EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into
as of April 8, 2003 by and among BROOK INDUSTRIES CORP., a Delaware
corporation ("Brook"), and the stockholders of SHANGHAI ORIENTAL AUTOMOTIVE
PARTS DEVELOPMENT CO., LIMITED, a Chinese corporation ("Shanghai Oriental"),
listed on the list of selling stockholders ("List of Selling Stockholders")
attached as Exhibit "A" hereto and who have executed this Agreement
("Selling Stockholders").
R E C I T A L S
A. Brook has authorized capital stock consisting of 80,000,000 shares
of common stock ("Common Stock"), $.0001 par value, and 10,000,000 shares of
preferred stock ("Preferred Stock"), $.0001 par value, of which 5,000,000
shares of Common Stock and no shares of Preferred Stock are issued and
outstanding.
B. The Selling Shareholders are the sole stockholders of Shanghai
Oriental, and the Selling Stockholders wish to sell, and Brook wishes to
acquire, all of the Shanghai Oriental Shares on the Closing Date (as defined
below), in exchange for Brook's issuance of 35,900,000 shares of Brook's
authorized and but not previously issued Common Stock ("Brook Shares") to the
Selling Stockholders, subject to and upon the terms and conditions hereinafter
set forth.
C. Immediately following the signing of the Agreement, but prior to the
Close (as defined below), Brook intends to change its corporate name to
"Oriental Automotive Parts Development (China) Co., Ltd.", as requested by
Shanghai Oriental.
D. Immediately prior to the Close (as defined below), the sole
shareholder of Brook intends to return 4,900,000 shares of Brook's Common Stock
to Brook for retirement.
A G R E E M E N T
It is agreed as follows:
1. SECURITIES PURCHASE AND REORGANIZATION.
1.1 Agreement to Exchange Securities. Subject to the terms and upon
the conditions set forth herein, each Selling Stockholder agrees to sell,
assign, transfer and deliver to Brook, and Brook agrees to purchase from each
Selling Stockholder, at the Closing, the Shanghai Oriental Shares owned by
the respective Selling Stockholder as set forth on the List of Selling
Stockholders, in exchange for the issuance of an aggregate of 35,900,000 shares
of Brook's authorized and but not previously issued Common Stock, at the
Closing, by Brook to each Selling Stockholder of a pro rata share of the Brook
Shares.
1.2. Issuance of Shares
(a) Upon the Closing of this Agreement, Brook shall cause to be
issued and delivered to Shanghai Oriental, stock certificates representing
35,900,000 shares of Common Stock of Brook, par value $.0001 per share.
(b) The shares of Brook Common Stock to be issued hereunder shall
be authorized but previously unissued shares of Brook Common Stock and shall
be issued directly to and in the name of the shareholders of Shanghai Oriental.
1.3 Closing. The closing of this Agreement and the transactions
contemplated hereby (the "Closing") shall take place on or before April 15,
2003 (the "Closing Date"), at a time and place to be mutually agreed to by
the Selling Shareholders and Brook. Prior to or contempor-aneous with the
Closing, (i) the board of directors of Brook shall appoint to the board of
directors of Brook, effective upon the Closing, Xxxxx Xxxx Wei, Wu Xx Xxxxx,
Xxxxx Xxxx Xx, Xxx Xxx Xxxxx and Li Xx Xxxx; (ii) all of the pre-Closing
officers and directors of Brook shall submit to Brook and the Selling
Shareholders their written resignations to be effective as of the Closing;
and (iii) An amendment to the Certificate of Incorporation of Brook shall be
filed with the State Secretary of Delaware to (a) change Brook's corporate
name from "Brook Industries Corp." to "Oriental Automotive Parts Development
(China) Co., Ltd." ("Oriental China"); (b) increase the number of the
authorized shares of Preferred Stock of Oriental China from 10,000,000 shares
to 20,000,000 shares; and (c)increase the par value of Oriental China's
capital stock, both Common Stock and Preferred Stock, from $.0001 per share
to $0.1 per share. As a result of said amendment, the authorized capital
stock of Oriental China will be consisting of 90,000,000 shares of common
stock, $0.1 par value, and 10,000,000 shares of preferred stock ("Preferred
Stock"), $0.1 par value
The Selling Shareholders shall be responsible for preparing and filing
all appropriate information, financial statements and periodic reports
required to be filed by Brook after the Closing with the Securities and Exchange
Commission under the Securities Exchange Act of 1934.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Each Selling Stockholder severally represents, warrants and covenants to
and with BROOK with respect to himself, as follows:
2.1. Power and Authority. The Selling Stockholder has all requisite
power and authority to enter into and carry out all of the terms of this
Agreement and all other documents executed and delivered in connection herewith
(collectively, the "Documents"). All individual action on the part of the
Selling Stockholder necessary for the authorization, execution, delivery and
performance of the Documents by the Selling Stockholder has been taken and no
further authorization on the part of the Selling Stockholder is required to
consummate the transactions provided for in the Documents. When executed and
delivered by the Selling Stockholder, the Documents shall constitute the valid
and legally binding obligation of the Selling Stockholder enforceable in
accordance with their respective terms.
2.2. Ownership of and Title to Securities. Exhibit A to this Agreement
accurately and completely sets forth all of the capital stock of Shanghai
Oriental owned by the Selling Stockholder. There are no warrants, options,
subscriptions, calls, or other similar rights of any kind for the issuance or
purchase of any securities of Shanghai Oriental held by the Selling Stockholder
or, to his knowledge, any other person. The Selling Stockholder represents that
the Selling Stockholder will transfer to BROOK good and marketable title to
the Shanghai Oriental Shares which he owns, free and clear of all pledges,
security interests, mortgages, liens, claims, charges, restrictions or
encumbrances.
2.3. Investment and Related Representations. The Selling Stockholder is
aware that the BROOK Shares that will be issued to the Selling Stockholder
under the terms of this Agreement have not been registered under the Securities
Act of 1933, as amended ("Securities Act"), or under any state securities law.
The Selling Stockholder understands that the Brook Shares will be characterized
as "restricted" securities under federal securities laws inasmuch as they are
being acquired in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances.
The Selling Stockholder agrees that the Selling Stockholder will not sell all
or any portion of Brook Shares except pursuant to registration under the
Securities Act or pursuant to an available exemption from registration under
the Securities Act. The Selling Stockholder understands that each certificate
for Brook Shares issued to the Selling Stockholder or to any subsequent
transferee shall be stamped or otherwise imprinted with the legend set forth
below summarizing the restrictions described in this Section 2.3 and that Brook
shall refuse to transfer the Brook Shares except in accordance with such
restrictions:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"). THE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A CURRENT AND
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT WITH RESPECT TO
SUCH SHARES, OR AN OPINION OF THE ISSUER'S COUNSEL TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT.
The Selling Stockholder acknowledges having received and reviewed Brook's
SEC Reports (as defined in Section 3.4). The Selling Stockholder further
acknowledges that Brook has given to the Selling Stockholder and his counsel,
accountants and other advisors, agents, consultants and representatives, full
access to all of the properties, books, contracts, commitments and records
of Brook, and has furnished or will furnish all such information concerning
it (including its operations, financial condition and business plan) as the
Selling Stockholder has requested or may request.
3. REPRESENTATIONS AND WARRANTIES OF BROOK. Brook represents, warrants
and covenants to and with each of the Selling Stockholders as follows:
3.1. Organization and Good Standing. Brook is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and has full corporate power and authority to enter into and
perform its obligations under this Agreement.
3.2. Capitalization. The recitals to this Agreement accurately and
completely describe the authorized, issued and outstanding capital stock of
Brook. All outstanding shares of Common Stock have been duly authorized and
validly issued, and are fully paid, nonassessable, and free of any preemptive
rights. There are no agreements, options, warrants or other rights to
purchase from Brook any of Brook's authorized and unissued Preferred Stock
or Common Stock.
3.3. Validity of Transactions. This Agreement, and each document
executed and delivered by Brook in connection with the transactions
contemplated by this Agreement, and the performance of the transactions
contemplated therein have been duly authorized, executed and delivered by
Brook and is each the valid and legally binding obligation of Brook,
enforceable in accordance with its terms.. The Brook Shares issuable hereunder,
when issued in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable. The Brook Shares
will be free of any liens or encumbrances, except for any restrictions imposed
by federal or state securities laws.
3.4. Financial Statements; SEC Reports. Brook has furnished to the
Selling Shareholders its balance sheet as of December 31, 2002 and its
statements of operations, shareholders' equity and cash flows for the period
ended December 31, 2002, together with appropriate notes to such financial
statements, accompanied by reports thereon containing opinions without comment
or qualification, except as therein noted, by its independent certified public
accountants. All of the foregoing financial statements (collectively, the
"Brook Financial Statements"), including in each case the related notes, have
been prepared in conformity with generally accepted accounting principles in
the United States consistently applied and are correct and complete in all
material respects and such financial statements fairly present the financial
position of Brook as of the dates of such balance sheets and the results of
operations for the respective periods indicated.
Brook represents that it has delivered to Selling Shareholders (i) its
registration statement on Form 10-SB, and (ii) its quarterly report on Form
10-QSB for the period ended December 31, 2002 (collectively, the "SEC Reports"),
filed with the Securities and Exchange Commission ("SEC"). The information in
the SEC Reports, taken as a whole, is true and correct in all material
respects and does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Except as provided in the SEC Reports, since December 31, 2002 until the date
of this Agreement, there has been no material adverse change in the business
or financial condition of Brook.
3.5. Absence of Certain Changes or Events. Since the date of Brook's
financial statements for the period ending December 31, 2002, Brook has not
(i) issued or sold any promissory note, stock, bond, option or other corporate
security of which it was an issuer or other obligor, (ii) discharged or
satisfied any lien or encumbrance or paid any obligation or liability,
absolute or contingent, direct or indirect, (iii) incurred or suffered to be
incurred any liability or obligation whatsoever, (iv) caused or permitted any
lien, encumbrance or security interest to be created or arise on or in any
of its properties or assets, (v) declared or made any dividend, payment or
distribution to stock holders or purchased or redeemed or agreed to purchase
or redeem any shares of its capital stock, (vi) reclassified its shares of
capital stock, or (vii) entered into any agreement or transaction except in
connection with the execution and performance of this Agreement.
3.6. Assets and Liabilities. Brook has good and marketable title to all
of its assets and property, free and clear of any and all liens, claims and
encumbrances, except as may be otherwise explicitly set forth herein. As of
date hereon, Brook does not have any debts, liabilities or obligations of any
nature, whether accrued, absolute, contingent, or otherwise, whether due or
to become due, that are not fully reflected in the Brook Balance Sheet dated
December 31, 2002.
3.7. Tax Returns and Payments. All of Brook tax returns (federal or
state) which are required by law to be filed on or before the date of this
Agreement, have been duly filed with the appropriate governmental authority.
Brook has paid all taxes to be due on said returns, any assessments made
against Brook and all other taxes, fees and similar charges imposed on Brook
by any governmental authority. No tax liens have been filed and no claims
are being assessed with respect to any such taxes, fees or other similar
charges.
3.8. Compliance with Law and Government Regulations. Brook is in
compliance with and is not in violation of, applicable federal, state, or
local statutes, laws and regulations affecting its properties or the operation
of its business.
3.9. Litigation. There is no litigation, arbitration, proceeding or
investigation pending or threatened to which Brook is a party or which may
result in any material change in the business or condition, financial or
otherwise, of Brook or in any of its properties or assets, or which might
result in any liability on the part of Brook or which questions the validity
of this Agreement or of any action taken or to be taken pursuant to or in
connection with the provisions of this Agreement, and to the best knowledge
of Brook, there is no basis for any such litigation, arbitration, proceeding
or investigation.
3.10 Authority. Brook and its Board of Directors shall have approved
this Agreement and the transactions contemplated hereby prior to the Closing
and duly authorized the execution and delivery hereof. Brook has full power,
authority and legal right to enter into this Agreement and to consummate the
transactions contemplated hereby, and all corporate action necessary to
authorize the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby has been duly and validly taken.
3.11. Charter Documents. Complete and correct copies of the Certificate
of Incorporation and Bylaws of Brook have been or will be delivered to Shanghai
Oriental at the Closing.
4. MISCELLANEOUS.
4.1. Expenses. All of the expenses incurred by Brook in connection with
the authorization, preparation, execution and performance of this Agreement
by Brook, including without limitation all fees and expenses of agents,
representatives, counsel and accountants for Brook, shall be paid by Brook.
All expenses incurred by Shanghai Oriental in connection with the authorization,
preparation, execution and performance of this Agreement, including without
limitation all fees and expenses of agents, representatives and counsel, shall
be paid by Shanghai Oriental.
4.2. Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed
or not.
4.3. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement or the other documents.
4.4 Applicable Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey of the United States.
4.5. Counterparts. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts when taken together will constitute one
and the same agreement.
4.6. Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties with respect to the subject matter thereof,
and supersedes all prior and contemporaneous agreements and understandings.
IN WITNESS WHEREOF, each of the parties to this Agreement has executed
or caused this Agreement to be executed as of the date first above written.
BROOK INDUSTRIES CORP.,
a Delaware corporation
By: /s/ Xxxx Xxxx
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President and the Sole Shareholder
SHANGHAI ORIENTAL AUTOMOTIVE PARTS DEVELOPMENT CO., LIMITED
a Chinese corporation
Signed on behalf of all the Selling Shareholders of Shanghai
Oriental Automotive Parts Development Co., Limited.
By: /s/ Hong Xxx Xxxxx
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President and Chairman of the Board
Representative of all the Selling Shareholders of Shanghai
Oriental Automotive Parts Development Co., Limited
