EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
BY AND AMONG
Eurofaith Holdings, Inc.,
a British Virgin Islands corporation,
and
Rim Holdings, Inc.
a Nevada corporation
June 29, 2004
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of June 29, 2004 (this
"Agreement"), is made and entered into by and between Rim Holdings, Inc., a
Nevada corporation ("Buyer") and Eurofaith Holdings, Inc., a British Virgin
Islands corporation ("Seller").
WHEREAS, the Seller owns 100 shares of common stock (the "Starway Shares")
of Starway Management Ltd., a British Virgin Islands corporation ("Starway")
which represent all of the issued and outstanding capital stock of Starway;
WHEREAS, Starway solely owned (i) directly the entire issued share capital
of Shenzhen Xxxxxx which is a wholly foreign-owned enterprise established under
the laws of the PRC and responsible for the operation and sales of energy saving
products; and (ii) indirectly, through Shenzhen Xxxxxx, 100% shareholding
interest in Shenzhen Xxxxxx Technology Development Limited which is a limited
company incorporated in the PRC and holds the patent and is responsible for the
development of energy saving projects of Shenzhen Xxxxxx Group. Shenzhen Xxxxxx
Group develops, manufactures and sells energy saving products including
electricity and light saving devices and equipment used or installed in a wide
range of facilities and machines, such as lighting system, air-conditioning
systems or manufacturing machinery systems.
WHEREAS, Seller wishes to sell and Buyer wishes to purchase all of the
Starway Shares.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
THE STOCK PURCHASE
1.1 PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties contained
herein, at the Closing, the Buyer shall purchase from Seller 50% of the Starway
Shares equaling to 50 shares, which represents all of the issued and outstanding
capital stock of Starway. The purchase price for such stock is $120,000,000 (the
"Purchase Price"), payable by the issuance by Buyer of a convertible promissory
note, the form of which is set forth in Exhibit A, hereof (the "Convertible
Note"). The unaudited profit after tax of Starway as of 31 May 2004 is 10.4
million. Basing on the commitment of the management of Starway and Shenzhen
Xxxxxx Industrial Development Ltd. The Purchase Price was determined with
reference to the estimated profit after tax for the year 2004, being no less
than $24 million, times 50% at PE ratio of 10.
1.2 PRESS RELEASES. At the Closing, Buyer shall issue such press release
or announcement of the transactions contemplated by this Agreement as may be
required by the reporting requirements of the Securities Exchange Act of 1934,
as amended.
1.3 CLOSING. The closing of the stock purchase (the "Closing") shall take
place on or before June 30, 2004, or on such other date as may be mutually
agreed upon by the parties. Such date is referred to herein as the "Closing
Date."
1.4 APPOINTMENT OF DIRECTORS. The Seller and the Buyer mutually agree upon
Closing, there will be a total of 3 directors appointed to Starway, namely, 2 by
the Buyer and 1 by the Seller.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF SELLER
The Seller hereby represents and warrants to Buyer as follows:
2.1 OWNERSHIP OF THE STARWAY SHARES. The Seller owns, beneficially and of
record, good and marketable title to the Starway Shares, free and clear of all
security interests, liens, adverse claims, encumbrances, equities, proxies,
options or stockholders' agreements. At the Closing, the Seller will convey to
Buyer good and marketable title to the Starway Shares, free and clear of any
security interests, liens, adverse claims, encumbrances, equities, proxies,
options, stockholders' agreements or restrictions.
2.2 AUTHORITY RELATIVE TO THIS AGREEMENT. The execution, delivery and
performance of this Agreement by the Seller and the consummation by the Seller
of the transactions contemplated hereby have been duly authorized by the Seller,
and no other actions on the part of the Seller are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Seller and constitutes a valid and
binding agreement of the Seller, enforceable against the Seller in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally or by general principles of equity.
2.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for requirements of
applicable laws, no filing with, and no permit, authorization, consent or
approval of, any public body or authority is necessary for the consummation by
the Seller of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by the Seller nor the consummation by
the Seller of the transactions contemplated hereby, nor compliance by the Seller
with any of the provisions hereof, will (a) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which the Seller is a party or by which the Seller or his property may be bound
or (b) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Seller, except in the case of clauses (a) and (b) for
violations, breaches or defaults which are not in the aggregate material to the
Seller.
2.4 RESTRICTED SECURITIES. The Seller acknowledges that the Convertible
Note or any securities that the Convertible Note is convertible into ("Buyer
Securities") will not be registered pursuant to the Securities Act of 1933, as
amended (the "Securities Act") or any applicable state securities laws, that
will be characterized as "restricted securities" under federal securities laws,
and that under such laws and applicable regulations the Buyer Securities cannot
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be sold or otherwise disposed of without registration under the Securities Act
or an exemption therefrom. In this regard, the Seller is familiar with Rule 144
promulgated under the Securities Act, as currently in effect, and understands
the resale limitations imposed thereby and by the Securities Act.
2.5 ACCREDITED INVESTOR. The Seller is an "Accredited Investor" as that
term is defined in rule 501 of Regulation D promulgated under the Securities
Act. The Seller is able to bear the economic risk of acquiring the Buyer
Securities pursuant to the terms of this Agreement, including a complete loss of
the Seller's investment in the Buyer Securities.
2.6 LEGEND. The Seller acknowledges that the certificate(s) representing
the Buyer Securities shall each conspicuously set forth on the face or back
thereof a legend in substantially the following form:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.
2.7 DUE ORGANIZATION. Seller and Starway has been duly incorporated, is
validly existing as a corporation and is in good standing under the laws of its
jurisdiction of incorporation, and has the requisite power to carry on its
business as now conducted.
2.8 CAPITALIZATION OF STARWAY. The authorized capital stock of Starway
consists solely of 50,000 shares of common stock, U.S. $1.00 par value, of which
100 shares are issued and outstanding. All of the issued and outstanding shares
of capital stock of Starway are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. There are no outstanding or
authorized options, rights, warrants, calls, convertible securities, rights to
subscribe, conversion rights or other agreements or commitments to which Starway
is a party or which are binding upon Starway providing for the issuance or
transfer by Starway of additional shares of its capital stock and Starway has
not reserved any shares of its capital stock for issuance, nor are there any
outstanding stock option rights, phantom equity or similar rights, contracts,
arrangements or commitments which are binding upon Starway. There are no voting
trusts or any other agreements or understandings with respect to the voting of
Starway's capital stock.
2.9 CERTAIN STARWAY CORPORATE MATTERS. Starway is duly qualified to do
business as a corporation and is in good standing in each jurisdiction in which
the ownership of its properties, the employment of its personnel or the conduct
of its business requires it to be so qualified, except where the failure to be
so qualified would not have a material adverse effect on Starway's financial
condition, results of operations or business. Starway has full corporate power
and authority and all authorizations, licenses and permits necessary to carry on
the business in which it is engaged and to own and use the properties owned and
used by it.
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2.10 FINANCIAL STATEMENTS OF STARWAY. The reviewed consolidated balance
sheets, consolidated statements of operations and cash flows of Starway as of
fiscal year ended December 31, 2003 and the reviewed consolidated balance
sheets, statements of operations and cash flows for the 3 months ended March 31,
2004 (collectively, the "Financial Statements") were delivered to Buyer and (a)
were prepared in accordance with the books and records of Starway; and (b) are
accurate and fairly present its financial condition and the results of
operations as of the relevant dates thereof and for the entities and periods
covered thereby.
2.11 ABSENCE OF MATERIAL CHANGES OF STARWAY. Since last as of date of the
Financial Statements, there has not been any material adverse change in the
condition (financial or otherwise) of the properties, assets, liabilities or
business of Starway, except changes in the ordinary course of business which,
individually and in the aggregate, have not been materially adverse.
2.12 TITLE TO STARWAY ASSETS. Starway has good and marketable title to all
of the assets and properties now carried on its books including those reflected
in the most recent balance sheet contained in the Financial Statements, free and
clear of all liens, claims, charges, security interests or other encumbrances,
except as described in the Starway Financial Statements or arising thereafter in
the ordinary course of business (none of which will be material).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation, and has
the requisite corporate power to carry on its business as now conducted.
3.2 CAPITALIZATION. Buyer's authorized capital stock consists of
20,000,000 shares of capital stock, of which 18,740,967 shares and at the
Closing will be issued and outstanding. All issued and outstanding shares of
Buyer common stock are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. There are no outstanding or
authorized options, rights, warrants, calls, convertible securities, rights to
subscribe, conversion rights or other agreements or commitments to which Buyer
is a party or which are binding upon Buyer providing for the issuance by Buyer
or transfer by Buyer of additional shares of Buyer's capital stock and Buyer has
not reserved any shares of its capital stock for issuance, nor are there any
outstanding stock option rights, phantom equity or similar rights, contracts,
arrangements or commitments to issue capital stock of Buyer. There are no voting
trusts or any other agreements or understandings with respect to the voting of
Buyer's capital stock.
3.3 CERTAIN CORPORATE MATTERS. Buyer is duly licensed or qualified to do
business and is in good standing in every jurisdiction in which the character of
Buyer's properties or nature of Buyer's business requires it to be so licensed
or qualified other than such jurisdictions in which the failure to be so
licensed or qualified does not, or insofar as can reasonably be foreseen, in the
future will not, have a material adverse effect on its financial condition,
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results of operations or business. Buyer has full corporate power and authority
and all authorizations, licenses and permits necessary to carry on the business
in which it is engaged or in which it proposes presently to engage and to own
and use the properties owned and used by it. Buyer is not in default under or in
violation of any provision of its certificate or articles of incorporation or
bylaws in any material respect. Buyer is not in any material default or in
violation of any restriction, lien, encumbrance, indenture, contract, lease,
sublease, loan agreement, note or other obligation or liability by which it is
bound or to which any of its assets is subject.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has the requisite
corporate power and authority to enter into this Agreement and carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
by Buyer and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors of Buyer and no other actions on the
part of Buyer are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes a valid and binding obligation of Buyer,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
3.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of federal securities laws and state securities or blue-sky laws,
no filing with, and no permit, authorization, consent or approval of, any third
party, public body or authority is necessary for the consummation by Buyer of
the transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement by Buyer nor the consummation by Buyer of the
transactions contemplated hereby, nor compliance by Buyer with any of the
provisions hereof, will (a) conflict with or result in any breach of any
provisions of the charter or Bylaws of Buyer, (b) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which Buyer is a party or by which it or any of its properties or assets may be
bound or (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer, or any of its properties or assets, except in
the case of clauses (b) and (c) for violations, breaches or defaults which are
not in the aggregate material to Buyer taken as a whole.
3.6 SEC DOCUMENTS. Buyer hereby makes reference to the following documents
filed with the United States Securities and Exchange Commission (the "SEC"), as
posted on the SEC's website, XXX.XXX.XXX: (collectively, the "SEC Documents"):
(a) Annual Report on Form 10-KSB for the fiscal year ended September 30, 2003,
2002, 2001 and 2000; (b) General Form For Registration of Securities Of Small
Business Issuers on Form 10-SB12G as filed on July 17, 2000, and all amendments
thereto; and (c) Quarterly Reports on Form 10-QSB for the periods ended December
31, 2000, 2001, 2002 and 2003, March 31, 2001, 2002, 2003 and 2004, and July 31,
2001, 2002 and 2003, and all amendments thereto. The SEC Documents constitute
all of the documents and reports that the Company was required to file with the
SEC pursuant to the Securities Exchange Act of 1934 ("Exchange Act"). As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act and the rules and regulations promulgated
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thereunder and none of the SEC Documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Buyer included
in the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles in the United States (except, in the case of unaudited
statements, as permitted by the applicable form under the Exchange Act) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the financial position of Buyer as of the
dates thereof and its statements of operations, stockholders' equity and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal and recurring year-end audit adjustments which were and are not
expected to have a material adverse effect on Buyer, its business, financial
condition or results of operations).
3.7 FINANCIAL STATEMENTS.
(a) Included in the SEC Documents are the audited balance sheet of
Buyer (collectively, "Buyer's Audited Financials").
(b) Included in the SEC Documents are the unaudited balance sheets of
Buyer as at March 31, 2004, and the related statements of operations and cash
flows for the six months ended March 31, 2004 ("Buyer's Interim Financials").
(c) Buyer's Audited Financials and Buyer's Interim Financials
(collectively "Buyer's Financial Statements") are (i) in accordance with the
books and records of Buyer, (ii) correct and complete, (iii) fairly present the
financial position and results of operations of Buyer as of the dates indicated,
and (iv) prepared in accordance with U.S. GAAP (except that (x) unaudited
financial statements may not be in accordance with GAAP because of the absence
of footnotes normally contained therein, and (y) interim (unaudited) financials
are subject to normal year-end audit adjustments that in the aggregate will not
have a material adverse effect on Buyer, its business, financial condition or
results of operations.
3.8 TAX MATTERS.
(a) Buyer has duly filed all material federal, state, local and
foreign tax returns required to be filed by or with respect to it with the
Internal Revenue Service or other applicable taxing authority, and no extensions
with respect to such tax returns have been requested or granted;
(b) Buyer has paid, or adequately reserved against in Buyer's
Financial Statements, all material taxes due, or claimed by any taxing authority
to be due, from or with respect to it;
(c) To the best knowledge of Buyer, there has been no material issue
raised or material adjustment proposed (and none is pending) by the Internal
Revenue Service or any other taxing authority in connection with any of Buyer's
tax returns;
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(d) No waiver or extension of any statute of limitations as to any
material federal, state, local or foreign tax matter has been given by or
requested from Buyer; and
(e) Buyer has not filed a consent under Section 341(f) of the
Internal Revenue Code of 1986, as amended.
For the purposes of this SECTION 3.8, a tax is due (and must
therefore either be paid or adequately reserved against in Buyer's Financial
Statements) only on the last date payment of such tax can be made without
interest or penalties, whether such payment is due in respect of estimated
taxes, withholding taxes, required tax credits or any other tax.
3.9 REAL PROPERTY. Buyer does not own or lease any real property.
3.10 ENVIRONMENTAL MATTERS.
(a) DEFINITIONS. For the purpose of this Agreement, the following
terms shall have the meaning herein specified:
(i) "Governmental Authority" shall mean the United States, each
state, each county, each city and each other political subdivision in which
Buyer's business is located, and any court, political subdivision, agency or
instrumentality with jurisdiction over Buyer's business.
(ii) "Environmental Laws" shall mean (A) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.A. 9601 et
seq. ("CERCLA"), (B) the Resource Conservation and Recovery Act, as amended by
the Hazardous and Solid Waste Amendment of 1984, 42 U.S.C.A. 6901 et seq.
("RCRA"), (C) the Clean Air Act, 42 U.S.C.A. 7401 et seq., (D) the Federal Water
Pollution Control Act, as amended, 33 U.S.C.A. 1251 et seq., (E) the Toxic
Substances Control Act, 15 U.S.C.A. 2601 et seq., (F) all applicable state laws,
and (G) all other laws and ordinances relating to municipal waste, solid waste,
air pollution, water pollution and/or the handling, discharge, disposal or
recovery of on-site or off-site hazardous substances or materials, as each of
the foregoing has been or may hereafter be amended from time to time.
(iii) "Hazardous Materials" shall mean, among others, (A) any
"hazardous waste" as defined by RCRA, and regulations promulgated thereunder;
(B) any "hazardous substance" as defined by CERCLA, and regulations promulgated
thereunder; (C) any "toxic pollutant" as defined in the Federal Water Pollution
Prevention and Control Act, as amended, 33 U.S.C. 1251 et seq., (commonly known
as "CWA" for "Clean Water Act"), and any regulations thereunder; (D) any
"hazardous air pollutant" as defined in the Air Pollution Prevention and Control
Act, as amended, 42 U.S.C. 7401 et seq. (commonly known as "CAA" for "Clean Air
Act") and any regulations thereunder; (E) asbestos; (F) polychlorinated
biphenyls; (G) any substance the presence of which at the Business Location (as
hereinafter defined) is prohibited by any Environmental Laws; and (H) any other
substance which is regulated by any Environmental Laws.
(iv) "Hazardous Materials Contamination" shall mean the presence
of Hazardous Materials in the soil, groundwater, air or any other media
regulated by the Environmental Laws on, under or around Buyer's facilities at
levels or concentration which trigger any requirement under the Environmental
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Laws to remove, remediate, mitigate, xxxxx or otherwise reduce the level or
concentration of the Hazardous Materials. The term "Hazardous Materials
Contamination" does not include the presence of Hazardous Materials in process
tanks, lines, storage or reactor vessels, delivery trucks or any other equipment
or containers, which Hazardous Materials are used in the manufacture,
processing, distribution, use, storage, sale, handling, transportation,
recycling, reuse or disposal of the products that were manufactured and/or
distributed by Buyer.
(v) "Business Location" shall mean any real property, building,
facility or structure owned, leased or occupied by Buyer at any time from its
inception until the present.
3.11 INTELLECTUAL PROPERTY. Buyer does not own or use any trademarks, trade
names, service marks, patents, copyrights or any applications with respect
thereto. Buyer has no knowledge of any claim that, or inquiry as to whether, any
product, activity or operation of Buyer infringes upon or involves, or has
resulted in the infringement of, any trademarks, trade-names, service marks,
patents, copyrights or other proprietary rights of any other person, corporation
or other entity; and no proceedings have been instituted, are pending or are
threatened.
3.12 INSURANCE. Buyer has no insurance policies in effect.
3.13 CONTRACTS. Buyer has no material contracts, leases, arrangements or
commitments (whether oral or written). Buyer is not a party to or bound by or
affected by any contract, lease, arrangement or commitment (whether oral or
written) relating to: (a) the employment of any person; (b) collective
bargaining with, or any representation of any employees by, any labor union or
association; (c) the acquisition of services, supplies, equipment or other
personal property; (d) the purchase or sale of real property; (e) distribution,
agency or construction; (f) lease of real or personal property as lessor or
lessee or sublessor or sublessee; (g) lending or advancing of funds; (h)
borrowing of funds or receipt of credit; (i) incurring any obligation or
liability; or (j) the sale of personal property.
3.14 LITIGATION. Buyer is not subject to any judgment or order of any court
or quasijudicial or administrative agency of any jurisdiction, domestic or
foreign, nor is there any charge, complaint, lawsuit or governmental
investigation pending against Buyer. Buyer is not a plaintiff in any action,
domestic or foreign, judicial or administrative. There are no existing actions,
suits, proceedings against or investigations of Buyer, and Buyer knows of no
basis for such actions, suits, proceedings or investigations. There are no
unsatisfied judgments, orders, decrees or stipulations affecting Buyer or to
which Buyer is a party.
3.15 EMPLOYEES. Buyer does not have any employees. Buyer does not owe any
compensation of any kind, deferred or otherwise, to any current or previous
employees. Buyer has no written or oral employment agreements with any officer
or director of Buyer. Buyer is not a party to or bound by any collective
bargaining agreement.
3.16 LEGAL COMPLIANCE. To the best knowledge of Buyer, after due
investigation, no claim has been filed against Buyer alleging a violation of any
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applicable laws and regulations of foreign, federal, state and local governments
and all agencies thereof. Buyer holds all of the material permits, licenses,
certificates or other authorizations of foreign, federal, state or local
governmental agencies required for the conduct of its business as presently
conducted.
3.17 LISTING AND MAINTENANCE REQUIREMENTS. Buyer is currently quoted on the
OTC Bulletin Board and Buyer has not, in the 12 months preceding the date
hereof, received any notice from the OTC Bulletin Board or the NASD or any
trading market on which Buyer's common stock is or has been listed or quoted to
the effect that Buyer is not in compliance with the quoting, listing or
maintenance requirements of the OTCBB or such other trading market. Buyer is,
and has no reason to believe that it will not, in the foreseeable future
continue to be, in compliance with all such quoting, listing and maintenance
requirements.
3.18 DISCLOSURE. The representations and warranties and statements of fact
made by Buyer in this Agreement are, as applicable, accurate, correct and
complete and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained herein not false or misleading.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller under
this Agreement shall be subject to each of the following conditions:
(a) CLOSING DELIVERIES. At the Closing, Buyer shall have delivered or
caused to be delivered to Seller the following:
(i) resolutions duly adopted by the Board of Directors of Buyer
authorizing and approving the purchase of shares and the execution, delivery and
performance of this Agreement;
(ii) executed Convertible Note;
(v) this Agreement duly executed by Buyer;
(vi) such other documents as Seller may reasonably request in
connection with the transactions contemplated hereby.
(b) REPRESENTATIONS AND WARRANTIES TO BE TRUE. The representations
and warranties of Buyer herein contained shall be true in all material respects
at the Closing with the same effect as though made at such time. Buyer shall
have performed in all material respects all obligations and complied in all
material respects with all covenants and conditions required by this Agreement
to be performed or complied with by them at or prior to the Closing.
(c) CURRENT ON SEC FILINGS. At the Closing, Buyer will be current on
all SEC filings and tax obligations and will have had no material changes to its
business or financial condition.
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4.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer under
this Agreement shall be subject to each of the following conditions:
(a) CLOSING DELIVERIES. On the Closing Date, Seller shall have
delivered to Buyer the following:
(i) one or more certificates representing the Starway Shares to
be delivered pursuant to this Agreement duly endorsed or accompanied by duly
executed stock power;
(ii) this Agreement duly executed by Seller; and
(iii) such other documents as Buyer may reasonably request in
connection with the transactions contemplated hereby.
(b) REPRESENTATIONS AND WARRANTIES TO BE TRUE. The representations
and warranties of Seller herein contained shall be true in all material respects
at the Closing with the same effect as though made at such time. Seller shall
have performed in all material respects all obligations and complied in all
material respects with all covenants and conditions required by this Agreement
to be performed or complied with by them at or prior to the Closing.
ARTICLE 5
GENERAL PROVISIONS
5.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
sent by overnight courier or mailed by registered or certified mail (postage
prepaid and return receipt requested) to the party to whom the same is so
delivered, sent or mailed at addresses set forth on the signature page hereof
(or at such other address for a party as shall be specified by like notice).
5.2 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated.
5.3 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the parties shall negotiate
in good faith to modify this Agreement to preserve each party's anticipated
benefits under this Agreement.
5.4 MISCELLANEOUS. This Agreement (together with all other documents and
instruments referred to herein): (a) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof; (b) except as
expressly set forth herein, is not intended to confer upon any other person any
rights or remedies hereunder and (c) shall not be assigned by operation of law
or otherwise, except as may be mutually agreed upon by the parties hereto.
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5.5 SEPARATE COUNSEL. Each party hereby expressly acknowledges that it has
been advised to seek its own separate legal counsel for advice with respect to
this Agreement, and that no counsel to any party hereto has acted or is acting
as counsel to any other party hereto in connection with this Agreement.
5.6 GOVERNING LAW; VENUE. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Arizona,
U.S.A. Any and all actions brought under this Agreement shall be brought in the
state and/or federal courts of the United States sitting in the City of Los
Angeles, California and each party hereby waives any right to object to the
convenience of such venue.
5.7 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed
in two or more counterparts, which together shall constitute a single agreement.
This Agreement and any documents relating to it may be executed and transmitted
to any other party by facsimile, which facsimile shall be deemed to be, and
utilized in all respects as, an original, wet-inked document.
5.8 AMENDMENT. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by all parties hereto.
5.9 PARTIES IN INTEREST: NO THIRD PARTY BENEFICIARIES. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective heirs, legal representatives,
successors and assigns of the parties hereto. This Agreement shall not be deemed
to confer upon any person not a party hereto any rights or remedies hereunder.
5.10 WAIVER. No waiver by any party of any default or breach by another
party of any representation, warranty, covenant or condition contained in this
Agreement shall be deemed to be a waiver of any subsequent default or breach by
such party of the same or any other representation, warranty, covenant or
condition. No act, delay, omission or course of dealing on the part of any party
in exercising any right, power or remedy under this Agreement or at law or in
equity shall operate as a waiver thereof or otherwise prejudice any of such
party's rights, powers and remedies. All remedies, whether at law or in equity,
shall be cumulative and the election of any one or more shall not constitute a
waiver of the right to pursue other available remedies.
5.11 EXPENSES. At or prior to the Closing, the parties hereto shall pay all
of their own expenses relating to the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of their
respective counsel and financial advisers.
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SELLER: BUYER:
EuroFaith Holdings, Inc., Rim Holdings, Inc.,
a British Virgin Islands corporation a Nevada corporation
By: /s/ Sim Lai Fun By: /s/ Xxx Xxx Man
-------------------------------- --------------------------------
Name: Sim Lai Fun Name: Xxx Xxx Man
Title: Sole Director Title: Chief Executive Officer
12
EXHIBIT A
CONVERTIBLE PROMISSORY NOTE
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
Date of Issuance: June 30, 2004
$120,000,000
CONVERTIBLE PROMISSORY NOTE
DUE DECEMBER 31, 2004
THIS CONVERTIBLE PROMISSORY NOTE is issued by Rim Holdings, Inc., a Nevada
corporation (the "Company"), designated as its Convertible Promissory Note, due
December 31, 2004 (the "CONVERTIBLE NOTE") issued pursuant to the Stock Purchase
Agreement dated June 29, 2004 between Eurofaith Holdings, Inc., a British Virgin
Islands corporation and the Company (the "Purchase Agreement").
FOR VALUE RECEIVED, the Company promises to pay to Eurofaith Holdings, Inc.
or its registered assigns (the "HOLDER"), the principal sum of $120,000,000 on
December 31, 2004 or such earlier date as the Convertible Note is required or
permitted to be repaid as provided hereunder (the "MATURITY DATE"), and to pay
interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Convertible Note at the rate of 5% per annum, payable
on the Maturity Date as set forth herein. Interest shall be calculated on the
basis of a 360-day year and shall accrue on the Maturity Date. On the Maturity
Date, the Company may, in its sole discretion, pay the principal sum and
interest accrued by issuing to the Holder 223,073,380 at $0.50 per share
(11,153,669 at $10.76 per share post a contemplated 1 for 20 reverse stock
split) shares of the Company's restricted common stock.
This Convertible Note is subject to the following additional provisions:
1. SUBJECT TO PURCHASE AGREEMENT. This Convertible Note has been issued
subject to certain investment representations of the original Holder set forth
in the Purchase Agreement and may be transferred or exchanged only in compliance
with the Purchase Agreement and applicable federal and state securities laws and
regulations. Prior to due presentment to the Company for transfer of this
Convertible Note, the Company and any agent of the Company may treat the Person
in whose name this Convertible Note is duly registered on the Convertible Note
Register as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Convertible Note is
overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary.
2. EVENTS OF DEFAULT.
(a) "EVENT OF DEFAULT", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):
(i) any default in the payment of the principal of, interest on, or
liquidated damages in respect of, any Convertible Note, free of any claim of
subordination, as and when the same shall become due and payable (whether on a
Conversion Date or the Maturity Date or by acceleration or otherwise) which
default is not cured, if possible to cure, within 30 days of notice of such
default sent by the Holder;
(ii) the Company or any of its subsidiaries shall commence, or there
shall be commenced against the Company or any such subsidiary a case under any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Company commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company or any subsidiary thereof or there
is commenced against the Company or any subsidiary thereof any such bankruptcy,
insolvency or other proceeding which remains undismissed for a period of 60
days; or the Company or any subsidiary thereof is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Company or any subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of 60 days; or
the Company or any subsidiary thereof makes a general assignment for the benefit
of creditors; or the Company shall fail to pay, or shall state that it is unable
to pay, or shall be unable to pay, its debts generally as they become due; or
the Company or any subsidiary thereof shall call a meeting of its creditors with
a view to arranging a composition, adjustment or restructuring of its debts; or
the Company or any subsidiary thereof shall by any act or failure to act
expressly indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate or other action is taken by the Company or any
subsidiary thereof for the purpose of effecting any of the foregoing.
(b) REMEDIES UPON DEFAULT. If any Event of Default occurs and is
continuing, the full principal amount of this Convertible Note, together with
interest and other amounts owing in respect thereof, to the date of acceleration
shall become at the Holder's election, immediately due and payable in cash. The
Holder need not provide and the Company hereby waives any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by Holder at any time prior to payment
hereunder and the Holder shall have all rights as a Convertible Note holder
until such time, if any, as the full payment under this Section shall have been
received by it. No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.
2
3. CONVERSION.
(a) CONVERSION RIGHT. At any time after the Original Issue Date until this
Convertible Note is no longer outstanding, this Convertible Note shall be
convertible into shares of Common Stock at the option of the Holder, in whole
(and not in part) at any time and from time to time (subject to the limitations
on conversion set forth in this Section 3(a) hereof). The Holder shall effect
conversions by delivering to the Company the form of Notice of Conversion
attached hereto as ANNEX A (a "NOTICE OF CONVERSION"), specifying therein the
principal amount of Convertible Note to be converted and the date on which such
conversion is to be effected (a "CONVERSION DATE"). If no Conversion Date is
specified in a Notice of Conversion, the Conversion Date shall be the date that
such Notice of Conversion is provided hereunder. To effect conversions
hereunder, the Holder shall be required to physically surrender Convertible Note
to the Company. Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Convertible Note in an amount equal to the
applicable conversion. The Holder and the Company shall maintain records showing
the principal amount converted and the date of such conversion. The Holder and
any assignee, by acceptance of this Convertible Note, acknowledge and agree
that, by reason of the provisions of this paragraph, following conversion of
this Convertible Note, the principal amount of this Convertible Note may be less
than the amount stated on the face hereof.
(b) UNDERLYING SHARES ISSUABLE UPON CONVERSION AND PURSUANT TO THE
CONVERSION OF PRINCIPAL AMOUNT. The number of shares of Common Stock issuable
upon a conversion shall be 223,073,380 (11,153,669 post a contemplated 1 for 20
reverse stock split) shares of the Company's restricted common stock (the
"Underlying Shares").
(d) DELIVERIES UPON CONVERSION. Not later than 10 Trading Days after any
Conversion Date, the Company will deliver to the Holder a certificate or
certificates representing the Underlying Shares representing the number of
shares of Common Stock being acquired upon the conversion of Convertible Note
(including, if so timely elected by the Company, shares of Common Stock
representing the payment of accrued interest).
(f) ADJUSTMENTS.
(i) If the Company, at any time while the Convertible Note is
outstanding: (A) shall pay a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Convertible Note, including interest thereon), (B) subdivide
outstanding shares of Common Stock into a larger number of shares, (C) combine
(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (D) issue by reclassification of shares of
the Common Stock any shares of capital stock of the Company, then the number of
Underlying Shares into which this Convertible Note is convertible into shall be
correspondingly adjusted by multiplying such number of shares by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become effective
3
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.
(ii) All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be outstanding
as of a given date shall be the sum of the number of shares of Common Stock
(excluding treasury shares, if any) outstanding on a fully diluted basis.
(g) The Company covenants that all shares of Common Stock that shall be so
issuable shall, upon issue, be duly and validly authorized, issued and fully
paid, nonassessable.
(h) The issuance of certificates for shares of the Common Stock on
conversion of the Convertible Note shall be made without charge to the Holders
thereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that the Company
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Holder of such Convertible Note so
converted and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
4. DEFINITIONS. For the purposes hereof, in addition to the terms defined
elsewhere in this Convertible Note: (a) capitalized terms not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement, and (b)
the following terms shall have the following meanings:
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday in the United States or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock, $0.001 par value per share, of the
Company and stock of any other class into which such shares may hereafter have
been reclassified or changed.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"ORIGINAL ISSUE DATE" shall mean the date of the first issuance of the
Convertible Note regardless of the number of transfers of any Convertible Note
and regardless of the number of instruments which may be issued to evidence such
Convertible Note.
"PERSON" means a corporation, an association, a partnership, organization,
a business, an individual, a government or political subdivision thereof or a
governmental agency.
4
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"TRADING DAY" means (a) a day on which the shares of Common Stock are
traded on a Principal Market on which the shares of Common Stock are then listed
or quoted, or (b) if the shares of Common Stock are not quoted on a Principal
Market, a day on which the shares of Common Stock are quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); PROVIDED, that in the event that the shares of Common Stock
are not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading
Day shall mean a Business Day.
"UNDERLYING SHARES" means the shares of Common Stock issuable upon
conversion of Convertible Note or as payment of interest in accordance with the
terms hereof.
5. DEBT OBLIGATION. This Convertible Note is a direct debt obligation of the
Company. This Convertible Note ranks PARI PASSU with all other Convertible Notes
now or hereafter issued under the terms set forth herein.
6. REPLACEMENT OF NOTE. If this Convertible Note shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Convertible Note, or in
lieu of or in substitution for a lost, stolen or destroyed Convertible Note, a
new Convertible Note for the principal amount of this Convertible Note so
mutilated, lost, stolen or destroyed but only upon receipt of evidence of such
loss, theft or destruction of such Convertible Note, and of the ownership
hereof, and indemnity, if requested, all reasonably satisfactory to the Company.
7. INTERPRETATION; CHOICE OF LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Convertible Note shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Nevada, without regard to the principles of conflicts of law
thereof. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Convertible Note or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of this Convertible Note, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys' fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
8. WAIVER. Any waiver by the Company or the Holder of a breach of any
provision of this Convertible Note shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Convertible Note. The failure of the Company or the Holder to
insist upon strict adherence to any term of this Convertible Note on one or more
occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Convertible Note. Any waiver must be in writing.
5
9. MISCELLANEOUS. If any provision of this Convertible Note is invalid,
illegal or unenforceable, the balance of this Convertible Note shall remain in
effect, and if any provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons and circumstances. If
it shall be found that any interest or other amount deemed interest due
hereunder violates applicable laws governing usury, the applicable rate of
interest due hereunder shall automatically be lowered to equal the maximum
permitted rate of interest. The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law or other law which would prohibit or forgive the Company from
paying all or any portion of the principal of or interest on the Convertible
Note as contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this indenture,
and the Company (to the extent it may lawfully do so) hereby expressly waives
all benefits or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impeded the execution of any power
herein granted to the Holder, but will suffer and permit the execution of every
such as though no such law has been enacted. Whenever any payment or other
obligation hereunder shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day.
*********************
6
IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly
executed by a duly authorized officer as of the date first above indicated.
RIM HOLDINGS, INC.
By: /s/ Xxx Xxx Man
--------------------------------
Name: Xxx Xxx Man
Title: Chief Executive Officer
7
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Convertible Note of
Rim Holdings, Inc. (the "Company"), due on December 31, 2004, into 470,611,780
(23,530,589 post a contemplated 1 for 20 reverse stock split) shares of common
stock (the "COMMON STOCK"), of the Company according to the conditions hereof,
as of the date written below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates and opinions
as reasonably requested by the Company in accordance therewith. No fee will be
charged to the holder for any conversion, except for such transfer taxes, if
any.
The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.
HOLDER:
EuroFaith Holdings, Inc.
By: _______________________________
Name: Sim Lai Fun
Title: Sole Director
