EXCHANGE AGREEMENT BY AND AMONG BOUNDLESS CORPORATION, ADVANCETECH GLOBAL LIMITED, EACH MEMBER OF ADVANCETECH GLOBAL LIMITED, JILIN HAITIAN INDUSTRIAL COMPANY, LTD., AND JILIN CITY HAITIAN BUSINESS CONSULTING CO., LTD. DATED AS OF DECEMBER 15th, 2006...
BY
AND
AMONG
BOUNDLESS
CORPORATION,
ADVANCETECH
GLOBAL LIMITED,
EACH
MEMBER OF ADVANCETECH GLOBAL LIMITED,
JILIN
HAITIAN INDUSTRIAL COMPANY, LTD.,
AND
JILIN
CITY HAITIAN BUSINESS CONSULTING CO., LTD.
DATED
AS
OF DECEMBER 15th,
2006
THIS
EXCHANGE AGREEMENT (the "Agreement") is made and entered into as of December
15th,
2006, by and among Boundless Corporation, a Delaware corporation
("Boundless"), Jilin City Haitian Business Consulting Co., Ltd. ("HBC"), a
limited liability company under the Company Law of The People's Republic of
China (the "PRC"), Jilin Haitian Industrial Company, Ltd. ("Haitian"), a limited
liability company formed under the laws of the PRC, Advancetech Global Limited,
an International Business Company incorporated in the British Virgin Islands
(the "Company"), and each of the persons listed under the caption "Members"
on
the signature page hereof, together with each person becoming a Member prior
to
the closing of the transactions contemplated hereunder who shall execute a
counterpart signature of this Agreement, such persons being all of the members
of the Company. The Members shall be referred to herein collectively as the
"Members" and individually as the "Member".
RECITALS
A.
The
Members own all of the Shares (as defined in Section 1.1) of the
Company.
B.
The
Company owns all of the registered capital of HBC, a wholly foreign owned
enterprise under the wholly foreign-owned enterprises laws of the
PRC.
C.
Haitian is a limited liability company formed under the laws of the PRC and
a
domestic enterprise with exclusively domestic capital registered in Jilin]
Province in the PRC whose registered capital is owned directly by the Members,
and who is engaged in the business of manufacturing chemical products in the
PRC.
D.
HBC
has agreed to advise, consult, manage and operate Haitian's business in
consideration for certain payments by Haitian to HBC pursuant to certain
agreements to be entered into by the parties prior to Closing including, without
limitation, an Exclusive Business Consulting Agreement, ("Consulting
Agreement"), an Operating Agreement, ("Operating Agreement"), and an Technology
Consulting Services Agreement, ("Technology Agreement") (collectively, theses
agreements are referred to herein as the "Restructuring Agreements"), each
of
which shall be acceptable to
Boundless.
E.
Boundless desires to acquire all of the Shares and equity ownership of the
Members of the Company in exchange for certain of equity securities of
Boundless, and the Members desire to transfer and contribute all of their Shares
and equity ownership of the Company to Boundless in exchange for certain equity
securities of Boundless, on the terms and conditions hereinafter set
forth.
F.
The
parties intend, by executing this Agreement, to adopt a plan of reorganization
under Section 368 of the Internal Revenue Code of 1986, as amended (the "Code")
or implement a tax-deferred exchange of property governed by Section 351 of
the
Code.
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 are hereby acknowledged, the parties agree as
follows:
ARTICLE
I
EXCHANGE
OF SHARES
1.1
Exchange. At the Closing and subject to and upon the terms and conditions of
this Agreement, the Members of the Company agree to contribute, transfer, assign
and deliver to Boundless, and Boundless agrees to acquire from the Members,
all
of the outstanding shares of capital stock of or other ownership interests
in
the Company (the "Shares") owned by the Members as specifically set forth on
Schedule
1.1
hereto.
As of the Closing Date, the Shares shall constitute all of the issued and
outstanding Shares and equity ownership interests of the Company. The exchange
of Shares contemplated hereunder and the other transactions contemplated
hereunder shall be referred to herein as the "Transaction" or the
"Transactions".
1.2
Closing. Unless this Agreement shall have been terminated pursuant to Article
IX
hereof, the closing of the Transaction (the "Closing") shall take place at
the
offices of Xxxxx & Xxx Xxxxxx, LLP, 0 Xxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 at a time and date to be specified by the parties,
which shall be no later than the third business day after the satisfaction
or
waiver of the conditions set forth in Article VII, or at such other time, date
and location as the parties hereto agree in writing (the "Closing
Date").
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1.3
Exchange Consideration. In exchange for the Shares of the Company, Boundless
shall issue 30,600,000 shares of common stock, par value $0.01 per share. (the
"Exchange Shares"), The Exchange Shares shall represent 76.5% of the issued
and
outstanding shares of common stock of Boundless, on an as converted and fully
diluted basis immediately following the Closing, after giving effect to any
Shares, ownership interests, equity securities, convertible securities,
warrants, options, or other derivative securities of Boundless or the Company
issued or to be issued to any Person (as defined herein), or assumed or to
be
assumed by Boundless, in connection with or following the Transactions
(including any shares of Boundless' common stock to be issued to any finder,
consultant or advisor engaged by the Company with respect to this
Transaction).Boundless will also issue 5,400,000 shares of common stock to
Global Access Ventures, LLC in connection with services rendered to the Company,
Haitian and HBC with respect to the transaction.
1.4
Allocation of Exchange Shares. At the Closing, the Exchange Shares to be issued
to the Members of the Company in exchange for the Shares shall be issued to
the
respective Members in proportion to their respective ownership of the Shares,
as
described in Schedule
1.1
hereto.
1.5
Delivery of Assignment of Shares. At Closing, the Company shall deliver to
Boundless a certificate duly executed and authorized by the registered agent
of
the Company and each of the officers and directors of the Company certifying
to
the ownership of the Shares by each Member as set forth on Schedule
1.1
hereof,
and each Member shall deliver an assignment, stock power or other acceptable
instrument of transfer of the Shares owned by such Member, duly executed by
such
Member with (i) all certificates representing the Shares and such other
documents as may be reasonably requested to vest in Boundless good and
marketable title to the Shares free and clear of any and all Liens (as defined
in Section 2.3 hereof) and (ii) all reasonably necessary other documentary
stamps. The Company shall record the transfer of the Shares described in this
Section 1.5 on its transfer books.
1.6
Issuance of Certificates Representing Boundless' Exchange Shares. At Closing,
Boundless will issue the Exchange Shares to the Members as provided in Section
1.4 above. The Exchange Shares, when issued, shall be restricted shares and
may
not be sold, transferred or otherwise disposed of by the Members without
registration under the Securities Act of 1933, as amended ("Securities Act")
or
an available exemption from registration under the Securities Act. The
certificates representing the Exchange Shares will contain the appropriate
restrictive legends.
1.7
Tax
Consequences. It is intended by the parties hereto that the Members
contributions and transfers of the Shares to Boundless in exchange for the
Exchange Shares constitutes a plan of reorganization under Section 368 of the
Code or a tax-deferred exchange of property within the meaning of Section 351
of
the Code.
1.8
Taking of Necessary Action; Further Action. If, at any time after the Closing,
any further action is necessary or desirable to carry out the purposes of this
Agreement, including qualifying the Transaction as a plan of reorganization
within the meaning of Section 368 of the Code or a tax-deferred exchange of
property within the meaning of Section 351 of the Code, and to vest Boundless
with full right, title and possession to the Shares, the Members of the Company
and Boundless will take all such lawful and necessary action.
3
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF MEMBERS WITH RESPECT TO SHARES
Each
Member of the Company for himself only, and not with respect to any other
Member, hereby represents and warrants to, and covenants with, Boundless with
respect to such Member as follows:
2.1
Ownership of Shares. Each Member of the Company is both the record and
beneficial owner of the Shares set forth beside such Member's name on
Schedule
1.1
hereto.
Each Member is not the record or beneficial owner of any other Shares. The
information set forth on Schedule
1.1
with
respect to each Member is accurate and complete.
2.2
Authority of Members. Each Member that is a natural person has full power and
authority and is competent to (i) execute, deliver and perform this Agreement,
and each ancillary document which each such Member has executed or delivered
or
is to execute or deliver pursuant to this Agreement (including the Restructuring
Agreements), and (ii) carry out each such Member's obligations hereunder and
thereunder, without the need for any Governmental Action/Filing (as defined
herein). Each Member that is a corporate or other entity has obtained all due
authorization and has full power for the execution, delivery and performance
of
this Agreement and each ancillary document which each such Member has executed
or delivered or is to execute or deliver pursuant to this Agreement (including
the Restructuring Agreements) and to carry out each such Member's obligations
hereunder and thereunder without the need for any Governmental Action/Filing.
The execution, delivery and performance by each Member of this Agreement and
each ancillary document does not and will not conflict with, result in a breach
of, or constitute a default or require a consent or action under, any agreement
or other instrument to or by which such Member is a party or is bound or to
which any of the Shares of such Member are subject, or, to such Member's
knowledge, any Legal Requirement (as defined herein) to which such Member is
subject, or result in the creation of any Lien (as defined in Section 2.3)
on
the Shares. This Agreement, and each Member's ancillary documents to be executed
and delivered by such Member at the Closing, has been duly executed and
delivered by such Member (and each ancillary document to be executed and
delivered by such Member at or after the Closing will be duly executed and
delivered by such Member), and this Agreement constitutes, and each ancillary
document, when executed and delivered by such Member will constitute, and
assuming the due authorization, execution and delivery thereof by the other
parties hereto and thereto, as applicable, such Member's legal, valid and
binding obligation, enforceable against such Member in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and
by general principles of equity and public policy. For purposes of this
Agreement, (x) the term "Governmental Action/Filing" shall mean any franchise,
license, certificate of compliance, authorization, consent, order, permit,
approval, consent or other action of, or any filing, registration or
qualification with, any federal, state, municipal, foreign or other
governmental, administrative or judicial body, agency or authority, and (y)
the
term "Legal Requirements" means any federal, state, local, municipal, foreign
or
other law, statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, ruling or requirement issued,
enacted, adopted, promulgated, implemented or otherwise put into effect by
or
under the authority of any Governmental Entity (as defined in Section 3.5(b)),
and all requirements set forth in applicable Contracts (as defined in Section
3.19(a)).
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2.3
Title
To Shares. Each Member has and shall transfer to Boundless at the Closing,
good
and marketable title to the Shares shown as owned of record by such Member
on
Schedule
1.1
to this
Agreement, free and clear of all liens, claims, charges, encumbrances, pledges,
mortgages, security interests, options, rights to acquire, proxies, voting
trusts or similar agreements, restrictions on transfer or adverse claims of
any
nature whatsoever ("Liens").
2.4
Pre-emptive Rights. At Closing, no Member has any pre-emptive rights or any
other rights to acquire any Shares of the Company that have not been waived
or
exercised.
2.5
Repayment of Obligations. At the Closing Date, all amounts owed to the Company,
HBC or Haitian or any Subsidiary of the foregoing (as defined in Section 3.2
hereof) by each Member of the Company (regardless of whether such amounts are
due and payable) shall have been paid in full.
2.6
Acquisition of Exchange Shares for Investment.
(a)
Each
Member is acquiring the Exchange Shares for investment for Member's own account
and not as a nominee or agent, and not with a view to the resale or distribution
of any part thereof, and each Member has no present intention of selling,
granting any participation in, or otherwise distributing the same. Each Member
further represents that he does not have any contract, undertaking, agreement
or
arrangement with any person to sell, transfer or grant participation to such
person or to any third person, with respect to any of the Exchange
Shares.
(b)
Each
Member understands that the Exchange Shares are not registered under the
Securities Act, that the issuance of the Exchange Shares is intended to be
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof and such other available exemptions, including Regulation S of the
Exchange Act, and that Boundless' reliance on such exemption is predicated
on
the Member's representations set forth herein. Each Member represents and
warrants that: (i) he is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D under the Act or is not a U.S. Person as defined
in
Rule 902 of Regulation S under the Act and the offer and sale of the Exchange
Shares occurred outside the United States, (ii) he can bear the economic risk
of
his respective investments, and (iii) he possesses such knowledge and experience
in financial and business matters that he is capable of evaluating the merits
and risks of the investment in Boundless and its securities.
5
(c)
Each
Member acknowledges that neither the U.S. Securities and Exchange Commission
("SEC"), nor the securities regulatory body of any state or other jurisdiction,
has received, considered or passed upon the accuracy or adequacy of the
information and representations made in this Agreement.
(d)
Each
Member acknowledges that he has carefully reviewed such information as he has
deemed necessary to evaluate an investment in Boundless and its securities.
To
the full satisfaction of each Member, he has been furnished all materials that
he has requested relating to Boundless and the issuance of the Exchange Shares
hereunder, and each Member has been afforded the opportunity to ask questions
of
Boundless' representatives to obtain any information necessary to verify the
accuracy of any representations or information made or given to the Members.
Notwithstanding the foregoing, nothing herein shall derogate from or otherwise
modify the representations and warranties of Boundless set forth in this
Agreement, on which each of the Members have relied in making an exchange of
his
Shares of the Company for the Exchange Shares of Boundless.
(e)
Each
Member understands that the Exchange Shares may not be sold, transferred, or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Exchange Shares or any available exemption from
registration under the Securities Act, the Exchange Shares may have to be held
indefinitely.
Each
Member further acknowledges that the Exchange Shares may not be sold pursuant
to
Rule 144 promulgated under the Securities Act unless all of the conditions
of
Rule 144 are satisfied (including, without limitation, Boundless' compliance
with the reporting requirements under the Securities Exchange Act of 1934,
as
amended ("Exchange Act")).
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES WITH RESPECT TO THE COMPANY, HAITIAN AND HBC
Wang
Xitian (“WX”), Jilin Province Huizheng Venture Capital Co., Ltd. (“Huizheng”),
the Company, HBC and Haitian hereby jointly and severally represent and warrant
to, and covenant with, Boundless, as follows:
3.1
Organization and Qualification.
(a)
The
Company is a company organized as an International Business Company under the
laws of the British Virgin Islands, is duly formed or organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has the requisite power and authority to own, please and operate its assets
and properties and to carry on its business as it is
now
being or currently planned by the Company to be conducted. The Company is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Approvals") necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, and to consummate
the
Transactions contemplated under this Agreement, except where the failure to
have
such Approvals could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect (as defined in Section 11.2(b))
on
the Company. Complete and correct copies of the articles of organization and
bylaws or similar governing, organization or charter documents (collectively
referred to herein as "Charter Documents") of the Company, as amended and
currently in effect, have been heretofore delivered to Boundless. The Company
is
not in violation of any of the provisions of the Company's Charter Documents.
The Company is duly qualified or licensed to do business as a foreign company
and is in good standing in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities
makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that could not, individually
or
in the aggregate, reasonably be expected to have a Material Adverse Effect
on
the Company. The minute books or the equivalent contain true, complete and
accurate records of meetings and consents in lieu of meetings of its board
of
directors (and any committees thereof), similar governing bodies and
stockholders ("Corporate Records") of the Company, since the time of the
Company's organization. Copies of such Corporate Records of the Company have
been heretofore delivered to Boundless. The ownership records of the Company'
Shares are true, complete and accurate records of the ownership of the Shares
as
of the date of such records and contain all transfers of such Shares since
the
time of the Company's organization ("Share Records"). Copies of such Share
Records of the Company have been heretofore delivered to Boundless.
6
(b)
HBC
is a limited liability company organized under the Company Law of the PRC and
a
wholly foreign owned enterprise under the wholly foreign-owned enterprises
laws
of the PRC, is duly formed or organized, validly existing and in good standing
under the laws of its jurisdiction of organization and has the requisite power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being or currently planned by HBC to be conducted.
HBC is in possession of all Approvals necessary to own, lease and operate the
properties it purports to own, operate or lease, to carry on its business as
it
is now being conducted, to consummate the Transactions contemplated under this
Agreement, to enter into and perform all of its obligations under the
Restructuring Agreements, to become, and to maintain its status as, a wholly
foreign owned enterprise under the laws of the PRC, except where the failure
to
have such Approvals could not, individually or in the aggregate, reasonably
be
expected to have a Material Adverse Effect on HBC. Complete and correct copies
of the Charter Documents of HBC, as amended and currently in effect, have been
heretofore delivered to Boundless. HBC is not in violation of any of the
provisions of HBC's Charter Documents. HBC is duly qualified or licensed to
do
business as a foreign company and is in good standing in each jurisdiction
where
the character of the properties owned, leased or operated by it or the nature
of
its activities makes such qualification or licensing necessary, except for
such
failures to be so duly qualified or licensed and in good standing that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on HBC. The Corporate Records of HBC contain true, complete
and
accurate records of meetings and consents in lieu of meetings of its board
of
directors (and any committees thereof), similar governing bodies and holders
of
its registered capital, since the time of HBC's organization. Copies of such
Corporate Records of HBC have been heretofore delivered to Boundless. The
ownership records of HBC's registered capital are true, complete and accurate
records of such ownership as of the date of such records and contain all
transfers of such registered capital since the time of HBC's organization,
and
copies of such records of HBC have been heretofore delivered to
Boundless.
7
(c)
Haitian is a limited liability company formed under the laws of the PRC and
a
domestic company with exclusively domestic capital under the laws of the PRC,
is
duly formed or organized, validly existing and in good standing under the laws
of its jurisdiction of organization and has the requisite power and authority
to
own, lease and operate its assets and properties and to carry on its business
as
it is now being or currently planned by Haitian to be conducted. Haitian is
in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease, to carry on its business as it is now
being conducted, to consummate the Transactions contemplated under this
Agreement, and to enter into and perform all of its obligations under the
Restructuring Agreements, except where the failure to have such Approvals could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Haitian. Complete and correct copies of the Charter Documents
of Haitian, as amended and currently in effect, have been heretofore delivered
to Boundless. Haitian is not in violation of any of the provisions of Haitian's
Charter Documents. Haitian is duly qualified or licensed to do business as
a
foreign company and is in good standing in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Haitian. The Corporate Records of Haitian contain true,
complete and accurate records of meetings and consents in lieu of meetings
of
its board of directors (and any committees thereof), similar governing bodies
and holders of its registered capital, since the time of Haitian's organization.
Copies of such Corporate Records of Haitian have been heretofore delivered
to
Boundless. The ownership records of Haitian's registered capital are true,
complete and accurate records of such ownership as of the date of such records
and contain all transfers of such registered capital since the time of Haitian's
organization, and copies of such records of Haitian have been heretofore
delivered to Boundless.
3.2
Subsidiaries. Set forth in Schedule
3.2
hereto
is a true and complete list of all Subsidiaries of the Company, HBC and Haitian
stating, with respect to each Subsidiary, its jurisdiction of incorporation
or
organization, date of incorporation or organization, capitalization and equity
ownership. Each Subsidiary is a corporation duly incorporated or organized,
validly existing and in good standing under the laws of the jurisdiction of
its
incorporation or organization, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its businesses as
they
are now being conducted, and no Subsidiary is required to qualify to do business
as a foreign corporation in any other jurisdiction. All of the outstanding
shares of capital stock or the registered capital of each Subsidiary have been
duly and validly authorized and issued, are fully paid and non-assessable,
have
not been issued in violation of any preemptive or other right of stockholders
(or any other Person) or of any Legal Requirements, and are owned beneficially
and of record by the relevant corporate owner as specified on Schedule
3.2,
free
and clear of any Liens. Complete and correct copies of the Charter Documents
of
each Subsidiary, as amended and currently in effect, have heretofore been
delivered to Boundless. No Subsidiary is in violation of any of the provisions
of its Charter Documents.
8
Except
as
described in Schedule
3.2
hereto,
neither the Company, HBC or Haitian nor any Subsidiary owns, directly or
indirectly, any ownership, equity, profits or voting interest in any Person,
as
defined in the next paragraph (other than the Company, HBC, Haitian or the
Subsidiaries) or has any agreement or commitment to purchase any such interest,
and the Company, HBC, Haitian and its Subsidiaries have not agreed and are
not
obligated to make nor are bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or any date
hereafter, under which any of them may be obligated to make any future
investment in or capital contribution to any other entity.
For
purposes of this Agreement, (i) the term "Subsidiary" shall mean any Person
in
which the Company, Haitian, HBC or any Subsidiary directly or indirectly, owns
beneficially securities or interests representing more than 50% of (x) the
aggregate equity or profit interests, or (y) the combined voting power of voting
interests ordinarily entitled to vote for management or otherwise, (ii) the
term
"Person" shall mean and include an individual, a corporation, a partnership
(general or limited), a joint venture, an association, a limited liability
company, a trust or any other organization or entity, including a government
or
political subdivision or an agency or instrumentality thereof, and (iii) the
term "Affiliated Company" or "Affiliated Companies"
shall mean the Company, Haitian and HBC, individually or collectively, as the
case may be.
3.3
Capitalization.
(a)
The
authorized capital stock of the Company consists of 50,000 shares of capital
stock, par value US$1.00 per share, or an authorized capital of US$50,000.
At
the close of business on the business day prior to the date hereof, Schedule
1.1
hereto
contains all of the outstanding equity securities of the Company. At Closing,
the Company shall deliver to Boundless a current and updated Schedule
1.1
showing
all equity securities outstanding immediately prior to Closing, which
Schedule
1.1
shall be
substituted for and replace the Schedule
1.1
attached
hereto as of the date of this Agreement with all references to Schedule
1.1
herein
referring to the Schedule
1.1
to be
delivered at Closing. All Shares on Schedule
1.1
have
been validly issued, fully paid and are nonassessable. Except as set forth
in
Schedule
1.1
and
Schedule
3.3,
there
are no outstanding securities, convertible securities, options, warrants or
derivative securities, and there are no agreements or commitments obligating
the
Company to issue or grant any of the foregoing, including any pre-emptive or
similar rights. All outstanding Shares, options, warrants and other securities
of the Company have been issued in compliance with (i) all applicable securities
laws and (in all material respects) other applicable laws and regulations,
and
(ii) all requirements set forth in any applicable contracts. Except as described
in Schedule
3.3
hereto,
there are no commitments or agreements of any character to which the Company
is
bound obligating the Company to accelerate the vesting of any options or
warrants as a result of the Transactions. The Company has heretofore delivered
to Boundless true, complete and accurate copies of all options, warrants and
other securities of the Company, if any, including any and all documents and
agreements relating thereto.
9
(b)
HBC
has a registered capital of HK $800,000 and a required invested capital of
HK
$800,000, which will be invested within six months from the date hereof. At
the
close of business on the business day prior to the date hereof, all of the
registered capital of HBC is owned beneficially and of record by the Company.
All of HBC's registered capital has been validly issued, fully paid and are
nonassessable. Except as set forth in Schedule
3.3,
there
are no outstanding registered capital, ownership interests, securities,
convertible securities, options, warrants or derivative securities, and there
are no agreements or commitments obligating HBC to issue or grant any of the
foregoing, including any pre-emptive or similar rights. All outstanding
registered capital, options, warrants and other securities of HBC have been
issued in compliance with (i) all applicable securities laws and (in all
material respects) other applicable laws and regulations, and (ii) all
requirements set forth in any applicable contracts. Except as described in
Schedule
3.3
hereto,
there are no commitments or agreements of any character to which HBC is bound
obligating HBC to accelerate the vesting of any options or warrants as a result
of the Transactions. HBC has heretofore delivered to Boundless true, complete
and accurate copies of all options, warrants and other securities of HBC, if
any, including any and all documents and agreements relating
thereto.
(c)
Haitian has a registered capital of RMB 55,000,000 and an invested capital
of
RMB 55,000,000. At the close of business on the business day prior to the date
hereof, WX owns 25.89% of the registered capital of Haitian and Huizheng owns
45.45% of the registered capital of Haitian. All the registered capital of
Haitian has been validly issued, fully paid and are nonassessable. Except as
set
forth in Schedule
3.3,
there
are no outstanding registered capital, ownership interests, securities,
convertible securities, options, warrants or derivative securities, and there
are no agreements or commitments obligating Haitian to issue or grant any of
the
foregoing, including any pre-emptive or similar rights. All outstanding
registered capital, options, warrants and other securities of Haitian have
been
issued in compliance with (i) all applicable securities laws and (in all
material respects) other applicable laws and regulations, and (ii) all
requirements set forth in any applicable contracts. Except as described in
Schedule
3.3
hereto,
there are no commitments or agreements of any character to which Haitian is
bound obligating Haitian to accelerate the vesting of any options or warrants
as
a result of the transactions. Haitian has heretofore delivered to Boundless
true, complete and accurate copies of all options, warrants and other securities
of Haitian, if any, including any and all documents and agreements relating
thereto.
(d)
Except as set forth in this Section 3.3 or in Schedule
3.3
hereto,
there are no registered capital, equity securities, partnership interests or
similar ownership interests of any class of any equity security of the
Affiliated Companies, or any securities exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership
interests, issued, reserved for issuance or outstanding. Except as set forth
in
this Section 3.3 or in Schedule
3.3
hereof,
and except for that certain Exclusive Option Agreement by and among HBC,
Haitian, and the Members ("Option Agreement"), which shall be entered into
prior
to the Closing and shall be acceptable to Boundless, there are no registered
capital, subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which the Affiliated
Companies or any Member are a party or by which they are bound obligating them
to issue, deliver or sell, or cause to be issued, delivered or sold, or
repurchase, redeem or otherwise acquire, or cause the repurchase, redemption
or
acquisition of, any registered capital, shares of capital stock, partnership
interests or similar ownership interests of the Affiliated Companies or
obligating the Affiliated Companies to grant, extend, accelerate the vesting
of
or enter into any such subscription, option, warrant, equity security, call,
right, commitment or agreement.
10
(e)
Except as contemplated by this Agreement and except as set forth in Schedule
3.3
hereto,
and except for those certain Authorizations by and among HBC, Haitian, and
the
Members ("Authorizations") which shall be entered into prior to Closing and
be
acceptable to Boundless, there are no registration rights, and there is no
voting trust, voting agreement, proxy, rights plan, anti-takeover plan or other
agreement or understanding to which the Affiliated Companies or any Member
are a
party or by which they are bound with respect to any shares of capital stock,
registered capital, equity securities, partnership interests or similar
ownership interests of any class of the Affiliated Companies, and there are
no
agreements to which the Affiliated Companies are a party, or which the
Affiliated Companies have knowledge of, which conflict with this Agreement
or
the transactions contemplated herein or otherwise prohibit the consummation
of
the transactions contemplated hereunder.
3.4
Authority Relative to this Agreement. Each Affiliated Company has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and, to consummate the transactions
contemplated hereby (including the Transaction). The execution and delivery
of
this Agreement and the consummation by each Affiliated Company of the
transactions contemplated hereby (including the Transaction) have been duly
and
validly authorized by all necessary action on the part of each Affiliated
Company (including the approval by its stockholders), and no other proceedings
on the part of each Affiliated Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by each Affiliated Company and, assuming
the due authorization, execution and delivery thereof by the other parties
hereto, constitutes the legal and binding obligation of each Affiliated Company,
enforceable
against each of them in accordance with its terms, except as may be limited
by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
and public policy.
3.5
No
Conflict; Required Filings and Consents.
(a)
The
execution and delivery of this Agreement by each Affiliated Company does not,
and the performance of this Agreement by each Affiliated Company shall not,
(i)
conflict with or violate their respective Charter Documents, (ii) conflict
with
or violate any Legal Requirements, or (iii) result in any breach of or
constitute a default (or an event that with notice
or
lapse of time or both would become a default) under, or materially impair the
Affiliated Company's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of any Affiliated Company or
its
Subsidiaries
pursuant to, any Material Contracts (as defined below), except, with respect
to
clauses (ii) or (iii), for any such conflicts, violations, breaches, defaults
or
other occurrences that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Affiliated Companies and
their Subsidiaries.
11
(b)
The
execution and delivery of this Agreement by each Affiliated Company does not,
and the performance of obligations of each Affiliated Company hereunder will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any court, administrative
agency, commission, governmental or regulatory authority, domestic or foreign
(a
"Governmental Entity"), except (i) for applicable requirements, if any, of
the
Securities Act, the Exchange Act, state securities laws ("Blue Sky Laws"),
and
the rules and regulations thereunder, and appropriate documents with the
relevant authorities of other jurisdictions in which the Company is qualified
to
do business, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would
not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Affiliated Companies or, after the Closing, Boundless,
or
prevent consummation of the Transaction or otherwise prevent the parties hereto
from performing their obligations under this Agreement.
3.6
Compliance. Each Affiliated Company and any Subsidiaries have complied with
and
are not in violation of any Legal Requirements with respect to the conduct
of
their business, or the ownership or operation of their business, except for
failures to comply or violations which, individually or in the aggregate, have
not had and are not reasonably likely to have a Material Adverse Effect on
the
Affiliated Companies and the Subsidiaries. To each Affiliated Company's
knowledge, the businesses and activities of the Affiliated Company and any
Subsidiaries have not been and are not being conducted in violation of any
Legal
Requirements. Each Affiliated Company and any Subsidiaries are not in default
or
violation of any term, condition or provision of any applicable Charter
Documents or Contracts. Except as set forth on Schedule
3.6,
no
written notice of non-compliance with any Legal Requirements relating or with
respect to the business of the Affiliated Companies or any Subsidiaries has
been
received by the Affiliated Companies or any Subsidiaries (and each Affiliated
Company has no knowledge of any material such notice delivered to any other
Person). To each Affiliated Company's knowledge, the Affiliated Companies and
any Subsidiaries are not in violation of any material term of any contract
or
covenant relating to employment, patents, proprietary information disclosure,
non-competition or non-solicitation.
3.7
Financial Statements.
(a)
The
Company will provide Boundless a correct and complete copy of Haitian’s audited
financial statements (including, any related notes thereto), for the last two
fiscal years], which statements were prepared in accordance with generally
accepted accounting principles of the United States ("U.S. GAAP") applied on
a
consistent basis throughout the period involved (except as may be indicated
in
the notes thereto), and such statements fairly present in all material respects
the financial position of the Company, on a consolidated basis, at the date
thereof and the results of its operations and cash flows for the periods
indicated on a consolidated basis, and does not contain any untrue statement
of
a material fact or omit 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.
12
(b)
The
Company will provide to Boundless a correct and complete copy of its unaudited
financial statements, on a consolidated basis with HBC and Haitian, with
Haitian's financial statements being the historical financial statements of
the
consolidated group for financial reporting purposes (including, in each case,
any related notes thereto) for the nine-month period ended September 30, 2006,
complied as to form in all material respects with, and prepared in accordance
with U.S. GAAP applied on a consistent basis throughout the period involved
(except as may be indicated in the notes thereto), and such statements fairly
present in all material respects the financial position of the Company, on
a
consolidated basis, at the date thereof and the results of its operations and
cash flows for the period indicated on a consolidated basis, except that the
unaudited interim financial statements were or are subject to normal adjustments
which were not or are not expected to have a Material Adverse Effect on the
Company or Haitian.
(c)
The
books of account and other financial records of the Company, HBC, and Haitian
have been maintained in accordance with good business practice, and the Company
and Haitian maintain a system of internal controls to assure the accuracy of
their financial records and statements.
3.8
No
Undisclosed Liabilities. Except as set forth in Schedule
3.8
hereto,
the Affiliated Companies have no liabilities individually in excess of $25,000
and in the aggregate in excess of $50,000 (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or in the
related notes to the consolidated financial statements prepared in accordance
with U.S. GAAP which are, individually or in the aggregate, material to the
business, results of operations or financial condition of the Affiliated
Companies and any Subsidiaries, except: (i) liabilities provided for in or
otherwise disclosed in the consolidated balance sheets of Haitian as of December
31, 2005, prepared in accordance with U.S. GAAP, which have been delivered
to
Boundless, (ii) such liabilities arising in the ordinary course of business
of
Haitian and its Subsidiaries since December 31, 2005, none of which would have
a
Material Adverse Effect on such entities or (iii) such liabilities which were
otherwise disclosed to Boundless in writing.
3.9
Absence of Certain Changes or Events. Except as set forth in Schedule
3.9
hereto
or in the consolidated balance sheets of Haitian as of December 31, 2005, since
December 31, 2005, or except with respect to the Restructuring Agreements,
there
has not been, with respect to Haitian and its Subsidiaries: (i) any Material
Adverse Effect, (ii) any declaration, setting aside or payment of any dividend
on, or other distribution (whether in cash, securities or property) in respect
of, any of equity securities, or any purchase, redemption or other acquisition
of any of equity securities or any options, warrants, calls or rights to acquire
any equity securities or other securities, (iii) any split, combination or
reclassification of any equity securities, (iv) any granting of any increase
in
compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment of any bonus, except for bonuses made in the ordinary course
of
business consistent with past practice, or any granting of any increase in
severance or termination pay or any entry into any currently effective
employment, severance, termination or indemnification agreement or any agreement
the benefits of which are contingent or the terms of which are materially
altered upon the occurrence of a transaction of the nature contemplated hereby,
(v) entry into any licensing or other agreement with regard to the acquisition
or disposition of any Intellectual Property (as defined in Section 3.18 hereof)
other than licenses in the ordinary course of business consistent with past
practice or any amendment or consent with respect to any licensing agreement
filed or required to be filed with respect to any Governmental Entity, (vi)
any
material change in its accounting methods, principles or practices, (vii) any
change in the auditors, (vii) any issuance of securities, or (viii) any
revaluation of any of their respective assets, including, without limitation,
writing down the value of capitalized inventory or writing off notes or accounts
receivable or any sale of assets other than in the ordinary course of
business.
13
3.10
Litigation. Except as disclosed in Schedule
3.10
hereto,
there are no claims, suits, actions or proceedings pending, or to the knowledge
of any Affiliated Company, threatened against the Affiliated Companies or any
Subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seeks to restrain or enjoin
the consummation of the transactions contemplated by this Agreement or which
could reasonably be expected, either individually or in the aggregate with
all
such claims, actions or proceedings, to have a Material Adverse Effect on the
Affiliated Companies or any Subsidiaries or have a Material Adverse Effect
on
the ability of the parties hereto to consummate the Transaction.
3.11
Employee Benefit Plans.
(a)
To
each Affiliated Company's knowledge, all employee compensation, incentive,
fringe or benefit plans, programs, policies, commitments or other arrangements
(whether or not set forth in a written document) covering any active or former
employee, director or consultant of the Affiliated Companies or any Subsidiary,
or any trade or business (whether or not incorporated) which is under common
control with the Affiliated Companies or any Subsidiary, with respect to which
the Affiliated Companies or any Subsidiary has liability (collectively, the
"Plans") has been maintained and administered in all material respects in
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to such Plans,
and
all liabilities with respect to the Plans have been properly reflected in the
consolidated financial statements of Haitian. No suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of
Plan activities) has been brought or is continuing, or to the knowledge of
each
Affiliated Company is threatened, against or with respect to any such Plan.
To
each Affiliated Company's
knowledge, there are no audits, inquiries or proceedings pending or, to the
knowledge of each Affiliated Company, threatened by any governmental agency
with
respect to any Plans. To each Affiliated Company's knowledge, all contributions,
reserves or premium payments required to be made or accrued as of the date
hereof to the Plans have been timely made or accrued. To each Affiliated
Company's knowledge, each Plan can be amended, terminated or otherwise
discontinued after the Closing in accordance with its terms, without
liability
to Boundless or the Affiliated Companies or any Subsidiary (other than ordinary
administration expenses and expenses for benefits accrued but not yet
paid).
14
(b)
Except as disclosed on Schedule
3.11
hereto,
neither the execution and delivery of this Agreement nor the consummation of
the
transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any stockholder, officer, director or employee of the Affiliated
Companies or any Subsidiary under any Plan or otherwise, (ii) materially
increase any benefits
otherwise payable under any Plan, or (iii) result in the acceleration of the
time of payment or vesting of any such benefits
3.12
Labor Matters. Except as disclosed in Schedule
3.12
hereto,
the Affiliated Companies and any Subsidiaries are not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Affiliated Companies or any Subsidiary nor does any Affiliated
Company know of any activities or proceedings of any labor union to organize
any
such employees.
3.13
Restrictions on Business Activities. Except as disclosed on Schedule
3.13
hereto,
to each Affiliated Company's knowledge there is no agreement, commitment,
judgment, injunction, order or decree binding upon the Affiliated Companies
or
any Subsidiary or to which the Affiliated Companies or any Subsidiary is a
party
which has or could reasonably be expected to have the effect of prohibiting
or
materially impairing any business practice of the Affiliated Companies or any
Subsidiary, any acquisition of property by the Affiliated Companies or any
Subsidiary or the conduct of business by the Affiliated Companies or any
Subsidiary as currently conducted other than such effects, individually or
in
the aggregate, which have not had and could not reasonably be expected to have
a
Material Adverse Effect on the Affiliated Companies or any
Subsidiaries.
3.14
Title to Property.
(a)
All
real property owned by the Affiliated Companies and any Subsidiary (including
land use rights, improvements and fixtures thereon, easements and rights of
way)
(the "Real Property") is shown or reflected on the U.S. GAAP Financial
Statements (as defined in Section 6.4(b) hereof). The Affiliated Companies
and
any Subsidiary have good, valid and marketable title to the Real Property,
and
except as set forth in the U.S. GAAP Financial Statements or
on
Schedule
3.14
hereto,
all of the Real Property is held free and clear of all Liens, rights of way,
easements, restrictions, exceptions, variances, reservations, covenants or
other
title defects or limitations of any kind, other than liens for taxes not yet
due
and payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or materially interfere with the present
use of the property affected thereby. Schedule
3.14
hereto
is a list of all options or other contracts under which any Affiliated Company
or any Subsidiary has a right to acquire any interest in real
property.
(b)
All
leases of real property held by the Affiliated Companies and any Subsidiary
and
all personal property and other property and assets of the Affiliated Companies
and any Subsidiary (other than Real Property) owned, used or held for use in
connection with the business of the Affiliated Companies and any Subsidiaries
(the "Personal Property") are shown or reflected on the U.S. GAAP Financial
Statements. The Affiliated Companies and any Subsidiary own and have good and
marketable title to the Personal Property, and all such assets and properties
are in each case held free and clear of all Liens, except for Liens disclosed
in
the U.S. GAAP Financial Statements or in Schedule
3.14
hereto,
none of which Liens has or will have, individually or in the aggregate, a
Material Adverse Effect on such property or on the present or contemplated
use
of such property in the businesses of the Affiliated Companies or any
Subsidiaries.
15
(c)
All
leases pursuant to which an Affiliated Company or a Subsidiary leases from
others material real or personal property are valid and effective in accordance
with their respective terms, and there is not, under any of such leases, any
existing material default or event of default of the Affiliated Companies or
any
Subsidiary or, to each Affiliated Company's knowledge, any other party (or
any
event which with notice or lapse of time, or both, would constitute a material
default), except where the lack of such validity and effectiveness or the
existence of such default or event of default could not reasonably be expected
to have a Material Adverse Effect on the Affiliated
Companies or any Subsidiaries.
3.15
Taxes.
(a)
Definition of Taxes. For the purposes of this Agreement, "Tax" or "Taxes" refers
to any and all federal, state, local and foreign taxes, including, without
limitation, gross receipts, income, profits, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, assessments, governmental charges and
duties together with all interest, penalties and additions imposed with respect
to any such amounts and any obligations under any agreements or arrangements
with any other person with respect to any such amounts and including any
liability of a predecessor entity for any such amounts.
(b)
Tax
Returns and Audits. Except as set forth in Schedule
3.15 hereto,
to each Affiliated Company's knowledge:
(i)
The
Affiliated Companies and each Subsidiary have timely filed all federal, state,
local and foreign returns, estimates, information statements and reports
relating to Taxes ("Returns") required to be filed by the Affiliated Companies
and each Subsidiary with any Tax authority (which under this Agreement includes
foreign Tax authorities) prior to the date hereof, except such Returns which
are
not material to the Affiliated Companies
or any Subsidiary. All such Returns are true, correct and complete in all
material respects. The Affiliated Companies and each Subsidiary have paid all
Taxes shown to be due on such Returns.
(ii)
All
Taxes that the Affiliated Companies and each Subsidiary are required by law
to
withhold or collect have been duly withheld or collected, and have been timely
paid over to the proper governmental authorities to the extent due and
payable.
16
(iii)
The
Affiliated Companies and each Subsidiary have not been delinquent in the payment
of any material Tax nor is there any material Tax deficiency outstanding,
proposed or assessed against the Affiliated Companies or any Subsidiary, nor
have the Affiliated Companies or any Subsidiary executed any unexpired waiver
of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv)
No
audit or other examination of any Return of the Affiliated Companies or any
Subsidiary by any Tax authority is presently in progress, nor have the
Affiliated Companies or any Subsidiary been notified of any request for such
an
audit or other examination.
(v)
No
adjustment relating to any Returns filed by the Affiliated Companies or any
Subsidiary has been proposed in writing, formally or informally, by any Tax
authority to the Affiliated Companies or any Subsidiary or any representative
thereof.
(vi)
The
Affiliated Companies and each Subsidiary have no liability for any material
unpaid Taxes which have not been accrued for or reserved on Haitian's balance
sheets included in the audited financial statements for the most recent fiscal
year ended, whether asserted or unasserted, contingent or otherwise, which
is
material to the Affiliated Companies or any Subsidiaries, other than any
liability for unpaid Taxes that may have accrued since the end of the most
recent fiscal year in connection with the operation of the business of the
Affiliated Companies or any Subsidiary in the ordinary course of business,
none
of which is material to the business, results of operations or financial
condition of the Affiliated Companies or any Subsidiaries.
(vii)The
Affiliated Companies have not taken any action and does not know of any fact,
agreement, plan or other circumstance that is reasonably likely to prevent
the
Transaction from qualifying as a reorganization under Section 368 of the Code
or
a tax-deferred exchange of property within the meaning of Section 351 of the
Code.
3.16
Environmental Matters. Except as disclosed in Schedule
3.16 hereto
and except for such matters that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect, to each Affiliated
Company's knowledge: (i) the Affiliated Companies and each Subsidiary have
complied with all applicable Environmental Laws; (ii) the properties currently
owned or operated by the Affiliated Companies and each Subsidiary (including
soils, groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances; (iii) the properties formerly owned
or operated by the Affiliated Companies and each Subsidiary were not
contaminated with Hazardous Substances during the period of ownership or
operation by the Affiliated Companies or any Subsidiary; (iv) the Affiliated
Companies and each Subsidiary are not subject to liability for any Hazardous
Substance disposal or contamination on any third party property; (v) the
Affiliated
Companies and each Subsidiary have not been associated with any release or
threat of release of any Hazardous Substance; (vi) the Affiliated Companies
and
each Subsidiary have not received any notice, demand, letter, claim or request
for information alleging that the Affiliated Companies or any Subsidiary may
be
in violation of or liable under any Environmental Law; and (vii)
the
Affiliated Companies and each Subsidiary are not subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or subject to
any
indemnity or other agreement with any third party relating to liability under
any Environmental Law or relating to Hazardous Substances.
17
As
used
in this Agreement, the term "Environmental Law" means any federal, state, local
or foreign law, regulation, order, decree, permit, authorization, opinion,
common law or agency requirement relating to: (A) the protection, investigation
or restoration of the environment, health and safety, or natural resources;
(B)
the handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, odor, wetlands, pollution, contamination
or
any injury or threat of injury to persons or property.
As
used
in this Agreement, the term "Hazardous Substance" means any substance that
is:
(i) listed, classified or regulated pursuant to any Environmental Law; (ii)
any
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon;
or
(iii) any other substance which is the subject of regulatory action by any
Governmental Entity pursuant to any Environmental Law
3.17
Brokers; Third Party Expenses. Except as set forth on Schedule
3.17,
neither
the Affiliated Companies nor, to each Affiliated Company's knowledge, any Member
of the Company have incurred, nor will they incur, directly or indirectly,
any
liability for brokerage, finders' fees, agent's commissions or any similar
charges in connection with this Agreement or any transactions contemplated
hereby. Except as disclosed on Schedule
3.17,
no
ownership interests, equity securities, convertible securities, warrants,
options, or other derivative securities of the Affiliated Companies or Boundless
are payable to any third party by the Affiliated Company or any Member as a
result of this Transaction.
3.18
Intellectual Property. For the purposes of this Agreement, the following terms
have the following definitions:
"Intellectual
Property" shall mean any or all of the following: (i) patents and applications
therefor and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof ("Patents") worldwide; (ii)
inventions (whether patentable or not), invention disclosures, improvements,
trade secrets, proprietary information, know how, technology,
technical data and customer lists, and all documentation relating to any of
the
foregoing; (iii) registered copyrights and applications therefor, and all other
rights corresponding thereto, worldwide; (iv) material domain names, uniform
resource locators ("URLs") and other names and locators associated with the
Internet ("Domain Names"); (v) registered industrial designs and applications
therefor, worldwide; (vi) registered trade names, logos, trademarks and
service marks, and any applications therefor (collectively, "Trademarks"),
worldwide; (vii) all databases and data collections and all rights therein;
and
(viii) all moral and economic rights of authors and inventors, however
denominated;
"the
Company Intellectual Property" shall mean any Intellectual Property that is
owned by, or licensed to, the Affiliated Companies or any Subsidiary;
and
"the
Company Products" means all current versions of products or services
of the Affiliated Companies or any Subsidiary.
18
(a)
Except as disclosed on Schedule
3.18,
to each
Affiliated Company's knowledge, the Company Intellectual Property and the
Company Products are not subject to any material proceeding or outstanding
decree, order, judgment, contract, license, agreement or stipulation restricting
in any manner the use, transfer or licensing thereof by the Affiliated Companies
or any Subsidiary, or which may affect the validity, use or enforceability
of
such Company Intellectual Property or the Company Product, which in any such
case could reasonably be expected to have a Material Adverse Effect on the
Affiliated Companies and any Subsidiaries.
(b)
Except as disclosed on Schedule
3.18
hereto,
to each Affiliated Company's knowledge, the Affiliated Companies and any
Subsidiaries either own and have good and marketable title to each material
item
of the Company Intellectual Property owned by it free and clear of any Liens
(excluding licenses and related restrictions granted in the ordinary course)
or
have one or more licenses sufficient for use of the Company Intellectual
Property by the Affiliated
Companies and any Subsidiary; and the Affiliated Companies and any Subsidiaries
are the owner or licensee of all material Trademarks used in connection with
the
operation or conduct of the business of the Affiliated Companies and any
Subsidiaries including the sale of any the Company Products.
(c)
The
operation of the business of the Affiliated Companies and any Subsidiaries
as
such business currently is conducted, including the use of any product, device
or process, to each Affiliated Company's knowledge and except as could not
reasonably be expected to have a Material Adverse Effect, has not and does
not
infringe or misappropriate the Intellectual Property of any third party or
constitute unfair competition or trade practices under the laws of
any
jurisdiction.
3.19
Agreements, Contracts and Commitments.
(a)
Except as otherwise disclosed in the U.S. GAAP Financial Statements (as defined
in Section 6.4(b)), Schedule
3.19
hereto
sets forth a complete and accurate list of all Material Contracts (as
hereinafter defined), specifying the parties thereto. For purposes of this
Agreement, (i) the term "Contracts" shall mean all written contracts,
agreements, leases, mortgages, indentures,
notes, bonds, liens, licenses, arbitration awards, judgments, decrees, orders,
documents, instruments, understandings and commitments to which the Affiliated
Companies or any Subsidiary is a party or by or to which any of the properties
or assets of the Affiliated Companies or any Subsidiary may be bound, subject
or
affected (including without limitation notes or other instruments payable to
the
Affiliated Companies), and (ii) the term "Material Contracts"
shall mean (x) each Contract (I) providing for payments (present or future)
to
the Affiliated Companies or any Subsidiary in excess of U.S.$50,000 in the
aggregate, or (II) under which or in respect of which the Affiliated Companies
presently have any liability or obligation of any nature whatsoever (absolute,
contingent or otherwise) in excess of U.S.$100,000, and (y) without limitation
of subclause (x), each of the following Contracts:
(i)
any
mortgage, indenture, note, installment obligation or other instrument, agreement
or arrangement for or relating to any borrowing of money by or from the
Affiliated Companies or any Subsidiary;
19
(ii)
any
guaranty, direct or indirect, by the Affiliated Companies or any Subsidiary
or
any officer, director or 5% or more stockholder ("Insider") of the Affiliated
Companies or any Subsidiary of any obligation of the Affiliated Companies or
any
Subsidiary for borrowings, or otherwise, excluding endorsements made for
collection in the ordinary course of business;
(iii)
any
Contract made other than in the ordinary course of business or (x) providing
for
the grant of any preferential rights to purchase or lease any asset of the
Affiliated Companies or any Subsidiary or (y) providing for any right (exclusive
or non-exclusive) to sell or distribute, or otherwise relating to the sale
or
distribution of, any product or service of the Affiliated Companies or any
Subsidiary;
(iv)
any
obligation to register any shares of the capital stock or other securities
of
the Affiliated Companies or any Subsidiary with any Governmental
Entity;
(v)
any
obligation to make payments, contingent or otherwise, arising out of the prior
acquisition of the business, assets or stock of other Persons;
(vi)
any
collective bargaining agreement with any labor union;
(vii)
any
lease or similar arrangement for the use by the Affiliated Companies or any
Subsidiary of personal property;
(viii)
any Contract granting or purporting to grant, or otherwise in any way relating
to, any mineral rights or any other interest (including, without limitation,
a
leasehold interest) in real property; and
(ix)
any
Contract with the Affiliated Companies or any Subsidiary to which any Insider
of
the Affiliated Companies or Subsidiary is a party.
(b)
Each
Material Contract was entered into at arms' length and in the ordinary course,
is in full force and effect and, to each Affiliated Company's knowledge, is
valid and binding upon and enforceable against each of the parties thereto.
True, correct and complete copies of all Material Contracts have been heretofore
delivered to Boundless. The Restructuring Agreements, the Option Agreement
and
the Authorization are each valid and binding upon and enforceable against each
of the parties thereto under the laws of the PRC and the laws of any other
jurisdiction which may be applicable, and true, correct and complete copies
of
each such agreement have been attached as Exhibits hereto.
(c)
Except as set forth in Schedule
3.19,
neither
the Affiliated Companies or any Subsidiary nor, to each Affiliated Company's
knowledge, any other party thereto, is in breach of or in default under, and
no
event has occurred which with notice or lapse of time or both would become
a
breach of or default under, any Material Contract, which breach, individually
or
in the aggregate,
could be reasonably likely to have a Material Adverse Effect on the Affiliated
Companies and any Subsidiaries, and no party to any Material Contract has given
any written notice of any claim of any such breach, default or event, which,
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on the Affiliated Companies and any Subsidiaries. Each Material
Contract to which the Affiliated Companies or any Subsidiary is a party or
by
which it is bound that has not expired by its terms is in full force and effect,
except where such failure to be in full force and effect is not reasonably
likely to have a Material Adverse Effect on the Affiliated Companies and any
Subsidiaries.
20
3.20
Insurance. Schedule
3.20
sets
forth the insurance policies covering the assets, business, equipment,
properties, operations, employees, officer and directors (collectively, the
"Insurance Policies") of the Affiliated Company and any Subsidiaries which
the
Affiliated Companies reasonably believe are adequate in amount and scope for
the
business in which they are engaged.
3.21
Governmental Actions/Filings; Approvals. Except as set forth in Schedule
3.21,
the
Affiliated Companies and each Subsidiary hold, and/or have made, all
Governmental Actions/Filings and Approvals reasonably necessary for the conduct
by the Affiliated Companies and any Subsidiaries of their business (as presently
conducted and to be conducted following the Closing) including, without
limitation: with respect to HBC, the receipt of any and all certifications
and approvals required to qualify as a wholly foreign owned enterprise ("WFOE
Certification"), which WFOE certifications by their terms do not expire for
a
period of 15 years from the date of issuance on October 16, 2006, except with
respect to any Governmental Actions/Filings and Approvals the failure of which
to hold or make would not reasonably be likely to have a Material Adverse Effect
on the Affiliated Companies and any Subsidiaries.
For
purposes of this Agreement, the term "Governmental Action/Filing" shall mean
any
franchise, license, certificate of compliance, authorization, consent, order,
permit, approval, consent or other action of, or any filing, registration or
qualification with, any federal, state, municipal, foreign or other
governmental, administrative or judicial body, agency or authority.
3.22
Interested Party Transactions. Except as set forth in the Schedule
3.22
hereto,
no employee, officer, director or stockholder of the Affiliated Companies or
any
Subsidiary or a member of his or her immediate family is indebted to the
Affiliated Companies or any Subsidiary, nor are the Affiliated Companies or
any
Subsidiary indebted (or committed to make loans or extend or guarantee credit)
to any of them, other than (i) for payment of salary for services
rendered, (ii) reimbursement for reasonable expenses incurred on behalf of
the
Affiliated Companies and any Subsidiaries, and (iii) for other employee benefits
made generally available to all employees. Except as set forth in Schedule
3.22,
to each
Affiliated Company's knowledge, none of such individuals has any direct or
indirect ownership interest in any Person with whom the Affiliated Companies
or
any Subsidiary is affiliated or with whom the Affiliated Companies
or any Subsidiary has a contractual relationship, or any Person that competes
with the Affiliated Companies or any Subsidiary, except that each employee,
officer, director or stockholder of the Affiliated Companies and any Subsidiary
and members of their respective immediate families may own less than 5% of
the
outstanding stock in publicly traded companies that may compete with the
Affiliated Companies or any Subsidiary. Except as set forth in Schedule
3.22,
to the
knowledge of the Affiliated Companies, no employee, officer, director
or stockholder or any member of their immediate families is, directly or
indirectly, interested in any material contract with the Affiliated Companies
or
any Subsidiary (other than such contracts as relate to any such individual
ownership of interests in or securities of the Affiliated
Companies).
21
3.23
Board of Director Approval. The board of directors of the Affiliated Companies
or similar governing body has, as of the date of this Agreement, unanimously
approved, subject to the approval of all of the members or stockholders, this
Agreement and the transactions contemplated hereby, and resolved to seek the
members' or stockholders' approval and adoption of this Agreement and approval
of the Transaction as provided in the applicable Charter Documents.
3.24
Management. During the past five year period, to each Affiliated Company's
knowledge, no current or former officer or director or member or stockholder
of
the Affiliated Companies or any Subsidiary has been the subject of:
(a)
a
petition under bankruptcy laws or any other insolvency or moratorium law or
has
a receiver, fiscal agent or similar officer been appointed by a court for such
person, or any partnership in which such person was a general partner at or
within two years before the time of such filing, or any corporation or business
association of which such person was an executive officer
at or within two years before the time of such filing;
(b)
a
conviction in a criminal proceeding or a named subject of a pending criminal
proceeding (excluding traffic violations that do not relate to driving while
intoxicated or driving under the influence);
(c)
any
order, judgment or decree, not subsequently reversed, suspended or vacated,
of
any court of competent jurisdiction, permanently or temporarily enjoining any
such person from, or otherwise limiting, the following activities:
(i)
Acting as a futures commission merchant, introducing broker, commodity trading
advisor, commodity pool operator, floor broker, leverage transaction merchant,
any other person regulated by the United States Commodity Futures Trading
Commission or an associated person of any of the foregoing, or as an investment
adviser, underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any conduct
or
practice in connection
with such activity;
(ii)
Engaging in any type of business practice; or
(iii)
Engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of securities laws or
commodities laws;
(d)
any
order, judgment or decree, not subsequently reversed, suspended or vacated,
of
any authority barring, suspending or otherwise limiting for more than 60 days
the right of any such person to engage in any activity described in the
preceding sub-paragraph, or to be associated with persons engaged in any such
activity;
22
(e)
a
finding by a court of competent jurisdiction in a civil action or by the U.S.
Securities and Exchange Commission ("SEC") or other authority to have violated
any securities law, regulation or decree and the judgment in such civil action
or finding by the SEC or any other authority has not been subsequently reversed,
suspended or vacated; or
(f)
a
finding by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding has not been subsequently
reversed, suspended or vacated.
3.25
Representations and Warranties Complete. The representations and warranties
of
WX, Huizheng, the Company, HBC and Haitian included in this Agreement and any
Schedule provided pursuant to this Agreement, are true and complete in all
material respects and do not contain any untrue statement of a material fact
or
omit to state a material fact required to be stated therein or necessary to
make
the statements contained therein not misleading, under the circumstance under
which they were made. Any disclosure on one schedule will be deemed notice
of
and disclosure in respect of any other representation and warranty. All
disclosures with respect to the Company, HBC and Haitian made in the Form 8-K
of
Boundless prepared by Haitian with respect to the Transactions and related
matters will be deemed disclosed in the relevant schedule of this Article III,
provided such disclosure was provided to Boundless prior to the date
hereof.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF BOUNDLESS
Boundless
represents and warrants to, and covenants with, the Company, as
follows:
4.1
Organization and Qualification.
(a)
Boundless is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to own, lease and operate its assets and properties and
to
carry on its business as it is now being or currently planned by Boundless
to be
conducted. To its knowledge, Boundless is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being or currently planned
by
Boundless to be conducted, except where the failure to have such Approvals
could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Boundless. Complete and correct copies of the Charter
Documents of Boundless, as amended and currently in effect, have been heretofore
delivered to the Company. Boundless is not in violation of any of the provisions
of Boundless' Charter Documents.
(b)
Boundless is duly qualified or licensed to do business as a foreign corporation
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities
makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Boundless.
23
4.2
Subsidiaries. As of the date of this Agreement, Boundless has no Subsidiaries
and does not own, directly or indirectly, any ownership, equity, profits or
voting interest in any Person and, other than this Agreement, has no agreement
or commitment to purchase any such interest, and Boundless has not agreed and
is
not obligated to make nor is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or as may
hereafter be in effect under which it may become obligated to make, any future
investment in or capital contribution to any other entity.
4.3
Capitalization.
(a)
The
authorized capital stock of Boundless consists of 100,000,000 shares of common
stock, par value $0.01 per share ("Boundless Common Stock"). At the close of
business on the business day prior to the date hereof, (i) 4,000,000 shares
of
Boundless Common Stock were either issued and outstanding or required to be
issued, all of which are or on issuance will be validly issued, fully paid
and
nonassessable. All outstanding shares of Boundless Common Stock have been issued
and granted in compliance with (i) all applicable securities laws and (in all
material respects) other applicable laws and regulations, and (ii) all
requirements set forth in any applicable Contracts. Prior to Closing, there
will
be an aggregate of 96,000,000 shares of authorized but unissued shares of
Boundless Common Stock. The Exchange Shares when issued, will be validly issued,
fully paid and non-assessable. Immediately following the Transaction, the
Members will own 76.5% of the total combined voting power of all classes of
Boundless stock entitled to vote.
(b)
There
are no equity securities, partnership interests or similar ownership interests
of any class of any equity security of Boundless, or any securities exchangeable
or convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except for this Agreement or as set forth in Schedule
4.3,
there
are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which Boundless is a
party or by which it is bound obligating Boundless to issue, deliver or sell,
or
cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition of, any shares
of
capital stock, partnership interests or similar ownership interests of Boundless
or obligating Boundless to grant, extend, accelerate the vesting of or enter
into any such subscription, option, warrant, equity security, call, right,
commitment or agreement. To Boundless' knowledge, there is no plan or
arrangement to issue Boundless Common Stock or Boundless Preferred Stock except
as set forth in this Agreement. Except as contemplated by this Agreement and
except as set forth in Schedule
4.3
hereto,
there are no registration rights, and there is no voting trust, proxy, rights
plan, anti-takeover plan or other agreement or understanding to which Boundless
is a party or by which it is bound with respect to any equity security of any
class of Boundless.
24
4.4
Authority Relative to this Agreement. Boundless has full corporate power and
authority to: (i) execute, deliver and perform this Agreement, and each
ancillary document which Boundless has executed or delivered or is to execute
or
deliver pursuant to this Agreement, and (ii) carry out Boundless' obligations
hereunder and thereunder and, to consummate the transactions contemplated hereby
(including the Transaction). The execution and delivery of this Agreement and
the consummation by Boundless of the transactions contemplated hereby (including
the Transaction) have been duly and validly authorized by all necessary
corporate action on the part of Boundless (including the approval by its Board
of Directors), and no other corporate proceedings on the part of Boundless
are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Boundless and, assuming the due authorization, execution and
delivery thereof by the other parties hereto, constitutes the legal and binding
obligation of Boundless, enforceable against Boundless in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and
by general principles of equity and public policy.
4.5
No
Conflict; Required Filings and Consents.
(a)
The
execution and delivery of this Agreement by Boundless and the execution and
delivery of each ancillary document to be delivered by Boundless hereunder
do
not, and the performance of this Agreement and each such ancillary document
by
Boundless shall not: (i) conflict with or violate Boundless' Charter Documents,
(ii) conflict with or violate any Legal Requirements, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time
or both would become a default) under, or materially impair Boundless' rights
or
alter the rights or obligations of any third party under, or give to others
any
rights of termination, amendment, acceleration or cancellation of, or result
in
the creation of a lien or encumbrance on any of the properties or assets of
Boundless pursuant to, any Contracts, except, with respect to clauses (ii)
or
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, have a Material
Adverse Effect on Boundless.
(b)
The
execution and delivery of this Agreement by Boundless does not, and the
performance of its obligations hereunder will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, Blue Sky Laws, and the rules and regulations
thereunder, and appropriate documents with the relevant authorities of other
jurisdictions in which Boundless is qualified to do business, and (ii) where
the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Boundless, or
prevent consummation of the Transaction or otherwise prevent the parties hereto
from performing their obligations under this Agreement.
4.6
Compliance. To Boundless' knowledge, Boundless has complied with, and is not
in
violation of, any Legal Requirements with respect to the conduct of its
business, or the ownership or operation of its business, except for failures
to
comply or violations which, individually or in the aggregate, have not had
and
are not reasonably likely to have a Material Adverse Effect on Boundless. To
Boundless' knowledge, the businesses and activities of Boundless have not been
and are not being conducted in violation of any Legal Requirements. Boundless
is
not in default or violation of any material term, condition or provision of
its
Charter Documents. Except as set forth on Schedule
4.6,
to
Boundless' knowledge, no written notice of non-compliance with any Legal
Requirements has been received by Boundless.
25
4.7
SEC
Filings; Financial Statements.
(a)
Boundless has made available to the Company a correct and complete copy, or
there has been available on XXXXX copies, of each report, registration statement
and definitive proxy statement filed by Boundless with the SEC for the 36 months
prior to the date of this Agreement (the "Boundless SEC Reports"), which, to
Boundless' knowledge, are all the forms, reports and documents filed by
Boundless with the SEC for the 36 months prior to the date of this Agreement.
As
of their respective dates, to Boundless' knowledge, the Boundless SEC Reports:
(i) were prepared in accordance and complied in all material respects with
the
requirements of the Securities Act or the Exchange Act, as the case may be,
and
the rules and regulations of the SEC thereunder applicable to such Boundless
SEC
Reports, and (ii) did not at the time they were filed (and if amended or
superseded by a filing prior to the date of this Agreement then on the date
of
such filing and as so amended or superceded) contain any untrue statement of
a
material fact or omit 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. Except to the extent set forth
in
the preceding sentence, Boundless makes no representation or warranty whatsoever
concerning the Boundless SEC Reports as of any time other than the time they
were filed.
(b)
To
Boundless' knowledge, each set of financial statements (including, in each
case,
any related notes thereto) contained in the Boundless SEC Reports comply as
to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, were prepared in accordance with U.S. GAAP applied
on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto or, in the case of unaudited statements, do not contain
footnotes as permitted by Form 10-QSB promulgated under the Exchange Act) and
each fairly presents in all material respects the financial position of
Boundless at the respective dates thereof and the results of its operations
and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal adjustments which were not
or
are not expected to have a Material Adverse Effect on Boundless taken as a
whole.
(c)
Boundless has previously furnished to the Company a complete and correct copy
of
any amendments or modifications, which have not yet been filed with the SEC
but
which are required to be filed, to agreements, documents or other instruments
which previously had been filed by Boundless with the SEC pursuant to the
Securities Act or the Exchange Act.
4.8
No
Undisclosed Liabilities. Except as set forth in Schedule
4.8
hereto
or as set forth in or as contemplated in the Fourth Amended and Modified Chapter
11 Plan of Reorganization (the “Bankruptcy Plan”) filed by Boundless and its
former affiliated companies and the Findings of Fact, Conclusions of Law and
Order Confirming the Bankruptcy Plan (the “Order”), Boundless has no liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the financial statements
prepared in accordance with U.S. GAAP which are, individually or in the
aggregate, material to the business, results of operations or financial
condition of Boundless, except those liabilities and obligations specifically
set forth in Section 6.11.
26
4.9
Absence of Certain Changes or Events. Except as set forth in Schedule
4.9
hereto
or in Boundless SEC Reports filed prior to the date of this Agreement, and
except as contemplated by this Agreement or the Bankruptcy Plan or the Order,
since the effective date of the Bankruptcy Plan, there has not been: (i) any
Material Adverse Effect on Boundless, (ii) any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of Boundless' capital stock, or any purchase,
redemption or other acquisition by Boundless of any of Boundless' capital stock
or any other securities of Boundless or any options, warrants, calls or rights
to acquire any such shares or other securities, (iii) any granting by Boundless
of any compensation or fringe benefits, or any payment by Boundless of any
bonus, or any granting by Boundless of any severance or termination pay or
any
entry by Boundless into any currently effective employment, severance,
termination or indemnification agreement or any agreement the benefits of which
are contingent or the terms of which are materially altered upon the occurrence
of a transaction involving Boundless of the nature contemplated hereby, (iv)
entry by Boundless into any licensing or other agreement with regard to the
acquisition or disposition of any Intellectual Property or any amendment or
consent with respect to any licensing agreement filed or required to be filed
by
Boundless with respect to any Governmental Entity, (v) any material change
by
Boundless in its accounting methods, principles or practices, except as required
by concurrent changes in U.S. GAAP, (vi) any change in the auditors of
Boundless, (vii) any issuance of capital stock of Boundless, or (viii) any
revaluation by Boundless of any of their respective assets, including, without
limitation, writing down the value of, or any sale of, assets of Boundless.
4.10
Litigation. Except as set forth on Schedule
4.10
hereto
or in Boundless SEC Reports, there are no claims, suits, actions or proceedings
pending or to Boundless' knowledge, threatened against Boundless, before any
court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that seeks to restrain or enjoin the consummation
of the transactions contemplated by this Agreement or which could reasonably
be
expected, either individually
or in the aggregate with all such claims, actions or proceedings, to have a
Material Adverse Effect on Boundless or have a Material Adverse Effect on the
ability of the parties hereto to consummate the Transaction.
4.11
Employee Benefit Plans. Except as disclosed on Schedule
4.11
hereto
or in the Boundless SEC Reports, Boundless does not maintain, and has no
liability under, any Plan, and neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(i)
result in any payment (including severance, unemployment compensation, golden
parachute, bonus or otherwise) becoming due to any stockholder, director or
employee of Boundless, or (ii) result in the acceleration of the time of payment
or vesting of any such benefits.
27
4.12
Labor Matters. Boundless is not a party to any collective bargaining agreement
or other labor union contract. Boundless has no employees.
4.13
Restrictions on Business Activities. To Boundless' knowledge, there is no
agreement, commitment, judgment, injunction, order or decree binding upon
Boundless or to which Boundless is a party which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Boundless, any acquisition of property by Boundless or the conduct
of business by Boundless as currently conducted other than such effects,
individually or in the aggregate, which have not had and could not reasonably
be
expected to have, a Material Adverse Effect on Boundless.
4.14
Title to Property. Boundless does not own or lease any Real Property or Personal
Property. There are no options or other contracts under which Boundless has
a
right or obligation to acquire or lease any interest in Real Property or
Personal Property.
4.15
Taxes. Except as set forth in Schedule
4.15
hereto,
to Boundless' knowledge:
(a)
Boundless has timely filed all Returns required to be filed by Boundless with
any Tax authority prior to the date hereof, except such Returns which are not
material to Boundless. All such Returns are true, correct and complete in all
material respects. Boundless has paid all Taxes shown to be due on such
Returns.
(b)
All
Taxes that Boundless is required by law to withhold or collect have been duly
withheld or collected, and have been timely paid over to the proper governmental
authorities to the extent due and payable.
(c)
Boundless has not been delinquent in the payment of any material Tax nor is
there any material Tax deficiency outstanding, proposed or assessed against
Boundless, nor has Boundless executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of
any
Tax.
(d)
No
audit or other examination of any Return of Boundless by any Tax authority
is
presently in progress, nor has Boundless been notified of any request for such
an audit or other examination.
(e)
No
adjustment relating to any Returns filed by Boundless has been proposed in
writing, formally or informally, by any Tax authority to Boundless or any
representative thereof.
(f)
Boundless has no liability for any material unpaid Taxes which have not been
accrued for or reserved on Boundless' balance sheets included in the audited
financial statements for the most recent fiscal year ended, whether asserted
or
unasserted, contingent or otherwise, other than any liability for unpaid Taxes
that may have accrued since the end of the most recent fiscal year in connection
with the operation of the business of Boundless in the ordinary course of
business. All of such liabilities, if any, have been assumed by Boundless
Technologies, Inc. under the Bankruptcy Plan.
28
(g)
Boundless has not taken any action and does not know of any fact, agreement,
plan or other circumstance that is reasonably likely to prevent the Transaction
from qualifying as a reorganization under Section 368 of the Code or a
tax-deferred exchange of property within the meaning of Section 351 of the
Code.
Boundless is not an investment company within the meaning of Section 351(e)of
the Code.
4.16
Environmental Matters. Except as disclosed in Schedule
4.16
hereto
and except for such matters that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect, to Boundless' knowledge:
(i) Boundless has complied with all applicable Environmental Laws; (ii) the
properties currently owned or operated by Boundless (including soils,
groundwater, surface water, buildings or other structures) are not contaminated
with any Hazardous Substances; (iii) the properties formerly owned or operated
by Boundless were not contaminated with Hazardous Substances during the period
of ownership or operation by Boundless; (iv) Boundless is not subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) Boundless has not been associated with any release or threat
of release of any Hazardous Substance; (vi) Boundless has not received any
notice, demand, letter, claim or request for information alleging that Boundless
may be in violation of or liable under any Environmental Law; and (vii)
Boundless is not subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or subject to any indemnity or other
agreement with any third party relating to liability under any Environmental
Law
or relating to Hazardous Substances.
4.17
Brokers. Boundless has not incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders' fees or agent's commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
4.18
Intellectual Property. Boundless does not own, license or otherwise have any
right, title or interest in any Intellectual Property.
4.19
Agreements, Contracts and Commitments.
(a)
Except as disclosed in the Bankruptcy Plan or except as set forth on
Schedule
4.19
to
Boundless' knowledge, there are no contracts, agreements, leases, mortgages,
indentures, note, bond, liens, license, arbitration awards, judgments, decrees,
orders, documents, instruments, understandings and commitments, to which
Boundless is a party or by or to which any of the properties or assets of
Boundless may be bound, subject or affected ("Boundless
Contracts").
(b)
To
Boundless' knowledge, each Boundless Contract was entered into at arms' length
and in the ordinary course, is in full force and effect and is valid and binding
upon and enforceable against each of the parties thereto. True, correct and
complete copies of all Boundless Contracts (or written summaries in the case
of
oral Boundless Contracts) and of all outstanding offers or proposals of
Boundless have been heretofore delivered to the Company.
(c)
Neither Boundless nor, to the knowledge of Boundless, any other party thereto
is
in breach of or in default under, and no event has occurred which with notice
or
lapse of time or both would become a breach of or default under, any Boundless
Contract, and no party to any Boundless Contract has given any written notice
of
any claim of any such breach, default or event, which, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect on Boundless.
Each agreement, contract or commitment to which Boundless is a party or by
which
it is bound that has not expired by its terms is in full force and effect,
except where such failure to be in full force and effect is not reasonably
likely to have a Material Adverse Effect on Boundless.
29
4.20
Insurance. Boundless does not maintain any Insurance Policies.
4.21
Governmental Actions/Filings. To its knowledge, Boundless has been granted
and
holds, and has made, all Governmental Actions/Filings necessary to the conduct
by Boundless of its businesses (as presently conducted) or used or held for
use
by Boundless, all of which are listed in Schedule
4.21
hereto,
and true, complete and correct copies of which have heretofore been delivered
to
the Company. Each such Governmental Action/Filing is in full force and effect
and, except as disclosed in Schedule
4.21
hereto,
will not expire prior to December 31, 2006, and Boundless is in compliance
with
all of its obligations with respect thereto. To Boundless' knowledge, no event
has occurred and is continuing which requires or permits, or after notice or
lapse of time or both would require or permit, and consummation of the
transactions contemplated by this Agreement or the ancillary documents will
not
require or permit (with or without notice or lapse of time, or both), any
modification or termination of any such Governmental Actions/Filings. Except
as
set forth in Schedule
4.21,
to
Boundless' knowledge, no Governmental Action/Filing is necessary to be obtained,
secured or made by Boundless to enable it to continue to conduct its businesses
and operations and use its properties after the Closing in a manner which is
consistent with current practice.
4.22
Interested Party Transactions. Except as set forth in the Schedule
4.22
hereto,
no employee, officer, director or stockholder of Boundless or a member of his
or
her immediate family is indebted to Boundless, nor is Boundless indebted (or
committed to make loans or extend or guarantee credit) to any of them. Except
as
set forth in Schedule
4.22,
to
Boundless' knowledge, none of such individuals has any direct or indirect
ownership interest in any Person with whom Boundless is affiliated or with
whom
Boundless has a material contractual relationship, or any Person that competes
with Boundless, except that each employee, stockholder, officer or director
of
Boundless and members of their respective immediate families may own less than
5% of the outstanding stock in publicly traded companies that may compete with
Boundless. Except as set forth in Schedule
4.22,
to
Boundless' knowledge, no officer, director or stockholder or any member of
their
immediate families is, directly or indirectly, interested in any material
contract with Boundless (other than such contracts as relate to any such
individual ownership of capital stock or other securities of
Boundless).
4.23
Indebtedness; Boundless Assets. Except as set forth on Schedule
4.23,
Boundless has no indebtedness for borrowed money. Immediately prior to the
Closing, Boundless will have no assets, except for cash reserves earmarked
for
the payment of certain accounts payable and accrued expenses of Boundless with
respect to the period prior to Closing which remain unpaid, which Boundless
shall be responsible for payment following the Closing pursuant to Section
6.11
hereof ("Cash Reserve").
30
4.24
Exchange Act Compliance. Boundless is in compliance with, and current in, all
of
the reporting, filing and other requirements under the Exchange Act, except
where a failure to so comply is not reasonably likely to have a Material Adverse
Effect on Boundless.
4.25
Board Approval. The Board of Directors of Boundless (including any required
committee or subgroup of the Board of Directors of Boundless) has, as of the
date of this Agreement, unanimously approved this Agreement and the transactions
contemplated hereby.
4.26
Representations and Warranties Complete. The representations and warranties
of
Boundless included in this Agreement and any Schedule provided pursuant to
this
Agreement or delivered hereunder, are true and complete in all material respects
and do not contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading, under the circumstance under which they were
made. Any disclosure on one schedule will be deemed notice of and disclosure
by
Boundless in respect of any other representation and warranty of
Boundless.
ARTICLE
V
CONDUCT
PRIOR TO CLOSING
5.1
Conduct of Business by the Affiliated Companies and Boundless. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Closing, the
Affiliated Companies and any Subsidiaries and Boundless shall, except to the
extent that the other party shall otherwise consent in writing, carry on its
business in the usual, regular and ordinary course consistent with past
practices, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations (except where noncompliance
would not have a Material Adverse Effect), pay its debts and taxes when due
subject to good faith disputes over such debts or taxes, pay or perform other
material obligations when due, and use its commercially reasonable efforts
consistent with past practices and policies to (i) preserve substantially intact
its present business organization, (ii) keep available the services of its
present officers, managers and employees, and (iii) preserve its relationships
with customers, suppliers, distributors, licensors, licensees, and others with
which it has significant business dealings. In addition, except as permitted
or
required by the terms of this Agreement or set forth on the Schedule
5.1
hereto,
without the prior written consent of the other party, during the period from
the
date of this Agreement and continuing until the earlier of the termination
of
this Agreement pursuant to its terms or the Closing, the Affiliated Companies
and any Subsidiaries and Boundless shall not do any of the
following:
(a)
Waive
any stock repurchase rights, accelerate, amend or (except as specifically
provided for herein) change the period of exercisability of options or
restricted stock, or reprice options granted under any employee, consultant,
director or other stock plans or authorize cash payments in exchange for any
options granted under any of such plans;
31
(b)
Grant
any severance or termination pay to any officer, manager or employee except
pursuant to applicable law, written agreements outstanding, or policies existing
on the date hereof and as previously or concurrently disclosed in writing or
made available to the other party, or adopt any new severance plan, or amend
or
modify or alter in any manner any severance plan, agreement or arrangement
existing on the date hereof;
(c)
Except with respect to the Restructuring Agreements, transfer or license to
any
person or otherwise extend, amend or modify any material rights to any
Intellectual Property, or enter into grants to transfer or license to any person
future patent rights, other than in the ordinary course of business consistent
with past practices provided that in no event shall any party license
on
an
exclusive basis or sell any Intellectual Property;
(d)
Except for employment agreements in the ordinary course or otherwise scheduled
or set forth in this Agreement, declare, set aside or pay any dividends on
or
make any other distributions (whether in cash, stock, equity securities or
property) in respect of any capital stock, membership interests or ownership
interests, or split, combine or reclassify any capital stock, membership
interests or ownership interests, or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for any capital
stock, membership interests or ownership interests;
(e)
Purchase, redeem or otherwise acquire, directly or indirectly, any shares of
capital stock, membership interests or ownership interests, except repurchases
of unvested shares, membership interests or ownership interests at cost in
connection with the termination of the employment relationship with any employee
pursuant to stock option or purchase agreements in effect on the date
hereof;
(f)
Issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to
any
of the foregoing with respect to, any shares of capital stock, membership
interests or ownership interests or any securities convertible into or
exchangeable for shares of capital stock, membership interests or ownership
interests, or subscriptions, rights, warrants or options to acquire any shares
of capital stock, membership interests or ownership interests or any securities
convertible
into or exchangeable for shares of capital stock, membership interests or
ownership interests, or enter into other agreements or commitments of any
character obligating it to issue any such shares, membership interests,
ownership interests or convertible or exchangeable securities (except relating
to employment and similar agreements);
(g)
Amend
its Charter Documents;
(h)
Acquire or agree to acquire by merging or consolidating with, or by purchasing
any equity interest in or a portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire
any
assets which are material, individually or in the aggregate, to the business
of
Boundless or the Affiliated Companies or any Subsidiary, as applicable, or
enter
into any joint ventures, strategic partnerships or alliances or other
arrangements that provide for exclusivity of territory or otherwise restrict
such party's ability to compete or to offer or sell any products or
services;
32
(i)
Sell,
lease, license, encumber or otherwise dispose of any properties or assets,
except sales of inventory in the ordinary course of business consistent with
past practice and, except for the sale, lease or disposition (other than through
licensing) of property or assets which are not material,
individually or in the aggregate, to the business of such party;
(j)
Incur
any indebtedness for borrowed money in excess of $100,000 in the aggregate
or
guarantee any such indebtedness of another person, issue or sell any debt
securities or options, warrants, calls or other rights to acquire any debt
securities of Boundless or the Affiliated Companies or any Subsidiary, as
applicable, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the economic
effect
of
any of the foregoing other than in the ordinary course of business of such
party;
(k)
Adopt
or amend any employee benefit plan, policy or arrangement, any employee stock
purchase or employee stock option plan, or enter into any employment contract
or
collective bargaining agreement (other than offer letters and agreements entered
into in the ordinary course of business consistent with past practice), pay
any
special bonus or special remuneration to any director or employee, or increase
the salaries or wage rates or fringe benefits (including rights to severance
or
indemnification) of its directors, officers, employees or consultants,
except in the ordinary course of business consistent with past practices and
other than for new hires in the ordinary course;
(l)
Pay,
discharge, settle or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), or litigation
(whether or not commenced prior to the date of this Agreement) other than the
payment, discharge, settlement or satisfaction, in the ordinary
course of business consistent with past practices or in accordance with their
terms, or liabilities recognized or disclosed in the most recent financial
statements (or the notes thereto) of the Affiliated Companies or of any
Subsidiary or of Boundless, as applicable, or incurred since the date of such
financial statements, or waive the benefits of, agree to modify in any manner,
terminate, release any person from or knowingly fail to enforce any
confidentiality or similar agreement to which the Affiliated Companies or any
Subsidiary or Boundless is a party or a beneficiary;
(m)
Except in the ordinary course of business consistent with past practices,
modify, amend or terminate any Material Contract of the Affiliated Companies
or
any Subsidiary or Boundless, as applicable, or waive, delay the exercise of,
release or assign any material rights or claims thereunder;
(n)
Except as required by U.S. GAAP, revalue any of its assets or make any change
in
accounting methods, principles or practices;
(o)
Incur
or enter into any agreement, contract or commitment requiring such party to
pay
in excess of $100,000 in any 12 month period, other than in the ordinary course
or otherwise provided in this Agreement and employment agreements which may
be
entered into by the Affiliated Companies or any Subsidiary;
33
(p)
Engage in any action that could reasonably be expected to cause the Transaction
to fail to qualify as a reorganization under Section 368 of the Code or a
tax-deferred exchange of property under Section 351 of the Code;
(q)
Settle any litigation;
(r)
Make
or rescind any Tax elections that, individually or in the aggregate, could
be
reasonably likely to adversely affect in any material respect the Tax liability
or Tax attributes of such party, settle or compromise any material income tax
liability or, except as required by applicable law, materially change any method
of accounting for Tax purposes or prepare or file any
Return in a manner inconsistent with past practice;
(s)
Form,
establish or acquire any Subsidiary;
(t)
Permit any Person to exercise any of its discretionary rights under any Plan
to
provide for the automatic acceleration of any outstanding options, the
termination of any outstanding repurchase rights or the termination of any
cancellation rights issued pursuant to such plans; or
(u)
Agree
in writing or otherwise agree, commit or resolve to take any of the actions
described in Section 5.1 (a) through (t) above.
ARTICLE
VI
ADDITIONAL
AGREEMENTS
6.1
Board
of Directors of Boundless. At Closing, the current board of directors of
Boundless shall deliver duly adopted resolutions to: (a) set the size of
Boundless' board of directors to five (5) members effective as of the Closing;
and (b) elect the following persons to Boundless' board of directors effective
as of the Closing: (i) WX, who shall be the Chairman of Boundless'
board of directors; and (ii) Xxxxxx Xxxxxxxx, Xxx Xxxxxxx and Jin Yuanjie and
(c) accepting the resignations of the current officers of Boundless effective
as
of the Closing ("Resolutions"). At Closing, the current officers of Boundless
shall deliver their resignations, as appropriate, as officers and directors
of
Boundless to be effective upon the Closing (the "Resignations"). Prior to
Closing, the Company shall deliver or cause to be delivered to Boundless
completed and signed director and officer questionnaires ("Questionnaires")
in
the English language for each person who shall be a member of Boundless’ Board
of Director and each person who shall serve as an officer of
Boundless.
6.2
Undertaking by Accountant. On or before the Closing,the Accountant (defined
in
Section 6.3 below) shall have determined that the financial statements of
Boundless and the Affiliated Companies may be consolidated for financial
reporting purposes under U.S. GAAP and SEC rules following the Closing.
34
6.3
Change of Accountants. At Closing, Boundless shall prepare the Form 8-K
announcing the change in Boundless' certifying accountants from BP Audit Group,
PLLC ("Boundless' Accountant") to Xxxxxxxxx, Pinchuk & Xxxxxxxx (the
“Accountant”) effective as of or following the Closing ("Change of Accountant
Form 8-K"), in a form acceptable to the Company and in a format acceptable
for
XXXXX filing. The Change of Accountant Form 8-K shall be filed with the SEC
at
or within four (4) business days following Closing, and prior to the filing
thereof, Boundless' Accountant shall have issued its resignation letter to
Boundless resigning from the engagement and consenting to the use of its name
and the disclosure of its resignation in the Change of Accountant Form 8-K
("Resignation Letter").
6.4
Other
Actions.
(a)
At
least five (5) days prior to Closing, shall prepare the Form 8-K announcing
the
Closing, which shall include all information required by such form, as
determined by counsel to the Company, including required financial statements
("Transaction Form 8-K"), which shall be in a form reasonably acceptable to
Boundless and in a format acceptable for XXXXX filing. Prior to Closing, the
Company shall prepare the press release announcing the consummation of the
Transaction hereunder ("Press Release"). At the Closing, Boundless shall file
the Transaction Form 8-K with the SEC and distribute the Press
Release.
(b)
At
least ten (10) days prior to the Closing, Haitian, shall deliver to Boundless
its audited consolidated financial statements, for the last two fiscal years
ended, which financials statements shall comply in all material respects with
the published rules and regulations of the SEC, shall be prepared in accordance
with U.S. GAAP applied on a consistent basis throughout the period involved,
and
shall fairly present in all material respects the financial position of Haitian,
on a consolidated basis, at the respective dates thereof and the results of
its
operations and cash flows for the periods indicated on a consolidated basis
(the
"U.S. GAAP Financial Statements").
(c)
The
U.S. GAAP Financial Statements shall have been audited by the
Accountant.
(d)
At
least ten (10) days prior to the Closing, the Company shall deliver to Boundless
pro forma financial statements for the Company, Haitian and HBC and Boundless,
on a consolidated basis, giving effect to the Transaction, or other information
for such periods as required by the SEC to be included in a Form 8-K or any
other report or form required to be filed with the SEC at or after Closing
with
respect to the Transaction, all prepared in all material respects with the
published rules and regulations of the SEC and in accordance with U.S. GAAP
applied on a consistent basis throughout the periods involved (the "Pro Forma
Financial Statements"). The Pro Forma Financial Statements shall have been
reviewed by, the Accountant and shall be in a format acceptable for inclusion
on
the Transaction 8-K. In lieu of this information, the Company shall deliver
to
Boundless such other information it reasonably requests to satisfy such
requirements.
The
Affiliated Companies and Boundless shall cooperate with each other and use
their
respective commercially reasonable efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or advisable
on its part under this Agreement and applicable laws to consummate the
Transaction and the other transactions contemplated hereby as soon as
practicable, including preparing and filing as soon as practicable all
documentation to effect all necessary notices, reports and other filings and
to
obtain as soon as practicable all consents, registrations, approvals, permits
and authorizations necessary or advisable to be obtained from any third party
and/or any Governmental Entity in order to consummate the Transaction or any
of
the other transactions contemplated hereby. Subject to applicable laws relating
to the exchange of information and the preservation of any applicable
attorney-client privilege, work-product doctrine, self-audit privilege or other
similar privilege, each of the Affiliated Companies and Boundless shall have
the
right to review and comment on in advance, and to the extent practicable each
will consult the other on, all the information relating to such party, and
any
Subsidiaries, that appear in any filing made with, or written materials
submitted to, any third party and/or any Governmental Entity in connection
with
the Transaction and the other transactions contemplated hereby. In exercising
the foregoing right, each of the Affiliated Companies and Boundless shall act
reasonably and as promptly as practicable.
35
6.5
Required Information. In connection with the preparation of the Transaction
Form
8-K and Press Release, and for such other reasonable purposes, the Affiliated
Companies and Boundless each shall, upon request by the other, furnish the
other
with all information concerning themselves, their respective subsidiaries,
directors, officers, managers, managing members, stockholders and members
(including the directors and officers of Boundless to be elected effective
as of
the Closing pursuant to Section 6.1 hereof) and such other matters as may be
reasonably necessary or advisable in connection with the Transaction, or any
other statement, filing, notice or application made by or on behalf of the
Affiliated Companies and Boundless or any of their respective subsidiaries
to
any third party and/or any Governmental Entity in connection with the
Transaction and the other transactions contemplated hereby. Each party warrants
and represents to the other party that all such information shall be true and
correct in all material respects and will not contain any untrue statement
of a
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
6.6
Confidentiality; Access to Information.
(a)
Any
confidentiality agreement or letter of intent previously executed by the parties
shall be superseded in its entirety by the provisions of this Agreement. Each
party agrees to maintain in confidence any non-public information received
from
the other party, and to use such non-public information only for purposes of
consummating the transactions contemplated by this
Agreement. Such confidentiality obligations will not apply to (i) information
which was known to the one party or their respective agents prior to receipt
from the other party; (ii) information which is or becomes generally known;
(iii) information acquired by a party or their respective agents from a third
party who was not bound to an obligation of confidentiality; and (iv) disclosure
required by law. In the event this Agreement is terminated as provided in
Article IX hereof, each party will return or cause to be returned to the other
all documents and other material obtained from the other in connection with
the
Transaction contemplated hereby.
36
(b)
Access to Information.
(i)
The
Company will afford Boundless and its financial advisors, accountants, counsel
and other representatives reasonable access during normal business hours, upon
reasonable notice, to the properties, books, records and personnel of the
Company and its Subsidiaries during the period prior to the Closing to obtain
all information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of the
Affiliated Companies and any Subsidiaries, as Boundless may reasonably request.
No information or knowledge obtained by Boundless in any investigation pursuant
to this Section 6.6 will affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties
to
consummate the Transaction.
(ii)
Boundless will afford the Company and its financial advisors, underwriters,
accountants, counsel and other representatives reasonable access during normal
business hours, upon reasonable notice, to the properties, books, records and
personnel of Boundless during the period prior to the Closing to obtain all
information concerning the business, including the status of product development
efforts, properties, results of operations and personnel of Boundless, as the
Company may reasonably request. No information or knowledge obtained by the
Company in any investigation pursuant to this Section 6.6 will affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the
Transaction.
6.7
No
Solicitation. Other than with respect to the Transaction, each of the Affiliated
Companies and Boundless agrees that neither it nor any of its officers,
directors, managers, or managing members shall, and that it shall direct and
use
its reasonable best efforts to cause its and its agents and other
representatives (including any investment banker, attorney or accountant
retained
by it) not to, directly or indirectly, initiate, solicit, encourage or otherwise
facilitate any inquiries or the making of any proposal or offer with respect
to
(i) a merger, reorganization, share exchange, consolidation or similar
transaction involving it, (ii) any sale, lease, exchange, mortgage, pledge,
transfer or purchase of all or substantially all of the assets or equity
securities
of it, taken as a whole, in a single transaction or series of related
transactions or (iii) any tender offer or exchange offer for 20% or more of
the
outstanding shares of Boundless Common Stock or the Company's Shares (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal").
Each of the Affiliated Companies and Boundless further agree that they and
their
officers, directors, managers, or managing members shall, and that they shall
direct and use their reasonable best efforts to cause their agents and
representatives not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal.
Each of the Affiliated Companies and Boundless agree that they will immediately
cease and cause to be terminated any existing discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposal.
Each
of the Affiliated Companies and Boundless agree that they will take the
necessary steps to promptly inform the individuals or entities referred to
in
the first sentence hereof of the obligations undertaken in this Section
6.7.
37
6.8
Public Disclosure. Except to the extent previously disclosed or to the extent
the parties believe that they are required by applicable law or regulation
to
make disclosure, prior to Closing, no party shall issue any statement or
communication to the public regarding the Transaction without the consent of
the
other party, which consent shall not be unreasonably withheld. To the extent
a
party hereto believes it is required by law or regulation to make disclosure
regarding the Transaction, it shall, if possible, immediately notify the other
party prior to such disclosure. Notwithstanding the foregoing, the parties
hereto agree that Boundless will prepare and file a Current Report on Form
8-K
pursuant to the Exchange Act reasonably acceptable to the Company to report
the
execution of this Agreement and that any party hereto may file any reports
as
required by the Exchange Act including, without limitation, any reports on
Schedule 13D.
6.9
Reasonable Efforts; Notification.
(a)
Upon
the terms and subject to the conditions set forth in this Agreement, each of
the
parties agrees to use its commercially reasonable efforts to take, or cause
to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Transaction and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Article VII to be satisfied, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents, approvals,
orders
and authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining of all consents,
approvals or waivers from third parties required as a result of the
transactions contemplated in this Agreement, (iv) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary
restraining order entered by any court or other Governmental Entity vacated
or
reversed, and (v) the execution or delivery of any additional instruments
reasonably necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing, Boundless and its board of directors and the Affiliated
Companies and any Subsidiaries and the Members shall, if any state takeover
statute or similar statute or regulation is or becomes applicable to the
Transaction, this Agreement or any of the transactions contemplated by this
Agreement, use its commercially reasonable efforts to enable the Transaction
and
the other transactions contemplated by this Agreement to be consummated as
promptly as practicable on the terms contemplated by this Agreement.
Notwithstanding anything herein to the contrary, nothing in this Agreement
shall
be deemed to require Boundless or any Affiliated Company to agree to any
divestiture by itself or any of its affiliates of shares of capital stock,
membership interests or ownership interest or of any business, assets or
property, or the imposition of any material limitation on the ability of any
of
them to conduct their business or to own or exercise control of such assets,
properties and stock.
38
(b)
The
Affiliated Companies and Members shall give prompt notice to Boundless upon
becoming aware that any representation or warranty made by them contained in
this Agreement has become untrue or inaccurate, or of any failure of the
Affiliated Companies or Members to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by
them under this Agreement, in each case, such that the conditions set forth
in
Article VII would not be satisfied; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
(c)
Boundless shall give prompt notice to the Affiliated Companies and Members
upon
becoming aware that any representation or warranty made by it contained in
this
Agreement has become untrue or inaccurate, or of any failure of Boundless to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in each
case, such that the conditions set forth in Article VII would not be satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
6.10
Treatment as a Reorganization or Tax-Deferred Exchange. Neither Boundless nor
the Affiliated Companies nor Members shall take any action prior to or following
the Transaction that could reasonably be expected to cause the Transaction
to
fail to qualify as a reorganization under Section 368 of the Code or a
tax-deferred exchange of property within the meaning of Section 351 of the
Code.
The Company and the Members agree to report the Transaction as a reorganization
or a tax-deferred exchange within the meaning of the Code for Federal income
tax
purposes.
6.11
Absence of Material Liabilities. Immediately prior to Closing, Boundless
shall have no material liabilities or obligations requiring the payment of
monies, other than obligations under or with respect to: (i) any agreement
with
the Transfer Agent, (ii) Boundless Contracts disclosed under Section 4.19
hereto, and (iii) accounts payable and accrued expenses of Boundless with
respect to the period prior to Closing. Boundless will establish the Cash
Reserve provided for in Section 4.23 in an amount equal to the monetary
obligations of Boundless in respect of all unpaid accounts payable and accrued
expenses of Boundless as of Closing (collectively, the "Pre-Closing Cash
Obligations"). Following Closing, to the extent not satisfied by Boundless
prior
to or at Closing, the Pre-Closing Cash Obligations will be paid in full from
the
Cash Reserve. Following the Closing, the Affiliated Companies shall pay and
satisfy Boundless' obligations under the agreement with the Transfer Agent
and
the Boundless Contracts which arise with respect to the period following
Closing.
6.12
Business Records. At Closing, Boundless shall cause to be delivered to the
Company or made available as requested by the Company all records and documents
relating to Boundless, which Boundless possesses, including, without limitation,
books, records, government filings, Returns, Charter Documents, Corporate
Records, Stock Records, consent decrees, orders, and correspondence, director
and stockholder minutes and resolutions, stock ownership records, financial
information and records, electronic files containing any financial information
and records, and other documents used in or associated with Boundless ("Business
Records").
39
ARTICLE
VII
CONDITIONS
TO THE TRANSACTION
7.1
Conditions to Obligations of Each Party to Effect the Transaction. The
respective obligations of each party to this Agreement to effect the Transaction
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a)
No
Order. No Governmental Entity shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order, decree, injunction
or
other order (whether temporary, preliminary or permanent) which is in effect
and
which has the effect of making the Transaction illegal or otherwise prohibiting
consummation of the Transaction, substantially on the terms contemplated by
this
Agreement. All waiting periods, if any, under any law in any jurisdiction in
which the Affiliated Companies or Boundless has material operations relating
to
the transactions contemplated hereby have expired or terminated early and all
material approvals required to be obtained prior to the Transaction in
connection with the transactions contemplated hereby shall have been obtained.
The parties expressly acknowledge and agree that any SEC rulemaking requiring
enhanced disclosure of reverse merger transactions with a public shell will
not
be a reason for either party to terminate this Agreement or deemed a failure
of
any condition set forth herein.
(b)
Debt
Holder Consents. The lenders under any of the Affiliated Companies or any
Subsidiary credit facilities, secured loans, mortgages and other indebtedness
for borrowed money shall have consented in writing to the Transaction (if such
consent is required in connection with this Transaction).
(c)
Required Approvals. This Agreement and the Transaction have been duly approved
and adopted, by the requisite vote of the Members under the laws of the
jurisdiction of its organization and the Company's Charter Documents, and by
the
requisite actions of the Board of Directors of Boundless under the laws of
the
State of Delaware and Boundless' Charter Documents.
(d)
Agreement of All Members. All Members owning any Shares or equity securities
of
the Company prior to or at Closing shall have executed this Agreement evidencing
his agreement to exchange his Shares or equity securities of the Company into
Exchange Shares on the same terms and conditions as each other Member. To the
extent applicable, the Company shall have obtained modification agreements
to
all options, warrants, and other agreements eliminating any and all rights
to
acquire securities of the Affiliated Companies or any Subsidiary and terminating
all pre-emptive rights.
(e)
Financial Statements; Transaction Form 8-K. The Company shall have delivered
to
Boundless the U.S. GAAP Financial Statements and the Pro Forma Financial
Statements as required by Sections 6.4(b) and 6.4(d) and the Transaction Form
8-K as required by Section 6.4(a). Boundless shall have filed the Transaction
Form 8-K with the SEC at Closing.
40
(f)
Blue
Sky Laws. the Exchange Shares to be issued under this Agreement are exempt
from,
or have been qualified under, the Blue Sky Laws of each appropriate jurisdiction
to the satisfaction of Boundless and the Company and their respective
counsels.
(g)
Restructuring Agreements. The Restructuring Agreements, the Option Agreement
and
the Authorization, each in a form reasonably acceptable to Boundless, have
been
duly authorized and executed by the parties thereto, with a copy of each of
the
foregoing having been delivered to Boundless at or prior to
Closing.
7.2
Additional Conditions to Obligations of the Members and the Company. The
obligations of the Company and the Members to consummate and effect the
Transaction shall be subject to the satisfaction at or prior to the Closing
Date
of each of the following conditions, any of which may be waived, in writing,
exclusively and only by the Company:
(a)
Representations and Warranties. Each representation and warranty of Boundless
contained in this Agreement (i) shall have been true and correct as of the
date
of this Agreement and (ii) shall be true and correct on and as of the Closing
Date with the same force and effect as if made on the Closing Date. The Company
and the Members shall have received a certificate with respect to the foregoing
signed on behalf of Boundless by an authorized officer of Boundless ("Boundless
Closing Certificate").
(b)
Agreements and Covenants. Boundless shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Closing
Date.
(c)
Director and Officer Resignations and Appointments. Boundless shall have
delivered to the Company the Resignations and Resolutions in a form satisfactory
to the Company, effective as of the Closing. Boundless shall also have delivered
to the Company evidence satisfactory to the Company of the appointment of new
directors of Boundless in accordance with Section 6.1 hereof.
(d)
Consents. Boundless shall have obtained all consents, waivers and approvals
required in connection with the consummation of the transactions contemplated
hereby, other than consents, waivers and approvals the absence of which, either
alone or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect on Boundless.
(e)
Material Adverse Effect. No Material Adverse Effect with respect to Boundless
shall have occurred since the date of this Agreement.
(f)
No
Financial Obligations. Immediately prior to the Closing, Boundless shall have
no
liabilities or obligations, other than as set forth in Section 6.11
hereof.
41
(g)
SEC
Compliance. Immediately prior to Closing, Boundless shall be in compliance
with
the reporting requirements under the Exchange Act.
(h)
Business Records; Resignation Letter. Boundless shall have delivered to the
Company the Business Records and the Resignation Letter from Boundless'
Accountants.
(i)
Other
Deliveries. At Closing, Boundless shall have delivered to the Company and/or
its
Members: (i) certificates representing the Exchange Shares to the Members as
set
forth in Schedule
1.1
hereof
and in accordance with Section 1.6, (ii) copies of resolutions and actions
taken
by Boundless' board of directors in connection with the approval of this
Agreement and the Transactions contemplated hereunder, and (iii) such other
documents or certificates as shall reasonably be required by the Company and
its
counsel in order to consummate the transactions contemplated
hereunder.
7.3
Additional Conditions to the Obligations of Boundless. The obligations of
Boundless to consummate and effect the Transaction shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by
Boundless:
(a)
Representations and Warranties. Each representation and warranty of the
Affiliated Companies and the Members contained in this Agreement (i) shall
have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as
if
made on and as of the Closing. Boundless shall have received a certificate
with
respect to the foregoing signed on behalf of the Affiliated Companies by an
authorized officer of the Affiliated Companies and by each Member with respect
to the foregoing ("Closing Certificate").
(b)
Agreements and Covenants. The Affiliated Companies and Members shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them at or prior
to the Closing Date.
(c)
Consents. The Affiliated Company and any Subsidiaries shall have obtained all
consents, waivers and approvals required in connection with the consummation
of
the transactions contemplated hereby, including the transactions contemplated
by
the Restructuring Agreements, other than consents, waivers and approvals the
absence of which, either alone or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Affiliated Companies and
any
Subsidiaries. The Affiliated Companies and any Subsidiaries have
received all approvals and permits required by any applicable national, foreign,
provincial and local governing bodies and regulatory authorities to permit
the
Affiliated Companies and any Subsidiaries: (i) to be listed or quoted, through
Boundless' ownership of all Shares of the Company, as a public company on a
U.S.
exchange or quotation system following the Closing, and (ii) to operate their
respective businesses following the Closing) including, without limitation,
receipt by all WFOE Certifications.
(d)
Material Adverse Effect. No Material Adverse Effect with respect to the
Affiliated Companies or any Subsidiaries shall have occurred since the date
of
this Agreement.
42
(e)
D&O Information. The Company shall have delivered the Questionnaires in a
timely manner, and the D&O Information shall be acceptable to
Boundless.
(f)
Change of Accountant Form 8-K; Press Release. The Company shall have delivered
the Change of Accountant Form 8-K and Press Release to Boundless, each in a
form
acceptable to Boundless.
(g)
Legal
Opinion by PRC Counsel. The legal counsel of Haitian and HBC in the PRC shall
have issued its legal opinion, in the English language and addressed to
Boundless, that (i) each of Haitian and HBC are duly formed or organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and have the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being or currently planned to be conducted, (ii) that the authorized and
registered capital and the shares of capital stock outstanding of Haitian and
HBC are in accordance with the representations set forth in Section 3.3 hereof,
(iii) that the Restructuring Agreements, the Option Agreement and the
Authorization are each valid and binding upon and enforceable against each
of
the parties thereto under the laws of the PRC and the laws of any other
jurisdiction which may be applicable, (iv) with respect to HBC, the all
certifications and approvals required to qualify as a wholly foreign owned
enterprise ("WFOE Certification") have been received by HBC, and such WFOE
certifications by their terms do not expire and are not revocable for a period
of 15 years from the date of issuance, (v) the WFOE Certifications and the
continuation thereof are not subject to any conditions which have not already
been satisfied, (vi) HBC is entitled to all tax benefits under the PRC and
its
subdivisions that are enjoyed by a wholly foreign owned enterprise ("WFOE"),
(vii) Haitian is in compliance with all environmental and tax laws in the PRC,
and owns all real estate (including land use rights) for each property on which
Haitian is currently operating in the PRC, (viii) nothing contained in this
Agreement or the transactions contemplated hereunder will affect in any way
HBC's status and continued status as a WFOE, and (ix) Haitian and HBC have
all
proper authority to enter into this Agreement and the transactions contemplated
hereunder, and this Agreement and the transactions contemplated hereunder have
been duly authorized and approved by each of their board of directors or
comparable governing body and their members or stockholders, and this Agreement
and the transactions contemplated hereunder do not require any consents or
approvals from any governmental bodies or authorities in the PRC or its
subdivisions.
(h)
Repayment of Affiliate Obligations. At the Closing Date, all amounts owed to
the
Affiliated Companies or any Subsidiary by each Member and any person to become
an officer or director of Boundless following Closing and their respective
affiliates (regardless of whether such amounts are due and payable) shall have
been paid in full.
(j)
Other
Deliveries. At Closing, the Affiliated Companies and/or Members shall have
delivered to Boundless: (i) documents evidencing the exchange of Shares owned
by
Members, in accordance with Section 1.5, (ii) copies of resolutions and actions
taken the each Affiliated Company's board of directors or comparable governing
body and its members or stockholders in connection with the approval of this
Agreement and the transactions contemplated hereunder, and (iii) such other
documents or certificates as shall reasonably be required by Boundless and
its
counsel in order to consummate the transactions contemplated
hereunder.
43
ARTICLE
VIII
SURVIVAL
Except
as
specifically set forth in Sections 6.11, 6.13 and 6.14, and Articles II, III,
X
and XI hereof ("Surviving Provisions"), all representations, warranties,
agreements and covenants contained in or made pursuant to this Agreement by
any
party hereto or contained in any Schedule hereto shall not survive the Closing,
and no claims made by virtue of such representations,
warranties, agreements and covenants shall be made or commenced by any party
hereto from and after the Closing. The agreements and covenants of any party
contained in the Surviving Provisions which require or contemplate performance
by such party after the Closing shall survive (and not be affected in any
respect by) the Closing and may be enforced by the parties hereto. Each Member,
for himself only, and not with respect to any other Member, hereby indemnifies
and holds harmless, and agrees to indemnify and hold harmless, Boundless (from
and after the Closing), and its respective directors, officers, shareholders,
employees and agents (collectively, the "Indemnified Parties") against (i)
any
and all liabilities, obligations, losses, damages, claims, actions, Liens and
deficiencies which exist, or which may be imposed on, incurred by or asserted
against any one or more of the Indemnified Parties, (1) based upon, resulting
from or arising out of, or as to which there was, any material breach or
inaccuracy of any representation or warranty contained in Articles II or III
of
this Agreement, or (2) based upon, resulting from or arising out of any present
or future claim, action, suit or proceeding brought or asserted against any
Indemnified Party by or on behalf of any Person who, at any time prior to the
Closing, had (or purports to have had) any interest in the Shares held by such
Member, and (ii) any cost or expense (including reasonable attorneys' fees
and
court costs) incurred by the Indemnified Parties or any of them in connection
with the foregoing (including, without limitation, any cost or expense incurred
by the Indemnified Parties in enforcing their rights hereunder. The provisions
of this Article VIII shall survive (and not be affected in any respect by)
the
Closing.
ARTICLE
IX
TERMINATION,
AMENDMENT AND WAIVER
9.1
Termination. This Agreement may be terminated at any time prior to the
Closing:
(a)
by
mutual written agreement of Boundless and the Affiliated Companies;
(b)
by
either Boundless or any of the Affiliated Companies if the Transaction shall
not
have been consummated for any reason by December 31, 2006; provided, however,
that the right to terminate this Agreement under this Section 9.1(b) shall
not
be available to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Transaction to occur on or before
such date and such action or failure to act constitutes a breach of this
Agreement;
44
(c)
by
either Boundless or any of the Affiliated Companies if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in
any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Transaction, which order, decree, ruling or other action is
final and nonappealable;
(d)
by
any of the Affiliated Companies, upon a material breach of any representation,
warranty, covenant or agreement on the part of Boundless set forth in this
Agreement, or if any representation or warranty of Boundless shall have become
materially untrue, in either case such that the conditions set forth in Section
7.1 or Section 7.2 would not be satisfied as of the time of such breach or
as of
the time such representation or warranty shall have become untrue, provided,
that if such inaccuracy in Boundless' representations and warranties or breach
by Boundless is curable by Boundless prior to the Closing Date, then no
Affiliated Company may not terminate this Agreement under this Section 9.1(d)
for thirty (30) days after delivery of written notice from an Affiliated Company
to Boundless of such breach, provided Boundless continues to exercise
commercially reasonable efforts to cure such breach (it being understood that
no
Affiliated Company may not terminate this Agreement pursuant to this Section
9.1(d) if it shall have materially breached this Agreement or if such breach
by
Boundless is cured during such thirty (30)-day period); or
(e)
by
Boundless, upon a material breach of any representation, warranty, covenant
or
agreement on the part of the Affiliated Companies or Members set forth in this
Agreement, or if any representation or warranty of the Affiliated Companies
or
Members shall have become materially untrue, in either case such that the
conditions set forth in Section 7.1 or Section 7.3 would not be satisfied as
of
the time of such breach or as of the time such representation or warranty shall
have become untrue, provided, that if such inaccuracy in any Affiliated
Company's or Members' representations and warranties or breach by the Affiliated
Companies or Members is curable by the Affiliated Companies or Members prior
to
the Closing Date, then Boundless may not terminate this Agreement under this
Section 9.1(e) for thirty (30) days after delivery of written notice from
Boundless to the Affiliated Companies and Members of such breach, provided
the
Affiliated Companies and Members continues to exercise commercially reasonable
efforts to cure such breach (it being understood that Boundless may not
terminate this Agreement pursuant to this Section 9.1(e) if it shall have
materially breached this Agreement or if such breach by the Affiliated Companies
or Members is cured during such thirty (30)-day period).
9.2
Notice of Termination; Effect of Termination. Any termination of this Agreement
under Section 9.1 above will be effective immediately upon (or, if the
termination is pursuant to Section 9.1(d) or Section 9.1(e) and the provision
therein is applicable, thirty (30) days after) the delivery of written notice
of
the terminating party to the other parties hereto. In the event of the
termination
of this Agreement as provided in Section 9.1, this Agreement shall be of no
further force or effect and the Transaction shall be abandoned, except as set
forth in this Section 9.2, Section 9.3 and Article XI (General Provisions),
each
of which shall survive the termination of this Agreement.
45
9.3
Fees
and Expenses. All fees and expenses incurred in connection with this Agreement
and the Transactions contemplated hereby shall be paid by the party incurring
such expenses whether or not the Transaction is consummated. The parties further
agree that, whether or not the Transaction is consummated, the Affiliated
Companies shall be responsible for any and all costs and expenses incurred
in
connection with the preparation and filing of the Transaction Form 8-K
(including the U.S. GAAP Financial Statements and the Pro Forma Financial
Statements contained therein).
9.4
Amendment. This Agreement may be amended by the parties hereto at any time
by
execution of an instrument in writing signed on behalf of each of Boundless,
each Affiliated Company and each Member.
9.5
Extension; Waiver. At any time prior to the Closing, any party hereto may,
to
the extent legally allowed, (i) extend the time for the performance of any
of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party
contained
herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of
such party. Delay in exercising any right under this Agreement shall not
constitute a waiver of such right.
ARTICLE
X
POST-CLOSING
COVENANTS
10.1
Post-Closing Covenants. The Affiliated Companies acknowledge that the agreements
contained in this Section 10.1 are an integral part of the transactions
contemplated by this Agreement and that, without these agreements, Boundless
would not enter into this Agreement. The parties hereto acknowledge and agree
that the failure by Boundless or the Affiliated Companies to satisfy, perform
and comply with the covenants set forth in this Section 10.1 ("Post-Closing
Covenants") following the Closing will have a material adverse effect on
Boundless. During the period beginning upon the Closing and ending on the first
anniversary of the Closing, Boundless agrees to satisfy, perform and comply
with, and the Affiliated Companies agrees to cause Boundless to satisfy,
perform, and comply with, the following agreements and covenants:
(a)
Complete and file the Form 8-K/A which includes such information (financial
or
otherwise) that may from time to time be required by the SEC to be included
on
any report, statement or form to be filed with the SEC in connection with a
reverse merger transaction ("Form 8-K/A") .
(b)
Respond promptly, and to the satisfaction of the SEC, to any review or inquiry
by the SEC to the Transaction Form 8-K, the Form 8-K/A or any other form, report
or document filed by Boundless with the SEC, and file within the statutory
time
limits any required filings or notifications with the SEC, NASDAQ, NASD and
any
other federal, state, foreign government or regulatory agency including any
agency or organization with jurisdiction over any exchange on which the
Boundless' securities are listed or quoted.
46
(c)
Engage certified public accountants that are at all times registered with the
U.S. Public Company Accounting Oversight Board (“PCAOB”) and, in the event
Boundless' certified public accountants resign or are terminated for any reason,
Boundless shall promptly engage a new certified public accountant registered
with PCAOB.
(d)
Adopt
proper disclosure, xxxxxxx xxxxxxx and code of ethics policies to the extent
required by law or applicable regulation.
(e)
Pay,
when due, all transfer agent fees, listing fees and any other fees the
non-payment of which may adversely effect compliance with applicable laws and
regulations (including securities laws and regulations) or the listing or
quotation of Boundless' securities.
(f)
File
all tax returns of any kind in a timely manner, and pay, when due, all tax
obligations of any kind or nature.
(g)
(i)
Remain in compliance with and current in its reporting requirements under the
Exchange Act and (ii) use best efforts to become and remain quoted on, at a
minimum, the OTC BB
10.2
Other Provisions. Notwithstanding anything contained herein to the contrary,
the
provisions of this Article X shall survive (and not be affected in any respect
by) the Closing.
ARTICLE
XI
GENERAL
PROVISIONS
11.1
Notices. All notices and other communications hereunder shall be in writing
and
shall be deemed given if delivered personally or by commercial delivery service,
or sent via telecopy (receipt confirmed) to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy numbers
for
a party as shall be specified by like notice):
(a)
if to
Boundless, to:
Boundless
Corporation, Inc.
00
Xxxxxxxxx Xxxx
Xxxxxxxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxx
(000)
000-0000 telephone
(000)
000-0000 telecopy
47
(b)
if to
the Affiliated Companies or Members, to:
Jilin
Haitian Industrial Company, Ltd.
No.
0-0
Xxxxx-xxxxxxx Xxxxxx,
Xxxxxxx
Economic Development Zone
Jilin
City, China
Attention:
Wang Xitian
00-000-0000000
telephone
86
-432-5078895 telecopy
In
either
case with a copy to:
Xxxxx
& Xxx Xxxxxx LLP
0
Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxxx
(000)
000-0000 telephone
(000)
000-0000 telecopy
AND
Zhang
Xing
Beijing
Times-Highland Law Firm
Room
501-504, Jing Guang Center Office Building
Chayang
District, Beijing P.R. China
(000)
00000000/5/6/8/9-31 telephone
00000000
telecopy
11.2
Interpretation.
(a)
When
a reference is made in this Agreement to Exhibits, such reference shall be
to an
Exhibit to this Agreement unless otherwise indicated. When a reference is made
in this Agreement to Sections, such reference shall be to a Section of this
Agreement. Unless otherwise indicated the words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by
the
words "without limitation." The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. When reference is made
herein to "the business of" an entity, such reference shall be deemed to include
the business of all direct and indirect subsidiaries of such
entity.
(b)
For
purposes of this Agreement, the term "Material Adverse Effect" when used in
connection with an entity means any change, event, violation, inaccuracy,
circumstance or effect, individually or when aggregated with other changes,
events, violations, inaccuracies, circumstances or effects, that is materially
adverse to the business, assets (including intangible assets),
revenues, financial condition or results of operations of such entity and its
Subsidiaries, if any, taken as a whole (it being understood that neither of
the
following alone or in combination shall be deemed, in and of itself, to
constitute a Material Adverse Effect: (a) changes attributable to the public
announcement or pendency of the transactions contemplated hereby, (b) changes
in
general
national or regional economic conditions, (c) changes affecting the industry
generally in which the Affiliated Companies or Boundless operates, or (d) any
SEC rulemaking requiring enhanced disclosure of reverse merger transactions
with
a public shell.
48
(c)
For
purposes of this Agreement, the term "Person" shall mean any individual,
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or
Governmental
Entity.
(d)
For
purposes of this Agreement, all monetary amounts set forth herein are referenced
in United States dollars, unless otherwise noted.
11.3
Counterparts. This Agreement may be executed in one or more counterparts, all
of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other party, it being understood that all parties need not
sign
the same counterpart.
11.4
Entire Agreement; Third Party Beneficiaries. This Agreement and the documents
and instruments and other agreements among the parties hereto as contemplated
by
or referred to herein, including the Schedules hereto (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and
(b)
are not intended to confer upon any other person any rights or remedies
hereunder.
11.5
Severability. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to
other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such
void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business
and
other purposes of such void or unenforceable provision.
11.6
Other Remedies; Specific Performance. Except as otherwise provided herein,
any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or
by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions
of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to seek an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being
in
addition to any other remedy to which they are entitled at law or in
equity.
49
11.7
Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, USA, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law
thereof.
11.8
Rules of Construction. The parties hereto agree that they have been represented
by counsel during the negotiation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
11.9
Assignment. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other parties. Subject to the first sentence of this Section 11.9, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
11.10
Arbitration. Any disputes or claims arising under or in connection with this
Agreement or the transactions contemplated hereunder shall be resolved by
binding arbitration. Notice of a demand to arbitrate a dispute by either party
shall be given in writing to the other at their last known address. Arbitration
shall be commenced by the filing by a party of an arbitration demand
with
the
American Arbitration Association ("AAA") in its office in New York City, New
York USA. The arbitration and resolution of the dispute shall be resolved by
a
single arbitrator appointed by the AAA pursuant to AAA rules. The arbitration
shall in all respects be governed and conducted by applicable AAA rules, and
any
award and/or decision shall be conclusive and binding on the parties. The
arbitration shall be conducted in New York City, New York USA. The arbitrator
shall supply a written opinion supporting any award, including a statement
of
facts and conclusions of law, and judgment may be entered on the award in any
court of competent jurisdiction. Each party shall pay its own fees and expenses
for the arbitration, except that any costs and charges imposed by the AAA and
any fees of the arbitrator for his services shall be assessed against the losing
party by the arbitrator. In the event that preliminary or permanent injunctive
relief is necessary or desirable in order to prevent a party from acting
contrary to this Agreement or to prevent irreparable harm prior to a
confirmation of an arbitration award, then either party is authorized and
entitled to commence a lawsuit solely to obtain equitable relief against the
other pending the completion of the arbitration in a court having jurisdiction
over the parties. All rights and remedies of the parties shall be cumulative
and
in addition to any other rights and remedies obtainable from
arbitration.
50
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the
date first written above.
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BOUNDLESS
CORPORATION
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Xxxxxx
Xxxxxxx
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ADVANCETECH
GLOBAL LIMITED
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|
|
| By: | /s/ Wang Xxxxxx | |
|
Xxxx
Xitian
|
||
| JILIN HAITIAN INDUSTRIAL COMPANY, LTD. | ||
| |
|
|
| By: | /s/ Wang Xxxxxx | |
|
Xxxx
Xitian
|
||
|
JILIN
CITY HAITIAN
BUSINESS CONSULTING CO., LTD
|
||
| |
|
|
| By: | /s/ Wang Xxxxxx | |
|
Xxxx
Xitian
|
||
| MEMBERS: | ||
|
Jilin
Province Huizheng Venture Capital Co., Ltd
|
||
| |
|
|
| By: | /s/ Wang Xxxxxx | |
|
Xxxx
Xitian, Chairman
|
||
|
/s/
Wang Xxxxxx
|
||
|
Xxxx
Xitian
|
||
51
|
/s/
Xxx Xxxxxxx
|
||
|
Xxx
Xxxxxxx
|
||
|
/s/
Cui Xxxxxx
|
||
|
Xxx
Youzhi
|
||
|
/s/
Jin Yuanjie
|
||
|
Jin
Yuanjie
|
||
|
/s/
Song
Xxxxxx
|
||
|
Song
Xxxxxx
|
||
|
/s/
Xxxx Xxxxx
|
||
|
Xxxx
Xxxxx
|
||
|
/s/
Xxx Xxxx
|
||
|
Xxx
Xxxx
|
||
|
/s/
Cui Qingchun
|
||
|
Cui
Qingchun
|
||
|
/s/
Wang Xxxxxxx
|
||
|
Xxxx
Zhenyun
|
||
|
/s/
Zhang Xxxxx
|
||
|
Xxxxx
Lijun
|
||
|
/s/
Sha Li
|
||
|
Sha
Li
|
||
|
/s/
Guo Xxxxxx
|
||
|
Xxx
Guizhi
|
||
52
|
/s/
Xxx Xxxxxxx
|
||
|
Xxx
Xxxxxxx
|
||
|
/s/
Wang Xxxxx
|
||
|
Xxxx
Decai
|
||
|
/s/
Xxxx Xxxxxxx
|
||
|
Xxxx
Xxxxxxx
|
||
|
/s/
Xxxx Xxxxxx
|
||
|
Xxxx
Xxxxxx
|
||
|
/s/
Wang Xxxxx
|
||
|
Xxxx
Xijun
|
||
|
/s/
Xxxx Xxxxxxx
|
||
|
Xxxx
Xxxxxxx
|
||
|
/s/
Xxxx Xxxxxx
|
||
|
Xxxx
Kaixia
|
||
|
/s/
Xxx Xxxxxx
|
||
|
Xxx
Xxxxxx
|
||
|
/s/
Zou Changkai
|
||
|
Zou
Changkai
|
||
|
/s/
Xxx Xxxxxx
|
||
|
Xxx
Xxxxxx
|
||
|
/s/
Lv
Nali
|
||
|
Lv
Nali
|
||
|
/s/
Gao
Xxxxxxx
|
||
|
Xxx
Meixian
|
||
53
|
/s/
Xxxx
Xxxxxx
|
||
|
Xxxx
Xxxxxx
|
||
|
/s/
Xxxx
Xxxxxx
|
||
|
Xxxx
Xxxxxx
|
||
|
/s/
Xxx Xxxxxx
|
||
|
Xxx
Xxxxxx
|
||
|
/s/
Zhang
Dianhuai
|
||
|
Zhang
Dianhuai
|
||
|
/s/
Xxxx
Xxxxxx
|
||
|
Xxxx
Xxxxxx
|
||
|
/s/
Song
Xinhua
|
||
|
Song
Xinhua
|
||
|
/s/
Xxxx
Xxxxxxxx
|
||
|
Xxxx
Xxxxxxxx
|
||
|
/s/
Xxxx Xxxxx
|
||
|
Xxxx
Xxxxx
|
||
|
/s/
Sun
Yanhong
|
||
|
Sun
Yanhong
|
||
|
/s/
Jin
Yushu
|
||
|
Jin
Yushu
|
||
|
/s/
Liu
Xxxxx
|
||
|
Xxx
Zhong
|
||
|
/s/
Xxx Xxxxxxx
|
||
|
Xxx
Xxxxxxx
|
||
54
|
/s/
Xxxx
Xxxxx
|
||
|
Xxxx
Xxxxx
|
||
|
/s/
Xxx
Xxxxxxx
|
||
|
Xxx
Zhenjin
|
||
|
/s/
Gao
Meishun
|
||
|
Gao
Meishun
|
||
|
/s/
Ren
Fengqin
|
||
|
Ren
Fengqin
|
||
|
/s/
Zhou
Yaquan
|
||
|
Zhou
Yaquan
|
||
|
/s/
Xxxx
Xxxx
|
||
|
Xxxx
Xxxx
|
||
|
/s/
Xxxx Xxxxxxxx
|
||
|
Xxxx
Xxxxxxxx
|
||
|
/s/
Xxxxx Xxxxx
|
||
|
Xxxxx
Xxxxx
|
||
|
/s/
Zhang
Xxxxxx
|
||
|
Xxxxx
Yitang
|
||
|
/s/
Xxxx Xx
|
||
|
Xxxx
Xx
|
||
55
Index of Exhibits and Schedules
Schedules
|
Schedule
|
Description
|
|
|
Schedule
1.1
|
Company
Share Ownership and Allocation
|
|
|
Company
Schedules
|
||
|
Schedule
3.2
|
Subsidiaries
|
|
|
Schedule
3.3
|
Capitalization
|
|
|
Schedule
3.6
|
Compliance
|
|
|
Schedule
3.8
|
No
Undisclosed Liabilities
|
|
|
Schedule
3.9
|
Absence
of Certain Changes or Events
|
|
|
Schedule
3.10
|
Litigation
|
|
|
Schedule
3.11
|
Employee
Benefit Plans
|
|
|
Schedule
3.12
|
Labor
Matters
|
|
|
Schedule
3.13
|
Restrictions
on Business Activities
|
|
|
Schedule
3.14
|
Title
to Property
|
|
|
Schedule
3.15
|
Taxes
|
|
|
Schedule
3.16
|
Environmental
Matters
|
|
|
Schedule
3.17
|
Brokers;
Third Party Expenses
|
|
|
Schedule
3.18
|
Intellectual
Property
|
|
|
Schedule
3.19
|
Agreements;
Contracts; Commitments
|
|
|
Schedule
3.20
|
Insurance
|
|
|
Schedule
3.21
|
Government
Actions/Filings; Approvals
|
|
|
Schedule
3.22
|
Interested
Party Transactions
|
|
56
|
Boundless
Schedules
|
||
|
Schedule
4.3
|
Capitalization
|
|
|
Schedule
4.6
|
Compliance
|
|
|
Schedule
4.8
|
No
Undisclosed Liabilities
|
|
|
Schedule
4.9
|
Absence
of Certain Changes or Events
|
|
|
Schedule
4.10
|
Litigation
|
|
|
Schedule
4.11
|
Employee
Benefit Plans
|
|
|
Schedule
4.15
|
Taxes
|
|
|
Schedule
4.16
|
Environmental
Matters
|
|
|
Schedule
4.19
|
Contracts;
Agreements; Commitments
|
|
|
Schedule
4.21
|
Government
Actions/Filings; Approvals
|
|
|
Schedule
4.22
|
Interested
Party Transactions
|
|
|
Schedule
4.23
|
Indebtedness;
Boundless Assets
|
|
|
Conduct
Pending Closing
|
||
|
Schedule
5.1
|
Parties'
Conduct Prior to Closing
|
|
57
SCHEDULE
1.1
|
Name
|
Number
of Shares
|
Name
|
Number
of Shares
|
|||
|
Jilin
Province Huizheng Venture Capital Co., Ltd
|
13,909,091
|
Gao
Meixian
|
55,636
|
|||
|
Wang
Xitian
|
7,922,618
|
Xxxx
Xxxxxx
|
55,636
|
|||
|
Xxx
Xxxxxxx
|
472,909
|
Xxxx
Xxxxxx
|
83,455
|
|||
|
Cui
Youzhi
|
389,455
|
Xxx
Xxxxxx
|
83,455
|
|||
|
Jin
Yuanjie
|
472,909
|
Zhang
Dianhuai
|
83,455
|
|||
|
Song
Xxxxxx
|
417,273
|
Xxxx
Xxxxxx
|
55,636
|
|||
|
Xxxx
Xxxxx
|
417,273
|
Song
Xinhua
|
55,636
|
|||
|
Xxx
Xxxx
|
422,836
|
Xxxx
Xxxxxxxx
|
83,455
|
|||
|
Cui
Qingchun
|
417,273
|
Xxxx
Xxxxx
|
55,636
|
|||
|
Wang
Zhenyun
|
361,636
|
Sun
Yanhong
|
55,636
|
|||
|
Xxxxx
Xxxxx
|
389,455
|
Jin
Yushu
|
83,455
|
|||
|
Sha
Li
|
333,818
|
Xxx
Xxxxx
|
83,455
|
|||
|
Guo
Guizhi
|
244,800
|
Xxx
Xxxxxxx
|
55,636
|
|||
|
Xxx
Xxxxxxx
|
400,582
|
Xxxx
Xxxxx
|
55,636
|
|||
|
Wang
Decai
|
222,545
|
Hong
Yujuan
|
55,636
|
|||
|
Xxxx
Xxxxxxx
|
233,673
|
Jin
Zhenjin
|
55,636
|
|||
|
Xxxx
Xxxxxx
|
178,036
|
Gao
Meishun
|
55,636
|
|||
|
Wang
Xijun
|
289,309
|
Ren
Fengqin
|
83,455
|
|||
|
Xxxx
Xxxxxxx
|
311,564
|
Zhou
Yaquan
|
83,455
|
|||
|
Meng
Kaixia
|
222,545
|
Xxxx
Xxxx
|
83,455
|
|||
|
Xxx
Xxxxxx
|
211,418
|
Xxxx
Xxxxxxxx
|
111,273
|
|||
|
Zou
Changkai
|
306,000
|
Xxxxx
Xxxxx
|
105,709
|
|||
|
Xxx
Xxxxxx
|
55,636
|
Zhang
Yitang
|
111,273
|
|||
|
Lv
Nali
|
194,727
|
Xxxx
Xx
|
111,273
|
58
