Exhibit 16.1
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of February 8, 2004, by and among BIO-ONE CORPORATION, a Nevada
corporation ("Bio-One"), WEIFANG SHENGTAI PHARMACEUTICALS CO. LTD., a Company
organized under the laws of the People's Republic of China ("Shengtai"), and 39
INDIVIDUAL SHAREHOLDERS OF SHENGTAI (the "Original Shareholders").
RECITALS:
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A. The Original Shareholders own all the equity of Shengtai (the
"Shengtai Equity"), which constitutes all the registered capital of Shengtai.
B. The Original Shareholders desire to exchange fifty-one percent (51%)
of Shengtai Equity (the "Shengtai Capital") for cash and newly-issued shares of
preferred stock par value $0.001 per share of Bio-One (the "Bio-One Series A
Preferred Stock"), on the terms and conditions set forth herein. This
transaction is intended to be tax-free under the Internal Revenue Code of 1986,
as amended (the "Code").
AGREEMENT:
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NOW, THEREFORE, in consideration of the mutual agreements, covenants
and premises set forth herein for certain other good and valuable consideration,
the receipt and adequacy which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. STOCK PURCHASE, PURCHASE PRICE AND RELATED TRANSACTIONS.
1.1. INCORPORATION OF RECITALS. The foregoing recitals are true and
correct and are incorporated by this reference.
1.2. PURCHASE PRICE AND SALE. Bio-One shall acquire and the Original
Shareholders shall sell to Bio-One fifty-one percent (51%) of the capital stock
of Shengtai in exchange for the Purchase Price (as defined below) as set forth
in Section 2 hereof.
1.3. PURCHASE PRICE. In consideration of the purchase by Bio-One of the
Shengtai Capital, Bio-One shall (a) pay to the Original Shareholders cash in an
amount equal to Two Million Dollars (US $2,000,000) and (b) issue to the
Original Shareholders two million and ninety thousand (2,090,000) shares (the
"Bio-One Series A Preferred Shares") of Bio-One Series A Preferred Stock, par
value $0.001 per share (the "Bio-One Series A Preferred Stock"). The Bio-One
Series A Preferred Stock shall have the rights, preferences, privileges and
restrictions set forth in the Certificate of Designation of Series A Preferred
Stock, in the form attached hereto as EXHIBIT "A" (the "Certificate of
Designation of Series A Preferred Stock").
1.4. CLOSING AND EFFECTIVE DATE. The closing shall occur as soon as
practicable after the satisfaction of the conditions precedent set forth in
Sections 6, 7 and 8 hereof, but in no event later than June 30, 2004 (the
"Closing"). The date of Closing is referred to herein as the "Closing Date." The
Closing shall take place at the principal offices of Bio-One's counsel, or at
such other place as may be mutually agreed upon by Bio-One and the Original
Shareholders. At the Closing, (i) the Original Shareholders shall deliver to
Bio-One original stock certificates representing the Shengtai Capital, together
with stock powers duly executed in blank; and (ii) Bio-One shall deliver Two
Million Dollars (US $2,000,000) and the Bio-One Series A preferred Shares to the
Original Shareholders.
1.5. CONVERSION OF BIO-ONE SERIES A PREFERRED SHARES. The Original
Shareholders shall be entitled to convert the Bio-One Series A Preferred Shares
into shares of common stock, par value $0.001 per share, of Bio-One (the
"Bio-One Common Stock") in accordance with the terms and conditions set forth in
the Certificate of Designation of Series A Preferred Stock and as set forth
herein. The Original Shareholders shall not convert any of the Bio-One Series A
Preferred Shares prior to the one (1) year anniversary of the Closing Date. The
Original Shareholders may elect to: (a) convert a maximum of eight-hundred
thirty-eight thousand seven-hundred fifty (838,750) shares of the Bio-One Series
A Preferred Shares into Bio-One Common Stock after the one (1) year anniversary
of the Closing Date; and (b) convert a maximum of one million two-hundred
fifty-one thousand two-hundred fifty (1,251,250) shares of the Bio-One Series A
Preferred Shares into Bio-One Common Stock after the two (2) year anniversary of
the Closing Date. Each share of Bio-One Series A Preferred Stock shall be
convertible into one (1) share of Bio-One Common Stock as set forth in the
Certificate of Designation of Series A Preferred Stock. In the event that
Shengtai converts all of the Bio-One Series A Preferred Shares and such Bio-One
Series A Preferred Shares in the aggregate are less than Four Million One
Hundred Eighty Thousand Dollars (US $4,180,000) of Bio-One Common Stock, as
valued on the dates such Bio-One Series A Preferred Shares were converted into
Bio-One Common Stock, Bio-One shall issue the difference of such amount to the
Original Shareholders in shares of Bio-One Common Stock valued on the date the
last conversion of Bio-One Series A Preferred Shares were converted by the
Original Shareholders into shares of Bio-One Common Stock.
1.6. FRACTIONAL SHARES; LOST CERTIFICATES. Neither certificates nor
scrip for fractional shares of Bio-One Common Stock shall be issued. Any
fractional interest in Bio-One Common Stock to be issued pursuant this Agreement
shall be rounded up or down to the nearest whole share. Bio-One shall deliver
the pro-rata portion of the Purchase Price attributable to any certificate which
has been lost or destroyed upon receipt of evidence satisfactory to Bio-One and
its counsel of ownership of Shengtai Equity represented thereby and of
appropriate indemnification to Bio-One.
1.7. JOINT VENTURE.
1.7.1. FORMATION OF THE JOINT VENTURE COMPANY. Bio-One and the
Original Shareholders acknowledge and agree that Bio-One and the Original
Shareholders entered into that certain Contract for Joint Ventures, dated
February 8, 2004 (the "Contract for Joint Venture") and Articles of Joint
Venture, dated February 8, 2004 and have agreed to convert Shengtai from a
limited liability company wholly owned by Chinese individuals into a
Sino-foreign equity joint venture limited liability company, organized under the
laws of the People's Republic of China (the "Joint Venture Company").
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1.7.2. BIO-ONE'S INITIAL INVESTMENT IN THE JOINT VENTURE
COMPANY. Bio-One and the Original Shareholders hereby agree that the Two Million
Dollars (US $2,000,000) cash portion of the Purchase Price shall be treated as
Bio-One's initial investment in the Joint Venture Company as set forth in
Article 10 of the Contract for Joint Venture.
1.7.3. DISTRIBUTION OF JOINT VENTURE COMPANY PROFITS. Bio-One
and the Original Shareholders hereby agree that the Original Shareholders shall
be entitled to receive the first Two Million Dollars (US $2,000,000) of profit
earned by the Joint Venture Company. Thereafter, Bio-One and the Original
Shareholders hereby agree that Bio-One shall be entitled to fifty-one percent
(51%) of any and all distributions of profit of the Joint Venture Company and
the Original Shareholders shall be entitled to forty-nine percent (49%) of any
and all distributions of profit of the Joint Venture Company.
1.7.4. SALE OF OWNERSHIP INTERESTS IN JOINT VENTURE COMPANY.
In the event that the Original Shareholders shall desire to sell any or all of
its ownership interest in the Joint Venture Company, Bio-One and Shengtai hereby
agree that Bio-One shall, as permitted by the applicable laws, have a first
right of first refusal to purchase the Original Shareholders' ownership
interests in the Joint Venture Company.
1.7.5. BOARD OF DIRECTORS OF THE JOINT VENTURE COMPANY.
Bio-One. and the Original Shareholders hereby agree that Bio-One shall nominate
a majority of the members of the Board of Directors of the Joint Venture
Company.
1.7.6. INTRODUCTION TO FUNDING SERVICES AND NUTRITIONAL
SUPPLEMENT INDUSTRY IN THE UNITED STATES. During the two (2) years following the
Closing, Bio-One hereby agrees to use its best efforts to introduce the Joint
Venture Company to potential funding sources and contacts in the nutritional
supplement industry in North America.
2. ADDITIONAL AGREEMENTS.
2.1. ACCESS AND INSPECTION. Each party hereto has allowed, and shall
continue to allow the other parties (as applicable) and their authorized
representatives full access to all of the properties, books, contracts,
commitments and records of the other party for the purpose of making such
investigations as each party may reasonably requested in connection with the
transactions contemplated hereby. Each party shall finish the other parties such
information concerning its affairs as any other party may reasonably request.
Shengtai and the Original Shareholders have caused and shall continue to cause
the personnel of Shengtai to assist Bio-One in making such investigation and
shall use their best efforts to cause the counsel, accountants, and other
non-employee representatives of Shengtai to be reasonably available to Bio-One
for such purposes. The Original Shareholders shall cause Shengtai to comply with
its all obligations under this Agreement. Bio-one has caused and shall continue
to cause the personnel of Bio-One to assist Shengtai and the Original
Shareholders in making its investigation and shall use its best efforts to cause
the counsel, accountants, and other non-employee representatives of Bio-One to
be reasonably available to Shengtai and the Original Shareholders for such
purposes.
2.2. CONFIDENTIAL TREATMENT OF INFORMATION. From and after the date
hereof, the parties hereto shall and shall cause their representatives to hold
in confidence this Agreement (including the Schedules hereto), all matters
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relating hereto and all data and information obtained with respect to the other
parties or their business, except such data or information as is published or is
a matter of public record, or as compelled by legal process. In the event this
Agreement is terminated pursuant to Section 10 hereof, each party shall promptly
return to the other(s) any statements, documents, schedules, exhibits or other
written information obtained from them in connection with this Agreement, and
shall not retain any copies thereof.
2.3. NONCOMPETITION.
2.3.1. COMPETITIVE BUSINESS. From and after the Closing Date
and for a period of two (2) years thereafter (the "Restricted Period"), the
Original Shareholders shall not directly or indirectly compete with Shengtai,
Bio-One and/or the Joint Venture Company by owning, managing, controlling or
participating in the ownership, management or control of or be employed by or
engaged in any Competitive Business (as defined herein) in any location in the
United States and/or the People's Republic of China in which Shengtai, Bio-One
and/or the Joint Venture Company are doing business. As used herein, a
"Competitive Business" is any other corporation, partnership, proprietorship,
firm or other business entity which is engaged in a "core business of Shengtai,
Bio-One and/or the Joint Venture Company". A "core business of Shengtai, Bio-One
and/or the Joint Venture Company" is the development, production, marketing,
and/or selling of products in the nutritional supplement industry.
Notwithstanding the above, any individual in the Original Shareholders may
become employed by or engaged by a "Competitive Business" so long as such
individual is not involved directly in that part of the Competitive Business
which is competitive with the "core business of Shengtai, Bio-One and/or the
Joint Venture Company." In addition, any individual in the Original Shareholders
may be employed by or engaged by any business which after the Closing Date
becomes a "Competitive Business," if such employment or engagement occurred
prior to Shengtai, Bio-One and/or the Joint Venture Company are entering into a
new "core business of Bio-One" (whether by acquisition or through their own
initiative), which caused such other business to become a Competitive Business.
Also, this Section is not violated if the Original Shareholders owns no more
than five percent (5%) of shareholding of any Competitive Business.
2.3.2. NON-INTERFERENCE. From and after the date hereof and
during the Restricted Period, the Original Shareholders shall not induce or
solicit any employee of Bio-One, Shengtai and/or the Joint Venture Company or
any person doing business with Bio-One, Shengtai and/or the Joint Venture
Company to terminate his or her employment or business relationship with
Bio-One, Shengtai and/or the Joint Venture Company or otherwise interfere with
any such relationship.
2.3.3. CONFIDENTIALITY. The Original Shareholders agree and
acknowledge that, by reason of the nature of the Original Shareholders'
ownership interest in Bio-One, the Original Shareholders will have or may have
access to and become informed of confidential and secret information which is a
competitive asset of Bio-One, Shengtai and/or the Joint Venture Company
("Confidential Information"), including, without limitation, technology, any
lists of customers, financial statistics, research data or any other statistics
and plans contained in profit plans, capital plans, critical issue plans,
strategic plans or marketing or operation plans or other trade secrets of
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Bio-One, Shengtai and/or the Joint Venture Company and any of the foregoing
which belong to any person or company but to which the Original Shareholders
have had access by reason of his relationship with Bio-One, Shengtai and/or the
Joint Venture Company. The Original Shareholders agree faithfully to keep in
strict confidence, and not, either directly or indirectly, to make known,
divulge, reveal, furnish, make available or use any such Confidential
Information. The Original Shareholders acknowledge that all manuals, instruction
books, price lists, information and records and other information and aids
relating to the business of Bio-One, Shengtai and/or the Joint Venture and any
and all other documents containing Confidential Information furnished to the
Original Shareholders by Bio-One, Shengtai and/or the Joint Venture Company or
otherwise acquired or developed by the Original Shareholders, shall at all times
be the property of Bio-One, Shengtai and/or the Joint Venture Company, as the
case may be. Upon the termination of this Agreement, the Original Shareholders
shall return to Bio-One any such property or documents which are in their
possession, custody or control, but the Original Shareholders' obligation of
confidentiality shall survive such termination and unless any such Confidential
Information shall have become, through no fault of the Original Shareholders,
generally known to the trade. The obligations of the Original Shareholders under
this subsection are in addition to, and not in limitation or preemption of, all
other obligations of confidentiality which the Original Shareholders may have to
Bio-One, Shengtai and/or the Joint Venture Company under general legal or
equitable principles or under an Executive Management Agreement (as hereinafter
defined). Notwithstanding the above, however, Bio-One acknowledges that the
Original Shareholders have extensive experience in the genual industry in which
Bio-One, Shengtai and/or the Joint Venture Company operates, and these
restrictions are not intended to prevent the Original Shareholders from using
his knowledge of the industry. These restrictions only apply to technology which
is owned by Bio-One, Shengtai and/or the Joint Venture Company, or was learned
by the Original Shareholders as shareholders of Bio-One.
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2.3.4. NO SOLICITATION OF COMPETING TRANSACTIONS. From and
after the date hereof until the later of the Closing Date or the termination of
this Agreement, the Original Shareholders will not, directly or indirectly, and
will instruct his respective representatives not to, directly or indirectly,
solicit or initiate (including by way of furnishing nonpublic information), or
take any other action knowingly to facilitate, any inquiries or the making of
any proposal or offer that constitutes: (a) a merger, consolidation, share
exchange, business combination or other similar transaction; (b) a sale, lease,
exchange, transfer or other disposition of any significant assets of Shengtai or
the Joint Venture Company, other than in the ordinary course of business or
sales of obsolete materials; or (c) an acquisition of any Shengtai capital stock
of the Joint Venture Company (collectively, a "Competing Transaction"), or enter
into or maintain or continue discussions or negotiate with any person or entity
in furtherance of such inquiries or to obtain a Competing Transaction, or agree
to or endorse any Competing Transaction, or authorize or permit any of their
representatives to take any such action. The Joint Venture Company or Shengtai
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted with respect to a Competing Transaction.
2.3.5. REMEDIES. It is expressly agreed by the Original
Shareholders and Bio-One that the provisions in this Section 2 are reasonable
for purposes of preserving for Bio-One, Shengtai and the Joint Venture Company,
its business, goodwill and Confidential Information. It is also agreed that if
any provision is found by a court having jurisdiction to be unreasonable because
of scope, area or time, then that provision shall be amended to correspond in
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scope, area and time to that considered reasonable by a court and as amended
shall be enforced and the remaining provisions shall remain effective. In the
event any breach of these provisions by the Original Shareholders, the parties
recognize and acknowledge that a remedy at law will be inadequate and Bio-One
may suffer irreparable injury. The Original Shareholders consents to injunctive
and other appropriate equitable relief without the posting of a bond upon the
institution of proceedings therefor by Bio-One in order to protect Bio-One's
rights. Such relief shall be in addition to any other relief to which Bio-One
may be entitled at law, in equity, or under any other agreement between the
Original Shareholders and Bio-One. The provisions of this Section 2.3 (including
the subsections) shall survive the termination of this Agreement.
2.4. PUBLIC ANNOUNCEMENTS. The parties will consult with each other
before issuing any press releases or otherwise making any public statement with
respect to this Agreement or any of the transactions contemplated hereby and no
party will issue any such press release or make any such public statement
without the prior written consent of the other parties, except as may be
required by law or by the rules and regulations of any governmental authority or
securities exchange.
2.5. SECURITIES LAW MATTERS.
2.5.1. PRIVATE PLACEMENT. The issuance of the Bio-One Shares
to the Original Shareholders hereunder shall not be registered under the
Securities Act of 1933, as amended, (the "Securities Act") by reason of the
exemption provided by Section 4(2) thereof, and such shares may not be further
transferred unless such transfer is registered under applicable securities laws
or, in the opinion of Bio-One's counsel, such transfer complies with an
exemption from such registration. All certificates evidencing the Bio-One Shares
to be issued to Original Shareholders shall be legended to reflect the foregoing
restriction.
2.6. FURTHER ASSURANCES. The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including,
without limitation, all necessary stock powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of the Shengtai
Equity to Bio-One and to consummate the transactions contemplated by this
Agreement.
2.7. EXECUTIVE MANAGEMENT AGREEMENT. At Closing, the Original
Shareholders shall execute and deliver an Executive Management Agreement (the
"Executive Management Agreement") with Bio-One in the form attached hereto as
EXHIBIT "C."
2.8. CONSISTENT TAX FILING POSITION. Each of the parties hereto shall
file all federal income tax returns in a manner consistent with the intended
tax-free nature of this transaction.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE ORIGINAL SHAREHOLDERS AND
SHENGTAI.
To further induce Bio-One to enter into this Agreement and to
consummate the transactions contemplated hereby, Shengtai and the Original
Shareholders each hereby jointly and severally represent and warrant to and
covenant with Bio-One as follows:
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3.1. ORGANIZATION AND QUALIFICATION; ABSENCE OF SUBSIDIARIES. Shengtai
is a corporation duly organized and validly existing and in good standing under
the laws of the People's Republic of China and has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as it is currently being conducted. Shengtai is in good standing in the Changle
County, Shandong Province, People's Republic of China,. Shengtai is duly
qualified or licensed 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
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a material adverse effect on the
business, properties, assets, financial condition, prospects or future business
of Shengtai (collectively, a "Shengtai Material Adverse Effect"). Shengtai does
not have any subsidiaries nor an equity interest in any partnerships or joint
venture arrangements or other business entity.
3.2. CAPITALIZATION AND RELATED MATTERS.
3.2.1. EQUITY; CAPITALIZATION. As of the date hereof, all the
equity of Shengtai consists of its registered capital in the total amount of Six
Million Four Hundred and Four Thousand RenMinBi (RMB6,440,000). All of the
Shengtai Capital are owned of record, legally and beneficially by the Original
Shareholders. The Shengtai Capital are free and clear of any and all security
interests, encumbrances, and rights of any kind or nature whatsoever
(collectively, "Encumbrances"), and upon delivery of the Shengtai Capital
hereunder, Bio-One will acquire title thereto, free and clear of any and all
Encumbrances. Other than voting rights, redemption rights and such other rights
conferred by Shengtai's charter documents and by applicable Chinese statutes,
there exist no Securities Rights (as defined herein) with respect to the
Shengtai Capital. All rights and powers to vote the Shengtai Capital are held
exclusively by the Original Shareholders. All of the Shengtai Capital are
validly issued, fully paid and nonassessable, were not issued in violation of
the terms of any agreement or other understanding, and were issued in compliance
with all applicable securities laws and regulations. The certificates
representing the Shengtai Capital to be delivered to Bio-One at the Closing are,
and the signatures and endorsements thereof or stock powers relating thereto
will be, valid and genuine. For the purposes of this section, "Securities
Rights" means, with respect to the Shengtai Capital (whether issued or unissued)
or any other securities convertible into or exchangeable for Shengtai Capital,
and includes all written or unwritten contractual rights relating to the
issuance, sale, assignment, transfer, purchase, redemption, conversion,
exchange, registration or voting of the Shengtai Capital and all rights
conferred by Shengtai's governing documents and by any applicable agreement.
3.2.2. LIABILITIES AND OBLIGATIONS. To the Original
Shareholders' knowledge, Shengtai has no debt, obligation or liability,
absolute, fixed, contingent or otherwise, of any nature whatsoever, whether due
or to become due, including any unasserted claim, whether incurred directly or
by any predecessor thereto, and whether arising out of any act, omission,
transaction, circumstance, sale of goods or services, state of facts or other
condition, which individually or in the aggregate would have a Shengtai Material
Adverse Effect except: (i) those reflected or reserved against on the Shengtai
Financial Statements (as defined herein) in the amounts shown therein; (ii)
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those that have arisen in the ordinary course of business of Shengtai after the
Balance Sheet Date (as defined herein) through the Closing Date, none of which,
individually or in the aggregate, has had or will have a Shengtai Material
Adverse Effect on the business or financial condition of Shengtai; and (iii)
those set forth in SCHEDULE 3.6.
3.3. CHARTER DOCUMENTS AND BY-LAWS. Shengtai has heretofore made
available to Bio-One a complete and correct copy of its charter and
organizational documents and the by-Laws of Shengtai. Such charter and
organizational documents and by-Laws are in full force and effect.
3.4. AUTHORITY RELATIVE TO THIS AGREEMENT. Shengtai and the Original
Shareholders have all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated by this Agreement. The Original Shareholders have
full right and capacity to enter into this Agreement and to carry out his or her
obligations hereunder. The execution and delivers of this Agreement by Shengtai
and the Original Shareholders, the performance by the Original Shareholders of
his or her obligations hereunder and the consummation by Shengtai of the
transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of Shengtai or the Original Shareholders as are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by Shengtai and the Original Shareholders and constitutes
the legal, valid and binding obligations of Shengtai and the Original
Shareholders, enforceable against Shengtai and the Original Shareholders in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization or other similar laws of general
application affecting the enforcement of creditors' rights generally.
3.5. PERMITS AND LICENSES; COMPLIANCE. To the best knowledge of the
Original Shareholders and Shengtai, Shengtai is in possession of all permits and
licenses necessary for the conduct of its business and, as of the date hereof,
no suspension or cancellation of any such permits or licenses is pending or, to
the knowledge of the Original Shareholders and Shengtai after reasonable
investigation, threatened, except where the failure to possess, or the
suspension or cancellation of, any such permits or licenses would not,
individually or in the aggregate, have a Shengtai Material Adverse Effect. To
the best knowledge of the Original Shareholders and Shengtai, Shengtai is not in
conflict with, or in default or violation of, (a) any law applicable to Shengtai
or by which any property or asset of Shengtai is bound or (b) any permit or
license, other than conflicts or violations which, individually or in the
aggregate, would not have a Shengtai Material Adverse Effect.
3.6. FINANCIAL STATEMENTS. True and complete copies of (a) the audited
balance sheet of Shengtai for the fiscal period ended as of December 31, 2003
(the "Balance Sheet Date") and the related audited statements of income,
retained earnings and cash flow for the period from January 1, 2003 through
December 31, 2003 with all related notes and schedules thereto, accompanied by
the reports thereon by Shengtai's Accountants (collectively referred to herein
as the "Shengtai Audited Financial Statements") and (b) the unaudited balance
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sheets of Shengtai for each of January and February 2004 and the related
statements of income of Shengtai (collectively referred to herein as the
"Shengtai Interim Financial Statements and together with the Shengtai Audited
Financial Statements are collectively referred to as the "Shengtai Financial
Statements") have been delivered by Shengtai prior to Closing. The Shengtai
Financial Statements (i) were prepared in accordance with the books of account
and other financial records of Shengtai, (ii) present fairly the financial
condition and results of operations of Shengtai as of the dates thereof or for
the periods covered thereby, (iii) have been prepared in accordance with U.S.
GAAP (except as may be indicated in the notes thereto) applied on a basis
consistent with the past practices of Shengtai and (iv) include all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation of the financial condition of Shengtai and the results of the
operations of Shengtai as of the dates thereof or for the periods covered
thereby (subject, in the case of Shengtai Interim Financial Statement, to normal
recurring year-end adjustments).
3.7. ABSENCE OF LITIGATION. There is no legal or administrative action
or proceeding pending or, to the knowledge of Shengtai or the Original
Shareholders after reasonable investigation, threatened against Shengtai or any
property or asset of Shengtai.
3.8. EMPLOYEE BENEFIT MATTERS.
3.8.1. BENEFIT PLANS. There are no employee benefit plans,
bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements to which Shengtai is
a party, with respect to which Shengtai has any obligation, or which are
maintained, contributed to, or sponsored by Shengtai for the benefit of any
current or former employee, officer, or director of Shengtai.
3.9. INTELLECTUAL PROPERTY.
3.9.1. All of the customer lists, products, product know-how
and technology used by Shengtai in the conduct of its business as set forth on
SCHEDULE 3.9.1 (the "Shengtai Intellectual Property") will be made available to
Bio-One upon the completion of the transaction contemplated by this Agreement.
3.9.2. No claim has been asserted to the best knowledge of the
Original Shareholders and Shengtai that the use of the Shengtai Intellectual
Property or the conduct of the business of Shengtai does or may infringe upon
such rights of any third party.
3.9.3. Shengtai is the owner of the entire, title and interest
in and to the Shengtai Intellectual Property, free and clear of all
Encumbrances, and has the right to use, all the Shengtai Intellectual Property
in the continued operations of Shengtai.
3.9.4. The Shengtai Intellectual Property has not been
adjudged invalid or unenforceable in whole or part by any governmental
authority.
3.9.5. To the knowledge of Shengtai and the Original
Shareholders after reasonable investigation, no person or entity is engaging in
any activity that infringes upon the Shengtai Intellectual Property or upon the
rights of Shengtai therein. The consummation of the transactions contemplated by
this Agreement will not result in the termination or impairment of any of the
Shengtai Intellectual Property.
3.9.6. Shengtai has not granted to, nor received from, any
third party any license or sublicense of intellectual property.
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3.10. TAXES. Shengtai has (a) filed all federal, state, local and
foreign Tax (as defined herein) returns required to be filed by it prior to the
date of this Agreement (taking into account extensions), (b) paid or accrued all
Taxes shown to be due on such returns and paid all applicable ad valorem and
value added Taxes as are due, and (c) paid or accrued all Taxes for which a
notice of assessment or collection has been received (other than amounts being
contested in good faith by appropriate proceedings), except in the case of
clause (a), (b) or (c) for such filings, payments or accruals which would not,
individually or in the aggregate, have an Shengtai Material Adverse Effect.
Shengtai has open years for federal, state and local income Tax returns only for
year 2003. Shengtai has not received from any governmental authority any written
notice of proposed adjustment, deficiency or underpayment of any Taxes, which
notice has not been satisfied by payment or been withdrawn, and there are no
material claims that have been asserted or threatened relating to such Taxes
against Shengtai. Shengtai has withheld or collected and paid over to the
appropriate governmental authorities (or is properly holding for such payment)
all Taxes required by law to be withheld or collected, except for amounts which
would not, individually or in the aggregate, have an Shengtai Material Adverse
Effect. For purposes of this Agreement, "Tax" or "Taxes" means any and all
taxes, fees, levies, duties, tariffs, imposts and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority, including, without limitation: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature or excise, withholding, ad valorem, stamp, transfer, value
added or gains taxes, license, registration and documentation fees, and custom
duties, tariffs and similar charges.
3.11. ASSETS.
3.11.1. Except as disclosed in SCHEDULE 3.11.1, and excluding
any Shengtai Intellectual Property which is covered in Section 3.9 hereof,
Shengtai owns, leases or has the right to use all the properties and assets,
including, without limitation, the real property and personal property, used in
the conduct of its business or otherwise owned, leased, or used by Shengtai and,
with respect to contract rights, is a party to and enjoys the right to the
benefits of all contracts, agreements and other arrangements used or intended to
be used by Shengtai or in or relating to the conduct of its business (all such
properties, assets and contract rights being the "Assets"). Shengtai has good
and marketable title to, or, in the case of leased or subleased Assets, valid
and subsisting leasehold interests in, all the Assets, free and clear of all
Encumbrances.
3.11.2. The Assets constitute all the properties, assets and
rights forming a part of, used or held in, and all such properties, assets and
rights as are necessary in the conduct of, the business of Shengtai as it is
currently conducted. Shengtai has caused the Assets to be maintained in
accordance with good business practice, and all the Assets are in good operating
condition and repair, normal wear and tear excepted.
3.12. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC. The execution and delivery of
this Agreement by the Original Shareholders and Shengtai does not, and the
consummation of the transactions contemplated hereby will not, constitute a
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breach or violation of the charter or by-laws of Shengtai, or a default under
any of the terms, conditions or provisions of (or an act or omission that would
give rise to any right of termination, cancellation or acceleration under) any
material note, bond, mortgage, lease, indenture, agreement or obligation to
which Shengtai or the Original Shareholders is a party, pursuant to which
Shengtai or the Original Shareholders otherwise receives benefits, or to which
any of the properties of Shengtai or the Original Shareholders is subject.
3.13. CORPORATE RECORDS. The statutory records, including the stock
register and minute books of Shengtai, fully reflect all issuances, transfers
and redemptions of its capital stock, correctly show and will correctly show the
total number of shares of its capital stock issued and outstanding on the date
hereof and on the Closing Date, the charter or other organizational documents
and all amendments thereto, and its by-laws as amended and currently in force.
3.14. ABSENCE OF CHANGES. Except as described in SCHEDULE 3.14, from
the Balance Sheet Date to the date of this Agreement:
3.14.1. To the best knowledge of the Original Shareholders and
Shengtai, there has been no adverse change in the business, assets, liabilities,
results of operations or financial condition of Shengtai or its relationships
with suppliers, customers, employees, lessors or others, other than changes in
the ordinary course of business, none of which, singularly or in the aggregate,
have had or will have a Shengtai Material Adverse Effect; and
3.14.2. Shengtai has complied with the covenants and
restrictions set forth in Section 5 to the same extent as if this Agreement had
been executed on, and had been in effect since the Balance Sheet Date.
3.15. COMPLIANCE WITH LAW. The business and activities of Shengtai have
at all times been conducted in accordance with its charter and organizational
documents and by-laws and, to the best knowledge of each of the Original
Shareholders and Shengtai, any applicable law, regulation, ordinance, order,
license, permit, rule, injunction or other restriction or ruling of any court or
administrative or governmental agency, ministry, or body, except where the
failure to do so would not result in a Shengtai Material Adverse Effect.
3.16. CONTINGENCIES. There are no actions, suits, claims or proceedings
pending, or, to the knowledge of Shengtai and the Original Shareholders after
reasonable investigation, threatened against, by or affecting Shengtai in any
court or before any arbitrator or governmental agency that may have a Shengtai
Material Adverse Effect or which could adversely affect the right or ability of
Shengtai to consummate the transactions contemplated hereby. To the knowledge of
Shengtai and the Original Shareholders after reasonable investigation, there is
no valid basis upon which any such action, suit, claim, or proceeding may be
commenced or asserted against Shengtai. There are no unsatisfied judgments
against Shengtai and no consent decrees or similar agreements to which Shengtai
is subject and which could have a Shengtai Material Adverse Effect.
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3.17. MATERIAL CONTRACTS. There are no contracts of Shengtai which
involve consideration in excess of the equivalent of Ten Thousand Dollars (US
$10,000.00) or have a term of one (1) year or more (collectively, the "Material
Contracts").
3.18. INSURANCE. SCHEDULE 3.18 contains a complete list of all policies
of insurance presently maintained by Shengtai, all of which are, and will be
maintained through the Closing Date, in full force and effect, and all premiums
due thereon have been paid. Shengtai has received no notices of cancellation
with respect thereto. Shengtai has heretofore delivered to Bio-One or its
representatives a true, correct and complete copy of each such insurance policy.
3.19. EMPLOYMENT AND LABOR MATTERS. SCHEDULE 3.19 sets forth the name,
position, employment date, and current compensation (base and bonus) of each
employee of Shengtai. Shengtai is not a party to any collective bargaining
agreement or agreement of any kind with any union or labor organization. There
has not been any attempt by any union or other labor organization to organize
the employees of Shengtai at any time.
3.20. ENVIRONMENTAL MATTERS. Shengtai is not in violation, in any
material respect, of any Environmental Law (as defined herein); Shengtai has
received all permits and approvals with respect to emissions into the
environment and the proper collection, storage, transport, distribution or
disposal of Wastes (as defined herein) and other materials required for the
operation of its business at present operating levels; and Shengtai is not
liable or responsible for any clean up, fines, liability or expense arising
under any Environmental Law, as a result of the disposal of Wastes or other
materials in or on the property of Shengtai (whether owned or leased), or in or
on any other property, including property no longer owned, leased or used by
Shengtai. As used herein, (a) "Environmental Laws" means, collectively, any
federal or applicable state or local statute, law, ordinance, code, rule,
regulation, order or decree (foreign or domestic) regulating, relating to, or
imposing liability or standards of conduct concerning, Wastes, or the
environment; and (b) "Wastes" means and includes any hazardous, toxic or
dangerous waste, liquid, substance or material (including petroleum products and
derivatives), the generation, handling, storage, disposal, treatment or emission
of which is subject to any Environmental Law.
3.21. INVENTORIES. The amounts stated as inventories of Shengtai on the
Shengtai Financial Statements reflect fairly the products, materials and
supplies and spare parts held by it on each respective date for its use or for
sale to customers. The inventory shown on the Shengtai Financial Statements (i)
represents items of a quality and quantity usable and saleable in the ordinary
course of business, and (ii) conforms in all material respects to customary
trade standards for such inventory in Shengtai's current markets. The quantity
and quality of the inventory of Shengtai as of the Closing Date shall be the
same as that existing as of the Balance Sheet Date, except for changes occurring
in the ordinary course of business, none of which shall have a Shengtai Material
Adverse Effect. Shengtai has not given and shall not give, prior to the Closing
Date, any express written warranty with respect to any goods or products sold.
3.22. RECEIVABLES. Except as set forth in SCHEDULE 3.22, all notes
receivable and accounts receivable shown on the Shengtai Financial Statements
and all such receivables now held by Shengtai were and are valid and collectible
obligations of the respective makers thereof and were not and are not subject to
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any offset or counterclaim; except for a portion of such receivables, not to
exceed the amount, if any, shown as the allowance for bad debt on the Shengtai
Financial Statements, which may prove not to be collectible.
3.23. AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except as set
forth in SCHEDULE 3.23, Shengtai is not, and since the date of the Shengtai
Balance Sheet has not been, a party to any contract, agreement, lease or
transaction with, or any other commitment to, (i) the Original Shareholders,
(ii) any person related by blood, adoption or marriage to the Original
Shareholders, (iii) any director or officer of Shengtai, (iv) any corporation or
other entity in which any of the foregoing parties has, directly or indirectly,
at least five percent (5.0%) beneficial interest in the capital stock or other
type of equity interest in such corporation or other entity, or (v) any
partnership in which any such party is a general partner or a limited partner
having a five percent (5%) or more interest therein (any or all of the foregoing
being herein referred to as a "Related Party" and collectively as the "Related
Parties"). Without limiting the generality of the foregoing, except as set forth
in SCHEDULE 3.23, (A) no Related Party, directly or indirectly, owns or controls
any assets or properties which are or have since the date of the Shengtai
Balance Sheet been used in the business of Shengtai, and (B) no Related Party,
directly or indirectly, engages in or has any significant interest in or
connection with any business: (1) which is or which, since inception of
Shengtai, has been a competitor, customer or supplier of, or has done business
with, Shengtai, or (2) which as of the date hereof sells or distributes products
or provides services which are similar or related to the products or services of
Shengtai.
3.24. FULL DISCLOSURE. No representation or warranty of Shengtai or the
Original Shareholders contained in this Agreement, and none of the statements or
information concerning Shengtai contained in this Agreement and the Exhibits and
Schedules hereto, contains or will contain any untrue statement of a material
fact nor will such representations, warranties, covenants or statements taken as
a whole omit 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.
3.25. ACKNOWLEDGMENT OF RECEIPT OF DISCLOSURE MATERIALS. The Original
Shareholders have received and reviewed copies of the following disclosure
documents filed by Bio-One with the Securities and Exchange Commission
(collectively, the "SEC Documents"): (1) Reports on Form 10-QSB for the three
month periods ended March 31, 2003, June 30, 2003, and September 30, 2003; and
(2) Registration Statement on Form SB-2, as amended, filed on July 15, 2003.
4. REPRESENTATIONS AND WARRANTIES OF BIO-ONE.
To induce Shengtai and the Original Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, Bio-One
represents and warrants to and covenants with Shengtai and the Original
Shareholders as follows:
4.1. ORGANIZATION. Bio-One is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. Bio-One is
entitled to own or lease its properties and to carry on its business as and in
the places where such business is now conducted, and Bio-One is duly licensed
and qualified in all jurisdictions where the character of the property owned by
it or the nature of the business transacted by it makes such license or
qualification necessary, except where such failure would not result in a
material adverse effect on Bio-One.
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4.2. CAPITALIZATION AND RELATED MATTERS.
4.2.1. Bio-One has authorized capital stock consisting of
500,000,000 shares of common stock, $0.001 par value per share, of which
44,553,996 shares were issued and outstanding as of the date hereof. The Bio-One
Shares will be, as of the Closing Date, duly and validly authorized and issued,
and fully paid and non-assessable, and will be issued to the Original
Shareholders free of all Encumbrances, claims and liens whatsoever.
4.2.2. Except as set forth in the SEC Documents and/or as set
forth on SCHEDULE 4.2.2 hereof, Bio-One does not have outstanding any securities
convertible into capital stock, nor any rights to subscribe for or to purchase,
or any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock or securities convertible into its
capital stock.
4.3. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.
4.3.1. The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been or will be prior
to the Closing Date duly and validly authorized and approved by Bio-One and this
Agreement is a valid and binding agreement of Bio-One, enforceable against
Bio-One in accordance with its terms, except as such enforcement may be limited
by bankruptcy or similar laws affecting the enforcement of creditors' rights
generally, and the availability of equitable remedies.
4.3.2. The execution and delivery of this Agreement by Bio-One
does not, and the consummation of the transactions contemplated hereby will not,
constitute a breach or violation of the charter or by-laws of Bio-One, or a
default under any of the terms, conditions or provisions of (or an act or
omission that would give rise to any right of termination, cancellation or
acceleration under) any material note, bond, mortgage, lease, indenture,
agreement or obligation to which Bio-One is a party, pursuant to which it
otherwise receives benefits, or by which any of its properties may be bound.
4.4. FINANCIAL STATEMENTS. Prior to Closing, Bio-One shall deliver to
Shengtai the audited balance sheets of Bio-One as of December 31, 2003 and
December 31, 2002, and the audited statement of income for the two fiscal years
ended December 31, 2003 and 2002 (collectively, the "Bio-One Financial
Statements"). The Bio-One Financial Statements have been prepared in accordance
with GAAP, applied on a consistent basis (except that the unaudited statements
do not contain all the disclosures required by GAAP). Since September 30, 2003,
there has been no material adverse change in the assets or liabilities, in the
business or condition, financial or otherwise, of the Bio-One, or in its results
of operations.
4.5. LIABILITIES. Bio-One has no material debt, liability or obligation
of any kind, whether accrued, absolute, contingent or otherwise, except (i)
those reflected on the Bio-One Financial Statements, including the notes
thereto, and (ii) the liabilities incurred in the ordinary course of business
since September 30, 2003.
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4.6. CONTINGENCIES. There are no actions, suits, claims or proceedings
pending or, to Bio-One's knowledge, threatened, against, by or affecting Bio-One
in any court or before any arbitrator or governmental agency which could have a
material adverse effect on Bio-One or which could materially and adversely
affect the right or ability of the Bio-One to consummate the transactions
contemplated hereby. To the knowledge of Bio-One, there is no valid basis upon
which any such action, suit, claim or proceeding may be commenced or asserted
against Bio-One. There are no unsatisfied judgments against Bio-One and no
consent decrees or similar agreements to which Bio-One is subject and which
could have a material adverse effect on Bio-One or which could materially and
adversely affect the right or ability of Bio-One to consummate the transactions
contemplated hereby.
4.7. FULL DISCLOSURE. No representation or warranty of Bio-One
contained in this Agreement, and none of the statements or information
concerning Bio-One contained in this Agreement and the Schedules, contains or
will contain any untrue statement of a material fact nor will such
representations, warranties, covenants or statements taken as a whole omit 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.
5. CONDUCT OF BUSINESS OF SHENGTAI AND JOINT VENTURE COMPANY PENDING CLOSING.
5.1. Shengtai and the Original Shareholders covenant and agree that,
between the date hereof and the Closing Date, the business of Shengtai or the
Joint Venture Company shall be conducted only in the ordinary course and
consistent with past practice.
5.2. NO MATERIAL CHANGES. Except as contemplated in this Section 5.2,
Shengtai or the Joint Venture Company shall not materially alter its
organization, capitalization, or financial structure, practices or operations.
Without limiting the generality of the foregoing:
(a) no change shall be made in the charter and organizational
documents or by-laws of Shengtai;
(b) no change shall be made in the authorized or issued
capital stock of Shengtai;
(c) Shengtai and the Joint Venture Company shall not issue or
grant any right or option to purchase or otherwise acquire any of its capital
stock or other securities;
(d) no dividend or other distribution or payment shall be
declared or made with respect to any of the capital stock of Shengtai; and
(e) no change shall be made which affects Shengtai's banking
arrangements.
5.3. COMPENSATION. No increase shall be made in the compensation or
employee benefits payable or to become payable to any director, officer,
employee or agent of Shengtai and/or the Joint Venture Company, and no bonus or
profit-share payment or other arrangement (whether current or deferred) shall be
made to or with any such director, officer, employee or agent, except in the
ordinary course of business and consistent with prior practices.
15
5.4. NOTIFICATION. Each party to this Agreement shall promptly notify
the other parties in writing of the occurrence, or threatened occurrence, of any
event that would constitute a breach or violation of this Agreement by any party
or that would cause any representation or warranty made by the notifying party
in this Agreement to be false or misleading in any respect. The Original
Shareholders shall promptly notify Bio-One of any event of which the Original
Shareholders obtain knowledge which could have a Shengtai Material Adverse
Effect.
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligation of the parties hereto to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing, of each of the following conditions; any or all of which may be waived
in whole or in part by the joint agreement of the parties hereto:
6.1. ABSENCE OF ACTIONS. No action or proceeding shall have been
brought or threatened before any court or administrative agency to prevent the
consummation or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted that the within transactions (or any other pending transaction
involving Bio-One, the Original Shareholders or Shengtai when considered in
light of the effect of the within transactions) shall constitute a violation of
law or give rise to material liability on the part of Bio-One, the Original
Shareholders or Shengtai.
6.2. CONSENTS. The parties shall have received from any suppliers,
lessors, lenders, lien holders or governmental authorities, bodies or agencies
having jurisdiction over the transactions contemplated by this Agreement, or any
part hereof, such consents, authorizations and approvals as are necessary for
the consummation hereof, including, without limitation, the consents listed on
SCHEDULE 6.2.
7. CONDITIONS TO OBLIGATIONS OF BIO-ONE.
All obligations of Bio-One to consummate the transactions contemplated
by this Agreement are subject to the fulfillment and satisfaction of each and
every of the following conditions on or prior to the Closing, any or all of
which may be waived in whole or in part by Bio-One:
7.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 3 of this Agreement and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of Shengtai or
the Original Shareholders in connection with the transactions contemplated by
this Agreement shall be true, correct and complete in all material respects
(except for representations and warranties which are by their terms qualified by
materiality, which shall be true, correct and complete in all respects) as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true, correct and complete at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
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7.2. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Shengtai and the
Original Shareholders shall have performed and complied with all material
agreements and conditions required by this Agreement to be performed or complied
with by them prior to or on the Closing Date.
7.3. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change in
the business, assets, financial condition, or prospects of Shengtai shall have
occurred, no substantial part of the assets of Shengtai not substantially
covered by insurance shall have been destroyed due to fire or other casualty,
and no event shall have occurred which has had or will have a Shengtai Material
Adverse Effect.
7.4. CERTIFICATE OF SHENGTAI AND ORIGINAL SHAREHOLDERS. Shengtai and
the Original Shareholders shall have executed and delivered, or caused to be
executed and delivered, to Bio-One one (1) or more certificates, dated as of the
Closing Date, certifying in such detail as Bio-One may reasonably request to the
fulfillment and satisfaction of the conditions specified in Sections 7.1 through
7.3 above.
8. CONDITIONS TO OBLIGATIONS OF THE ORIGINAL SHAREHOLDERS.
All of the obligations of the Original Shareholders to consummate the
transactions contemplated by this Agreement are subject to the fulfillment and
satisfaction of each and every of the following conditions on or prior to the
Closing, any or all of which may be waived in whole or in part, by the Original
Shareholders:
8.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 4 of this Agreement and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of Bio-One in
connection with the transactions contemplated by this Agreement shall be true
and correct in all material respects (except for representations and warranties
which are by their terms qualified by materiality, which shall be true, correct
and complete in all respects) when made and shall be deemed to be made again at
and as of the Closing Date and shall be true at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
8.2. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Bio-One shall have
performed and complied with all material agreements and conditions required by
this Agreement to be performed or complied with by Bio-One prior to or on the
Closing Date.
8.3. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change in
the business, assets, financial condition, or prospects of Bio-One, taken as a
whole, shall have occurred, no substantial part of the assets of Bio-One, taken
as a whole, shall have been destroyed due to fire or other casualty, and no
event shall have occurred which has had, or will have a material adverse effect
on the business, assets, financial condition or prospects of Bio-One and its
subsidiaries, taken as a whole.
8.4. COMPLIANCE WITH SECTION 3.25. Bio-One shall have delivered to the
Original Shareholders copies of documents set forth in SECTION 3.25 hereof.
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8.5. CERTIFICATE OF BIO-ONE. Bio-One shall have delivered to the
Original Shareholders a certificate, executed by an executive officer of Bio-One
and dated as of the Closing Date, certifying in such detail as counsel for the
Original Shareholders may reasonably request to the fulfillment and satisfaction
of the conditions specified in SECTIONS 8.1 through 8.4 above.
9. INDEMNIFICATION.
9.1. INDEMNIFICATION BY THE ORIGINAL SHAREHOLDERS AND SHENGTAI. Subject
to Section 9.5, the Original Shareholders and Shengtai (hereinafter collectively
called the "Indemnitor") shall jointly and severally defend, indemnify and hold
harmless Bio-One, its direct and indirect parent corporations, subsidiaries and
affiliates (including the Joint Venture Company), their officers, directors,
employees and agents (hereinafter collectively called "Indemnitees") against and
in respect of any and all loss, damage, liability, fine, penalty, cost and
expense, including reasonable attorneys' fees and amounts paid in settlement
(collectively, "Indemnified Losses"), suffered or incurred by any Indemnitee by
reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any agreement of the Original Shareholders or Shengtai
contained in this Agreement or in any certificate, schedule, instrument or
document delivered to Bio-One by or on behalf of the Original Shareholders or
Shengtai pursuant to the provisions of this Agreement (without regard to
materiality thresholds contained therein); and
(b) any liabilities of Shengtai of any nature whatsoever
(including tax liability, penalties and interest), whether accrued, absolute,
contingent or otherwise, (i) existing as of the date of the Shengtai Balance
Sheet, and required to be shown therein in accordance with GAAP, to the extent
not reflected or reserved against in full in the Shengtai Balance Sheet; or (ii)
arising or occurring between the Shengtai Balance Sheet Date and the Closing
Date, except for liabilities arising in the ordinary course of business, none of
which shall have a Shengtai Material Adverse Effect.
9.2. INDEMNIFICATION BY BIO-ONE. Subject to Section 9.5, Bio-One
(hereinafter called the "Indemnitor") shall defend, indemnify and hold harmless
the Original Shareholders and Shengtai (hereinafter called "Indemnitee") against
and in respect of any and all loss, damage, liability, cost and expense,
including reasonable attorneys' fees and amounts paid in settlement
(collectively, "Indemnified Losses"), suffered or incurred by the Indemnitee by
reason of or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any material agreement of Bio-One contained in this Agreement
or in any other certificate, schedule, instrument or document delivered to the
Original Shareholders by or on behalf of Bio-One pursuant to the provisions of
this Agreement; and
(b) any liabilities of any nature whatsoever (including tax
liability, penalties and interest), whether accrued, absolute, contingent or
otherwise, arising from Bio-One's ownership or operation of Shengtai after
Closing, but only so long as such liability is not the result of an act or
omission, of Shengtai, or the Original Shareholders occurring prior to Closing.
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9.3. DEFENSE OF CLAIMS.
9.3.1. Should any claim or action by a third party arise after
the Closing Date for which an Indemnitor is liable under the terms of this
Agreement, the Indemnitee shall notify the Indemnitor within ten (10) days after
such claim or action arises and is known to Indemnitee, and shall give the
Indemnitor a reasonable opportunity to participate in any proceedings and to
settle or defend any such claim or action. The expenses of all proceedings,
contests or lawsuits with respect to such claims or actions shall be borne by
the Indemnitor. If the Indemnitor wishes to assume the defense of such claim or
action, the Indemnitor shall give written notice to the Indemnitees within ten
(10) days after notice from the Indemnitees of such claim or action, and the
Indemnitor shall thereafter assume the defense of any such claim or liability,
through counsel reasonably satisfactory to the Indemnitees, provided that
Indemnitees may participate in such defense at their own expense, and the
Indemnitor shall, in any event, have the right to control the defense of the
claim or action.
9.3.2. If the Indemnitor shall not assume the defense of, or
if after so assuming it shall fail to defend, any such claim or action, the
Indemnitees may defend against any such claim or action in such manner as they
may deem appropriate and the Indemnitees may settle such claim or litigation on
such terms as they may deem appropriate but subject to the Indemnitor's
approval, such approval not to be unreasonably withheld; provided, however, that
any such settlement shall be deemed approved by the Indemnitor if the Indemnitor
fails to object thereto, by written notice to the Indemnitees, within fifteen
(15) days after the Indemnitor's receipt of a written summary of such
settlement. The Indemnitor shall promptly reimburse the Indemnitees for the
amount of all expenses, legal and otherwise, incurred by the Indemnitees in
connection with the defense and settlement of such claim or action.
9.3.3. If a non-appealable judgment is rendered against any of
the Indemnitees in any action covered by the indemnification hereunder, or any
lien attaches to any of the assets of any of the Indemnitees, the Indemnitor
shall immediately upon such entry or attachment pay such judgment in full or
discharge such lien unless, at the expense and direction of the Indemnitor, an
appeal is taken under which the execution of the judgment or satisfaction of the
lien is stayed. If and when a final judgment is rendered in any such action, the
Indemnitor shall forthwith pay such judgment or discharge such lien before any
of the Indemnitees is compelled to do so.
9.4. WAIVER. The failure of any Indemnitee to give any notice or to
take any action hereunder shall not be deemed a waiver of any of the rights of
such Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.
9.5. LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything to the
contrary contained in this Agreement:
9.5.1. TIME LIMITATION. No party shall be responsible
hereunder for any Indemnified Loss unless the Indemnitee shall have provided
such party with written notice containing a reasonable description of the claim,
action or circumstances giving rise to such Indemnified Loss within one (1) year
after the Closing Date (the "Indemnity Notice Period"); provided, however, that:
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(a) there shall be no limit on the Indemnity Notice
Period for indemnity claims: (i) against the Original Shareholders for
Indemnified Losses arising or resulting from a breach of a representation or
warranty of Original Shareholders relating to Environmental Laws, Taxes or any
liability of Shengtai arising prior to the Closing and relating to the handling
or disposal of Wastes or the failure to comply with any Environmental Law; and
(ii) against any party based on fraud, intentional breach or misrepresentation.
9.5.2. CAPS ON LOSSES. The aggregate liability of the Original
Shareholders after Closing for Indemnified Losses shall not exceed the purchase
Price. The aggregate liability of Bio-One after Closing for Indemnified Losses
shall not exceed an amount equal to the Purchase Price.
9.5.3. INDEMNIFICATION BASKET. No party shall have any
liability hereunder for Indemnified Losses after Closing, with respect to a
breach of the representations and warranties contained herein, until the
aggregate of all Indemnified Losses for which the Original Shareholders and
Shengtai as a group or Bio-One, as applicable, are responsible under this
Agreement exceeds $200,000 (the "Basket"); provided that once this Basket amount
is exceeded for the Original Shareholders and Shengtai as a group or Bio-One, as
applicable, the responsible party or parties shall be responsible for all
Indemnified Losses, from the first dollar as if such Basket never existed; and
further provided that this Section 9.5.3 shall not limit in any respect
indemnity claims: (i) based upon fraud, intentional breach or misrepresentation;
(ii) arising from a breach by the Indemnitor of any covenant contained in
Sections 2.2 and 2.3 hereof; or (iii) arising from a breach by the Original
Shareholders of any representation or warranty contained in Section 3.2 hereto.
10. TERMINATION.
10.1. TERMINATION. This Agreement may be terminated at any time on or
prior to the Closing:
(a) By mutual consent of the parties hereto; or
(b) At the election of Bio-One if: (i) the Original
Shareholders or Shengtai has breached or failed to perform or comply with any of
their representations, warranties, covenants or obligations under this
Agreement; or (ii) any of the conditions precedent set forth in Section 6 or 7
is not satisfied as and when required by this Agreement; or (iii) the Closing
has not been consummated by June 30, 2004; or
(c) At the election of the Original Shareholders if: (i)
Bio-One has breached or failed to perform or comply with any of its
representations, warranties, covenants or obligations under this Agreement; or
(ii) any of the conditions precedent set forth in Section 6 or 8 is not
satisfied as and when required by this Agreement; or (iii) if the Closing has
not been consummated by June 30, 2004.
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10.2. MANNER AND EFFECT OF TERMINATION. Written notice of any
termination ("Termination Notice") pursuant to this Section 10 shall be given by
the party electing termination of this Agreement ("Terminating Party") to the
other party or parties (collectively, the "Terminated Party"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of ten (10) days after receipt of
Termination Notice to cure the matters giving rise to such termination to the
reasonable satisfaction of the Terminating Party. If the matters giving rise to
termination are not cured as required hereby, this Agreement shall be terminated
effective as of the close of business on the tenth (10th) day following the
Terminated Party's receipt of Termination Notice. Upon termination of this
Agreement prior to the consummation of the Closing and in accordance with the
terms hereof, this Agreement shall become void and of no effect, and none of the
parties shall have any liability to the others, except that nothing contained
herein shall relieve any party from: (i) its obligations under Sections 2.2 and
2.3; or (ii) liability for its intentional breach of any representation,
warranty or covenant contained herein, or its intentional failure to comply with
the terms and conditions of this Agreement or to perform its obligations
hereunder.
11. MISCELLANEOUS.
11.1. NOTICES.
11.1.1. All notices, requests, demands, or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon delivery if delivered in person or if sent
by Federal Express (or similar recognized overnight courier service) to the
parties at the following addresses:
If to Original Shareholders: To the addresses contained on the
signatures page of this Agreement
With a copy to: Weifang Shengtai Pharmaceuticals Co. Ltd.
000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Shandong Province
People's Republic of China
Attention: Liu Qingtai
If to Bio-One: Bio-One Corporation
0000 Xxxxxx Xxxxxxx Xxxx.
Xxxxxx Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
With a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
000 X. Xxxxxxxx Xxxx.
Xxxxx 0000, Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
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With a copy to: XxxXxxxxx Law Offices
Suite 2501, Xxx Xxx Building
Shanghai, the People's Republic of
China 200121
Attention: Xxxx Xx
If to Shengtai: Weifang Shengtai Pharmaceuticals Co. Ltd.
000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Shandong Province
People's Republic of China
Attention: Liu Qingtai
11.1.2. Notices may also be given in any other manner
permitted by law, effective upon actual receipt. Any party may change the
address to which notices, requests, demands or other communications to such
party shall be delivered or mailed by giving notice thereof to the other parties
hereto in the manner provided herein.
11.2. SURVIVAL. The representations, warranties, agreements and
indemnifications of the parties contained in this Agreement or in any writing
delivered pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by the parties and the consummation
of the transactions contemplated herein and shall continue in full force and
effect and survive after the Closing, subject to the limitations of Section 9.5.
11.3. COUNTERPARTS; INTERPRETATION. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, and all
of which shall constitute one instrument. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and this Agreement contains the sole and entire agreement among
the parties with respect to the matters covered hereby. All Schedules and
Exhibits hereto shall be deemed a part of this Agreement. This Agreement shall
not be altered or amended except by a written instrument signed by or on behalf
of all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement "herein," "hereby," "hereof,"
"hereunder," "herewith," "hereafter" and "hereinafter" and similar words refer
to this Agreement in its entirety, and not to any particular subsection or
paragraph. References to "including" means including without limiting the
generality of any description preceding such term. Nothing expressed or implied
in this Agreement is intended, or shall be construed, to confer upon or give any
person other than the parties hereto any rights or remedies under or by reason
of this Agreement.
11.4. ARBITRATION. Any and all disputes or controversies arising out of
this Agreement shall be finally settled by arbitration conducted in Florida in
accordance with the then-existing rules of the American Arbitration Association,
and judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof; provided, that nothing in this Section 11.14
shall prevent a party from applying to a court of competent jurisdiction to
obtain temporary relief pending resolution of the dispute through arbitration.
The parties hereby agree that service of any notices in the course of such
arbitration at their respective addresses as provided for in Section 11.1 shall
be valid and sufficient.
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11.5. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida. The parties hereto agree
that any claim, suit, action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby shall be submitted for
adjudication exclusively in any state or federal court sitting in Miami-Dade
County, Florida, United States and each party hereto expressly agrees to be
bound by such selection of jurisdiction and venue for purposes of such
adjudication. Each party (a) waives any objection which it may have that such
court is not a convenient forum for any such adjudication, (b) agrees and
consents to the personal jurisdiction of such court with respect to any claim or
dispute arising out of or relating to this Agreement or the transactions
contemplated hereby and (c) agrees that process issued out of such court or in
accordance with the rules of practice of such court shall be properly served if
served personally or served by certified mail or other form of substituted
service, as provided under the rules of practice of such court.
11.6. PARTIAL INVALIDITY AND SEVERABILITY. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any terms of this Agreement not essential to the commercial
purpose of this Agreement shall be held to be illegal, invalid or unenforceable
by a court of competent jurisdiction, it is the intention of the parties that
the remaining terms hereof shall constitute their agreement with respect to the
subject matter hereof and all such remaining terms shall remain in full force
and effect. To the extent legally permissible, any illegal, invalid or
unenforceable provision of this Agreement shall be replaced by a valid provision
which will implement the commercial purpose of the illegal, invalid or
unenforceable provision.
11.7. WAIVER. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
a party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
11.8. HEADINGS. The headings as to contents of particular paragraphs of
this Agreement are inserted for convenience only and shall not be construed as a
part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
11.9. EXPENSES. Except as otherwise expressly provided herein, all
legal and other costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by Bio-One or the
Original Shareholders as each party incurs such expenses, and none of such
expenses shall be charged to or paid by Shengtai.
11.10. FINDER'S FEES. Except for Aidi Financial Investment LLC, Bio-One
represents to the Original Shareholders that no broker, agent, finder or other
party has been retained by it in connection with the transactions contemplated
hereby and that except for the fee to be paid by Bio-One to Aidi Financial
Investment LLC, no other fee or commission has been agreed by the Bio-One to be
paid for or on account of the transactions contemplated hereby. The Original
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Shareholders represents to Bio-One that no broker, agent, finder or other party
has been retained by the Original Shareholders or Shengtai in connection with
the transactions contemplated hereby and that no other fee or commission has
been agreed by the Original Shareholders or Shengtai to be paid for or on
account of the transactions contemplated hereby.
11.11. GENDER. Where the context requires, the use of the singular form
herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
11.12. ACCEPTANCE BY FAX. This Agreement shall be accepted, effective
and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
11.13. ATTORNEYS' FEES. In the event of any litigation or other
proceeding arising out of or in connection with this Agreement, the prevailing
party or parties shall be entitled to recover its or their reasonable attorneys'
fees and court costs from the other party or parties.
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IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement or caused this Stock Purchase Agreement to be duly executed by their
duly authorized officers as of the date first above written.
BIO-ONE CORPORATION
By:
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
WEIFANG SHENGTAI PHARMACEUTICALS CO. LTD.
By:
----------------------------------------
Name:
----------------------------------------
Title:
--------------------------------------
THE ORIGINAL SHAREHOLDERS:
--------------------------------------------
Name: Liu Qingtai
Address: 000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Shandong Province
People's Republic of China
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