HEILONGJIANG LANXI SUNRISE LINEN TEXTILE INDUSTRY CO.,LTD And Shufan Wang, Lijie Fu LANXI TIANXIANFANG LINEN CO., LTD Stock Acquisition Agreement Harbin China November 15, 2010
HEILONGJIANG
LANXI SUNRISE LINEN TEXTILE INDUSTRY
CO.,LTD
And
Xxxxxx
Xxxx, Xxxxx Xx
LANXI
TIANXIANFANG LINEN CO., LTD
Stock
Acquisition Agreement
Harbin China
November
15, 2010
Content
1. The
parties of this Agreement
2. The
basic objective facts of this Agreement
3. The
status of this Agreement
4. The
acquisition / transfer object
5 The
basis and price to determine the stock acquisition / transfer price
6 The
payment deadline and method of the acquisition price
7. Debt
redemption supervision
8. The
prerequisite of stock acquisition / transfer
9. The
post processing provided that the prerequisite is out of completion
10.
Delivery
11 The
transferor joint guarantee
12. The
guarantee of stable operation of all parties
13 Duty
of confidentiality
14
Termination of the Agreement
15
Liability for breach of contract
16.
Dispute Resolution
17.
Notice
18
Miscellaneous
The
Parties in this Agreement:
The
Agreement was co-signed by the following parties on November 15, 2010 inHarbin,
Heilongjiang Province, PRC.
Acquisition
Party (hereinafter as ‘Party A’): HEILONGJIANG LANXI SUNRISE LINEN TEXTILE
INDUSTRY CO., LTD
Address:
Chengdong Street, Lanxi County, Heilongjiang Province
Legal
Representative: RenGao
Transferor (hereinafter as
‘Party B’): Xxxxxx Xxxx, female, Han,
was born on March 27, 1954, ID Card No: 230103195403275528
Transferor (hereinafter as
‘Party C’): Lijie Fu, male, Han, was
born on August 29, 1969, ID Card No: 232325196908290016
Target
Corporation (hereinafter as ‘Party D’): LANXI TIANXIANFANG LINEN CO.,
LTD
Address:
39th Group, 0xx Xxxxxxxxx, Xxxxxxxxx Xxxxxx, XxxxxXxxxxx
Legal
representative: Lijie Fu
Article
I. The Basic Objective Facts Of This Agreement
1.1 Party
A is a limited liability company (joint venture) founded based on the laws of
the People's Republic of China and validly existed. It was registered in Suihua
Administrative Bureau for Industry and Commerce of Heilongjiang Province with a
registered capital of RMB6 million. Its business license registration number is
232325100000046, and the business scope includes the production of linen yarn,
linen fiber, linen finished products and technology development consulting. The
business period is from June 11, 2002 to June 10, 2014.
1.2 Both
Party B and Party C are citizens of the PRC, until the effective date of this
agreement; Party B legally held 80% stock equity of Party D, while Party C
legally held 20% stock equity of Party D.
1.3 Party
D is a limited liability company founded based on the laws of the People's
Republic of China and validly existed. It was registered in Lanxi Administrative
Bureau for Industry and Commerce of Heilongjiang Province with a registered
capital of RMB10 million. Its business license registration number is
232325100007352, and the business scope includes linen and linen products deep
processing, distribution, import and export. The business period is from August
10, 2006 to August 10, 2026, and the shareholders are Party B and Party
C.
1.4 Party
A is based on the enterprise development on their own, by way of the acquisition
of the entire equity of Party D held by Party B and Party C so as to acquire
Party D and eventually own the entire equity of Party D, therefore, Party A,
Party B and Party C have co-signed the “Intention Agreement of the Acquisition”
on April 26, 2010.
1.5 In
accordance with the provision of the “Intention Agreement of the Acquisition”,
now Party A has completed the due diligence on the financial and legal items of
Party D, and has not found any of the facts that the target company has
undisclosed external guarantees, litigation, false assets, major business risk
which may have substantial influence on the acquisition of stock
equity.
1.6 Until
31 December 2008, the total assets of Party D were RMB45,615,029.35, the total
liabilities were RMB22,531,376.90, the total equity of owners were
RMB23,083,652.45; Until 31 December 2009, the total assets of Party D were
RMB47,553,638.15, the total liabilities were RMB22,810,224.82, the total equity
of owners were RMB24,743,413.33; Heilongjiang ZhongmingFutong Accounting Firm
issued HZMFTKS (2010) No. 10031 Audit Report (Appendix I),
HZMFTKS (2010) No 10032 Audit
Report (Appendix II) respectively on April 18, 2010, and April 19, 2010,
and the audit opinion of Heilongjiang ZhongmingFutong Accounting Firm was that
the target company’s financial statements have been prepared in accordance with
Accounting Standards for Business Enterprises and the Enterprise Accounting System,
and fairly reflected the financial situation of the target company on December
31, 2008 and December 31, 2009 in all material aspects, as well as the operating
results and cash flows in 2008 and 2009.
1.7
Heilongjiang Zhongming National Forest Assets Appraisal Co., Ltd issued
HZLPBZD[2010] No. 10060 Assets
Appraisal Report (Appendix III) on April 28, 2010, the appraisal
agencies, based on the target company’s financial statements, the external
economic environment and market conditions on the assessment benchmark date of
March 31, 2010, determined that the target company’s assessed assets value was
RMB44,401,485.41, assessed value of liabilities was RMB22,750,642.42 and the
assessed value of net assets was RMB21,650,842.99.
1.8 In
view of these above objective facts, based on the equal and free will
principal andafter full consultation, the parties have reached the
Agreement so as to jointly abideon the acquisition of the entire equity of the
target company by Party A which was held by Party B and Party C.
Article
II.The Status Of This Agreement
This
agreement is a final determination reached until the effective date of this
Agreement based on all intentions agreed by Party A, Party B, Party C and Party
D on the related matters of equity acquisition / transfer, also a final
agreement reached by all parties relating to specific transactions. During the
performance of this agreement by all parties, in the event that any oral or
written various consensuses, guarantees, promises, understandings, agreements
and other related issues agreed in the past occurred is inconsistence with the
Agreement, this Agreement should govern..
Article
Iii. The Acquisition / Transfer Object
3.1 Until
the effective date of this Agreement, Party B has paid all subscribed capital in
full according to the provision of the Article of Incorporation of Party D
company, legally holding 80% stock equity of Party D, Party C has paid all
subscribed capital in full according to the provision of the Article of
Incorporation of Party D company, legally holding 20% stock equity of
Party D.
3.2 Party
B and Party C stated as follows to Party A:
3.2.1 The
80% stock equity of Party D held by Party B was the legally acquired equity
invested by his own lawful property, so the equity is owned by himself solely,
without any ownership dispute, without collateral security and without any
rights restricted.
3.2.2 The
20% stock equity of Party D held by Party C was the legally acquired equity
invested by his own lawful property, so the equity is owned by himself solely,
without any ownership dispute, without collateral security and without any
rights restricted.
3.3 Party
B and Party C voluntarily transfer the target company’s entire equity held by
them respectively to Party A in one time under the regulation of theAgreement;
Party A voluntarily purchases all of the target company’s entire equity held by
Party B and Party C under the regulation of theAgreement.
Article
IV.The Basis And Price To Determine The Stock Acquisition / Transfer
Price
4.1 The
parties agree the determination that the assessed value of the target company’s
total assets assessed by the assessment agency with statutory qualifications
based on the financial audit of the target company was taken as the benchmark
price of this equity acquisition / transfer. According to Appendix I of this
Agreement, until December 31, 2008, the total assets of Party D were
RMB45,615,029.35; According to Appendix II of this Agreement, until December 31,
2009, the total assets of Party D were RMB47,553,638.15; According to Appendix
III of this Agreement, until the base date of assets assessment of March 31,
2010, the total assets assessed values of Party D were 44,401,485.41
Yuan.
4.2 All
of the parties in this agreement have no objection to above audit and evaluation
on the asset value, therefore, the parties voluntarily and irrevocably confirm
that the stock acquisition / transfer price is
RMB44,401,485.00.
Article
X.Xxxxxx Company Liabilities And Commitments
5.1 The
parties agree all target company’s legal and valid liabilities which are
determined by the audit report and assessment report issued by audit and
assessment agencies with statutory qualifications. According to Appendix I of
this Agreement, until December 31, 2008, the total liabilities of Party D were
RMB22,531,376.90; According to Appendix II of this Agreement, until December 31,
2009, the total liabilities of Party D were RMB22,810,224.82; According to
Appendix III of this Agreement, until the base date of assets assessment of
March 31, 2010, the total liabilities assessed values of Party D were RMB22,750,
642.42.
5.2 All
of the parties in this agreement have no objection to above audit and evaluation
on liabilities. Hereby Party B and Party C promise and guarantee that the total
liabilities assessed values ofRMB 22,750,642.42 of Party D until the base date
of assets assessment of March 31, 2010 should be undertaken jointly by Party B
and Party C, while Party B and Party C jointly pay off the above liabilities
using the cost paid by Party A, and the remaining cost after paying off the
liabilities of Party D should be paid for Party B and Party C according to the
equity proportion.
Article
VI.The Payment Deadline And Method Of The Acquisition Price
6.1 Party
A, Party B and Party C agree to use RMB as the settlement currency of stock
equity acquisition / transfer.
6.2 Party
A, Party B and Party C agree that after the effective date of this Agreement,
Party A should pay the consideration for all stock equity
acquisition in one time:
Within
three working days since the effective date of this Agreement, Party A shall pay
44, RMB401,485.00 to Party B and Party C as the consideration of the equity
acquisition (RMBForty-four million four hundred one thousand four hundred and
eighty-five);
Since the
effective date of this Agreement, Party D will be responsible for the completion
of stock equity business change of registration within twenty working days and
change the registration of the entire stock equity under the name of Party B and
Party C to be under the name of Party A.
6.3 Party
B and Party C should issue a receiving credential written personally to Party A
immediately after receiving the stock equity consideration paid by Party
A.
Article
VII.Debt Redemption Supervision
7.1 Party
B and Party C undertake a liability for satisfaction of RMB (Twenty-two million
seven hundred fifty thousand six hundred and forty-two Yuan, forty-two Fen) for
Party D, and Party A is responsible for supervision.
7.2 Party
B and Party D promise that they will firstly deposit entire RMB22,750,642.42 to
the bank account designated by Party A within two working days after
fully receiving the stock equity consideration paid by Party A in accordance
with this Agreement, and the funds will be specially used to pay for the above
mentioned liabilities of Party D according to the deadline of redemption of debt
and the payment process should be supervised by the Party A. Before the
completion of all redemption of debt of Party D, the legal fruits of the bank
account belong to Party D.
7.3 If
Party B and Party C are not positive to pay for above liabilities of Party D,
Party A has the right to directly use the funds in the account to pay for
liabilities; If Party A refuses Party B and Party C to use the account balance
to repay the liabilities of Party D, then the debt settlement liability of Party
B and Party C to Party D as regulated in clause 7.1 of this Article is exempted,
meanwhile, Party A shall bear the corresponding liability for
satisfaction.
Article
VIII.The Prerequisite Of Stock Acquisition / Transfer
The
parties jointly determine the following situations are the prerequisites of the
stock equity acquisition / transfer, the agreement will be terminated
voluntarily if any of the condition is not achieved.
8.1 The
smooth delivery of acquisition / transfer object
After the
effective date of the Agreement, in the event that some disputes concerning the
stock equity transferred by Party B or Party C occur in terms
of ownership, guaranty of pledge, rights restricted, resulting the
inability to achieve the change of business registration, then the Agreement
will terminate voluntarily, and no party will assume the liability for breach of
contract.
8.2
Authority approval and abandonment of the right of preemption.
8.2.1 The
board of shareholders of Party D will pass “resolution of the board of
shareholders” aiming at the matters of the substantive conditions to acquire /
transfer (Appendix IV) entire stock equity of all shareholders determined by
Party A, Party B and Party C under this Agreement, all shareholders should agree
the substantive conditions determined by the Agreement to transfer all stock
equity held by them respectively, and should give up the right of
preemption under the same conditions.
8.2.2 The
Board of Directors of Party A passes a resolution (Appendix V) and agrees to
acquire all stock equity of Party D held by Party B and Party C.
8.2.3
After the effective date of the Agreement, if the clause 8.2 fails to achieve,
then the Agreement will terminate voluntarily, and no party will assume the
liability for breach of the contract.
Article
IX. The Post Processing Provided That The Prerequisite Is Out Of
Completion
9.1 If
any clause of 8.1, 8.2 in Article VIII fails to achieve, the disputing parties
should notice the other party the legal fact that fails to achieve in writing,
this Agreement will terminate voluntarily since the written notice has been sent
to the other party and no party should assume the liability for breach of
contract.
9.2 After
the emergence of the legal fact that the prerequisite failed to achieve, if
Party A has paid part of the consideration under this Agreement, Party B and
Party C shall one-off fully return principal and interest within three days
after receiving the written notice of Party A.
9.3 After
the emergence of the legal fact that the prerequisite failed to achieve, Party A
shall return and transfer the Party D’s financial books, stamps, benefits
certificate and corporate assets to Party B, Party C and Party D
for control within three working days.
Article
X. Delivery
10.1 The
delivery of financial and equity certificate
After the
effective date of the Agreement and within three working days after achieving
the precondition provided in clause 8.2 of Article VIII in this Agreement, Party
B and Party C should transfer the Party D’s financial books, stamps and benefits
certificate to party A and Party A should supervise and use during the
transition period. Party A shall make the necessary duty of a good administrator
to supervise reasonably, and shall not privately possess the company’s relevant
documents and seal, dispose corporate assets of Party D or waive relevant legal
rights during the transition period.
The
transition period mentioned in proceeding clause refers to the period from the
effective date of this Agreement until the date that Party A has paid full
consideration on schedule under this Agreement.
10.2 The
transfer of corporate assets
After the
effective date of the Agreement and within three working days after achieving
the precondition in clause 8.2 of Article VIII in this Agreement, Party B and
Party C shall transfer all assets of Party D to Party A for managing and
control. Party shall make the necessary duty of a good administrator and should
not dispose any asset of Party D during the transition period.
10.3
Change of business registration
After the
effective date of the Agreement and the achievement of the prerequisites in
clause 8.2 of Article VIII of this Agreement, the parties should immediately
deal with the change procedures of business registration, and change the
registration of all stock equity under the name of Party B and Party C to be
under the name of Party A.
10.4
During the period from the base date of assets evaluation (March 31, 2010) to
the expiration of the transition period, the income and liabilities generated by
normal legal business of Party D should be shared and assumed by Party D,
moreover, the transferred cost to Party B and Party C by Party A should be
invariable; all taxes and fees resulting from the stock equity acquisition/
transfer should be assumed by various parties according to the law.
Article
XI.The Transferor Joint Guarantee
11.1
Party B and Party C should undertake the liability for warrant of defects to the
stock equity transferred by them respectively.
11.2 Hereby Party B and Party
C jointly guarantee: if the possible liabilities of Party D arising due to the
reason of Party B and Party C prior to the date of change of registration are
not specified in the statutory accounts or
liabilities detailed statement of Party D, and have not been recognized as a
liability off the books, or although such liabilities are specified in the
statutory accounts or liabilities detailed statement of Party D before the date
of stock equity changes of
registration, however, the amount of liabilities is greater than the account or
the amount specified in liability detailed statement, then Party B and Party C
should bear joint liabilityfor satisfaction.
11.3
Hereby Party B and
Party C jointly
guarantee: During the period from the base date of assets evaluation
(March 31, 2010) to the effective date of the Agreement, Party B and Party C did
not provide third party guarantee by Party D’s assets, and did not engage in any
related transactions to cause the transfer of Party D’s legal
interests.
Article
XII.The Guarantee Of Stable Operation Of All Parties
12.1
During the period from the base date of assets evaluation (March 31, 2010) to
the expiration of the transition period, the parties shall not in any way
dispose the fixed assets and intangible assets of Party D’s
company.
12.2
Hereby Party B and Party C guarantee that they shall not transfer the business
opportunities of Party D in any way, shall not make any arrangement which is
against the future management of Party D’s company and shall not carry out
guarantee activity which can increase the liabilities of Party D’s company
before the expiry of the transition period.
Article
XIII.Duty Of Confidentiality
13.1 The
parties hereby agree that all terms and contents in this Agreement and the
Appendix, and all information related to one party obtained by another Party
under this agreement are confidential, and the parties have a duty of
confidentiality.However, it is except that such disclosure is the duty and
responsibility required by law.
13.2 The
parties hereby agree that they the confidential information shall not be used
for any purpose other than the following circumstances: required by law,
specified in this Agreement, or any litigation, arbitration, administrative
punishment suffered from this Agreement, even under such circumstances, the
parties should also use the confidential information strictly in accordance with
the legal procedure.
Article
XIV.Termination Of The Agreement
14.1
Termination by the consultation among the parties: if theAgreement cannot be
normally performeddue to force majeure or other circumstances after signed, this
Agreement can be terminated based on the consent of the parties, and no party
should assume theliability for breach of contract.
14.2
Termination due to breach of contract by one party: after signing the agreement,
if one party definitely expresses or by its behaviors indicates that he will
not perform its main liabilities, or one party delays to perform the
principal liabilities, and still not fulfill within a reasonable time after
receiving demand, or one party breaches of contract so that the agreement cannot
be performed continuously, therefore the other party cannot achieve
the objective of the contract, then it can unilaterally terminate
this Agreement based on the relevant provisions of “Contract Law of
PRC”.
Article
XV.Liability For Breach Of Contract
15.1 The
parties in this agreement should, based on the principle of good
faith, fully implement this agreement. The circumstances that any
party does not fulfill the obligations of this agreement so that other party
cannot exercise the rights stipulated in this Agreement shall constitute breach
of contract, the breaching party should be observant to any penalty unless the
circumstances that the parties agreed to assume no liability for breach of
contract.
15.2 If
the breaching party caused losses to the innocent party for its breach of
contract, the breaching party shall indemnify the actual loss caused by
breaching behavior, and the damages compensation scope includes travel costs,
due diligence costs, legal fees, audit fees and assessment fees caused by the
acquisition matters of promised party.
Article
XVI. Dispute Resolution
16.1 The
dispute arising from the implementation of this Agreement shall be governed
by the existing laws of PRC.
16.2 In
the event of any dispute relating to this Agreement or arising from this
Agreement, under the circumstance that cannot be resolved between the parties of
this agreement, the parties agreed that any party may resolve disputes by the
way of litigation according to relevant provisions of “Company Law of PRC”,
“Civil Procedure Law of PRC” etc.
Article
XVII. Notification
17.1
Communication Name of Party A: HEILONGJIANG LANXI SUNRISE LINEN TEXTILE INDUSTRY
CO., LTD.
Address:
Chengdong Street, Lanxicounty of Heilongjiang, Postcode: 151521
Legal
Representative: RenGao
17.2
Communication Name of Party B: Xxxxxx Xxxx, Address: Xx 0, 0xx Xxxxx,
Xxxx 0, Xxxxxxxx 214, Dafangli Street, Daowai District, Harbin, Heilongjiang
Province, Postcode: 150001
17.3
Communication Name of Party C: Lijie Fu, Address: No 00, Xxxxxxx
Xxxx, Xxxxx Road of Xierdao Street, XinshengCommmunity, Lanxi Country,
Heilongjiang Province, Postcode: 151500
17.4
Communication Name of Party D: LANXI TIANXIANFANG LINEN CO., LTD
Address:
39th Group, 0xx Xxxxxxxxx, Xxxxxxxxx Xxxxxx, XxxxxXxxxxx. Postcode:
151500
Legal
representative: Lijie Fu
Article
XVIII. Miscellaneous
18.1 The
Agreement Appendix is the indivisible part of the agreement.
18.2 The
agreement has six original copies. Party A holds two copies, other
parties hold one copy respectively, and all of them shall have the
same legal effect.
18.3 The
parties should, based on the common principle of good faith,negotiate and
resolve the unmentioned issues, if the parties reach common agreement and shall
sign a written supplement agreement, and the supplemental agreement has the same
effect with the Agreement.
18.4 The
Agreement can only come into force once signed by the legal representatives or
authorized representatives of Party A and Party D, stamped by the common seal of
legal representatives and signed by Party B and Party C.
18.5 At
the effective date of the Agreement, the “Enterprise Fixed Assets Lease
Agreement” signed by Party A and Party D should be terminated to
perform.
18.6 The
seal and signature represent that the parties related to this agreement have
fully reviewed the correctly confirmed, and represent the real meaning of the
parties.
18.7 The
date on the third page at the beginning of this Agreement is the effective date
of this Agreement.
The
following parts in this page are used for the common seal and signature of the
Parties to this Agreement and their representatives:
Party A: HEILONGJIANG LANXI SUNRISE LINEN TEXTILE
INDUSTRY
CO.,LTD(Seal)
Legal
representative or authorized representative (signature):
By: /s/
RenGao
RenGao
Party
B (sign and press fingerprint):
By: /s/
Xxxxxx Xxxx
Xxxxxx
Xxxx
Party
C (sign and press fingerprint):
By:/s/
Lijie Fu
Lijie
Fu
Party
D: LANXI TIANXIANFANG LINEN CO., LTD (Seal)
Legal
representative or authorized representative (signature):
By: /s/
Lijie Fu
Lijie
Fu
