereon imposed, assessed or collected by or under the authority of
any
Governmental Body or payable under any tax-sharing agreement or any other
Contract.
"Tax
Return"--any return (including any information return), report, statement,
schedule, notice, form, declaration, claim for refund or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"Third
Party"--a Person that is not a party to this Agreement.
"Third-Party
Claim"--any claim against any Indemnified Person by a Third Party, whether
or
not involving a Proceeding.
"Threat
of Release"--a reasonable likelihood of a Release that may require action in
order to prevent or mitigate damage to the Environment that may result from
such
Release.
-52-
EXHIBIT
2.3(a)(vi)
SELLER’S
LEGAL OPINION
Shuhong
You
Attorney
at Law License No: 000000000000
Dacheng
Law Firm ( Chongqing Branch)
Address:
Room A, 23 F Yutian Business Mansion , Xx. 000,
Xxxx
Xxxx, Xxxxxxx Xxxxxxxx , Xxxxxxxxx Xxxx, Xxxxx
Post
Code: 400010 Email : xxx00@000.xxx
Tel:
0000-00000000 Fax: 0000-00000000
Mobile:
00-00000000000
June
19,
2007
Xxxxx
Xxxxx, Esq.
Xxxxx
Xxxxx & Associates, PLLC
00
Xxxx
Xxxxxxxxx Xxxxxxx
Xxxxxx
Xxxxxx, XX 00000
|
Re:
|
Share
Purchase Agreement, dated June 19, 2007 (the “Purchase Agreement”), by and
among Chongqing Qiluo Textile Co. Ltd., a limited liability company
organized under the laws of the People’s Republic of China (the
“Company”), the selling shareholders of the Company identified on the
signature page of the Agreement (the “Sellers”), and Xxxxxxxx Xxxxxx
Enterprises, Inc., a Nevada corporation (the
“Buyer”)
|
Ladies
and Gentlemen:
We
have
acted as counsel to the Company and the Sellers in connection with the execution
and delivery by our clients of the Purchase Agreement. This opinion was prepared
and delivered to you at the specific request of our clients pursuant to Section
2.3(a)(v) of the Purchase Agreement. Capitalized terms not otherwise defined
herein are defined as set forth in the Purchase Agreement.
We
have
participated in the preparation and negotiation of the Purchase Agreement,
the
exhibits and schedules thereto, the Sellers’ Closing Documents, and the other
documents referred to therein. We have examined the original, certified,
conformed, photostat or xerox copies of all such documents and certificates
of
public officials, certificates or officers or representatives of the Company
and
others and such other documents, and have made such investigations of law and
facts, as we have deemed necessary or relevant as a basis for the opinions
expressed herein. We have reviewed the various corporate proceedings taken
by
the Company in connection with the authorization and delivery of such
documents.
-53-
Based
on
the foregoing and upon such investigation as we have deemed necessary, we give
you our opinion as follows:
1.
The
Company is a limited liability company duly organized, validly existing and
in
good standing under the laws of the People’s Republic of China, with corporate
power and corporate authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it owns or uses, and
to
perform all its obligations under the Company Contracts. Company is duly
qualified to do business as a foreign entity and is in good standing under
the
laws of each state or other jurisdiction in which either the ownership or use
of
the properties owned or used by it, or the nature of the activities conducted
by
it, requires such qualification. The Company has no subsidiaries and does not
own any shares of capital stock or other securities of any other
Person.
2. The
Company owns good and marketable title to all of the Assets, free and clear
of
any Encumbrances, security agreement, conditional sales contract, license,
or
other title retention or security arrangement, or is located other than in
the
possession of Company. The Assets (i) constitute all of the assets, tangible
and
intangible, of any nature whatsoever, necessary to operate Company's business
in
the manner presently operated by Company and (ii) include all of the operating
assets of Company.
3. Schedule
3.6(a)
to the
Purchase Agreement contains an accurate and complete list of all Tangible
Personal Property owned by the Company.
4. The
Company does not have any ownership interests in any Real Property.
5. Schedule
3.8
to the
Purchase Agreement contains an accurate and complete list of all Leased Real
Property.
6. The
Company is, and at all times has been, in full compliance with each Legal
Requirement that is, or was, applicable to it or to the conduct or operation
of
its business or the ownership or use of any of its Assets. The Company has
no
Liabilities, other than as expressly disclosed in the Purchase
Agreement.
7.
No
event
has occurred or circumstance exists that (with or without notice or lapse of
time) (A) may constitute or result in a violation by Company of, or a failure
on
the part of Company to comply with, any Legal Requirement or (B) may give rise
to any obligation on the part of Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.
8. The
Company has not received any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of, or failure to comply with,
any Legal Requirement or (B) any actual, alleged, possible or potential
obligation on the part of Company to undertake, or to bear all or any portion
of
the cost of, any remedial action of any nature.
-54-
9. The
Company does not have any Governmental Authorizations. The Company may lawfully
operate and conduct its presently existing and planned business operations
and
use or own the Assets without any such Governmental Authorizations. 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 term or requirement of any Governmental Authorization
required to be listed in Schedule
3.16(b)
to the
Purchase Agreement or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation or termination of, or any modification
to,
any Governmental Authorization required to be listed in Schedule
3.16(b).
10. The
Company has not received any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization or (B) any actual,
proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of or modification to any Governmental
Authorization.
11. There
is
no pending or threatened Proceeding: (i) by or against Company or that otherwise
relates to or may affect the business of, or any of the Assets owned or used
by,
Company; or (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Contemplated
Transactions.
12. The
Company is, and at all times has been, in full compliance with, and has not
been
and is not in violation of or liable under, any Environmental Law. None of
Company nor any Seller has any basis to expect, nor has any of them or any
other
Person for whose conduct they are or may be held to be responsible received,
any
actual or threatened order, notice or other communication from (i) any
Governmental Body or private citizen acting in the public interest or (ii)
the
current or prior owner or operator of any Facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual
or
threatened obligation to undertake or bear the cost of any Environmental, Health
and Safety Liabilities with respect to any Facility or other property or asset
(whether real, personal or mixed) in which Company has or had an interest,
or
with respect to any property or Facility at or to which Hazardous Materials
were
generated, manufactured, refined, transferred, imported, used or processed
by
Company or any other Person for whose conduct it is or may be held responsible,
or from which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled or received.
13. There
are
no pending or threatened claims, Encumbrances, or other restrictions of any
nature resulting from any Environmental, Health and Safety Liabilities or
arising under or pursuant to any Environmental Law with respect to or affecting
any Facility or any other property or asset (whether real, personal or mixed)
in
which Company has or had an interest.
14. Schedule
3.18(a)
to the
Purchase Agreement contains an accurate and complete list of the Company
Contracts. Each Contract identified or required to be identified in Schedule
3.18(a)
is in
full force and effect and is valid and enforceable in accordance with its terms.
The Company has no other Contracts or obligations to any third party other
than
as contained in said Company Contracts. Company has not given to or received
from any other Person any notice or other
-55-
communication
(whether oral or written) regarding any actual, alleged, possible or potential
violation or breach of, or default under, any Company Contract which is being
assigned to or assumed by Buyer.
15. Xinshengxiang
is the sole record and beneficial owner of 95% of the Shares. Dingliang is
the
sole record and beneficial owner of 2.5% of the Shares. Yue is the sole record
and beneficial owner of 2.5% of the Shares. Each Seller has good and marketable
title to the Shares, free and clear of any Encumbrance. Upon the execution
and
delivery of this Agreement and issuance of the Consideration Shares to the
Sellers, Buyer shall be the lawful record and beneficial owner of the Shares,
free and clear of all Encumbrances. There
are
no stockholders’ agreements, voting trust, proxies, options, rights of first
refusal or any other Contracts, agreements or understandings with respect to
the
Shares. The Shares were issued in compliance with all Legal Requirements and
the
Governing Documents of the Company, were duly authorized, and are fully paid
and
non-assessable. The Shares, which constitute one hundred (100%) percent of
the
issued and outstanding shares of capital stock of the Company, are free and
clear of any Encumbrances. Neither Seller has any obligation to the Company
for
the Shares.
16. There
are
no Contracts relating to the issuance, sale or transfer of any equity securities
or other securities of Company, including any of the following: options,
warrants, agreements, or other rights for the acquisition of shares of the
Company's capital stock; securities or other obligations of the Company which
are convertible into shares of the Company's capital stock; or sale agreements,
shareholder agreements, pledges, proxies, voting trusts, powers of attorney,
restrictions on transfer or other agreements or instruments that are binding
on
Seller or the Company, including without limitation, any such agreements or
instruments that relate to the ownership, voting or transfer of any shares
of
the Company's capital stock.
17. The
Purchase Agreement has been duly authorized, executed and delivered by the
Company, Xinshengxiang, Dingliang and Yue and assuming due authorization,
execution and delivery by Buyer, the Purchase Agreement constitutes valid and
binding obligation of the Company, Xinshengxiang, Dingliang and Yue enforceable
against the Company, Xinshengxiang, Dingliang and Yue in accordance with its
respective terms. The execution, delivery, and performance of the Purchase
Agreement shall convey good and marketable title of the Shares to Buyer, and
the
Company shall be a wholly-owned subsidiary of Buyer, and no further action
is
necessary to effectuate such transfer. The law firm of Shuhong You hereby
covenants and agrees to promptly take all further action that is necessary
to
evidence such transfer to Buyer.
18. Each
of
Sellers and the Company has the absolute and unrestricted right, power and
authority to execute and deliver this Agreement and the Sellers’ Closing
Documents to which it is a party and to perform its respective obligations
under
this Agreement and the Sellers’ Closing Documents, and such action has been duly
authorized by all necessary action by Sellers and the Company. Each of Seller
and the Company has all necessary legal capacity to enter into this Agreement
and the Sellers’ Closing Documents to which it is a party and to perform such
its obligations thereunder.
19. Neither
the execution and delivery of the Purchase Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly
-56-
(with
or
without notice or lapse of time): (i) Breach (A) any provision of any of the
Governing Documents of Company or (B) any resolution adopted by the board of
directors or the shareholders of Company; (ii) Breach or give any Governmental
Body or other Person the right to challenge any of the Contemplated Transactions
or to exercise any remedy or obtain any relief under any Legal Requirement
or
any Order to which Company or any of Seller, or any of the Assets, may be
subject; (iii) contravene, conflict with or result in a violation or breach
of
any of the terms or requirements of, or give any Governmental Body the right
to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by Company or that otherwise relates to the Assets
or
to the business of Company; (iv) Breach any provision of, or give any Person
the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or payment under, or to cancel, terminate or modify,
any Company Contract; or (v) result in the imposition or creation of any
Encumbrance upon or with respect to any of the Assets or the
Shares.
20. Neither
Company nor any Seller is required to give any notice to or obtain any Consent
from any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Contemplated
Transactions.
21.
Each
of
the English translations of the following documents provided by Sellers to
Buyer
is a complete and accurate translation of the original Chinese text contained
in
the originals of such documents: (i) Purchase and Sale Contract, dated December
18, 2006, between Hangzhou Textile Machinery Limited Company and the Company;
(ii) Leasehold Agreement, dated March 1, 2007, between Chongqing Xinshengxiang
Industrial Development Co., Ltd. and the Company; and (iii) the form of the
Labor Contract of the Company.
Very
truly yours,
___________________________
Shuhong
You
-57-
EXHIBIT
8.6
XXXXX
FAN
STOCK PURCHASE AGREEMENT
STOCK
PURCHASE AGREEMENT
This
STOCK PURCHASE AGREEMENT (this “Agreement”) dated June 19, 2007, by and between
Xxxxx Fan (the “Seller”), Xinshengxiang Industrial Development Co., Ltd. a
limited liability company organized under the laws of the People’s Republic of
China (“Xinshengxiang”), Dingliang Kuang (“X. Xxxxx”), and Xxx Xxxxx (“X. Xxxxx”
and together with Xinshengxiang and X. Xxxxx, the “Purchasers”).
RECITALS
A. Seller
is
the owner of nineteen million (19,000,000) shares of the common stock of
Xxxxxxxx Xxxxxx Enterprises, Inc., a Nevada corporation (“Xxxxxxxx
Xxxxxx”).
B.
Simultaneously
herewith, Xxxxxxxx Xxxxxx is entering into a Share Purchase Agreement with
Chongqing Qiluo Textile Co. Ltd., a limited liability company organized under
the laws of the People’s Republic of China (“Qiluo”), and Purchasers. Purchasers
will not enter into the foregoing Share Purchase Agreement with Xxxxxxxx Xxxxxx
and Qiluo unless Seller enters into this Agreement whereby Seller will sell,
and
Purchasers will purchase, in their respective amounts set forth herein, all
of
Seller’s rights, title, and interest in and to eighteen million (18,000,000)
shares of the common stock of Xxxxxxxx Xxxxxx which are issued and outstanding
and held by Seller (the “Purchased Shares”).
NOW,
THEREFORE, in consideration of the covenants, promises and representations
set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1. Purchase
and Sale.
1.1 Purchase
and Sale.
Subject
to the terms and conditions of this Agreement, at the Closing (hereafter
defined), Seller shall sell, assign, transfer, convey, and deliver to
Purchasers, and Purchasers shall accept and purchase, in their respective
amounts as set forth in Section 1.2 below, the Purchased Shares and any and
all
rights in the Purchased Shares to which Seller is entitled, and by doing so
Seller shall be deemed to have assigned all of her right, title and interest
in
and to the Purchased Shares to Purchasers. Such sale of the Purchased Shares
shall be evidenced by stock certificates, duly endorsed in blank or accompanied
by stock powers in the form annexed hereto as Exhibit A duly executed in blank,
or other instruments of transfer in form and substance reasonably satisfactory
to Purchasers. The Purchased Shares shall be payable at the Closing by the
issuance and delivery by Seller to Purchasers of stock certificates dated as
of
the Closing Date registered in the names and in such amounts as set forth
herein.
-58-
1.2 Allocation
of Purchased Shares. The
Purchased Shares shall be allocated between Purchasers as follows: 17,100,000
Purchased Shares to Xinshengxiang; 450,000 Purchased Shares to X. Xxxxx; and
450,000 Purchased Shares to X. Xxxxx.
2.
Closing.
2.1
Date
and Location.
The
closing of the transactions contemplated by this Agreement (the "Closing")
shall
be held simultaneously with the execution of this Agreement at such place as
the
parties hereto may agree.
2.2
Deliveries.
At the
Closing, Seller shall deliver to Purchasers in accordance with the terms of
Section 1.2 above, (i) stock certificates evidencing the Purchased Shares,
duly
endorsed in blank or accompanied by stock powers in the form annexed hereto
as
Exhibit A duly executed in blank, or other instruments of transfer in form
and
substance reasonably satisfactory to Purchasers, (ii) any documentary evidence
of the due recordation in the Company’s share register of Purchasers’ full and
unrestricted title to the Purchased Shares, and (iii) such other documents
as
may be required under applicable law or reasonably requested by
Purchasers.
3.
Representations
and Warranties of Seller.
As an
inducement to Purchasers to enter into this Agreement and to consummate the
transactions contemplated herein, Seller represents and warrants to Purchasers
as follows:
3.1 Authority.
Seller
has the right, power, authority and capacity to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and to perform
his
obligations under this Agreement. This Agreement constitutes the legal, valid
and binding obligations of Seller, enforceable against Seller in accordance
with
the terms hereof.
3.2
Ownership.
Seller
is the sole record and beneficial owner of the Purchased Shares, has good and
marketable title to the Purchased Shares, free and clear of all Encumbrances
(hereafter defined), other than applicable restrictions under applicable
securities laws, and has full legal right and power to sell, transfer and
deliver the Purchased Shares to Purchasers in accordance with this Agreement.
“Encumbrances” means any liens, pledges, hypothecations, charges, adverse
claims, options, preferential arrangements or restrictions of any kind,
including, without limitation, any restriction of the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership. Upon the
execution and delivery of this Agreement, Purchasers will receive good and
marketable title to the Purchased Shares, free and clear of all Encumbrances,
other than restrictions imposed pursuant to any applicable securities laws
and
regulations. There are no stockholders’ agreements, voting trust, proxies,
options, rights of first refusal or any other agreements or understandings
with
respect to the Purchased Shares.
3.3
Valid
Issuance.
The
Purchased Shares are duly authorized, validly issued, fully paid and
non-assessable, and were not issued in violation of any preemptive or similar
rights.
3.4
No
Conflict.
None of
the execution, delivery, or performance of this Agreement, and the consummation
of the transactions contemplated hereby, conflicts or will conflict with, or
(with or without notice or lapse of time, or both) result in a termination,
breach or violation
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of
(i)
any instrument, contract or agreement to which Seller is a party or by which
he
is bound, or to which the Purchased Shares are subject; or (ii) any federal,
state, local or foreign law, ordinance, judgment, decree, order, statute, or
regulation, or that of any other governmental body or authority, applicable
to
Seller or the Purchased Shares.
3.5
No
Consent.
No
consent, approval, authorization or order of, or any filing or declaration
with
any governmental authority or any other person is required for the consummation
by the Seller of any of the transactions on its part contemplated under this
Agreement.
4. Representations
and Warranties of Purchasers.
As an
inducement to Seller to enter into this Agreement and to consummate the
transactions contemplated herein, Purchasers represent and warrant, jointly
and
severally, to Seller as follows:
4.1 Authority.
Purchasers have the right, power, authority and capacity to execute and deliver
this Agreement, to consummate the transactions contemplated hereby and to
perform their obligations under this Agreement. This Agreement constitutes
the
legal, valid and binding obligations of Purchasers, enforceable against
Purchasers in accordance with the terms hereof.
4.2
No
Consent.
No
consent, approval, authorization or order of, or any filing or declaration
with
any governmental authority or any other person is required for the consummation
by the Purchasers of any of the transactions on its part contemplated under
this
Agreement.
4.3 No
Conflict.
None of
the execution, delivery, or performance of this Agreement, and the consummation
of the transactions contemplated hereby, conflicts or will conflict with, or
(with or without notice or lapse of time, or both) result in a termination,
breach or violation of (i) any instrument, contract or agreement to which
Purchasers are a party or by which they are bound; or (ii) any federal, state,
local or foreign law, ordinance, judgment, decree, order, statute, or
regulation, or that of any other governmental body or authority, applicable
to
Purchasers.
4.4
Restricted
Securities.
Purchasers understand that the Purchased Shares have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”) or registered or
qualified under any the securities laws of any state or other jurisdiction,
are
“restricted securities,” and cannot be resold or otherwise transferred unless
they are registered under the Securities Act, and registered or qualified under
any other applicable securities laws, or an exemption from such registration
and
qualification is available. Each certificate for any Purchased Shares shall
bear
a legend to the foregoing effect.
4.5 Review
of SEC Documents.
Purchasers have reviewed or received copies of all reports and other documents
filed by Xxxxxxxx Xxxxxx and its officers and directors with the Securities
and
Exchange Commission and any other documents or information requested by
Purchasers.
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4.6 No
Reliance.
Other than as set forth herein, Purchasers are not relying upon any other
information, representation or warranty by Seller or any representative of
Seller in determining to invest in the Purchased Shares. Purchasers have
consulted, to the extent deemed appropriate by Purchasers, with the Purchasers’
own advisers as to the financial, tax, legal and related matters concerning
an
investment in the Purchased Shares and on that basis believes that his, her
or
its investment in the Purchased Shares is suitable and appropriate for
Purchasers.
5.
Indemnification;
Survival.
5.1
Indemnification.
Sellers
on the one hand, and Purchasers on the other hand, shall jointly and severally
indemnify and hold harmless the other party and such other party’s agents,
beneficiaries, affiliates, representatives and their respective successors
and
assigns (collectively, the “Indemnified Persons”) from and against any and all
damages, losses, liabilities, taxes and costs and expenses (including, without
limitation, attorneys’ fees and costs) (collectively, “Losses”) resulting
directly or indirectly from (a) any inaccuracy, misrepresentation, breach of
warranty or non-fulfillment of any of the representations and warranties of
such
party in this Agreement, or any actions, omissions or statements of fact
inconsistent with in any material respect any such representation or warranty,
(b) any failure by such party to perform or comply with any agreement, covenant
or obligation in this Agreement.
5.2
Survival.
All
representations, warranties, covenants and agreements of the parties contained
herein or in any other certificate or document delivered pursuant hereto shall
survive the date hereof until the expiration of the applicable statute of
limitations.
6.
Miscellaneous.
6.1 Further
Assurances.
From
time to time, whether at or following the Closing, each party shall make
reasonable commercial efforts to take, or cause to be taken, all actions, and
to
do, or cause to be done, all things reasonably necessary, proper or advisable,
including as required by applicable laws, to consummate and make effective
as
promptly as practicable the transactions contemplated by this
Agreement.
6.2
Notices.
All
notices or other communications required or permitted hereunder shall be in
writing shall be deemed duly given (a) if by personal delivery, when so
delivered, (b) if mailed, three (3) business days after having been sent by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below, or (c) if sent through
an overnight delivery service in circumstances to which such service guarantees
next day delivery, the day following being so sent:
| (1) |
If
to Seller:
|
Xxxxx
Fan
0
Xxx
Xxxxx
Xxxxxx
Xxxxxxxxx, XX 00000
-61-
| (2) |
If
to Purchasers:
|
Xinshengxiang
Industrial Development Co., Ltd.
2
River ,
Chongqing Fulin , Bai Sheng County,
Fulin,
Chongqing China
Any
party
may change the address to which notices and other communications hereunder
are
to be delivered by giving the other parties notice in the manner herein set
forth.
6.3
Choice
of Law.
This
Agreement shall be governed, construed and enforced in accordance with the
laws
of the State of New York, without giving effect to principles of conflicts
of
law.
6.4
Jurisdiction.
The
parties hereby irrevocably consent to the in personam jurisdiction of the state
or federal courts located in the State of New York, in connection with any
action or proceeding arising out of or relating to this Agreement or the
transactions and the relationships established thereunder.
6.5 Entire
Agreement.
This
Agreement sets forth the entire agreement and understanding of the parties
in
respect of the transactions contemplated hereby and supersedes all prior and
contemporaneous agreements, arrangements and understandings of the parties
relating to the subject matter hereof. No representation, promise, inducement,
waiver of rights, agreement or statement of intention has been made by any
of
the parties which is not expressly embodied in this Agreement.
6.6 Assignment.
Each
party's rights and obligations under this Agreement shall not be assigned or
delegated, by operation of law or otherwise, without the other party's prior
written consent, and any such assignment or attempted assignment shall be void,
of no force or effect, and shall constitute a material default by such party.
6.7
Amendments.
This
Agreement may be amended, modified, superseded or cancelled, and any of the
terms, covenants, representations, warranties or conditions hereof may be
waived, only by a written instrument executed by the parties
hereto.
6.8 Waivers.
The
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by any party of any condition, or the breach of any term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach
or a
waiver of any other term, covenant, representation or warranty of this
Agreement.
6.9 Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts and by
facsimile, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
-62-
6.10 Severability.
If any
term, provisions, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
6.11
Interpretation.
The
parties agree that this Agreement shall be deemed to have been jointly and
equally drafted by them, and that the provisions of this Agreement therefore
shall not be construed against a party or parties on the ground that such party
or parties drafted or was more responsible for the drafting of any such
provision(s). The parties further agree that they have each carefully read
the
terms and conditions of this Agreement, that they know and understand the
contents and effect of this Agreement and that the legal effect of this
Agreement has been fully explained to its satisfaction by counsel of its own
choosing.
[The
remainder of this page left intentionally blank; signature page to
follow]
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IN
WITNESS WHEREOF, the undersigned have duly executed this Stock Purchase
Agreement as of the date first above written.
_____________________________
XXXXX
FAN
XINSHENGXIANG
INDUSTRIAL
DEVELOPMENT
CO., LTD.
By:
__________________________
Name:
Shouqing Xxxxx
Title:
Chairman
_____________________________
DINGLIANG
KUANG
_____________________________
XXX
XXXXX
-64-
EXHIBIT
A
IRREVOCABLE
STOCK POWER FORM
FOR
VALUE RECEIVED,
Name
of
Seller: _______________________________________
Hereby
sells, assigns and transfers unto:
(Please
print or typewrite name and address, including zip code, of
assignee)
Social
Security or other identifying number of
assignee________________________________________________________
0f
the
capital stock represented by the within certificate and do hereby irrevocably
constitute and appoint ________________________, Attorney to transfer the said
stock on the books of the within named Corporation with full power of
substitution in the premises.
Date:_____________________________
Signed:
__________________________________________________________
_________________________________________________________
(person(s)
executing this power sign(s) here)
Affix
a Medallion Signature Guarantee imprint------->
IMPORTANT
READ CAREFULLY
The
signature to this assignment must correspond with the name as written upon
the
face of the certificate in every particular without alteration or enlargement
or
any change whatsoever. The signature of the person executing this power must
be
guaranteed by an eligible Guarantor Institution such as a Commercial Bank,
Trust
Company, Securities Broker/Dealer, Credit Union, or Savings Association
participating in a Medallion Program approved by the Securities Transfer
Association, Inc. Unfortunately no other form of signature verification can
be
accepted.
-65-
SCHEDULES
-66-
Schedule
3.1(a):
Jurisdictions
of Company
1.
People’s
Republic of China
-67-
Schedule
3.1(b):
Governing
Documents of Company
-68-
Schedule
3.3(a):
Company’s
Capitalization
The
Registered Capital Stock of the Company is owned as follows:
|
(i)
|
Xinshengxiang
Industrial Development Co., Ltd., owns 95% of the shares of the registered
capital stock of the Company;
|
|
(ii)
|
Xx.
Xxxxxxxxx Xxxxx owns 2.5% of the shares of the registered capital
stock of
the Company; and
|
|
(iii)
|
Xx.
Xxx Xxxxx owns 2.5% of the shares of the registered capital stock
of the
Company.
|
-69-
Schedule
3.6(a):
Company’s
Assets
1.
$6,000,000 Yuan in bank deposits
2.
Machines
3.
Office
equipment
-70-
Schedule
3.7:
Real
Estate Owned by Company
None
-71-
Schedule
3.8:
Real
Estate Leased by Company
1.
On
January 28, 2007, the Company entered into a twenty (20) year lease with
Xinshengxiang, a 95% shareholder, to use 11,400 square meters factory building
located at 00 Xxxxxx Xxxx, Xxxx Economic Development Zone, Fulin, Chongqing.
The
monthly rent is $2,214 and will be paid by the end the year commencing on March
1, 2007.
-72-
Schedule
3.9(a):
Encumbrances
on Real Estate of Company
None
-73-
Schedule
3.15(a):
Company
Personnel Matters
1.
The
Company has ten employees.
-74-
Schedule
3.16(b):
Company
Governmental Authorizations
None
-75-
Schedule
3.18(a):
Company
Contracts
1.
On
December 18, 2006, the Company signed a purchase contract in the amount of
$307,440 (2,400,000 Chinese Yuan) with Hangzhou Textile Machinery Co. Ltd to
purchase six (6) new silk drawing machinery units. The Company is to pay 20%
of
the total contracted price by January 30, 2007. Delivery of the equipment will
be made upon payment of an additional 60% of the contracted price. The remaining
20% will be paid upon the completion of the installation.
2.
On
January 28, 2007, the Company signed a twenty (20) year lease with
Xinshengxiang, a 95% shareholder, to use 11,400 square meters factory building
located at 00 Xxxxxx Xxxx, Xxxx Economic Development Zone, Fulin, Chongqing.
The
monthly rent is $2,214 and will be paid by the end the year commencing on March
1, 2007.
-76-
Schedule
3.19(b):
Third
Party Obligations of Company to Provide Insurance Coverage
None
-77-
Schedule
3.21(b):
Company
Intellectual Property Matters
None
-78-
Schedule
3.21(c):
Intellectual
Property Licenses
None
-79-
Schedule
3.21(e):
Company
Patents
None
-80-
Schedule
3.21(h):
Company
Marks
None
-81-
Schedule
3.21(i):
Company
Copyrights
None
-82-
Schedule
3.21(k):
Company
Net Names
xxx.xxxxxxxxxxxx.xxx
-83-
Schedule
3.22:
Company
Related Persons
1.
The
Company borrowed $864 (6,760 Chinese Yuan) from Xinshengxiang during the process
of incorporation. The Company will repay the full amount due to “Xinshengxiang
Industrial Development Co., Ltd” when the Company starts operation. No interest
has been paid or accrued on the balance due to related party.
2.
On
January 28, 2007, the Company signed a twenty (20) year lease with
Xinshengxiang, a 95% shareholder, to use 11,400 square meters factory building
located at 00 Xxxxxx Xxxx, Xxxx Economic Development Zone, Fulin, Chongqing.
The
monthly rent is $2,214 and will be paid by the end the year commencing on March
1, 2007.
-84-
Schedule
3.23:
Company
Brokers
None
-85-
Schedule
4.7:
Buyer
Brokers
None
-86-
Schedule
7.3:
Company
Material Consents
None
-87-
Schedule
8.3:
Buyer
Material Consents
None
-88-
