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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated the 11th day
of August, 2006, by and among XXXXXXXX LAKE MINING, INC., a Nevada corporation
(the "Buyer"), JINAN YINQUAN TECHNOLOGY COMPANY, LTD. an equity joint venture
registered under the laws of the Republic of China (the "Company"), the Equity
Holders of the Company, more particularly described on Exhibit A attached hereto
and incorporated herein (collectively the "Shareholders") and Apollo Corporation
("Apollo"), the Majority Shareholder of the Buyer.
WHEREAS, Equity Holders desire to exchange with Buyer, and Buyer
desires to exchange with Equity Holders, all of the issued and outstanding
shares of capital stock of the Company from Equity Holders for the consideration
and upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the provisions and
the respective agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. Purchase and Sale of Stock.
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1.1 Agreement to Purchase and Sell. Upon the terms and subject to the conditions
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set forth in this Agreement and upon the representations and warranties made
herein by each of the parties to the other, on the Closing Date (as such term is
hereinafter defined), Company shall cause its Equity Holders to exchange and
deliver to Buyer, and Buyer shall acquire from Equity Holders, 100% ownership of
the Company.
1.2 Purchase Price. Upon the terms and subject to the conditions set forth in
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this Agreement, in reliance upon the representations, warranties, covenants and
agreements of the Company made on behalf of its Equity Holders contained herein,
and in exchange for 100% ownership of the Company, Buyer agrees to deliver to
Equity Holders a total of 40,000,000 shares of the common stock of Buyer
("Buyer's Shares") to be distributed to the Equity Holders based upon their
respective pro rata percentage interest in the Company (the "Purchase Price")
and also US$200,000 to be deposited by the buyer into the Company for Company
use in their normal operations. It is also further acknowledged that the
US$200,000 portion of the Purchase Price, will be distributed by the buyer upon
the successful completion of an anticipated US $1,000,000 private placement.
Upon the consummation of the transaction, the Company shall be a wholly-owned
subsidiary of Buyer.
1.3 Agreement to surrender shares. Apollo warrants and represents that it is the
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beneficial owner of Twelve Million Six Hundred Thousand (12,600,000) shares of
the Buyer's common stock. Apollo agrees to surrender to the buyer Eleven Million
Seven Hundred and Fifty Thousand (11,750,000) shares of the Buyer's common stock
on the closing date for cancellation. Apollo will retain Eight Hundred and Fifty
Thousand (850,000) shares of the Buyer's common stock on the closing date of
this agreement.
1.4 Financing. The Buyer further warrants and represents that it will sell a
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total of Five Hundred Thousand (500,000) shares of its common stock as part of a
private placement for One Million Dollars (US$1,000,000) to be used for general
corporate purposes. The Buyer further represents that he will advance the
Company $200,000 upon the closing of this agreement.
1.5 Consulting. The Buyer further represents that it will issue Four Hundred
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Thousand (400,000) shares of its common stock pursuant to a consulting agreement
with Leasing Standard Limited (the "Consultant") to cover costs of the initial
US GAAP audit of the 2004 and 2005 fiscal year ends of the Company, cover legal
costs associated with this transaction, provision of Investor Relations services
or the fees for a Investor Relations Firm for a period of one year and the
Consultant will coordinate and pay the costs of the preparation and filing of a
form SB-2 with the Securities and Exchange Commission for the shares to be
issued under the private placement mentioned in 1.4.
1.6 Payment of Purchase Price. The Purchase Price shall be payable on the
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Closing Date.
1.7 Closing. The closing of the transaction contemplated herein (the "Closing")
will be at the office of Buyer on or before August 10, 2006, or at such other
place or at such other date and time as Equity Holders and Buyer may mutually
agree. Such date and time of Closing is herein referred to as the "Closing
Date."
1.8 Share Structure at Closing. Upon the closing of this agreement, the Buyer
will have Fifty-One Million Seven Hundred and Fifty Eight Thousand (51,758,000)
shares of its common stock issued and outstanding.
2. Representations and Warranties of Shareholders. The Company, on
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behalf of its Shareholders, represents and warrants to Buyer as follows:
2.1 Existence and Good Standing. The Company is a limited liability
Company duly registered, validly existing and in good standing under the laws of
the Republic of China. The Company is duly licensed or qualified to do business
and is in good standing under the laws of all other jurisdictions in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary.
2.2 Corporate Authority. The Company has all requisite corporate
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power and authority to own its properties and carry on its business as now
conducted.
2.3 Compliance with Law. The Company is not in default with respect to
any order of any court, governmental authority or arbitration board or tribunal
to which the Company is a party or is subject, and the Company is not in
violation of any laws, ordinances, governmental rules or regulations to which it
is subject. The Company has obtained all licenses, permits and other
authorizations and has taken all actions required by applicable laws or
governmental regulations in connection with its business as now conducted.
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2.4 Validity and Effect of Agreements. This Agreement constitutes, and
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all agreements and documents contemplated hereby when executed and delivered
pursuant hereto will constitute, the valid and legally binding obligations of
the Company and Shareholders enforceable in accordance with their terms, except
that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws of general
application now or hereafter in effect relating to the enforcement of creditors'
rights generally and except that the remedies of specific performance,
injunction and other forms of equitable relief are subject to certain tests of
equity jurisdiction, equitable defenses and the discretion of the court before
which any proceeding therefore may be brought.
2.5 No Required Consents or Defaults. The execution and delivery of
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this Agreement by the Company on behalf of its Shareholders does not and the
consummation of the transactions contemplated hereby will not (i) require the
consent of any person not a party to this Agreement, (ii) result in the breach
of any term or provision of, or constitute a default under, or result in the
acceleration of or entitle any party to accelerate (whether after the giving of
notice or the lapse of time or both) any obligation under, or result in the
creation or imposition of any lien, charge, pledge, security interest or other
encumbrance upon any part of the property of the Company pursuant to any
provision of, any order, judgment, arbitration award, injunction, decree,
indenture, mortgage, lease, license, lien, or other agreement or instrument to
which Shareholders or the Company is a party or by which any of them is bound,
or violate or conflict with any provision of the by-laws or articles/certificate
of incorporation of the Company as amended to the date of this Agreement.
2.6 Affiliated Entities. Except as otherwise disclosed in Schedule 2.6
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attached hereto, the Company does not own, directly or indirectly, any interest
in any corporation, business trust, joint stock company, partnership or other
business organization or association.
2.7 Capitalization. The Company has a registered capital of 3,410,000
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RMB ($428,391 USD). Except for rights granted pursuant to this Agreement, there
are no outstanding rights, warrants, options, subscriptions, agreements or
commitments giving anyone any right to require the Company to sell or issue, or
the Equity Holders to sell, any ownership positions or other securities of the
Company.
2.8 Jurisdictions. Schedule 2.8 contains a list of all jurisdictions in
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which the Company is presently licensed or qualified to do business. The Company
has complied in all material respects with all applicable laws of each such
jurisdiction and all applicable rules and regulations of each regulatory agency
therein. The Company has not been denied admission to conduct any type of
business in any jurisdiction in which it is not presently admitted as set forth
in such Schedule 2.8, has not had its license or qualifications to conduct
business in any jurisdiction revoked or suspended, and has not been involved in
any proceeding to revoke or suspend a license or qualification.
2.9 Records. The corporate minute books of the Company to be delivered
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to Buyer at the Closing shall contain true and complete copies of the articles
of incorporation, as amended to the Closing Date, bylaws, as amended to the
Closing Date, and the minutes of all meetings of directors and shareholders and
certificates reflecting all actions taken by the directors or shareholders
without a meeting, from the date of incorporation of the Company to the Closing
Date.
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2.10 Officers and Directors. The officers and directors of the Company
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are as set forth in Schedule 2.10. The current directors and officers of Buyer
shall resign effective as of the Closing and shall be replaced with Board
Members selected by Seller.
2.11 Financial Statements. Shareholders shall furnished to Buyer
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audited balance sheets and related statements of income as of December 31, 2004
and 2005 (the "Financial Statements"). The Financial Statements fully and fairly
set forth the financial condition of the Company as of the dates indicated, and
the results of its operations for the periods indicated, in accordance with GAAP
consistently applied, except as otherwise stated therein and in the related
reports of independent accountants.
2.12 Undisclosed Liabilities. The Company has no liabilities or
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obligations whatsoever, whether accrued, absolute, contingent or otherwise,
which are not reflected or provided for in the Financial Statements except (i)
accounts payable and accrued expenses arising after the date of the Financial
Statements which were incurred in the ordinary course of business, in each case
in normal amounts and none of which is materially adverse, and (ii) liabilities
as and to the extent specifically described in Schedule 2.12.
2.13 Absence of Certain Changes or Events Since the Date of the
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Audited Balance Sheet. Since the date of the Financial Statements, the
Company has not:
(A) incurred any liability whatsoever, whether accrued,
absolute, contingent or otherwise, except those liabilities and obligations
referred to in Section 2.12 above, and except in connection with this Agreement
and the transactions contemplated hereby;
(B) discharged or satisfied any lien, security interest or
encumbrance or paid any obligation or liability (fixed or contingent), other
than in the ordinary course of business and consistent with past practice;
(C) mortgaged, pledged or subjected to any lien, security
interest or other encumbrance any of its assets or properties;
(D) transferred, leased or otherwise disposed of any of its
assets or properties except for a fair consideration in the ordinary course of
business and consistent with past practice or, except in the ordinary course of
business and consistent with past practice, acquired any assets or properties;
(E) canceled or compromised any debt or claim, except in
the ordinary course of business and consistent with past practice;
(F) waived or released any rights of material value;
(G) except pursuant to those contracts listed on Schedules
2.18 and 2.19 hereto, transferred or granted any rights under any concessions,
leases, licenses, agreements, patents, inventions, trademarks, trade names,
service marks or copyrights or with respect to any know-how;
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(H) made or granted any wage or salary increase applicable to
any group or classification of employees generally, entered into any employment
contract with, or made any loan to, or entered into any material transaction of
any other nature with, any officer or employee of the Company;
(I) entered into any transaction, contract or commitment,
except (i) contracts listed on Schedules 2.18 and 2.19 hereto and (ii) this
Agreement and the transactions contemplated hereby;
(J) suffered any casualty loss or damage (whether or not such
loss or damage shall have been covered by insurance) which affects in any
material respect its ability to conduct business, or suffered any casualty loss
or damage in excess of $25,000.00 and which is not covered by insurance; or
(K) declared any dividends or bonuses, or authorized or
affected any amendment or restatement of the articles of incorporation or
by-laws of the Company or taken any steps looking toward the dissolution or
liquidation of the Company.
Between the date of this Agreement and the Closing, the Company will not,
without prior written notice to Buyer, do any of the things listed in
sub-paragraphs (A) through (K) above.
2.14 Taxes. The Company (i) has duly and timely filed or caused to be
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filed all federal, state, local and foreign tax returns (including, without
limitation, consolidated and/or combined tax returns) required to be filed by it
prior to the date of this Agreement which relate to the Company or with respect
to which the Company or the assets or properties of the Company are liable or
otherwise in any way subject, (ii) has paid or fully accrued for all taxes shown
to be due and payable on such returns (which taxes are all the taxes due and
payable under the laws and regulations pursuant to which such returns were
filed), and (iii) has properly accrued for all such taxes accrued in respect of
the Company or the assets and properties of the Company for periods subsequent
to the periods covered by such returns. No deficiency in payment of taxes for
any period has been asserted by any taxing body and remains unsettled at the
date of this Agreement. Copies of all federal, state, local and foreign tax
returns of the Company have been made available for inspection by Buyer.
2.15 Title to Company Shares. The Company Shares are duly authorized,
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validly issued, fully paid and non-assessable and are owned by Shareholders free
and clear of all liens, encumbrances, charges, assessments and adverse claims.
The Company Shares are subject to no restrictions with respect to
transferability to Buyer in accordance with the terms of this Agreement. Upon
transfer of the Company Shares by Shareholders, Buyer will, as a result, receive
good and marketable title to all of the Company Shares, free and clear of all
security interests, liens, encumbrances, charges, assessments, restrictions and
adverse claims.
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2.16 Title to Property and Assets. The Company has good and marketable
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title to all of the properties and assets reflected in the Balance Sheets and
the Business Property Rights (as defined in Section 2.20). None of such
properties or assets is, except as disclosed in said Balance Sheets or the
Schedules hereto, subject to a contract of sale not in the ordinary course of
business, or subject to security interests, mortgages, encumbrances, liens or
charges of any kind or character.
2.17 Condition of Personal Property. All tangible personal property,
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equipment, fixtures and inventories included within the assets of the Company
are in good, merchantable or in reasonably repairable condition and are suitable
for the purposes for which they are used. No value in excess of applicable
reserves has been given to any inventory with respect to obsolete or
discontinued products. To the best of the Company's knowledge, all of the
inventories and equipment, including equipment leased to others, are well
maintained and in good operating condition.
2.18 Real Estate and Leases. Schedule 2.18 contains a list of all real
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property owned by the Company or in which the Company has a leasehold or other
interest (whether as landlord, tenant or otherwise) and of any lien, charge or
encumbrance thereupon. Such Schedule also contains a substantially accurate
description identifying all such real property and the significant rental terms
(including rents, termination dates and renewal conditions). The improvements
upon such properties and use thereof by the Company conform to all applicable
lease restrictions, zoning and other local ordinances.
2.19 List of Contracts and Other Data. Schedule 2.19 sets forth the
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following:
(A) (i) all computer software, patents and registrations for
trademarks, trade names, service marks and copyrights which are unexpired as of
the date of this Agreement and which are owned by the Company, as well as all
applications pending on said date for patents or for trademark, trade name,
service xxxx or copyright registrations, and all other proprietary rights, owned
or held by the Company, and (ii) all licenses granted by or to the Company and
all other agreements to which the Company is a party and which relate, in whole
or in part, to any items of the categories mentioned in sub-paragraph (A) above
or to other proprietary rights of the Company which are reasonably necessary to,
or used in connection with, the business of the Company;
(B) all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, profit-sharing
plans, deferred compensation agreements, employee pension or retirement plans,
employee stock purchase and stock option plans, group life insurance,
hospitalization insurance or other plans or arrangements providing for benefits
to employees of the Company;
(C) all contracts, understandings and commitments (including,
without limitation, mortgages, indentures and loan agreements) to which the
Company is a party, or to which it or any of its assets or properties are
subject and which are not specifically referred to in sub-paragraphs (A) or (B)
above or in Schedule 2.18 hereof;
(D) the names and current annual compensation rates of all
employees of the Company; and
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(E) all customer backlog which is represented by firm
purchase orders, identifying the customers, products and purchase prices.
True and complete copies of all documents and complete
descriptions of all oral understandings, if any, referred to in
Schedules 2.18 and 2.19 have been provided or made available to Buyer
and its counsel.
2.20 Business Property Rights. The property referred to in Section
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2.19(A) above, together with (i) all designs, methods, inventions and know-how
related thereto and (ii) all trademarks, trade names, service marks, and
copyrights claimed or used by the Company which have not been registered
(collectively "Business Property Rights"), constitute all such proprietary
rights owned or held by the Company. The Company owns or has valid rights to use
all such Business Property Rights without, to the best of Shareholders'
knowledge, conflict with the rights of others. Except as set forth in Schedule
2.23 hereto, no person or corporation has made or, to the knowledge of
Shareholders or the Company, threatened to make any claims that the operation of
the business of the Company is in violation of or infringes any Business
Property Rights or any other proprietary or trade rights of any third party. To
the knowledge of Shareholders or the Company, no third party is in violation of
or is infringing upon any Business Property Rights.
2.21 No Breach or Default. The Company is not in default under any
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contract to which it is a party or by which it is bound, nor has any event
occurred which, after the giving of notice or the passage of time or both, would
constitute a default under any such contract. Shareholders have no reason to
believe that the parties to such contracts will not fulfill their obligations
under such contracts in all material respects or are threatened with insolvency.
2.22 Labor Controversies. The Company is not a party to any collective
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bargaining agreement. There are not any controversies between the Company and
any of its employees which might reasonably be expected to materially adversely
affect the conduct of its business, or any unresolved labor union grievances or
unfair labor practice or labor arbitration proceedings pending or threatened
relating to its business, and there are not any organizational efforts presently
being made or threatened involving any of the Company's employees. The Company
has not received notice of any claim that the Company has not complied with any
laws relating to the employment of labor, including any provisions thereof
relating to wages, hours, collective bargaining, the payment of social security
and similar taxes, equal employment opportunity, employment discrimination and
employment safety, or that the Company is liable for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing.
2.23 Litigation. Except as set forth in Schedule 2.23, there are no
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actions, suits or proceedings with respect to the Company involving claims by or
against Shareholders or the Company which are pending or threatened against
Shareholders or the Company, at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality. No basis for any action, suit or proceeding exists,
and there are no orders, judgments, injunctions or decrees of any court or
governmental agency with respect to which Shareholders or the Company has been
named or to which Shareholders or the Company is a party, which apply, in whole
or in part, to the business of the Company, or to any of the assets or
properties of the Company or the Company Shares or which would result in any
material adverse change in the business or prospects of the Company.
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2.24 Bank Accounts. The name of each bank, savings institution or other
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person with which the Company has an account or safe deposit box and the names
and identification of all persons authorized to drawn thereon or to have access
thereto are as set forth on Schedule 2.24.
2.25 Powers of Attorney. There are no persons holding powers of
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attorney from the Company.
2.26 Insurance. A list of all insurance policies owned by the Company,
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together with a brief statement of the coverage thereof, are as set forth on
Schedule 2.26.
2.27 No Brokers. Neither Shareholders nor the Company has entered into
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any contract, arrangement or understanding with any person or firm which may
result in the obligation of Buyer or the Company to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, and neither Shareholders nor the Company are aware of any
claim or basis for any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
2.28 No Misrepresentation or Omission. No representation or warranty by
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Shareholders in this Article 2 or in any other Article or Section of this
Agreement, or in any certificate or other document furnished or to be furnished
by Shareholders pursuant hereto, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained therein not misleading or will omit to state a
material fact necessary in order to provide Buyer with accurate information as
to the Company.
3. Representations and Warranties of Buyer. Buyer represents and warrants
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to Shareholders as follows:
3.1 Existence and Good Standing. Buyer is a corporation duly
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incorporated, validly existing and in good standing under the laws of the State
of Nevada. Buyer is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of all other jurisdictions in
which the character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary.
3.2 Corporate Authority. Buyer has all requisite corporate
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power and authority to own its properties and carry on its business as now
conducted.
3.3 Compliance with Law. Buyer is not in default with respect to any
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order of any court, governmental authority or arbitration board or tribunal to
which Buyer is a party or is subject, and Buyer is not in violation of any laws,
ordinances, governmental rules or regulations to which it is subject. Buyer has
obtained all licenses, permits or other authorizations and has taken all actions
required by applicable laws or governmental regulations in connection with its
business as now conducted.
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3.4 Authorization; Validity and Effect of Agreements. The execution and
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delivery of this Agreement and all agreements and documents contemplated hereby
by Buyer, and the consummation by it of the transactions contemplated hereby,
have been duly authorized by all requisite corporate action. This Agreement
constitutes, and all agreements and documents contemplated hereby when executed
and delivered pursuant hereto will constitute, the valid and legally binding
obligations of Buyer enforceable in accordance with their terms, except that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws of general
application now or hereafter in effect relating to the enforcement of creditors'
rights generally and except that the remedies of specific performance,
injunction and other forms of equitable relief are subject to certain tests of
equity jurisdiction, equitable defenses and the discretion of the court before
which any proceeding therefor may be brought. The execution and delivery of this
Agreement by Buyer does not and the consummation of the transactions
contemplated hereby will not (i) require the consent of any third party, (ii)
result in the breach of any term or provision of, or constitute a default under,
or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or the lapse of time or both) any obligation under,
or result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any part of the property of the Company
pursuant to any provision of, any order, judgment, arbitration award,
injunction, decree, indenture, mortgage, lease, license, lien, or other
agreement or instrument to which Buyer is a party or by which it is bound, and
(iii) violate or conflict with any provision of the by-laws or articles of
incorporation of Buyer as amended to the date of this Agreement.
3.5 Capital Structure The authorized capital stock of the Buyer
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consists of Seventy-Five Million (75,000,000) shares of Common Stock at $.001
par value per share. There are Twenty-Two Million Six Hundred and Eight Thousand
(22,608,000) shares issued and outstanding prior to the closing date of this
agreement. Except as set forth above, no shares of capital stock or other equity
securities of the Buyer are issued, reserved or outstanding. All outstanding
shares of capital stock of the Buyer are duly authorized, validly issued, fully
paid and non-assessable and not subject to preemptive rights. There are no
outstanding bonds, debentures, notes or other indebtedness or other securities
of the buyer having the right to vote (convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of the
Buyer may vote. There are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Buyer is a party or by which it is bound obligating the Buyer to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity or voting securities of the Buyer. There
are no agreements or arrangements pursuant to which the Buyer is or could be
required to register shares of Buyer Common Stock or other securities under the
Securities Act of 1933, as amended (the "Securities Act") or other agreements or
arrangements with or among any security holders of the Buyer with respect to the
securities of the Buyer.
3.6 Absence of undisclosed liabilities. The Buyer has not had nor does
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it have any indebtedness, loss or liability of any nature whatsoever (other than
those occurred in the normal course of business) whether accrued, absolute or
contingent.
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3.7 Absence of Certain Changes or Events. Since April 30, 2006, the
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Company has conducted its business only in the ordinary course of consistent
past practice, and there is not and has not been: (i) any material adverse
change with respect to the Buyer; (ii) any condition, event or occurrence which
individually or in the aggregate could reasonably be expected to have a material
adverse effect or give rise to a material adverse change with respect to the
Buyer.
3.8 Financial Statements of Buyer. The Buyer warrants and represents
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that the financial statements found on schedule 2.18 fairly represent the
financial position of the Buyer as at April 30, 2006. The Buyer further
represents that no material changes have occurred since April 30, 2006.
4. Other Covenants and Agreements.
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4.1 Indemnification by Shareholders. Upon the terms and subject to the
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conditions set forth in Section 4.4 hereof, Shareholders agree to indemnify and
hold Buyer and the Company harmless against, and will reimburse Buyer (or the
Company if Buyer so requests) on demand for, any payment, loss, damage
(including incidental and consequential damages), cost or expense (including
reasonable attorney's fees and reasonable costs of investigation incurred in
defending against such payment, loss, damage, cost or expense or claim therefor)
made or incurred by or asserted against Buyer or the Company at any time after
the Closing Date in respect of any omission, misrepresentation, breach of
warranty, or nonfulfillment of any term, provision, covenant or agreement on the
part of Shareholders contained in this Agreement, or from any misrepresentation
in, or omission from, any certificate or other instrument furnished or to be
furnished to Buyer pursuant to this Agreement.
4.2 Indemnification by Buyer. Upon the terms and subject to the
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conditions set forth in Section 4.4 hereof, Buyer agrees to indemnify and hold
Shareholders harmless against, and will reimburse Shareholders on demand for,
any payment, loss, damage (including incidental and consequential damages), cost
or expense (including reasonable attorney's fees and reasonable costs of
investigation incurred in defending against such payment, loss, damage, cost or
expense or claim therefor) made or incurred by or asserted against Shareholders
at any time after the Closing Date in respect of any omission,
misrepresentation, breach of warranty, or nonfulfillment of any term, provision,
covenant or agreement on the part of Buyer contained in this Agreement, or from
any misrepresentation in, or omission from, any certificate or other instrument
furnished or to be furnished to Shareholders pursuant to this Agreement.
4.3 Tax Indemnity. Upon the terms and subject to the conditions set
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forth in Section 4.4 hereof, Shareholders agree to indemnify and hold Buyer and
the Company harmless against, and will reimburse Buyer (or the Company if Buyer
so requests) on demand for:
(A) any and all tax deficiencies in respect of federal, state,
local and foreign sales, use, income or franchise tax or taxes based on or
measured by income, including any interest or penalties thereon and legal fees
and expenses incurred by Buyer and the Company with respect to the taxable year
ended December 31, 2005, and all prior taxable years; and
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(B) any and all such taxes, interest, penalties and legal fees
and expenses in respect of the period from January 1, 2006 up to and including
the Closing Date, but only to the extent that such deficiencies, taxes,
interest, penalties and legal fees and expenses exceed, in the aggregate, the
amount of the aggregate reserves for such taxes, if any, shown as liabilities on
the Closing Balance Sheet.
The indemnity provided for in this Section 4.3 shall be independent of and in
addition to any other indemnity provision of this Agreement and, anything in
this Agreement to the contrary notwithstanding, including Section 4.4B(ii)
hereof, shall survive indefinitely.
4.4 Conditions of Indemnification. With respect to any actual or
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potential claim, any written demand, the commencement of any action, or the
occurrence of any other event which involves any matter or related series of
matters (a "Claim") against which a party hereto is due to be indemnified (the
"Indemnified Party") by the other party (the "Indemnifying Party") under
Sections 4.1, 4.2 or 4.3 hereof:
(A) Promptly (and in no event no more than 30 days) after (i)
Shareholders (if Shareholders are the Indemnified Party), or (ii) the President
of the Buyer or the Company (if Buyer or the Company is the Indemnified Party)
first receives written documents pertaining to the Claim, or if such Claim does
not involve a third party Claim (a "Third Party Claim"), promptly (and in no
event no more than 30 days) after (i) Shareholders (if Shareholders are the
Indemnified Party), or (ii) the President of the Buyer or the Company (if Buyer
or the Company is the Indemnified Party) first has actual knowledge of such
Claim, the Indemnified Party shall give notice to the Indemnifying Party of such
Claim in reasonable detail and stating the amount involved, if known, together
with copies of any such written documents.
(B) The Indemnifying Party shall have no obligation to
indemnify the Indemnified Party with respect to any Claim if the Indemnified
Party fails to give the notice with respect thereto in accordance with Section
4.4(A) hereof.
(C) If the Claim involves a Third Party Claim, then the
Indemnifying Party shall have the right, at its sole cost, expense and ultimate
liability regardless of the outcome, and through counsel of its choice (which
counsel shall be reasonably satisfactory to the Indemnified Party), to litigate,
defend, settle or otherwise attempt to resolve such Third Party Claim; provided,
however, that if in the Indemnified Party's reasonable judgment a conflict of
interest may exist between the Indemnified Party and the Indemnifying Party with
respect to such Third Party Claim, then the Indemnified Party shall be entitled
to select counsel of its own choosing, reasonably satisfactory to the
Indemnifying Party, in which event the Indemnifying Party shall be obligated to
pay the fees and expenses of such counsel. Notwithstanding the preceding
sentence, the Indemnified Party may elect, at any time and at the Indemnified
Party's sole cost, expense and ultimate liability, regardless of the outcome,
and through counsel of its choice, to litigate, defend, settle or otherwise
attempt to resolve such Third Party Claim. If the Indemnified Party so elects
(for reasons other than the Indemnifying Party's failure or refusal to provide a
defense to such Third Party Claim), then the Indemnifying Party shall have no
obligation to indemnify the Indemnified Party with respect to such Third Party
Claim, but such disposition will be without prejudice to any other right the
Indemnified Party may have to indemnification under Section 4.1, 4.2 or 4.3
hereof, regardless of the outcome of such Third Party Claim. If the Indemnifying
Party fails or refuses to provide a defense to any Third Party Claim, then the
Indemnified Party shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim, through counsel of its choice, on behalf
11
of and for the account and at the risk of the Indemnifying Party, and the
Indemnifying Party shall be obligated to pay the costs, expenses and attorney's
fees incurred by the Indemnified Party in connection with such Third Party
Claim. In any event, Buyer, the Company and Shareholders shall fully cooperate
with each other and their respective counsel in connection with any such
litigation, defense, settlement or other attempted resolution.
4.5 Taxes and Expenses.
------------------
(A) Shareholders hereby covenant and agree to assume and pay
all taxes imposed on Shareholders arising from or relating to the transactions
as contemplated by this Agreement. Except as otherwise specifically provided for
in this Agreement, Shareholders shall be individually responsible for and shall
personally pay all costs, liabilities and other obligations incurred by
Shareholders in connection with the performance of and compliance with all
transactions, agreements and conditions contained in this Agreement to be
performed or complied with by Shareholders, including legal and accounting fees.
In no event shall any of such taxes, costs, liabilities or other obligations be
paid by or incurred on behalf of the Company.
(B) Except as otherwise specifically provided for in this
Agreement, Buyer will assume and pay all costs, liabilities and other
obligations incurred by Buyer in connection with the performance of and
compliance with all transactions, agreements and conditions contained in this
Agreement to be performed or complied with by Buyer, including legal and
accounting fees.
4.6 Company Cooperation. Subject to the terms and conditions of this
--------------------
Agreement, Shareholders will use their best efforts to cause the Company, its
officers, directors, employees, accountants, consultants, advisors and agents,
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
4.7 Exclusive Dealing.
-----------------
(A) Prior to the termination of this Agreement, Shareholders
shall not authorize or permit, and shall not allow the Company or any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of any of the foregoing, to (i) solicit or initiate or encourage
the submission of any Acquisition Proposal (as herein defined) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonable
be expected to lead to any Acquisition Proposal. For purposes of this Agreement,
"Acquisition Proposal" means any inquiry about or proposal for the acquisition
to purchase of a substantial amount of assets of the Company or any type of
exchange offer or other offer that if consummated would result in any person
beneficially owning any equity securities of the Company, or any merger,
consolidation, business combination, sale of any material assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company (or equity securities thereof) other than transactions contemplated by
this Agreement, or any other transaction the consummation of which would
12
reasonable be expected to impede, interfere with, prevent or materially delay
the transaction contemplated by this Agreement, or which would reasonably be
expected to dilute materially the benefits to Buyer of the transaction
contemplated by this Agreement.
(B) During the term of this Agreement, Shareholders shall not,
nor permit the Company to, (i) approve or recommend, consider or evaluate or
cause to be considered or evaluated, any Acquisition Proposal or (ii) enter into
any agreement or understanding with respect to any Acquisition Proposal.
Shareholders acknowledge and agree that they are not required or obligated in
order to comply with any fiduciary or other duty to review, consider or take any
action with respect to any Acquisition Proposal (including, without limitation,
any action prohibited by this Section) during the term of this Agreement.
4.8 Public Announcements. Neither Shareholders nor Buyer will at any
---------------------
time, without the prior written consent of the other, make any announcement,
issue any press release or make any statement with respect to this Agreement or
any of the terms or conditions hereof except as may be necessary to comply with
any law, regulation or order and then only after written notice to the other
party of the timing, context and content of such announcement, press release or
statement; provided, however, that subsequent to the Closing Buyer may disclose
the consummation of the transaction herein contemplated without the consent of
the Shareholders.
5. Conditions of Closing.
---------------------
5.1 Buyer's Conditions of Closing. The obligation of Buyer
--------------------------------
to purchase and pay for the Company Shares shall be subject to and
conditioned upon the satisfaction (or waiver by Buyer) at the Closing of each of
the following conditions:
(A) All representations and warranties of Shareholders
contained in this Agreement and the Schedules hereto shall be true and correct
at and as of the Closing Date, Shareholders shall have performed all agreements
and covenants and satisfied all conditions on its part to be performed or
satisfied by the Closing Date pursuant to the terms of this Agreement, and Buyer
shall have received a certificate of the Shareholders dated the Closing Date to
such effect.
(B) There shall have been no material adverse change since the
date of the Audited Balance Sheet in the financial condition, business or
affairs of the Company, and the Company shall not have suffered any material
loss (whether or not insured) by reason of physical damage caused by fire,
earthquake, accident or other calamity which materially affects the value of its
assets, properties or business, and Buyer shall have received a certificate of
the Shareholders dated the Closing Date to such effect.
(C) Shareholders shall have delivered to Buyer a Certificate
of the Secretary of State (or other authorized officer) of the Company's
jurisdiction of incorporation certifying as of a date reasonably close to the
Closing Date that the Company has filed all required reports, paid all required
fees and taxes, and is, as of such date, in good standing and authorized to
transact business as a domestic corporation.
13
(D) Shareholders shall have delivered to Buyer certificates
and other instruments representing all Company Shares, duly endorsed for
transfer or accompanied by appropriate stock powers (in either case executed in
blank or in favor of Buyer with the execution thereof guaranteed by a bank or
trust company), together with all other documents necessary or appropriate to
validly transfer the Company Shares to Buyer free and clear of all security
interests, liens, encumbrances and adverse claims.
(E) Buyer shall have received from counsel for the Company and
its Shareholders, an opinion, dated the Closing Date, in form and substance
satisfactory to Buyer and its counsel.
(F) Intentionally Deleted
(G) Neither any investigation of the Company by Buyer, nor the
Schedules attached hereto or any supplement thereto nor any other document
delivered to Buyer as contemplated by this Agreement, shall have revealed any
facts or circumstances which, in the sole and exclusive judgment of Buyer and
regardless of the cause thereof, reflect in an adverse way on the Company or its
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects.
(H) The approval and all consents from third parties and
governmental agencies required to consummate the transactions contemplated
hereby shall have been obtained.
(I) No suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or legal or administrative
proceeding shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby.
(J) As of the Closing, there shall be no effective injunction,
writ, preliminary restraining order or any order of any nature issued by a court
of competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as so provided or imposing any conditions on the
consummation of the transactions contemplated hereby, which is unduly burdensome
on Buyer.
(K) As of the Closing, there shall have been no material
adverse change in the amount of issued and outstanding
common stock of the Company.
5.2 Shareholders's Conditions of Closing. The obligation of
-------------------------------------
Shareholders to sell the Company Shares shall be subject to and conditioned upon
the satisfaction (or waiver by Shareholders) at the Closing of each of the
following conditions:
(A) All representations and warranties of Buyer contained in
this Agreement shall be true and correct at and as of the Closing Date and Buyer
shall have performed all agreements and covenants and satisfied all conditions
on its part to the performed or satisfied by the Closing Date pursuant to the
terms of this Agreement, and Shareholders shall have received a certificate of
Buyer dated the Closing Date to such effect.
14
(B) Buyer shall have effected payment of the Purchase Price in
accordance with Section 1.3 of this Agreement by delivering to Shareholders
certificates and other instruments representing Buyer's Shares, duly endorsed
for transfer or accompanied by appropriate stock powers (in either case executed
in blank or in favor of Shareholders with the execution thereof guaranteed by a
bank or trust company), together with all other documents necessary or
appropriate to validly transfer the Buyer's Shares to Shareholders free and
clear of all security interests, liens, encumbrances and adverse claims.
(C) Buyer shall have delivered to Shareholders a Certificate
of its corporate Secretary certifying:
(1) Resolutions of its Board of Directors authorizing
execution of this Agreement and the execution, performance and delivery of all
agreements, documents and transactions contemplated hereby; and
(2) The incumbency of its officers executing this Agreement
and all agreements and documents contemplated hereby.
(D) The approval and all consents from third parties and
governmental agencies required to consummate the transactions contemplated
hereby shall have been obtained.
(E) No suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or legal or administrative
proceeding shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby.
(F) Intentionally Deleted
(G) As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so provided or imposing
any conditions on the consummation of the transactions contemplated hereby,
which is unduly burdensome on Shareholders.
(H) As of the Closing, there shall have been no material
adverse change in the amount of issued and outstanding common stock of Buyer.
6. Termination.
-----------
6.1 Methods of Termination. The transactions contemplated herein may be
----------------------
terminated and/or abandoned at any time before or after approval thereof by
Shareholders and Buyer, but not later than the Closing:
6.1.1 By mutual consent of Buyer and Shareholders; or
6.1.2 By Buyer, if any of the conditions provided for in
Section 5.1 hereof shall not have been met or waived in
writing by Buyer at or prior to Closing; or
15
6.1.3 By Shareholders, if any of the conditions provided for
in Section 5.2 hereof shall not have been met or waived in
writing by Shareholders at or prior to Closing.
6.2 Procedure Upon Termination. In the event of termination by Buyer or
--------------------------
Shareholders, as applicable, pursuant to Section 6.1 hereof, written notice
thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated without further action by
Buyer or Shareholders. If the transactions contemplated by this Agreement are so
terminated:
6.2.1 Each party will redeliver all documents, work
papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before
or after the execution of this Agreement, to the party
furnishing the same; and
6.2.2 No party hereto shall have any liability or
further obligation to any other party to this Agreement except
that if such termination is a result of the failure of any
condition set forth in (i) Sections 5.1(A) through 5.1(F) and
5.1(I) hereof, then Buyer shall be entitled to recover from
Shareholders all out-of-pocket costs which Buyer has incurred
(including reasonable attorney's fees, accounting fees and
expenses); and (ii) Sections 5.2(A) through 5.2(D) hereof,
then Shareholders shall be entitled to recover from Buyer all
out-of-pocket costs which Shareholders has incurred (including
reasonable attorney's fees, accounting fees and expenses).
7 Miscellaneous.
-------------
7.1 Notice. Any notice required or permitted hereunder shall be in
-------
writing and shall be sufficiently given if personally delivered or mailed by
certified or registered mail, return receipt requested, addressed as follows:
If to Buyer: Xxxxxxxx Lake Mining, Inc.
----------------------
----------------------
Copy to: The X'Xxxx Law Firm, P.C.
00000 X. Xxxx Xxxxxxxxx
Xxxxx000-X
Xxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. X'Xxxx, Esq.
Fax: 000-000-0000
16
If to Shareholders: Rm 508,
Xx. 000, Xxx Xxxx Xxxxxx,
Xx-xxxx Xxxxxxx Xxxx, XxXxx
Copy to:
==================
If to Company Jinan Yinquan Technology Co., Ltd.
Rm 508,
Xx. 000, Xxx Xxxx Xxxxxx,
Xx-xxxx Xxxxxxx Xxxx, XxXxx
If to Apollo Corporation:
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so personally
delivered or mailed.
7.2 Execution of Additional Documents. The parties hereto will at any
----------------------------------
time, and from time to time after the Closing Date, upon request of the other
party, execute, acknowledge and deliver all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances as may be
reasonably required to carry out the intent of this Agreement, and to transfer
and vest title to any Company Shares being transferred hereunder, and to protect
the right, title and interest in and enjoyment of all of the Company Shares
sold, granted, assigned, transferred, delivered and conveyed pursuant to this
Agreement; provided, however, that this Agreement shall be effective regardless
of whether any such additional documents are executed.
7.3 Binding Effect; Benefits. This Agreement shall be binding upon and
-------------------------
shall inure to the benefit of the parties hereto and their respective heirs,
successors, executors, administrators and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
7.4 Entire Agreement. This Agreement, together with the Exhibits,
-----------------
Schedules and other documents contemplated hereby, constitute the final written
expression of all of the agreements between the parties, and is a complete and
exclusive statement of those terms. It supersedes all understandings and
negotiations concerning the matters specified herein. Any representations,
promises, warranties or statements made by either party that differ in any way
from the terms of this written Agreement and the Exhibits, Schedules and other
documents contemplated hereby, shall be given no force or effect. The parties
specifically represent, each to the other, that there are no additional or
supplemental agreements between them related in any way to the matters herein
contained unless specifically included or referred to herein. No addition to or
modification of any provision of this Agreement shall be binding upon any party
unless made in writing and signed by all parties.
17
7.5 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Nevada exclusive of the conflict of
law provisions thereof.
7.6 Survival. All of the terms, conditions, warranties and
--------
representations contained in this Agreement shall survive the Closing.
7.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
7.8 Headings. Headings of the Articles and Sections of this Agreement
--------
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
7.9 Waivers. Either Buyer or Shareholders may, by written notice to the
-------
other, (i) extend the time for the performance of any of the obligations or
other actions of the other under this Agreement; (ii) waive any inaccuracies in
the representations or warranties of the other contained in this Agreement or in
any document delivered pursuant to this Agreement; (iii) waive compliance with
any of the conditions or covenants of the other contained in this Agreement; or
(iv) waive performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including without limitation any investigation by or
on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
7.10 Merger of Documents. This Agreement and all agreements and
-------------------
documents contemplated hereby constitute one agreement and are interdependent
upon each other in all respects.
7.11 Incorporation of Exhibits and Schedules. All Exhibits and
Schedules attached hereto are by this reference incorporated herein and made a
part hereof for all purposes as if fully set forth herein.
7.12 Severability. If for any reason whatsoever, any one or more
of the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases, such
circumstances shall not have the effect of rendering such provision invalid in
any other case or of rendering any of the other provisions of this Agreement
inoperative, unenforceable or invalid.
18
7.13 Assignability. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto without the prior
written consent of the other parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first above
written.
COMPANY:
JINAN YINQUAN TECHNOLOGY CO., LTD., an equity joint venture under the
laws of the Republic of China
By: /s/ Li Kunwu
----------------------
Its: President and CEO
BUYER:
XXXXXXXX LAKE MINING, INC., a Nevada corporation
By:/s/ Xxxxx Xxxxxxx
--------------------
Its: President
MAJORITY SHAREHOLDER OF BUYER:
Apollo Corporation
By: /s/ Xxxxx Xxxxx
-------------------
Its: President
