Exhibit 4.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT, dated as of the 1st day of November,
2002 (the "Agreement"), is by and among Nova International Films, Inc. a
Delaware corporation (the "Company"), and Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx (the
"Shareholders") on the one hand; and Sino Concept Enterprises, Limited, a
British Virgin Islands corporation ("SINO"), and Kingston Global Co. Limited, a
British Virgin Islands corporation ("Kingston") (collectively, the "Sellers")
and Solar Touch Limited, a British Virgin Island company ("Solar Touch"), on the
other hand.
W I T N E S S E T H:
WHEREAS, Kingston presently owns all of the equity interests (the
"Solar Touch Shares") in Solar Touch. Solar Touch in turn owns 49% of the issued
and outstanding shares of capital stock on a fully diluted basis of Baoding
Pascali Broadcasting Cable TV Integrated Information Networking Co., LTD
("Baoding").
WHEREAS, the Company desires to acquire from Kingston, and Kingston
desires to sell to the Company, the Solar Touch Shares in exchange (the
"Exchange") for the issuance by the Company of an aggregate of 49,567,002 (post
split) shares (the "Company Shares") of the Company's common stock, par value
$0.00001 per share (the "Company Common Stock") to be issued to the Sellers and
their designees, on the terms and conditions set forth below which is after
giving effect to a reverse split of 1 to 16 (the "Reverse Split").
WHEREAS, SINO will acquire prior to closing of the Exchange a
beneficial interest in the Solar Touch Shares.
WHEREAS, the Company currently has 96,583,000 shares of common stock
issued and outstanding. After giving effect to the Exchange, the Reverse Split,
and the issuance of 4,760,931 shares of the Company's Common Stock to the
Sellers' Financial Consultants (the "Financial Consultants"), the Company shall
have 60,364,369 shares of Common Stock issued and outstanding.
WHEREAS, the Shareholders are, officers, directors and principal
shareholders of the Company and will benefit from the transactions contemplated
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements set forth herein, the parties hereto
agree as follows:
ARTICLE I
EXCHANGE OF SHARES
1.1 Exchange of Shares. Subject to the terms and conditions of thiS
Agreement, on the Closing Date (as hereinafter defined):
(a) the Company shall issue and deliver to each of the Sellers
and/or their designees the number of authorized but unissued shares of Company
Common Stock set forth opposite such Seller's and designee's names set forth on
Schedule I hereto, and
(b) each Seller agrees to deliver to the Company, the number of
issued shares of Solar Touch set forth opposite such Seller's name on Schedule I
hereto along with an appropriately executed transfer documents in favor of the
company.
1.2 Time and Place of Closing. the closing of the transactions
contemplated hereby (the "closing") shall take place at the offices of Loeb &
:oeb LLP as soon as practicable after the date hereof but not later than
November 22, 2002 (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SHAREHOLDERS
The Company and the Shareholders represent and warrant, jointly and
severally to each of the Sellers that now and/or as of the Closing:
2.1 Due Organization and Qualification; Subsidiaries; Due
Authorization.
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of formation,
with full corporate power and authority to own, lease and operate its respective
business and properties and to carry on its respective business in the places
and in the manner as presently conducted. The Company is in good standing as a
foreign corporation in each jurisdiction in which the properties owned, leased
or operated, or the business conducted, by it requires such qualification except
for any such failure, which when taken together with all other failures, is not
likely to have a material adverse effect on the business of the Company.
(b) The Company does not own, directly or indirectly, any capital
stock, equity or interest in any corporation, firm, partnership, joint venture
or other entity.
(c) The Company has all requisite corporate power and authority to
execute and deliver this Agreement, and to consummate the transactions
contemplated hereby and thereby. Subject to obtaining stockholder approval of
the Reverse Split, The Company has taken all corporate action necessary for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and this Agreement constitutes the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its respective terms, except as may be affected by bankruptcy, insolvency,
moratoria or other similar laws affecting the enforcement of creditors' rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefore may be brought.
2.2 No Conflicts or Defaults. Subject to obtaining stockholder approval
of the Reverse Split, the execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated hereby do not and
shall not (a) contravene the Certificate of Incorporation or By-laws of the
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Company or (b) with or without the giving of notice or the passage of time (i)
violate, conflict with, or result in a breach of, or a default or loss of rights
under, any material covenant, agreement, mortgage, indenture, lease, instrument,
permit or license to which the Company is a party or by which the Company is
bound, or any judgment, order or decree, or any law, rule or regulation to which
the Company is subject, (ii) result in the creation of, or give any party the
right to create, any lien, charge, encumbrance or any other right or adverse
interest ("Liens") upon any of the assets of the Company, (iii) terminate or
give any party the right to terminate, amend, abandon or refuse to perform, any
material agreement, arrangement or commitment to which the Company is a party or
by which the Company's assets are bound, or (iv) accelerate or modify, or give
any party the right to accelerate or modify, the time within which, or the terms
under which, the Company is to perform any duties or obligations or receive any
rights or benefits under any material agreement, arrangement or commitment to
which it is a party.
2.3 Capitalization. The authorized capital stock of the Company
immediately prior to giving effect to the transactions contemplated hereby
consists of 100,000,000 shares of Common Stock par value $.00001 per share, of
which 96,583,000 shares are issued and outstanding as of the date hereof. All of
the outstanding shares of Common are, and the Company Shares when issued in
accordance with the terms hereof, will be, duly authorized, validly issued,
fully paid and nonassessable, and have not been or, with respect to the Company
Shares, will not be issued in violation of any preemptive right of stockholders.
The Company Shares are not subject to any preemptive or subscription right.
There is no outstanding voting trust agreement or other contract, agreement,
arrangement, option, warrant, call, commitment or other right of any character
obligating or entitling the Company to issue, sell, redeem or repurchase any of
its securities, and there is no outstanding security of any kind convertible
into or exchangeable for Common Stock. The Company has not granted registration
rights to any person other than as set forth in this Agreement.
2.4 Financial Statements. Item 2.4 of the Disclosure Schedule contains
copies of the balance sheets of the Company at October 31, 2001 and 2000 and the
related statements of operations and deficit, stockholders' deficiency and cash
flows for the fiscal years then ended, including the notes thereto, as audited
by Xxxxxxx & Xxxxx, P.C., certified accountants, and the balance sheet of the
Company at July 31, 2002 and the related statements of operations and deficit,
stockholders' deficiency and cash flows for the six month period then ended
prepared by the Company's management (all such statements being the "Company
Financial Statements"). The Company Financial Statements, together with the
notes thereto, have been prepared in accordance with U.S. generally accepted
accounting principles applied on a basis consistent throughout all periods
presented, subject to audit adjustments, which are not expected to be material.
Such Statements present fairly the financial position of the Company as of the
dates and for the periods indicated. The books of account and other financial
records of the Company have been maintained in accordance with good business
practices.
2.5 Further Financial Matters. The Company does not have any (a) assets
of any kind or (b) liabilities or obligations, whether secured or unsecured,
accrued, determined, absolute or contingent, asserted or unasserted or
otherwise, which are required to be reflected or reserved in a balance sheet or
the notes thereto under generally accepted accounting principles, but which are
not reflected in the Company Financial Statements.
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2.6 Taxes. The Company has filed all United States federal, state,
county, local and foreign national, provincial and local returns and reports
which were required to be filed on or prior to the date hereof in respect of all
income, withholding, franchise, payroll, excise, property, sales, use,
value-added or other taxes or levies, imposts, duties, license and registration
fees, charges, assessments or withholdings of any nature whatsoever (together,
"Taxes"), and has paid all Taxes (and any related penalties, fines and interest)
which have become due pursuant to such returns or reports or pursuant to any
assessment which has become payable, or, to the extent its liability for any
Taxes (and any related penalties, fines and interest) has not been fully
discharged, the same have been properly reflected as a liability on the books
and records of the Company and adequate reserves therefore have been
established. All such returns and reports filed on or prior to the date hereof
have been properly prepared and are true, correct (and to the extent such
returns reflect judgments made by the Company, as the case may be, such
judgments were reasonable under the circumstances) and complete in all material
respects. No tax return or tax return liability of the Company has been audited
or, presently under audit. the company has not given or been requested to give
waivers of any statute of limitations relating to the payment of any taxes (or
any related penalties, fines and interest). There are no claims pending or, to
the knowledge of the Company, threatened, against the Company for past due
Taxes. All payments for withholding taxes, unemployment insurance and other
amounts required to be paid for periods prior to the date hereof to any
governmental authority in respect of employment obligations of the Company,
including, without limitation, amounts payable pursuant to the Federal Insurance
Contributions Act, have been paid or shall be paid prior to the Closing and have
been duly provided for on the books and records of the Company and in the
Financial Statements.
2.7 Indebtedness; Contracts; No Defaults.
(a) The Company has no material instruments, agreements,
indentures, mortgages, guarantees, notes, commitments, accommodations, letters
of credit or other arrangements or understandings, whether written or oral, to
which the Company or any Subsidiary is a party, except for loans as reflected in
the Company Financial Statements which will be extinguished on or before the
Closing.
(b) Neither the Company, any Subsidiary, nor, to the Company's
knowledge, any other person or entity is in breach in any material respect of,
or in default in any material respect under, any material contract, agreement,
arrangement, commitment or plan to which the Company is a party, and no event or
action has occurred, is pending or is threatened, which, after the giving of
notice, passage of time or otherwise, would constitute or result in such a
material breach or material default by the Company or, to the knowledge of the
Company, any other person or entity. The Company has not received any notice of
default under any contract, agreement, arrangement, commitment or plan to which
it is a party, which default has not been cured to the satisfaction of, or duly
waived by, the party claiming such default on or before the date hereof.
2.8 Real Property. The Company does not own or lease any real property.
2.9 Compliance with Law. The Company is not conducting its respective
business or affairs in violation of any applicable federal, state or local law,
ordinance, rule, regulation, court or administrative order, decree or process,
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or any requirement of insurance carriers. The cCmpany has not received any
notice of violation or claimed violation of any such law, ordinance, rule,
regulation, order, decree, process or requirement.
(a) The Company is in compliance with all applicable federal,
state, local and foreign laws and regulations relating to the protection of the
environment and human health. There are no claims, notices, actions, suits,
hearings, investigations, inquiries or proceedings pending or, to the knowledge
of the Company, threatened against the Company that are based on or related to
any environmental matters or the failure to have any required environmental
permits, and there are no past or present conditions that the Company has reason
to believe are likely to give rise to any material liability or other
obligations of the Company or any Subsidiary under any environmental laws.
2.10 Permits and Licenses. The Company has all certificates of
occupancy, rights, permits, certificates, licenses, franchises, approvals and
other authorizations as are reasonably necessary to conduct its respective
business and to own, lease, use, operate and occupy its assets, at the places
and in the manner now conducted and operated, except those the absence of which
would not materially adversely affect its respective business. The Company has
not received any written or oral notice or claim pertaining to the failure to
obtain any material permit, certificate, license, approval or other
authorization required by any federal, state or local agency or other regulatory
body, the failure of which to obtain would materially and adversely affect its
business.
2.11 Litigation. There is no claim, dispute, action, suit, proceeding
or investigation pending or, to the knowledge of the Company, threatened,
against or affecting the business of the Company, or challenging the validity or
propriety of the transactions contemplated by this Agreement, at law or in
equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of the Company, has any such claim, dispute, action, suit, proceeding
or investigation been pending or threatened, during the 12 month period
preceding the date hereof; (b) there is no outstanding judgment, order, writ,
ruling, injunction, stipulation or decree of any court, arbitrator or federal,
state, local, foreign or other governmental authority, board, agency, commission
or instrumentality, against or materially affecting the business of the Company
; and (c) the Company has not received any written or verbal inquiry from any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality concerning the possible violation of any law, rule
or regulation or any matter disclosed in respect of its business.
2.12 Insurance. The Company does not currently maintain any form of
insurance.
2.13 Certificate of Incorporation and By-laws; Minute Books. The copies
of the Certificate of Incorporation and By-laws (or similar governing documents)
of the Company, and all amendments to each are true, correct and complete. The
minute books of the Company contains true and complete records of all meetings
and consents in lieu of meetings of their respective Board of Directors (and any
committees thereof), or similar governing bodies, since the time of their
respective organization. The stock books of the Company are true, correct and
complete.
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2.14 Employee Benefit Plans. The Company does not maintain, nor has the
Company maintained in the past, any employee benefit plans ("as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any plans, programs, policies, practices, arrangements or
contracts (whether group or individual) providing for payments, benefits or
reimbursements to employees of the Company, former employees, their
beneficiaries and dependents under which such employees, former employees, their
beneficiaries and dependents are covered through an employment relationship with
the Company, any entity required to be aggregated in a controlled group or
affiliated service group with the Company for purposes of ERISA or the Internal
Revenue Code of 1986 (the "Code") (including, without limitation, under Section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA, at any relevant
time ("Benefit Plans").
2.15 Patents; Trademarks and Intellectual Property Rights. The Company
does not own or possesses any patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, Internet web site(s) or
proprietary rights of any nature.
2.16 Brokers. Except as set forth on Item 2.16 of the Disclosure
Schedule, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company directly with the
Sellers without the intervention of any Person on behalf of the Company in such
a manner as to give rise to any valid claim by any Person against any Seller for
a finder's fee, brokerage commission or similar payment.
2.17 Affiliate Transactions. Except as disclosed in Item 2.17 of the
Disclosure schedule neither the Company nor any officer, director or employee of
the Company (or any of the relatives or Affiliates of any of the aforementioned
Persons) is a party to any agreement, contract, commitment or transaction with
the Company or affecting the business of the Company, or has any interest in any
property, whether real, personal or mixed, or tangible or intangible, used in or
necessary to the Company which will subject the Sellers to any liability or
obligation from and after the Closing Date.
2.18 Trading. The Company Common Stock is currently listed for trading
on the OTC Bulletin Board (the "Bulletin Board"), and the Company has received
no notice that its Common Stock is subject to being delisted therefrom.
2.19 Compliance. The Company has complied with all applicable foreign,
federal and state laws, rules and regulations, including, without limitation,
the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the Securities Act of 1933, as amended, is current in its
filings.
2.20 Filings. None of the filings made by the Company under the
Securities Act or the Exchange act make any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
SINO, Kingston and Solar Touch jointly and severally represent and
warrant to the Company that now and/or as of the Closing:
3.1 Due Organization and Qualification; Subsidiaries; Due
Authorization.
(a) Each of Solar Touch and Baoding is a Company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
formation, with full corporate power and authority to own, lease and operate its
business and properties and to carry on its business in the places and in the
manner as presently conducted or proposed to be conducted. Each of Solar Tech
and Baoding is in good standing as a foreign corporation in each jurisdiction in
which the properties owned, leased or operated, or the business conducted, by it
requires such qualification except for any such failure, which when taken
together with all other failures, is not likely to have a material adverse
effect on the business of Solar Touch or Baoding, as the case may be, taken as a
whole.
(b) Solar Touch does not own, directly or indirectly, any capital
stock, equity or interest in any corporation, firm, partnership, joint venture
or other entity, other than those (each, a "Subsidiary" and together, the
"Subsidiaries") set forth in item 3.1 of the Disclosure Schedule. Except as set
forth in item 3.1 of the Disclosure Schedule, each Subsidiary is wholly owned by
Solar Touch, all the outstanding shares of capital stock of each Subsidiary are
owned free and clear of all liens, there is no contract, agreement, arrangement,
option, warrant, call, commitment or other right of any character obligating or
entitling any Subsidiary to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind convertible into or
exchangeable for securities of any Subsidiary.
(c) Each of the Eellers and Eolar Touch has all requisite power
and authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby and thereby. Each of the Sellers and Solar
Touch has taken all corporate action necessary for the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby, and
this Agreement constitutes the valid and binding obligation of each of the
Sellers and Solar Touch, enforceable against each of the Sellers and Solar Touch
in accordance with its terms, except as may be affected by bankruptcy,
insolvency, moratoria or other similar laws affecting the enforcement of
creditors' rights generally and subject to the qualification that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefore may be brought.
3.2 No Conflicts or Defaults. The execution and delivery of this
Agreement by each of the Sellers and Solar Touch and the consummation of the
transactions contemplated hereby do not and shall not (a) contravene the
governing documents of said Seller or Solar Touch, or (b) with or without the
giving of notice or the passage of time, (i) violate, conflict with, or result
in a breach of, or a default or loss of rights under, any material covenant,
agreement, mortgage, indenture, lease, instrument, permit or license to which
Solar Touch, any of the Subsidiaries, any Seller or Baoding is a party or by
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which Solar Touch, any of the Subsidiaries, any Seller or Baoding or any of
their respective assets are bound, or any judgment, order or decree, or any law,
rule or regulation to which Solar Touch any of the Subsidiaries or any Seller or
any of their respective assets are subject, (ii) result in the creation of, or
give any party the right to create, any lien upon any of the assets of Solar
Touch, any of the Subsidiaries or Baoding, (iii) terminate or give any party the
right to terminate, amend, abandon or refuse to perform, any material agreement,
arrangement or commitment to which Solar Touch, any of the Subsidiaries, or
Baoding is a party or by which Solar Touch, any of the Subsidiaries or Baoding
or any of their respective assets are bound, or (iv) accelerate or modify, or
give any party the right to accelerate or modify, the time within which, or the
terms under which Solar Touch, any of the Subsidiaries or Baoding is to perform
any duties or obligations or receive any rights or benefits under any material
agreement, arrangement or commitment to which it is a party.
3.3 Capitalization. The outstanding capital stock of Solar Touch
consists of 1,000 ordinary shares. Set forth in Item 3.3 of the Disclosure
Schedule is a list of all holders of the equity of Solar Touch, setting forth
their names, addresses and number of shares owned as of the Closing. All of the
outstanding shares of Solar Touch are, and the Solar Touch Shares when
transferred in accordance with the terms hereof, will be, duly authorized,
validly issued, fully paid and nonassessable, and have not been or, with respect
to Solar Touch Shares, will not be transferred in violation of any rights of
third parties. The Solar Touch shares are not subject to any preemptive or
subscription right, any voting trust agreement or other contract, agreement,
arrangement, option, warrant, call, commitment or other right of any character
obligating or Entitling Solar Touch to issue, sell, redeem or repurchase any of
its securities, and there is no outstanding security of any kind convertible
into or exchangeable for Common Stock. All of the Solar Touch Shares are owned
of record and beneficially by the Sellers free and clear of any liens, claims,
encumbrances, or restrictions of any kind. The transfer and delivery of the
Solar Touch Shares by the Sellers, as contemplated by this Agreement, will be
sufficient to transfer good and marketable record and beneficial title to the
Solar Touch Shares, free and clear of liens, claims, encumbrances, and
restrictions of any kind.
3.4 Financial Statements. Solar Touch has delivered to the Sompany a
copy of the audited consolidated balance sheets of Solar Touch at December 31,
2000 and 2001 and the related statements of operations, stockholders' equity and
cash flows for the years then ended, including the notes thereto (all such
statements being the "Solar Touch International Financial Statements"). The
Solar Touch International Financial Statements, together with the notes thereto,
have been prepared in accordance with generally accepted International
accounting standards applied on a basis consistent throughout all the years
presented. Such Dtatements present fairly the financial position of Dolar Touch
as of the dates and for the years indicated. The books of account and other
financial records of Solar Touch have been maintained in accordance with good
business practices. Prior to the Closing Date, Solar Touch shall deliver to the
Company the following financial statements of Solar Touch which shall have been
audited by an independent certified public accounting firm ("Solar Touch
Auditors") and which shall be presented in accordance with United States
generally accepted accounting principles applied on a basis consistent
throughout all the years presented: Balance Sheet as at December 31, 2001 and
Statements of Income, Statements of Cash Flows and Changes in Stockholder's
Equity for the years ended December 31, 2000 and 2001, and the notes relating
thereto (the "Solar Touch Sudited Financial Statements"). In addition thereto,
at the earliest possible time but prior to the Vlosing Fate, Dolar Touch shall
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deliver to the Company the unaudited Balance Sheet of Solar Touch as at
September 30, 2002 and the related Statements of Income, Statements of Cash
Flows for the period then ended which will be prepared in accordance with U.S.
generally accepted accounting principles applicable on a basis consistent
throughout all periods presented and which will include a report of the Solar
Touch Auditors confirming that they have reviewed such financial statements
using professional standards and procedures for conducting such reviews as
established by generally accepted auditing standards (the "Solar Touch September
30, 2002 Financial Statements"). All of the financial statements to be delivered
pursuant hereto will be complete and accurate and present fairly the financial
position of Solar Touch and the results of its operations and changes in its
financial positions as of the dates and for the periods indicated as being
covered thereby.
3.5 Further Financial Matters. Except as set forth in Item 3.5 of the
Disclosure Schedule, neither Solar Touch nor any of the subsidiaries has any
liabilities or obligations, whether secured or unsecured, accrued, determined,
absolute or contingent, asserted or unasserted or otherwise, which are required
to be reflected or reserved in a balance sheet or the notes thereto under
generally accepted accounting principles, but which are not reflected in the
financial statements.
3.6 Taxes. each of solar touch and the subsidiaries has filed all
returns and reports which were required to be filed on or prior to the date
hereof, and has paid all taxes (and any related penalties, fines and interest)
which have become due pursuant to such returns or reports or pursuant to any
assessment which has become payable, or, to the extent its liability for any
Taxes (and any related penalties, fines and interest) has not been fully
discharged, the same have been properly reflected as a liability on the books
and records of Solar Touch and adequate reserves therefore have been
established. All such returns and reports filed on or prior to the date hereof
have been properly prepared and are true, correct (and to the extent such
returns reflect judgments made by Solar Touch or a Aubsidiary, as the case may
be, such judgments were reasonable under the circumstances) and complete in all
material respects. Except as indicated in 3.6 of the Disclosure Schedule, no
extension for the filing of any such return or report is currently in effect.
Except as indicated in Item 3.6 of the Disclosure Schedule, no tax return or tax
return liability of Solar Touch or any Subsidiary has been audited or, presently
under audit. All taxes and any penalties, fines and interest which have been
asserted to be payable as a result of any audits have been paid. Except as
indicated in Item 3.6 of the Disclosure Schedule, neither Solar Touch nor any
Subsidiary has given or been requested to give waivers of any statute of
limitations relating to the payment of any Taxes (or any related penalties,
fines and interest). There are no claims pending or, to the knowledge of the
Sellers for past due Taxes. Except as indicated in Item 3.6 of the Disclosure
Statement, all payments for withholding taxes, unemployment insurance and other
amounts required to be paid for periods prior to the date hereof to any
governmental authority in respect of employment obligations of Solar Touch and
each Subsidiary, have been paid or shall be paid prior to the Closing and have
been duly provided for on the books and records of Solar Touch and in the Solar
Touch Financial Statements.
3.7 Indebtedness; Contracts; No Defaults.
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(a) Item 3.7 of the Disclosure Schedule sets forth a true,
complete and correct list of all material instruments, agreements, indentures,
mortgages, guarantees, notes, commitments, accommodations, letters of credit or
other arrangements or understandings, whether written or oral, to which Solar
Touch or any Subsidiary or Baoding is a party (collectively, the "Operating
Agreements"). An agreement shall not be considered material for the purposes of
this Section 3.7(a) if it provides for expenditures or receipts of less than US
$100,000 and has been entered into by Solar Touch or a Subsidiary in the
ordinary course of business. The Operating Agreements constitute all of the
contracts, agreements, understandings and arrangements required for the
operation of the business of telecommunication services or which have a material
effect thereon.
(b) Except as disclosed in Item 3.7 of the Sisclosure Schedule,
neither Solar Touch any Subsidiary, Baoding nor, to Seller 's knowledge, any
other person or entity is in breach in any material respect of, or in default in
any material respect under, any material contract, agreement, arrangement,
commitment or plan to which Solar Touch, any Subsidiary or Baoding is a party,
and no event or action has occurred, is pending or is threatened, which, after
the giving of notice, passage of time or otherwise, would constitute or result
in such a material breach or material default by Solar Touch, any Subsidiary,
Baoding, or, to the knowledge of the Sellers, any other person or entity.
Neither Solar Touch, any Subsidiary nor Baoding has received any notice of
default under any contract, agreement, arrangement, commitment or plan to which
it is a party, which default has not been cured to the satisfaction of, or duly
waived by, the party claiming such default on or before the date hereof.
3.8 Compliance with Law.
(a) Solar Touch, each Subsidiary and Baoding is conducting its
respective business or affairs in material compliance with all applicable law,
ordinance, rule, regulation, court or administrative order, decree or process,
or any requirement of insurance carriers material to its business. Neither Solar
Touch, any Subsidiary, nor Baoding has received any notice of violation or
claimed violation of any such law, ordinance, rule, regulation, order, decree,
process or requirement.
(b) Each of Solar Touch, the Subsidiaries and Boading is in
compliance in all material respects with all applicable federal, state, local
and foreign laws and regulations relating to the protection of the environment
and human health. There are no claims, notices, actions, suits, hearings,
investigations, inquiries or proceedings pending or, to the knowledge of, the
Sellers threatened against Solar Touch or any of the Subsidiaries that are based
on or related to any environmental matters or the failure to have any required
environmental permits, and there are no past or present conditions with respect
to which the Sellers have reason to believe are likely to give rise to any
material liability or other obligations of Solar Touch or any Subsidiary under
any environmental laws.
3.9 No Adverse Changes. Except as set forth in Item 3.9 of the
Disclosure Schedule, since inception, there has not been (a) any material
adverse change in the business, prospects, the financial or other condition, or
the respective assets or liabilities of Solar Touch and the Subsidiaries as
reflected in the Solar Touch Financial Statements, (b) any material loss
sustained by Solar Touch, Baoding or any Subsidiary, including, but not limited
to any loss on account of theft, fire, flood, explosion, accident or other
calamity, whether or not insured, which has materially and adversely interfered,
or may materially and adversely interfere, with the operation of Baoding's,
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Solar Touch's, or any Subsidiary's business, or (c) to the best knowledge of the
Sellers, any event, condition or state of facts, including, without limitation,
the enactment, adoption or promulgation of any law, rule or regulation, the
occurrence of which materially and adversely does or would affect the results of
operations or the business or financial condition of Baoding, Solar Touch, or
any Subsidiary.
3.10 Litigation.
(a) Except as set forth in Item 3.10 of the Disclosure Schedule,
there is no claim, dispute, action, suit, proceeding or investigation pending
or, to the knowledge of the Sellers, threatened, against or affecting the
business of Solar Touch or any Subsidiary, or Baoding or challenging the
validity or propriety of the transactions contemplated by this Agreement, at law
or in equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of Solar Touch or Sellers, has any such claim, dispute, action, suit,
proceeding or investigation been pending or threatened, during the 12 month
period preceding the date hereof;
(b) There is no outstanding judgment, order, writ, ruling,
injunction, stipulation or decree of any court, arbitrator or federal, state,
local, foreign or other governmental authority, board, agency, commission or
instrumentality, against or materially affecting the business of Baoding, Solar
Touch or any Subsidiary; and (c) neither Baoding, Solar Touch nor any Subsidiary
has received any written or verbal inquiry from any federal, state, local,
foreign or other governmental authority, board, agency, commission or
instrumentality concerning the possible violation of any law, rule or regulation
or any matter disclosed in respect of its business.
3.11 Patents; Yrademarks and Intellectual Property Rights. Each of
Baoding, Solar Touch and the Subsidiaries owns or possesses sufficient legal
rights to all patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, internet web site(s) proprietary rights and
processes necessary for its business as now conducted without any conflict with
or infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, and neither
Baoding, Solar Touch nor any Subsidiary is bound by, or a party to, any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity.
3.12 Brokers. Except as set forth on Item 3.12 of the Disclosure
Schedule, all negotiations relative to this Aagreement and the transactions
contemplated hereby have been carried out by the Sellers directly with the
Company without the intervention of any Person on behalf of the Sellers in such
a manner as to give rise to any valid claim by any Person against any Seller for
a finder's fee, brokerage commission or similar payment.
3.13 Purchase for Investment.
(a) Each Seller is acquiring the Company shares for investment for
such Seller's own account and not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and such Seller has no present
intention of selling, granting any participation in, or otherwise distributing
the same. Each Seller further represents that he does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Company Shares.
11
(b) Each Seller understands that the Company Shares are not
registered under the Act on the ground that the sale and the issuance of
securities hereunder is exempt from registration under the Act pursuant to
Section 4(2) thereof, and that the Company's reliance on such exemption is
predicated on such Seller's representations set forth herein. Such Seller is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D
under the Act.
3.14 Investment Experience. Each Seller acknowledges that he can bear
the economic risk of its investment, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Company Shares.
3.15 Information. The Sellers have carefully reviewed such information
as each Seller deemed necessary to evaluate an investment in the Company Shares.
To the full satisfaction of each Seller, it has been furnished all materials
that it has requested relating to the Company and the issuance of the Company
Shares hereunder, and each Seller has been afforded the opportunity to ask
questions of representatives of the Company to obtain any information necessary
to verify the accuracy of any representations or information made or given to
the Sellers. Notwithstanding the foregoing, nothing herein shall derogate from
or otherwise modify the representations and warranties of the Company set forth
in this Agreement, on which each of the Sellers has relied in making an exchange
of the Solar Touch Shares for the Company Shares.
3.16 Restricted Securities. Each Seller understands that the Company
Shares may not be sold, transferred, or otherwise disposed of without
registration under the Act or an exemption there from, and that in the absence
of an effective registration statement covering the Company Shares or any
available exemption from registration under the act, the Company Shares must be
held indefinitely. Each Seller is aware that the Company Shares may not be sold
pursuant to Rule 144 promulgated under the Act unless all of the conditions of
that Rule are met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about the Company.
3.17 Permits and Licenses. Each of Solar Touch and Baoding has all
certificates of occupancy, rights, permits, certificates, licenses, franchises,
approvals and other authorizations as are reasonably necessary to conduct its
respective business and to own, lease, use, operate and occupy its assets, at
the places and in the manner now conducted and operated, except those the
absence of which would not materially adversely affect its respective business.
Neither Solar Touch nor Baoding has received any written or oral notice or claim
pertaining to the failure to obtain any material permit, certificate, license,
approval or other authorization required by any federal, state or local agency
or other regulatory body, the failure of which to obtain would materially and
adversely affect its business.
3.18 Assets Necessary to Business. Each of Solar Touch and Baoding owns
or leases all properties and assets, real, personal, and mixed, tangible and
intangible, and is a party to all licenses, permits and other agreements
necessary to permit it to carry on its business as presently conducted.
12
3.19 Governmental Permits. Each of Solar Touch and Baoding possesses
all licenses, permits and other authorizations necessary to own or lease and
operate its properties and to conduct its business as now conducted. all of such
licenses, permits and authorizations are hereinafter collectively the "Permits."
3.20 Schedules. All lists or other statements, information or documents
set forth in, attached to any schedule provided pursuant to this Agreement or
delivered hereunder shall be deemed to be representations and warranties by the
sellers and solar touch with the same force and effect as if such lists,
statements, information and documents were set forth herein. any list,
statement, document or any information set forth in, attached to any schedule
provided pursuant to this agreement or delivered hereunder shall not be deemed
to constitute disclosure for any other schedule provided pursuant to this
agreement unless specific cross reference is made.
3.21 Representations and Warranties. The representations and warranties
of the Sellers and Solar Touch included in this Agreement and any list,
statement, document or information set forth in, attached to any Schedule
provided pursuant to this Agreement or delivered hereunder, are true and
complete in all material respects and do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading, under the
circumstance under which they were made.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnity of the Company and the Shareholders. The Company and the
Shareholders agree to jointly and severally agree to defend, indemnify and hold
harmless each Seller from and against, and to reimburse each Seller with respect
to, all liabilities, losses, costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements (collectively the "Losses")
asserted against or incurred by such Seller solely by reason of any liabilities
of the Company which have not been disclosed or otherwise reflected in this
Agreement or in any document or certificate delivered by the Company or the
Shareholders pursuant to the provisions of this Agreement or in connection with
the transactions contemplated thereby arising out of facts existing prior to or
as of the Closing. All claims to be asserted hereunder must be made by the first
anniversary of the Closing. Notwithstanding the foregoing, each Shareholder and
the Company shall have responsibility hereafter only for the representations and
warranties made by such Shareholder or the Company, as the case may be.
4.2 Indemnity of the Sellers. Each of the Sellers and Solar Touch
agrees to jointly and severally defend, indemnify and hold harmless the Company
from and against, and to reimburse the Company with respect to, all liabilities,
losses, costs and expenses, including, without limitation, reasonable attorneys'
fees and disbursements, asserted against or incurred by the Company by reason
of, arising out of, or in connection with any material breach of any
representation or warranty contained in this Agreement and made by the
applicable Seller Solar Touch or in any document or certificate delivered by the
applicable Seller or Solar Touch pursuant to the provisions of this Agreement or
in connection with the transactions contemplated thereby, it being understood
that each Seller or Solar Touch shall have responsibility hereunder only for the
representations and warranties made by such Seller or Solar Touch. All claims to
be asserted hereunder must be made by the first anniversary of the Closing.
13
4.3 Indemnification Procedure. A party (an "Indemnified Party") seeking
indemnification shall give prompt notice to the other party (the "Indemnifying
Party") of any claim for indemnification arising under this Article 4. The
Indemnifying Party shall have the right to assume and to control the defense of
any such claim with counsel reasonably acceptable to such Indemnified Party, at
the Indemnifying Party's own cost and expense, including the cost and expense of
reasonable attorneys' fees and disbursements in connection with such defense, in
which event the Indemnifying Party shall not be obligated to pay the fees and
disbursements of separate counsel for such in such action. In the event,
however, that such Indemnified Party's legal counsel shall determine that
defenses may be available to such Indemnified Party that are different from or
in addition to those available to the Indemnifying Party, in that there could
reasonably be expected to be a conflict of interest if such Indemnifying Party
and the Indemnified Party have common counsel in any such proceeding, or if the
Indemnified Party has not assumed the defense of the action or proceedings, then
such Indemnifying Party may employ separate counsel to represent or defend such
Indemnified Party, and the Indemnifying Party shall pay the reasonable fees and
disbursements of counsel for such Indemnified Party. No settlement of any such
claim or payment in connection with any such settlement shall be made without
the prior consent of the Indemnifying Party which consent shall not be
unreasonably withheld.
ARTICLE V
DELIVERIES
5.1 Items to be delivered to the Sellers prior to or at Closing by the
Company.
(a) articles of incorporation and amendments thereto, bylaws and
amendments thereto, certificate of good standing in the Company's state of
incorporation;
(b) all applicable schedules hereto;
(c) all minutes and resolutions of board of director and
shareholder meetings in possession of the Company;
(d) shareholder list;
(e) all financial statements and tax returns in possession of the
Company;
(f) copies of all SEC filings for the last two years;
(g) resolution from the Company's current directors appointing the
designees of the Sellers to the Company's Board of Sirectors;
(h) letters of resignation from the Company's current officers and
directors to be effective upon Closing and after the appointments described in
this section;
14
(i) certificates representing 49,567,002 shares to the Sellers or
their designees and 4,760,931 shares to the Financial Consultants of the
Company's $0.00001 par value common stock issued in the denominations as set
forth opposite their respective names on Schedule I to this Agreement, duly
authorized, validly issued, fully paid for and non-assessable;
(j) copies of board, and if applicable, shareholder resolutions
approving this transaction and authorizing the issuances of the shares hereto;
(k) any other document reasonably requested by the Sellers that it
deems necessary for the consummation of this transaction
5.2 Items to be delivered to the Company prior to or at Closing by the
Sellers.
(a) all applicable schedules hereto;
(b) instructions from the Sellers appointing designees of the
Sellers to the Company's Board of Directors;
(c) documents from the Sellers transferring the equity interest in
Solar Touch as set forth opposite their respective names on Schedule I to this
Agreement;
(d) Financial Statements set forth in section 3.4;
(e) any other document reasonably requested by the Company that it
deems necessary for the consummation of this transaction.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent to Closing. The obligations of the Parties
under this Agreement shall be and are subject to fulfillment, prior to or at the
Closing, of each of the following conditions:
(a) That each of the representations and warranties of the Parties
contained herein shall be true and correct at the time of the Closing date as if
such representations and warranties were made at such time; and
(b) That the Parties shall have performed or complied with all
agreements, terms and conditions required by this Agreement to be performed or
complied with by them prior to or at the time of the Closing; and
(c) That each of the Parties shall be fully satisfied in the
exercise of its sole discretion with the results of the investigation and review
it conducts (or has its representatives conduct), prior to the Closing Date, of
the business properties or affairs of the Company or Solar Touch, as the case
may be.
15
6.2 Conditions to Obligations of Sellers. The obligations of Sellers
shall be subject to fulfillment prior to or at the Closing, of each of the
following conditions:
(a) The Shareholders shall have paid all of the costs and expenses
of the Company associated with the acquisition of the Solar Touch Shares by the
Company, except that the Company (post closing) shall be responsible for the
cost of the Reverse Split (not to exceed $1,500).
(b) As of the Closing, the Company shall have no assets and no
liabilities whatsoever, contingent or otherwise except for the costs referred to
in section 6.2(a);
(c) The Shares of the Company's Common Stock shall be continued to
be traded on the Bulletin Board.
(d) The Company shall have effected the Reverse Split.
(e) The Company and various designees of the Sellers (the
"Optionees") shall have entered into an Option Agreement pursuant to which the
Optionees shall have the right to purchase 4,750,000 shares (post split) of the
Company's Common Stock for $50,000 within two business days of the Closing.
6.3 Conditions to Obligations of the Company. The obligations of the
Company shall be subject to fulfillment prior to or at the Closing, of each of
the following conditions:
(a) The Shareholder's loan in the principal amount of $5,875,793,
as reflected in the Solar Touch Audited Financial Statements shall have been
eliminated and capitalized on the books and records of Solar Touch and which
will be reflected in the Solar Touch September 30, 2002 Financial Statements
(the "Loan Conversion");
(b) The Sellers and Solar Touch shall have paid all of the costs
and expenses of themselves associated with this Agreement and the transactions
contemplated hereby as well as arranging for the payment of the costs set forth
in 6.2(a);
(c) All legal matters in connection with this Agreement and the
Closing hereunder shall be subject to the reasonable approval of Danzig Xxxx
Xxxxxx & Xxxxx, LLP, counsel for the Company and Loeb & Loeb LLP, counsel for
the Sellers, and there shall have been furnished to such counsel such corporate
and other records and information as such counsel may reasonably have requested.
(d) There shall have been no disclosure in any Schedule or
documents set forth in or attached to any Schedule provided pursuant to this
Agreement or delivered hereunder, which, in the reasonable opinion of the
Company, does or may have a materially adverse effect on the value of the
businesses of Solar Touch (taken as a whole) or on their assets, properties or
goodwill (taken as a whole).
(e) The Solar Touch Audited Financial Statements as of December
31, 2001 shall show no material deviation from the Solar Touch International
Financial Statements as of such date previously delivered to the Company, and
the Solar Touch September 30, 2002 Financial Statements prepared under us GAAP
will show positive net income and stockholders equity of at least $6,000,000.
16
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time before
or, at Closing, by:
(a) The mutual agreement of the Parties;
(b) Any Party if:
(i) Any provision of this Agreement applicable to a party
shall be materially untrue or fail to be accomplished;
(ii) Any legal proceeding shall have been instituted or shall
be imminently threatening to delay, restrain or prevent the consummation of this
Agreement; or
(iii) The Closing has not occurred by November 22, 2002,
through no fault of the Party terminating the Agreement.
(c) Upon termination of this Agreement for any reason, in
accordance with the terms and conditions set forth in this paragraph, each said
party shall bear all costs and expenses as each party has incurred.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations, Warranties and Agreements. All
representations and warranties and statements made by a party to in this
Agreement or in any document or certificate delivered pursuant hereto shall
survive the Closing Date for a period of one year following the Closing Date.
Each of the parties hereto is executing and carrying out the provisions of this
agreement in reliance upon the representations, warranties and covenants and
agreements contained in this agreement or at the closing of the transactions
herein provided for and not upon any investigation which it might have made or
any representations, warranty, agreement, promise or information, written or
oral, made by the other party or any other person other than as specifically set
forth herein.
8.2 Access to Books and Records. During the course of this transaction
through Closing, each party agrees to make available for inspection all
corporate books, records and assets, and otherwise afford to each other and
their respective representatives, reasonable access to all documentation and
other information concerning the business, financial and legal conditions of
each other for the purpose of conducting a due diligence investigation thereof.
Such due diligence investigation shall be for the purpose of satisfying each
party as to the business, financial and legal condition of each other for the
purpose of determining the desirability of consummating the proposed
17
transaction. The Parties further agree to keep confidential and not use for
their own benefit, except in accordance with this Agreement any information or
documentation obtained in connection with any such investigation.
8.3 Further Assurances. If, at any time after the Closing, the parties
shall consider or be advised that any further deeds, assignments or assurances
in law or that any other things are necessary, desirable or proper to complete
the transactions contemplated hereby in accordance with the terms of this
agreement or to vest, perfect or confirm, of record or otherwise, the title to
any property or rights of the parties hereto, the Parties agree that their
proper officers and directors shall execute and deliver all such proper deeds,
assignments and assurances in law and do all things necessary, desirable or
proper to vest, perfect or confirm title to such property or rights and
otherwise to carry out the purpose of this Agreement, and that the proper
officers and directors the parties are fully authorized to take any and all such
action.
8.4 Notice. All communications, notices, requests, consents or demands
given or required under this Agreement shall be in writing and shall be deemed
to have been duly given when delivered to, or received by prepaid registered or
certified mail or recognized overnight courier addressed to, or upon receipt of
a facsimile sent to, the party for whom intended, as follows, or to such other
address or facsimile number as may be furnished by such party by notice in the
manner provided herein:
If to the Company and the Shareholders:
0000 X. X. Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, President
If to the Sellers:
At the respective addresses of the Sellers set forth on
Schedule 1 hereto.
8.5 Entire Agreement. This Agreement, the Disclosure Schedule and any
instruments and agreements to be executed pursuant to this Agreement, sets forth
the entire understanding of the parties hereto with respect to its subject
matter, merges and supersedes all prior and contemporaneous understandings with
respect to its subject matter and may not be waived or modified, in whole or in
part, except by a writing signed by each of the parties hereto. No waiver of any
provision of this Agreement in any instance shall be deemed to be a waiver of
the same or any other provision in any other instance. Failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver of
its rights under such provision.
8.6 Successors and Assigns. This Agreement shall be binding upon,
enforceable against and inure to the benefit of, the parties hereto and their
respective heirs, administrators, executors, personal representatives,
successors and assigns, and nothing herein is intended to confer any right,
remedy or benefit upon any other person. This Agreement may not be assigned by
any party hereto except with the prior written consent of the other parties,
which consent shall not be unreasonably withheld.
18
8.7 Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Delaware are
applicable to agreements made and fully to be performed in such state, without
giving effect to conflicts of law principles.
8.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.9 Construction. Headings contained in this Agreement are for
convenience only and shall not be used in the interpretation of this Agreement.
References herein to Articles, Sections and Exhibits are to the articles,
sections and exhibits, respectively, of this Agreement. The Disclosure Schedule
is hereby incorporated herein by reference and made a part of this Agreement. As
used herein, the singular includes the plural, and the masculine, feminine and
neuter gender each includes the others where the context so indicates.
8.10 Severability. If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, this Agreement
shall be interpreted and enforceable as if such provision were severed or
limited, but only to the extent necessary to render such provision and this
Agreement enforceable.
8.11 Consent to Jurisdiction and Service of Process. Any legal action,
suit or proceeding arising out of or relating to this Agreement, or the
transactions contemplated hereby, shall be instituted in any state or federal
court in the State of Delaware, and all parties agree not to assert by way of
motion, as a defense or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of such court, that
the action, suit or proceeding is brought in an inconvenient forum, the venue of
the action, suit or proceeding is improper to that the injured party is without
a remedy under this Agreement or the subject matter hereof. All parties further
irrevocably submit to the jurisdiction of any such court in any such action,
suit or proceeding, shall be effective against any party if served by registered
or certified mail, return receipt requested, or by any other means of mail or
delivery which requires a signed receipt, postage prepaid, mailed or delivered
to such party as herein provided, or by hand delivery. If for any reason such
service of process is ineffective, then all parties shall be subject to service
of process in accordance with applicable law or rule of court. Nothing herein
contained shall be deemed to limit or restrict the right of any party to serve
process in any manner permitted by law.
8.12 Registration of Shares. At any time subsequent to the Closing, the
holders holding at least 50% of the shares of Common Stock issued to the
Sellers, their designees, the Financial Consultants and the Optionees at the
Closing shall have the right on two occasions to require that the Company effect
the registration under the Securities Act of 1933, as amended, of the shares
acquired by the Sellers, their designees, the Financial Consultants and the
Optionees at the Closing, in which case the Xxxxxx Shares (up to 356,000
post-split shares) shall also be included in such registration statement if so
requested by the Shareholders. Additionally, all of the aforementioned shares
shall be entitled to piggyback rights. Such registration rights shall be
reflected in a Registration Rights Agreement containing customary terms to be
executed subsequent to Closing.
19
8.13 Stock Sales and Lock-Up. The Shareholders hereby agree to sign and
the Sellers and Solar Touch hereby agree to cause the Company to sign as of the
Closing Date a Stock Sale and Lock-Up Agreement in the form attached as Exhibit
8.13 as to shares of Common Stock owned by the Shareholders as of the Closing
Date (the "Xxxxxx Shares").
8.14 Rule 144. For a period of not less than two years after the
Closing, the Sellers shall cause the Company to continue to file in a timely
manner all required reports pursuant to the Securities Exchange Act of 1934 as
amended. Additionally, Sellers shall cause the Company to comply with the
following: (a) subject to the provision of Section 8.11, The Company will
promptly comply with any request of any Shareholder to sell any shares of the
Common Stock pursuant to Rule 144 subject to the receipt of appropriate
paperwork; and (b) 90 days after the Closing, at the request of any shareholder,
to instruct the Company's transfer agent to issue new certificates for the
shares of Common Stock owned by such Shareholders without any Securities Act
restrictive legend, subject to receipt of appropriate Rule 144(k) paperwork.
20
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first set forth above.
NOVA INTERNATIONAL FILMS, INC.
By:__________________________________________
Xxxxxx Xxxxxx
President
SINO CONCEPT ENTERPRISES LIMITED
By:__________________________________________
Anito So
Director
KINGSTON GLOBAL CO. LTD. By:_________________
SOLAR TOUCH LIMITED
By: _________________________________________
_____________________________________________
Xxxxxx Xxxxxx
_____________________________________________
Xxxxxxx Xxxxxx
21
SCHEDULE I
Seller's and Designee's Name Number of Solar Touch Number of Company
and Address Shares Shares
----------- ------ ------
Kingston Global Co. Ltd.
22/F., Xxxxxxxx Commercial 1,000 48,835,776
Xxxxxxxx, 00 Xxxxxxxx Xxxx Xxxx,
Xxxxxxx, Xxxx Xxxx
Sino Concept Enterprises
Limited of Xxxx 000, XXXX
Xxxx Xxx Xxxxxxxx, 000,000
0 Xxxxxx Xxx Xxxx, Xxxxxxx,
Xxxxxxx, Xxxx Xxxx
22
DISCLOSURE SCHEDULE - COMPANY
ITEM 2.4
FINANCIAL STATEMENTS
See SEC Filings
23
ITEM 2.16
BROKERS
Xxxxxx Xxxxxx
Fee for services to be paid by Sellers or Sellers' Financial Consultants.
24
ITEM 2.17
See SEC Filings
25
ITEM 3.1
DISCLOSURE SCHEDULE - SUBSIDIARIES
49% interest in Baoding Pascali Broadcasting Cable TV Integrated
Information Networking Co., Ltd.
26
ITEM 3.3
CAPITALIZATION
Name of Shareholder Number of Shares
------------------- ----------------
Kingston Global Co. Limited 1,000
Total 1,000
27
ITEM 3.5
MATERIAL LIABILITIES
None
28
ITEM 3.7
MATERIAL AGREEMENTS ETC.
Joint Venture Contract between Baoding Pascali Multi-Media Transmission
Networking Co., Ltd. and Solar Touch Limited.
29
ITEM 3.10
LITIGATION ETC.
None
30
ITEM 3.12
BROKERS ETC.
Agreement with Orient Financial Services, Inc. and Xxxxxx Xxxxxx.
Agreement with GCA Consulting Limited.
31
EXHIBIT 8.13
STOCK SALE AND LOCK-UP AGREEMENT
AGREEMENT dated as of the ___ day of November 2002, by and among NOVA
INTERNATIONAL FILMS, INC., a Delaware corporation (the "Company"), and XXXXXX
XXXXXX and XXXXXXX XXXXXX (the "Shareholders").
W I T N E S S E T H:
WHEREAS, as of the date hereof, the transactions contemplated by that
certain Share Exchange Agreement, dated as of the first day of November, 2002
(the "Agreement"), by and among the Company, the Shareholders, Sino Concept
Enterprises, Limited, a British Virgin Islands corporation, Kingston Global Co.
Limited, a British Virgin Islands corporation and Solar Touch Limited, a British
Virgin Island company were consummated:
WHEREAS, immediately prior to the closing thereunder, the Shareholders
were officers, directors and principal shareholders of the Company;
WHEREAS, immediately prior hereto, the Company effected a reverse stock
split of its common stock on a one-for-sixteen basis (the "Reverse Stock
Split");
WHEREAS, as of the date hereof, the Shareholders resigned as officers
and directors of the Company;
WHEREAS, as a result of the Reverse Stock Split, the Shareholders own
of record or beneficially a total of approximately 4,900,000 shares of the
Company's common stock (the "Shareholders Stock");
WHEREAS, in order to induce the parties to enter into the Share
Exchange Agreement and to consummate the transactions contemplated thereby, the
parties hereto have agreed to regulate the sale of the Shareholders Stock;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein and for other valuable consideration receipt of which is hereby
acknowledged, it is agreed as follows:
1. In the event at any time immediately after the date hereof any of
the Shareholders desires to effect a public sale without registration of any of
the Shareholders Stock pursuant to Rule 144 promulgated under the Securities Act
of 1933, the Shareholder shall give written notice to the Company and furnish
the documents customarily furnished in connection with a proposed Rule 144 sale.
Upon receipt thereof, the Company shall, without any cost to the Shareholders,
cause its transfer agent to complete the transfer as soon as possible (but no
later than three business days after receipt of the documentation), provided the
Shareholder has demonstrated compliance with Rule 144.
32
2. In addition to the foregoing, the parties agree that any time
commencing three months after the date hereof any of the Shareholders shall be
entitled to execute and deliver to the Company a standard Rule 144(k)
representation letter (the "Representation Letter") covering all or a portion of
the Shareholders Stock in such form as attached hereto as Exhibit A, and will
deliver to the Company the stock certificates representing the Shareholders
Stock referred to in the Representation Letter Upon receipt of such
Representation Letter and the aforesaid stock certificates, the Company will,
without any cost to the Shareholders, cause its transfer agent to deliver to the
Shareholders as soon as possible (but no later than three business days after
receipt of the Representation Letter and stock certificates) stock certificates
in such denominations as requested by the Shareholder (the "Replacement
Certificates"). Each of the Replacement Certificates shall be issued by the
Company as free trading without any legends thereon and without any "stop
transfer" noted with respect thereto, provided, however, that for a period of
one year from the date hereof, unless sooner terminated, the Company shall have
the right to note stop transfer instructions in its stock transfer records in
order to verify the Shareholders' compliance with the limitations set for the in
(i) and (ii) of paragraph 3.
3. Notwithstanding anything herein to the contrary, the Shareholders
agree that they will not sell, pledge or otherwise dispose of any of the
Shareholders Stock for a period of one year from the date hereof, except that
(i) the Shareholders shall be able to sell up to 156,000 shares of common stock
in the aggregate at any time; (ii) the Shareholders shall be able to sell up to
an additional 16,667 shares each month in the aggregate with the right to carry
over any unused allocation to any subsequent month(s); and (iii) if requested by
the Shareholders, the shares covered by (i) and (ii) above (up to 356,000
shares) shall be included in any registration statement referred to in Section
8.12 of the Share Exchange Agreement. The foregoing restrictions shall lapse one
year from the date hereof.
4. The foregoing restrictions on the sale of the Shareholders Stock
does not prohibit (i) gifts to which the proposed donee agrees in writing to be
bound by all tire provisions of this Agreement prior to the consummation of such
gift, or (ii) transfers by will or the laws of descent, provided that the shares
of common stock received upon transfer thereby remain subject to the
restrictions set forth herein.
5. The restrictions set forth in paragraph 3 shall also lapse and be of
no further effect upon the occurrence of any of the following events: (i) the
cessation of the Company's business; (ii) the dissolution of the Company; or
(iii) the sale of all or substantially all of the Company's assets.
6. The limitation on the number of shares which may be sold hereunder
pursuant to paragraph 3 hereof shall be adjusted proportionally to reflect any
stock dividend or stock split effected by the Company
7. Each of the parties hereto represents and warrants to the other that
it has the requisite power, corporate or otherwise, and authority to enter into
and perform this Agreement and the transactions contemplated hereby; that the
execution, issuance and delivery of this Agreement and the agreements and
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action and no further consent or authorization on behalf of
33
the parties is required; that this Agreement constitutes the valid and binding
obligation of each of the parties enforceable against each of the parties in
accordance with its terms.
8. The parties hereby covenant, each to the other that it and they
shall execute any further documentation as may be required reasonably to give
effect to this Agreement, the agreements referred to herein and the transactions
contemplated hereby and thereby.
9. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective heirs, successors and assigns.
10. This Agreement sets forth the entire understanding of the parties
hereto with respect to the subject matter hereof, merges and supersedes all
exiting agreements among them concerning such subject matter, and may only be
altered or amended by written instrument duly executed by the party against whom
such alteration or amendment is sought to be enforced.
11. All notices or other communications given or made pursuant hereto
shall be in writing and shall be deemed given if delivered personally or by
facsimile or sent by overnight courier to the parties at the following addresses
(or at such other address or facsimile number for the party as shall be
specified by like notice):
If to the Company:
c/o Loeb & Loeb LLP
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No: (000) 000-0000
Telephone No: (000) 000-0000
If to the Shareholders:
Xxxxxx Xxxxxx
Nutrition Now, Inc.
0000 X.X. Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Facsimile No: (000) 000-0000
Telephone No: (000) 000-0000
12. This Agreement shall be governed and construed in accordance with
the laws of the State of Delaware applicable to agreements made and to be
performed entirely within such State.
13. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
NOVA INTERNATIONAL FILMS, INC.
By:__________________________________
Name:
Title:
_____________________________________
Xxxxxxx Xxxxxx
_____________________________________
Xxxxxx Xxxxxx
35
EXHIBIT A
RULE 144 (k) REPRESENTATION LETTER
In order to induce Nova International Films, Inc. (the "Company"), to
implement the requested removal of transfer restrictions and to induce the
Company's counsel to render an opinion relating thereto, and acknowledging that
each of the same will rely hereon, the undersigned hereby represents and
warrants as follows:
1. The undersigned has read and understands Rule 144.
2. The undersigned has beneficially owned ____________ shares of
the Company's Common Stock evidenced by stock certificate
no(s). _______________, and they have been paid for in full
for a period of at least two years, in accordance with
paragraph (d) of Rule 144.
3. The undersigned is not now nor has the undersigned been for at
least three months prior to the date hereof, an "affiliate" of
the Company as that term is defined in paragraph (a) (1) of
Rule 144.
4. The undersigned agrees to notify the Company promptly in the
event that such representations and warranties become
inaccurate or incomplete, due to changes in facts or
circumstances, or otherwise.
IN WITNESS WHEREOF, the undersigned has executed this
Representation Letter on the ___ day of _________, 200__.
_______________________________
Print Name
_______________________________
Signature
36
