STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (the “Agreement”)
is
made as of May 8, 2008, by and among Shine Media Acquisition Corporation, a
Delaware corporation (“Shine”),
Green
China Resources, Inc., a company incorporated under the laws of British Virgin
Islands (“Buyer”),
China
Greenscape Co. Ltd. (“Greenscape”),
a
limited liability company incorporated under the laws of the British Virgin
Islands, Jiangsu Sunshine Zoology and Forestry Development Co., Ltd. (the
“Company”),
a
company organized and existing under the laws of the People’s Republic of China
(“PRC”),
and
those persons listed on Exhibit
A
hereof
(each a “Shareholder”
and
collectively the “Shareholders”).
Greenscape, the Company and the Shareholders are collectively referred to as
the
“Sellers.”
Shine,
Buyer, Greenscape, the Company and the Shareholders shall be collectively
referred to as the “Parties”
or
individually as a “Party.”
RECITALS
WHEREAS,
Shine
is a corporation, listed in the United States under the symbol SHNDU.OB, formed
for the purpose of acquiring, direct or indirect ownership of one or more
operating businesses located in the PRC; and
WHEREAS,
Buyer
is a wholly-owned subsidiary of Shine; and
WHEREAS,
Greenscape owns one hundred percent (100%) of the issued and outstanding
ownership interest of the Company; and
WHEREAS,
Greenscape, through the Company, is in the business of providing commercial
nursery stock and forest products; and
WHEREAS,
Shareholders
are the registered owners of one
hundred percent (100%) of the common shares of Greenscape and those persons
listed on Schedule
1
to
Exhibit
B
are the
registered owners of one hundred percent (100%) of the shares of Greenscape
Series A and Series C Preferred Stock (each a “Preferred
Shareholder”
and
collectively as the “Preferred
Shareholders”);
ands
WHEREAS,
subject
to
the terms and conditions of this Agreement, at the Closing (as defined below),
Buyer shall acquire all of the common shares of Greenscape held by the
Shareholders (the “Shares”),
and
will be the registered owner of one hundred percent (100%) of the common shares
of Greenscape, and the Shareholders, in exchange, shall receive 30,800,000
newly
issued shares of ordinary shares of the Buyer (“Buyer’s
Stock”);
and
WHEREAS,
the
Parties wish to provide for the opportunity for Company to acquire all of the
issued and outstanding preference shares of Greenscape; and in order to
accomplish that objective, in addition to the purchase of the Shares, the Buyer
intends, following the Closing, to make an offer to the Preferred Shareholders
to acquire all of the Series A and Series C Preferred Shares of Greenscape
(the
“Preferred
Shares”)
held
by the Preferred Shareholders for a combination of Buyer’s ordinary shares and
cash, all as more fully described in Exhibit
B
attached
hereto (the “Exchange
Offer”),
and
subject to the acceptance of the Exchange Offer, Buyer will be the registered
owner of one hundred percent (100%) of the Greenscape Preferred Shares.
AGREEMENT
NOW
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Purchase
and Sale of the Shares.
Upon
the terms and conditions hereof, at the Closing, the Shareholders shall sell,
transfer and convey to Buyer, and Buyer shall purchase from Shareholders, all
of
the Shares. At the Closing, each Shareholder shall sell, convey, transfer and
deliver all of its right, title and interest in and to the number of shares
of
Greenscape listed on Exhibit
A
opposite
such Shareholder’s name, free and clear from any mortgage, pledge, lien, charge,
transfer restrictions and/or security interest, as provided for, recognized
and/or enforceable under the Laws of the United States, British Virgin Islands,
Hong Kong or the PRC.
(a) Consideration.
Subject
to Section 11(d), in consideration for the Shares, Buyer shall issue to the
Shareholders 30,800,000 shares of Buyer’s Stock (the “Consideration”).
The
number of Buyer’s ordinary shares to be received by each of the Shareholder is
listed opposite such Shareholder’s name on Exhibit
A
attached
to this Agreement.
(b)
Incentive
Payments.
Based
on the Buyer’s consolidated post-Closing after-tax net operating profits
(“Net
Income”)
for
its fiscal years 2008 through 2012, Shareholders shall be entitled to incentive
payments in the form of shares of Buyer Stock as set forth below. All Incentive
Payments are intended to be and shall be deemed to be additional Purchase
Consideration for all purposes. Under no circumstances shall such payments
be
deemed employment or consulting compensation. Such Incentive payments are
subject to adjustment pursuant to Section 1(d) hereof.
(i) The
2008 Incentive Payment.
If
Buyer achieves Fiscal Year 2008 Net Income of twenty four million two hundred
and thirty thousand dollars (US$24,230,000), based upon an audit of the books
and records using generally accepted accounting principals consistently applied
in the United
States (“US
GAAP”),
Buyer
shall pay to Sellers an additional four
million and two hundred thousand (4,200,000) newly issued shares of Buyer Stock
(“2008
Incentive Payment”).
(ii) The
2009 Incentive Payment.
If
Buyer achieves Fiscal Year 2009 Net Income of thirty three million three hundred
and seventeen thousand dollars (US$33,317,000), based upon an audit of the
books
and records using US
GAAP,
Buyer shall pay to Sellers an additional four
million and two hundred thousand (4,200,000) newly issued shares of Buyer Stock
(“2009
Incentive Payment”).
(iii) The
2010 Incentive Payment.
If
Buyer achieves Fiscal Year 2010 Net Income of forty one million one hundred
and
twenty nine thousand dollars (US$41,129,000), based upon an audit of the books
and records using US
GAAP,
Buyer shall pay to Sellers an additional four
million and two hundred thousand (4,200,000) newly issued shares of Buyer Stock
(“2010
Incentive Payment”).
(iv) The
2011 Incentive Payment.
If
Buyer achieves Fiscal Year 2011 Net Income of fifty three million three hundred
and eleven thousand dollars (US$53,311,000), based upon an audit of the books
and records using US
GAAP,
Buyer shall pay to Sellers an additional four
million and two hundred thousand (4,200,000) newly issued shares of Buyer Stock
(“2011
Incentive Payment”).
(v) The
2012 Incentive Payment.
If
Buyer achieves Fiscal Year 2012 Net Income of sixty five million dollars
(US$65,000,000), based upon an audit of the books and records using US
GAAP,
Buyer shall pay to Sellers an additional four
million and two hundred thousand (4,200,000) newly issued shares of Buyer Stock
(“2012
Incentive Payment”).
The
2008
Incentive Payment, 2009 Incentive Payment, 2010 Incentive Payment, 2011
Incentive Payment, and 2012 Incentive Payment are collectively referred to
as
the “Incentive
Payments.”
The
Incentive Payments shall be earned on an all-or-none basis each year. The number
of shares of Buyer Stock to be received by each of the Shareholder is listed
opposite such Shareholder’s name on Exhibit
A
attached
to this Agreement. Notwithstanding anything to the contrary, for purposes of
determining the right of the Shareholders to receive Incentive Payments, an
Incentive Payment for any year shall not be applied, whether in the year such
payment is made or in any subsequent year, to reduce Buyer’s Net Income.
The
number of shares to be issued in connection with any Incentive Payment shall
be
subject to adjustment as the result of the Company’s declaring any stock splits,
stock dividends or other recapitalizations. In any transaction in which the
Company acquires, is acquired by, merges with or otherwise combines with another
business, provision shall be made in the documents governing such transaction
to
preserve for the Shareholders the benefits afforded them under this Paragraph
(c).
(c)
Timing
and Manner of Incentive Payments.
(i) Earnings
Report.
As
promptly as possible following the end of each of the applicable time periods
as
described in Sections 1(b)(i)-(v), but in no event later than seventy-two (72)
hours after the completion of the audit of the books and records of Buyer each
year, Buyer’s auditor shall determine whether the Company has reached the
applicable milestones as defined within Sections 1(b)(i)-(v) (“Earnings Report”).
(ii) Notice
of Disagreement.
The
Shareholders shall have thirty (30) days after receipt of the Earnings Report
to
assert any disagreements with such items by written notice to Buyer
(“Notice of Disagreement”).
If
such notice is not given within such thirty (30) days, the amounts reflected
in
the Earnings Report shall be final and binding on Buyer and the Shareholders.
Any Notice of Disagreement shall specify in reasonable detail the nature of
any
disagreement so asserted. During the forty-five (45) day period following the
delivery of any Notice of Disagreement, the parties shall attempt in good faith
to amicably resolve their differences specified in the Notice of Disagreement.
If, at the end of such forty-five (45) day period the parties have not reached
agreement on such matters, either Buyer or the Shareholders shall submit the
matters that remain in dispute for arbitration by an agreed upon accounting
firm
(“Arbitrating
Accountants”)
whose
determination shall be (i) in writing, (ii) furnished to Buyer and the
Shareholders as soon as practicable (and in no event later than thirty (30)
days
after submission of the dispute to the Arbitrating Accountants); (iii) made
in
accordance with the preparation of the Earnings Report; and
(iv) nonappealable and incontestable by Buyer and the Shareholders and not
subject to collateral attack for any reason other than manifest error or fraud.
The fees and expenses of the Arbitrating Accountants shall be split 50/50
between Buyer and the Shareholders. Buyer and the Shareholders shall use its
respective commercially reasonable efforts to cooperate with the Arbitrating
Accountants and to cause the Arbitrating Accountants to resolve any dispute
no
later than thirty (30) days after submission of the dispute to the Arbitrating
Accountants in accordance with this Agreement.
(d) Minimum
Balance Sheet Requirements.
(i) At
the
Closing or as of September 30, 2008, whichever is earlier, (the “Test
Date”),
Greenscape and the Company shall have a minimum amount in cash and accounts
receivable equal to 90% of the total cash and accounts receivable indicated
on
the Greenscape and the Company’s consolidated balance sheet as of March 31, 2008
reviewed by its auditor (“First
Quarter Balance Sheet”).
(ii) In
addition, Greenscape and the Company’s Total Debt as of the Test Date shall not
exceed an amount equal to 128.8% of the Total Debt indicated on the First
Quarter Balance Sheet. For purposes of this Section, Total Debt shall mean
an
amount equal to the sum of (A) loans extended to Greenscape or Company by any
prior or existing shareholders; (B) long-term loans; (C) short-term loans;
and
(D) any other interest-bearing instruments.
(iii) From
the
date hereof to the Test Date, Greenscape and the Company shall not increase
the
Total Debt without Buyer’s written consent., unless for the purpose of acquiring
any additional Inventory or making Inventory related Prepayments (as such term
is defined under US GAAP). Should Greenscape and the Company increase Total
Debt
beyond the 128.8% indicated in the paragraph above, even if for the purposes
of
additional Inventory, it will also obtain prior written consent from
Buyer.
(iv)
On
the
Test Date, Greenscape shall deliver a balance sheet reviewed and certified
by
its auditor as of such date (the “Closing
Balance Sheet”).
The
Closing Balance Sheet shall set forth, among other things, the amount of cash
and accounts receivable as of the Test Date. To the extent that the Closing
Balance shows (A) cash and accounts receivable less than as required by this
Section 1(d)(i), or (B) the Total Debt more than as required by this Section
1(d)(ii), (collectively the “Shortfall”),
the
Incentive Payments shall be reduced on a dollar for dollar basis, with each
$5.28 of the Shortfall reducing the Incentive Payments by one (1) share. The
reduction in Incentive Payment shall be applied against each Incentive Payment
in full, as earned, until the adjustment as to the entire Shortfall shall have
been achieved. Notwithstanding the above, there is nothing in this paragraph
which would limit the Buyer’s ability to terminate the contract should the Total
Debt exceed 128.8% (unless prior written consent has been given) as noted in
the
Closing Conditions below.
(e) Lockup
Period.
All
Shareholders owning five percent (5%) or more of the outstanding ordinary shares
of Buyer after the Closing shall execute a lock-up agreement, in the form and
containing the substance of Exhibit
C-1
hereto
and incorporated herein by reference providing that such persons shall not
sell
or otherwise dispose of any of Buyer’s Stock until after December 20, 2009 (the
“Lock-up
Agreement with Ordinary Shareholders [I]”).
All
Shareholders owning more than one percent (1%) but less than five percent (5%)
shall execute a lock-up agreement, in the form and containing the substance
of
Exhibit
C-2
hereto
and incorporated herein by reference (the “Lock-up
Agreement with Ordinary Shareholders [II]”,
together with Exhibit C-1 “Lock-up
Agreement”).
2. The
Closing or the Closing Date.
The
transactions set forth herein shall close within one week of the approval by
Buyer’s shareholders of the transactions contemplated herein at the offices of
Xxxxx Xxxxxxx LLP, 200 Page Xxxx Xxxx, Xxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxxxx
00000, or at such other place and time as the parties may mutually agree
(the “Closing” or
the “Closing
Date”).
The
transactions contemplated herein may be closed by delivering the executed
signature pages via facsimile or electronic PDF file to the other Parties
followed by original signature pages sent promptly by overnight courier.
(a) Documents
Delivered by the Sellers.
Subject
to the terms and conditions hereof, on the Closing, Sellers shall deliver to
Buyer the following documents and instruments:
(i)
this
Agreement executed by the Sellers;
(ii) stock
certificates evidencing the Shares, with the assignments endorsed thereon or
with an executed assignment separate from the certificate;
(iii)
one
(1)
copy resolution of the Board of Directors of Greenscape approving this
Agreement, any ancillary documents to this Agreement and the transactions
contemplated herein;
(iv)
certificates
in compliance with Section 7(c) below;
(v)
an
opinion of the Company’s PRC legal counsel in the form and substance
satisfactory to Buyer’s counsel (“PRC
Legal Opinion”)
as set
forth in Exhibit
D
attached
hereto and incorporated hereby reference;
(vi)
an
opinion of the legal counsel (“BVI
Legal Opinion”)
of
Greenscape in form and substance as set forth in Exhibit
E
;
(vii)
a
letter
from the Company’s certified public accountant in form and substance
satisfactory to Buyer that the Financial Statements (as defined below) are
substantially in accordance with the Company’s books and records, complete and
accurate in all material respects and prepared in accordance with US GAAP and
fairly present the financial condition of and operating results of the Company
during the period indicated therein;
(viii) employment
agreements (“Employment
Agreements”)
executed by Zhu Zhenghong, Xxxxxxx Xxx, and Xxxx Xxxxxxxx (collectively
“Management
Team”)
respectively in form attached hereto as Exhibit
F
and
incorporated hereby reference;
(ix)
the
appropriate Lock-up Agreements executed by each
Shareholder;
(x) Disclosure
Schedule of Sellers;
(xi)
Officer’s
Certificate;
(xii) Seller’s
Certificate; and
(xiii) any
approvals required by the Ministry of Commerce of the People’s Republic China
(“MOFCOM”)
or
other PRC governmental agencies.
(b) Documents
Delivered by Buyer.
Subject
to the terms and conditions hereof on the Closing, Buyer shall deliver the
following documents and instruments:
(i)
a
copy of
this Agreement executed by Buyer and Shine;
(ii)
resolutions
of the Board of Directors of Shine and Buyer approving this Agreement and any
ancillary documents to this Agreement and the transactions contemplated herein,
and the appointment of the new officers providing that such appointments to
take
effect upon the Closing;
(iii)
resolutions
of stockholders of Shine approving this Agreement and the transactions set
forth
herein;
(iv) evidence
of the appointment of members to the Board of Directors of Buyer, as set forth
in Section 9(b)(iv) hereof, as required by law of British Virgin Islands or
its
memorandum and articles of association.
(v) certificates
representing the new shares of Buyer’s Stock issued to each Shareholder as set
forth on Exhibit
A;
and
(vi) Disclosure
Schedule of Shine and Buyer;
(v) evidence
of down payment to Shine’s investment bankers of $25,000 and $150,000 for the
balance due upon delivery of the fairness opinion.
3. The
Company’s Representations and Warranties.
Except
as set forth in the Disclosure Schedule delivered in connection herewith, the
Company, Greenscape and Shareholders hereby jointly and severally represent
and warrant to Buyer and Shine as of the date hereof and at and as of the
Closing as follows:
(a) Capitalization
of Company.
Greenscape is the owner of one hundred percent (100%) of the issued and
outstanding equity securities of the Company and there are no outstanding
warrants, options, conversion privileges, preemptive rights, voting agreements
or similar arrangements, or other rights or agreements to purchase or otherwise
acquire or issue any capital stock or other equity interests of the Company.
(b) Binding
Obligation.
This
Agreement, and all related agreements, constitute the legal, binding and valid
obligations of the Company, enforceable in accordance with their respective
terms.
(c) Corporate
Organization and Authority.
The
Company: (i) is a limited liability company duly organized, validly existing
and
in good standing under the laws of the PRC; (ii) is authorized to exercise
all
of its powers, rights and privileges and is in good standing in PRC; (iii)
has
the power and authority to own and operate its properties and to carry on its
business as now conducted; and (iv) is qualified to do business in all
jurisdictions in which such qualification is required.
(d) Subsidiaries;
Transactions with Affiliates.
Schedule
3(d)
lists
the Company’s subsidiaries, associations, other business entities and any joint
ventures or partnerships that the Company is directly or indirectly involved.
No
director, officer, key employee of the Company, spouse, parent, sibling, child
or other relative or family member of any such director or key employee, and
no
entity controlled by any of the foregoing, has (i) any agreement, understanding,
proposed transaction with, indebtedness owing to, commitments to make loans
to,
or to extend or guarantee credit from, the Company other than in the ordinary
course of business; or (ii) any direct or indirect ownership interest in any
Affiliate of the Company or in any firm or corporation that competes with the
Company. For the purpose of this Agreement, “Affiliate”
means,
in respect of an individual, partnership,
corporation, joint venture, unincorporated organization, cooperative or a
governmental entity or agency thereof (“Person”)
that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under the common control with, the Company.
(e) No
Conflict With Other Instruments.
Except
as set forth in Schedule
3(e),
the
execution, delivery and performance of this Agreement and related agreements
delivered in connection herewith will not result in any material violation
of,
be in conflict with, or constitute a breach or default under, with or without
the passage of time or the giving of notice: (i) any provision of the Company’s
organizational documents, including the Articles of Association; (ii)
any
law,
statute, regulation, order, judgment or decree or any instrument, contract
or
other agreement to which the Company is a party or by which they (or any of
its
properties or assets) are subject or bound;
(iii)
any material contract, obligation or commitment to which the Company is a party
or by which either of them is bound; (iv) result
in
the creation of, or give any party the right to create, any lien, charge,
option, security interest or other encumbrance upon the assets of the Company;
(v) terminate or modify, or give any third party the right to terminate or
modify, the provisions or terms of any contract to which the Company is a party;
or (vi) result in any suspension, revocation, impairment, forfeiture or
non-renewal of any permit, license, qualification, authorization or approval
applicable to the Company.
(f) Changes.
Since
December 31, 2007, there has not been:
(i) Any
change in the assets, liabilities, financial condition, or operations of the
Company except changes in the ordinary course of business which have not been,
either in any case or in the aggregate, materially adverse;
(ii) Any
damage, destruction, or loss, whether or not covered by insurance, materially
and adversely affecting the properties or business of the Company;
(iii) Any
waiver or compromise by the Company of a valuable right or of any debt owed
to
it;
(iv) Any
loans
made by the Company to its employees, officers or directors, other than travel
or like advances made in the ordinary course of business not in excess of
$1,000;
(v) Any
declaration or payment of any dividend or other distribution by the Company
or
any repurchase or redemption of the Company’s capital stock;
(vi) Any
cancellation of any material purchase order or contract or any write-off as
uncollectible of $10,000 or greater; or
(vii) Any
material deterioration or any other event or condition of any character which
has materially and adversely affected the Company’s business or
prospects.
(g) Material
Contracts and Obligations.
Other
than as disclosed in the Financial Statements of Greenscape, the Company has
provided to Shine and Buyer or to counsel for such parties, and has listed
on
Disclosure Schedule, all contracts and agreements pertaining to the Company
(1)
with expected receipts or expenditures in excess of US$100,000, (2) involving
a
license or grant of rights to or from the Company involving patents, trademarks,
copyrights or other proprietary information applicable to the business of the
Company, (3) providing for indemnification by the Company with respect to
infringement of proprietary rights, (4) between the Company and any officers,
director or stockholder, other than agreements entered into the ordinary course
of business, or (5) involving any loans or advances by the Company which are
outstanding as of the date of the Closing. All such contracts and agreements
are
legally binding, valid and in full force and effect in all material aspects.
Notwithstanding the foregoing, except as set forth in Schedule
3(g):
(i)
There
are no agreements, understandings or proposed transactions between the Company
and any of its officers, directors, employees, affiliates or any affiliate
thereof.
(ii) There
are
no agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Company is a party or to its
knowledge by which it is bound which may involve (1) future obligations
(contingent or otherwise) of, or payments to, Company in excess of US$25,000
(other than obligations of, or payments to, Company arising from agreements
with
customers and vendors entered into in the ordinary course of business), (2)
the
transfer or license of any patent, copyright, trade secret or other proprietary
right to or from Company (other than licenses by Company of “off the shelf” or
other standard products, and non-exclusive licenses to customers in the ordinary
course of business), or (3) indemnification by Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase, sale or license agreements entered into in the ordinary
course of business).
(iii)
Company has not (1) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its capital stock,
(2) incurred or guaranteed any indebtedness for money borrowed or any other
liabilities (other than with respect to indebtedness and other obligations
incurred in the ordinary course of business or as disclosed in the Financial
Statements of Greenscape) individually in excess of US$25,000 or, in the case
of
indebtedness and/or liabilities individually less than US$25,000, in excess
of
US$50,000
in the
aggregate, (3) made any loans or advances to any person, other than ordinary
advances for travel expenses or in connection with employment relocation, or
(4)
sold, exchanged or otherwise disposed of any of its assets or rights, other
than
the sale of its inventory in the ordinary course of business.
(iv)
For
the purposes of subsections (ii) and (iii) above, all indebtedness, liabilities,
agreements, understandings, instruments, contracts and proposed transactions
involving the same person or entity (including persons or entities Company
has
reason to believe are affiliated therewith) shall be aggregated for the purpose
of meeting the individual minimum dollar amounts of such subsections.
(h) Litigation.
Except
as set forth on Schedule
3(h),
as of
the Closing, there is no claim, action, lawsuit, proceeding or investigation
pending or threatened against the Company (or to the knowledge of the Company,
against any of its officers or directors or the Management Team) or any basis
therefor known to the Company or the Management Team, including, without
limitation, any action that questions the validity of this Agreement or the
right of the Company to enter into this Agreement. There is no judgment, decree
or order of any court or tribunal or any arbitration or governmental authority
in effect against the Company or any of its properties and assets, and the
Company is not in default with respect to any such judgment, decree or order
to
which the Company is a party or by which it is bound. There is no action, suit,
proceeding or investigation by the Company currently pending or threatened
or
which the Company presently intends to initiate.
(i) Title
to and condition of the Assets.
Schedule
3(i)
is a
true and correct list of all of the assets, by category, currently owned by
the
Company (the “Assets”).
The
Company has good and marketable title to the Assets, which Assets are properly
reflected in the Financial Statements of Greenscape. The Assets are not subject
to any mortgage, pledge, lien, security interest, conditional sale agreement,
option license, encumbrance or charge. The Company owns or leases all tangible
assets necessary for the conduct of its business as currently conducted. The
Assets are currently in good operating condition and repair (subject to normal
wear and tear) and are suitable for the purposes for which they are currently
used. All current inventory of the Company is of merchantable quality and
saleable in the ordinary course of the Company’s business.
(j)
Intellectual
Property Rights.
Schedule
3(j) contains
an accurate and complete list and description of all Intellectual Property
used
by the Company in connection with its business, specifying as to each
(i) the nature of such right, (ii) the ownership thereof,
(iii) the governmental authority that has issued or recorded a registration
or certificate or similar document with respect thereto or with which an
application for such a registration, certificate or similar document is pending
and (iv) any applicable registration, certificate or application number.
Complete and accurate copies of all registered or pending Intellectual Property
relating to the Company has been provided to Buyer. The Company:
(i) it has sufficient title and ownership of all Intellectual
Property, including all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted, and as proposed to be conducted;
and (ii) the use thereof does not, and will not, conflict with or constitute
an
infringement of the rights of others. Each
former and current employee, officer and consultant of each group company has
executed a form of agreement which provides that all Intellectual Property
Rights which arise during the course or scope of their employment or engagement
by the Company is owned by the Company.
Any
third parties have validly and irrevocably assigned all of their Intellectual
Property rights to the Company or is duly and validly licensed to use all other
Intellectual Property used in connection with the Company, free and clear of
royalties. The Company has not assigned or transferred ownership of, agreed
to
so assign or transfer ownership of, or granted any exclusive license of or
exclusive right to use, any Intellectual Property used in connection with the
Company.
(k) Taxes,
Tax Returns and Audits.
The
Company has
filed
on a timely basis (taking into account any extensions received from the relevant
taxing authorities): (i) all returns and reports pertaining to all taxes that
are or were required to be filed by it with the appropriate taxing authorities
in all jurisdictions in which such returns and reports are or were required
to
be filed, and all such returns and reports are true, correct and complete in
all
material respects; (ii) all taxes that are due from or may be asserted against
the Company (including deferred taxes) in respect of or attributable to all
periods ending on or before the Closing Date have been or will be fully paid,
deposited or adequately provided for on the books and financial statements
of
the Company or are being contested in good faith by appropriate proceedings;
(iii) no issues have been raised (or are currently pending) by any taxing
authority in connection with any of the returns and reports referred to in
clause (i) which might be determined adversely to the Company; (iv) the
Company has not given or requested to give waivers or extensions of any statute
of limitations with respect to the payment of taxes; and (v) no tax liens which
have not been satisfied or discharged by payment or concession by the relevant
taxing authority or as to which sufficient reserves have not been established
on
the books and financial statements of the Company are in force as of the date
hereof.
(l) Insurance.
Schedule
3(l) sets
forth a complete list and a complete accurate description of all insurance
policies maintained by the Company. The Company is not aware of any pending
or
threatened claims against it for personal injuries, product liability or
property damages.
(m) Employees;
Employee Plans; Labor Matters.
(i)
Employees. Schedule
3(m)(i) contains an accurate and complete list of all current managerial
employees of the Company including all employees with supervisory responsibility
employed by the Company as of the Closing, and the name, title and compensation
of each such person. As of the Closing, the Company believes its relations
with
its employees are satisfactory. The Company’s employees are not represented by
any labor unions nor, to the Company’s knowledge, is any union organization
campaign in progress. The Company is not aware that any of its officers intends
to terminate employment.
(ii)
Employee
Plans.
Schedule
3(m)(ii)
contains
a description of all employee benefits, including, without limitation, pension,
medical insurance, work related injury insurance, birth and nursery insurance,
unemployment insurance and educational benefits, which the Company is obligated
to pay, including amounts and recipients of such payments. Except as disclosed
on Schedule 3(m)(ii),
the
Company has complied with all applicable laws relating to employment benefits,
including, without limitation, pension, medical insurance, work-related injury
insurance, birth and nursery insurance, unemployment insurance and educational
benefits.
(iii) Labor
Matters.
All
contributions or payments required to be made by the Company with respect to
employee benefits have been made on or before their due dates. Except as
disclosed in the Financial Statements of Greenscape: (i) all such contributions
and payments required to be made by any employees of the Company with respect
to
the employee benefits have been fully deducted and paid to the relevant
governmental authorities on or before their due dates, and no such deductions
have been challenged or disallowed by any governmental authority or any employee
of the Company; (ii) no liability has been incurred by the Company for breach
of
any contract of service, contract for services, payments under any applicable
laws or for any other obligations resulting from or accruing after the
termination of any contract of employment or for services; and (iii) the Company
has not made or agreed to make any payment or provided or agreed to provide any
benefit to any present or former director or employee or any dependant of any
such former director or employee in connection with the actual or proposed
termination or suspension of employment or variation of any contract of
employment of any present or former director or employee.
(n) Accounts
Receivable; Product Warranty.
All
accounts receivable of the Company reflected on the Financial Statements of
Greenscape are valid receivables subject to no material setoffs or counterclaims
and are current and collectible in the ordinary course of business, net of
the
applicable reserve for bad debts reflected in the Financial Statements of
Greenscape. To the Company’s knowledge, all accounts receivable reflected in the
financial or accounting records of it that have arisen since December 31, 2007,
are valid receivables subject to no material setoffs or counterclaims and are
collectible, net of a reserve for bad debts in an amount proportionate to the
reserve reflected in the Financial Statements of Greenscape. No product sold,
leased or delivered by the Company prior to the Closing is subject to any
guaranty, warranty, right of return or other such indemnity beyond the
manufacturer’s warranty. The Company has no liability for product liability or
product warranty claims with respect to sales of products or services prior
to
the Closing (other than product warranty claims in the ordinary course of
business) that would have a material adverse effect on the Company or its
financial condition.
(o) No
Undisclosed Material Liabilities. Except
as set forth on Schedule 3(o) or as reflected in the Financial Statements of
Greenscape, the Company does not have any material liabilities, whether known
or
unknown, absolute, accrued, contingent or otherwise.
(p) Real
Property. Schedule
3(p)
contains
an accurate and complete list and description of all real estate owned by the
Company (or the equivalent in the jurisdiction(s) in which the Company operates)
or to which the Company has rights, as well as any other real estate that is
in
the possession of or leased by the Company and the improvements (including
buildings and other structures) located on such real estate (collectively,
the
“Real
Property”),
and
lists and accurately describes any leases under which any such Real Property
is
possessed or occupied by the Company or its Affiliates (the “Real
Estate Leases”).
The
Company is not in default under any of the Real Estate Leases, and is not aware
of any default by any of the lessors thereunder.
(q)Licenses
and Permits. The
Company possesses or will possess prior to the Closing all material
franchises, permits, licenses and any similar governmental authority necessary
for the conduct of its business as now being conducted (“Licenses
and Permits”)
necessary
to own and operate its business, which necessary Licenses and Permits are
described or are as set forth on Schedule 3(q)
hereto.
Each
of
the Licenses and Permits is in full force and effect. The Company is not in
default in any respect under any of its Licenses and Permits and has not
received any notice relating to the suspension, revocation or modification
of
any such Licenses and Permits and has no knowledge of any event or occurrence
or
act or omission on the part of the Company for the period from the date of
this
Agreement until the date of the Closing that would or should serve as sufficient
notice to the Company, or that would or should serve as sufficient grounds,
for
the suspension, revocation or modification of any such Licenses and Permits.
The
execution of this Agreement and the execution and implementation of the
transactions contemplated herein do not adversely affect the Licenses and
Permits held by the Company.
(r) Legal
Compliance.
The
conduct and operations of the Company is in compliance with each law (including
rules and regulations thereunder) of any national, provincial, territorial,
local or foreign government, or any governmental entity, which (i) affects
or
relates to this Agreement or the transactions contemplated hereby; or (ii)
is
applicable to the Company or its business.
(s) Books
and Records.
As of
Closing, the books of account, minute books, stock certificate books and stock
transfer ledger of the Company are complete and correct in all material
respects, and there have been no material transactions involving the Company
which are required to be set forth therein and which have not been so set forth.
Such books and records accurately reflect in all material respects the assets,
liabilities, business, financial condition and results of operations of the
Company and have been maintained in accordance with good business and
bookkeeping practices.
(t) Customers
and Suppliers.
No
material supplier of the Company has indicated within the past year that it
will
stop, or materially decrease the rate of, supplying materials, products or
services to the Company, and no material customer of the Company has indicated
within the past year that it will stop or materially decrease the rate of buying
materials, products or services from it.
(u) Governmental
and Third Party Consents. Except
as
set forth on Schedule
3(u), the Company has secured or will secure as of the Closing, all approvals,
orders, or authorizations of, or has made or will make all registrations,
qualifications, designations, declarations, or filings with, any governmental
authority on the part of the Company required in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated in this Agreement, except any such items which may
or
must be obtained or filed subsequent to the Closing.
(v) Environmental
Regulations.
To the
Company’s knowledge, it has substantially met, and will continue through the
Closing to meet substantially, all applicable national, provincial, territorial,
local and foreign environmental regulations and has disposed of its waste
products and effluent and/or has caused others to dispose of such waste products
and effluent, in accordance with all applicable environmental regulations and
in
such a manner that no harm has resulted or will result to any of its employees
or properties or to any other person or entities or their
properties.
(w) Foreign
Corrupt Practices. The
Company is in full compliance with and will continue to comply with the United
States Foreign Corrupt Practices Act (“FCPA”).
(x) Full
Disclosure.
The
Company has
provided Buyer with all the information that Buyer has requested in connection
with deciding whether to consummate the transactions contemplated hereunder,
all
such information being true, accurate and complete in all material respects
and
not misleading in any material respect. The representations and warranties
contained in this Agreement and any other related agreements, certificates
and
other documents made or delivered in connection herewith do not contain any
untrue statement of material fact or omit to state any material fact necessary
to make the statements contained therein or herein, in view of the circumstances
under which they were made, not misleading.
(y) Foreign
Exchange Matters.
The
Company will complete all foreign exchange matters in connection with the
remittance, conversion and use of the proceeds from the transactions
contemplated herein in accordance with then applicable PRC foreign exchange
regulations, if applicable.
(z) Prior
Share Transfer.
All
previous transfers of shares of capital stock or ownership interest in the
Company have fully complied with all applicable laws, regulations, ordinances,
and other restrictions, including but not limited to, those of the PRC and
the
transferors and transferees, as appropriate, have obtained the necessary
governmental approvals for such transfers.
4. Representations
and Warranties of Greenscape.
Except
as set forth in the Disclosure Schedule delivered in connection herewith,
Greenscape and Ng Xxx Xxx, one of the Shareholders, hereby jointly and severally
represent and warrant to Buyer and Shine as of the date hereof and at and
as of the Closing as follows:
(a) Corporate
Organization and Authority.
Greenscape is duly organized, validly existing, authorized to exercise all
of
its powers, rights and privileges and is in good standing in the British Virgin
Islands; (ii) has the power and authority to own and operate its properties
and
to carry on its business as now conducted; and (iii) is qualified to do business
in all jurisdictions in which such qualification is required.
(b) Binding
Obligation.
This
Agreement, and all related agreements, constitute the legal, binding and valid
obligations of Greenscape, enforceable in accordance with their respective
terms.
(c) Subsidiaries;
Ownership of Shares.
The
Disclosure Schedule lists all of Greenscape’s subsidiaries and their
jurisdiction of organization. As of the date of this Agreement, Greenscape
is
the legal owner and holder, free and clear of all liens and encumbrances of
one
hundred percent (100%) of the equity interests of the Company. All the
outstanding equity interests of the Company have been validly issued and are
fully paid and nonassessable. Except for its interest in the Subsidiary,
Greenscape does not, as of the date of this Agreement, and will not, as of
the
date of the Closing, own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
in any person or entity other than the Company.
(d) Capital
Structure. The
authorized capital of Greenscape consists of 35,000,000 shares of common shares,
par value $0.01 per share and 4,000,000 shares of preferred share, par value
$0.01 per share. As of the date hereof, (i) 13,000,000 shares of common share
are issued and outstanding, (ii) no shares of common share are reserved for
issuance upon the exercise of outstanding options and warrants to purchase
Greenscape’s ordinary shares, and (iii) 400,000 shares of Series
A
Preferred Shares (convertible into 4,000,000 common shares), 5 shares of Series
B Preferred Share, 161,890 shares of Series C Preferred Share (convertible
into
1,618,900 common shares) and 5 shares of Series D Preferred Share are issued
and
outstanding. Except as set forth above, no shares of capital stock or other
voting securities of Greenscape were issued, reserved for issuance or
outstanding. All outstanding shares of the capital stock of Greenscape are,
and
all such shares that may be issued prior to the date hereof will be when issued,
duly authorized, validly issued, fully paid and nonassessable and not subject
to
or issued in violation of any right of first refusal, preemptive right or any
similar right under any provision of the BVI International Business Companies
Act or the Memorandum and Articles of Association, and other charter document
of
Greenscape. Except
as
set forth in this section 4 and in the Disclosure Schedule, there are not any
bonds, debentures, notes or other indebtedness of Greenscape or any Subsidiary
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which holders of the shares of
Greenscape or the common shares of any Subsidiary may vote (“Voting
Greenscape Debt”).
Except as set forth above, as of the date of this Agreement, there are not
any
options, warrants, rights, convertible or exchangeable securities, “phantom”
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which
Greenscape is a party or by which any of them is bound (i) obligating Greenscape
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity interests in, or any security
convertible or exercisable for or exchangeable into any capital stock of or
other equity interest in, Greenscape or the Company or any Voting Greenscape
Debt, (ii) obligating Greenscape to issue, grant, extend or enter into any
such
option, warrant, call, right, security, commitment, Contract, arrangement or
undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of the capital stock of Greenscape. Except as set forth
in
the Disclosure Schedule, as of the date of this Agreement there are not any
outstanding contractual obligations of Greenscape to repurchase, redeem or
otherwise acquire any shares of capital stock of Shine or Buyer.
(e) Financial
Statements.
Prior
to
the execution of this Agreement, Greenscape has delivered to Buyer consolidated
balance sheets dated as of December 31, 2005, 2006 and 2007, and related
consolidated statements of income and source and application of funds for the
three years ended December 31, 2005, 2006 and 2007 of the Company and/or
Greenscape audited by the accountants, and the notes, comments, schedules,
and
supplemental data therein (the “Greenscape
Financial Statements”).
The
Greenscape Financial Statements have been prepared in accordance with U.S.
GAAP
throughout the periods indicated and fairly present the consolidated financial
condition of Greenscape at their respective dates and the consolidated results
of the operations of the Company for the periods covered thereby in accordance
with U.S. GAAP. The Greenscape Financial Statements are included in Schedule 4(e)
to this
Agreement and are substantially
in accordance with its books and records, complete and accurate in all material
respects and to the Company’s knowledge prepared in accordance with generally
accepted accounting principles and fairly present the financial condition of
and
operating results of the Greenscape during the period indicated therein.
(f) No
Conflict With Other Instruments.
Except
as set forth in Schedule
4(f),
the
execution, delivery and performance of this Agreement and related agreements
delivered in connection herewith will not result in any material violation
of,
be in conflict with, or constitute a breach or default under, with or without
the passage of time or the giving of notice: (i) any provision of Greenscape’s
organizational documents, including the Articles of Association; (ii)
any
law,
statute, regulation, order, judgment or decree or any instrument, contract
or
other agreement to which the Greenscape is a party or by which they (or any
of
its properties or assets) are subject or bound;
(iii)
any material contract, obligation or commitment to which the Greenscape is
a
party or by which either of them is bound; (iv) result
in
the creation of, or give any party the right to create, any lien, charge,
option, security interest or other encumbrance upon the assets of the
Greenscape; (v) terminate or modify, or give any third party the right to
terminate or modify, the provisions or terms of any contract to which Greenscape
is a party; or (vi) result in any suspension, revocation, impairment,
forfeiture or non-renewal of any permit, license, qualification, authorization
or approval applicable to Greenscape.
(g) Changes.
Except
for the sale of shares of Series C Preferred Stock on January 18, 2008 by
Greenscape, Since December 31, 2007, there has not been:
(i) Any
change in the assets, liabilities, financial condition, or operations of
Greenscape except changes in the ordinary course of business which have not
been, either in any case or in the aggregate, materially adverse;
(ii) Any
damage, destruction, or loss, whether or not covered by insurance, materially
and adversely affecting the properties or business of Greenscape;
(iii) Any
waiver or compromise by Greenscape of a valuable right or of any debt owed
to
it;
(iv) Any
loans
made by Greenscape to its employees, officers or directors, other than travel
or
like advances made in the ordinary course of business not in excess of
$1,000;
(v) Any
declaration or payment of any dividend or other distribution by the Greenscape
or any repurchase or redemption of Greenscape’s capital stock;
(vi) Any
cancellation of any material purchase order or contract or any write-off as
uncollectible of $10,000 or greater; or
(vii) Any
material deterioration or any other event or condition of any character which
has materially and adversely affected Greenscape’s business or
prospects.
(h) Material
Contracts and Obligations.
Other
than as disclosed in the Greenscape Financial Statements, Greenscape has
provided to Shine and Buyer or to counsel for such parties, and has listed
on
Disclosure Schedule, all contracts and agreements pertaining to Greenscape
(1)
with expected receipts or expenditures in excess of US$100,000, or (2) between
Greenscape and any officers, director or stockholder, other than agreements
entered into the ordinary course of business, or (5) involving any loans or
advances by Greenscape which are outstanding as of the date of the Closing.
All
such contracts and agreements are legally binding, valid and in full force
and
effect in all material aspects. Notwithstanding the foregoing, except as set
forth in Schedule
4(h):
(i)
There
are no agreements, understandings or proposed transactions between Greenscape
and any of its officers, directors, employees, affiliates or any affiliate
thereof.
(ii) There
are
no agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which Greenscape is a party or to its
knowledge by which it is bound which may involve future obligations (contingent
or otherwise) of, or payments to, Greenscape in excess of US$25,000 (other
than
obligations of, or payments to, Greenscape arising from agreements with
customers and vendors entered into in the ordinary course of
business).
(iii)
Greenscape has not (1) declared or paid any dividends, or authorized or made
any
distribution upon or with respect to any class or series of its capital stock,
(2) incurred or guaranteed any indebtedness for money borrowed or any other
liabilities (other than with respect to indebtedness and other obligations
incurred in the ordinary course of business or as disclosed in the Greenscape
Financial Statements) individually in excess of US$25,000 or, in the case of
indebtedness and/or liabilities individually less than US$25,000, in excess
of
US$50,000 in the aggregate, (3) made any loans or advances to any person, other
than ordinary advances for travel expenses or in connection with employment
relocation, or (4) sold, exchanged or otherwise disposed of any of its assets
or
rights, other than the sale of its inventory in the ordinary course of
business.
(iv)
For
the purposes of subsections (ii) and (iii) above, all indebtedness, liabilities,
agreements, understandings, instruments, contracts and proposed transactions
involving the same person or entity (including persons or entities Greenscape
has reason to believe are affiliated therewith) shall be aggregated for the
purpose of meeting the individual minimum dollar amounts of such subsections.
(i) Litigation.
Except
as set forth on Schedule
4(i),
there
is no action, suit, proceeding, dispute, litigation, claim, complaint or
investigation by or before any court, tribunal or government body or arbitrator
pending or to the best of Greenscape’s knowledge, threatened against Greenscape
which challenges, would challenge or interferes with the actions required to
be
taken pursuant to this Agreement.
(j) Taxes,
Tax Returns and Audits.
Greenscape has
filed
on a timely basis (taking into account any extensions received from the relevant
taxing authorities): (i) all returns and reports pertaining to all taxes that
are or were required to be filed by it with the appropriate taxing authorities
in all jurisdictions in which such returns and reports are or were required
to
be filed, and all such returns and reports are true, correct and complete in
all
material respects; (ii) all taxes that are due from or may be asserted against
Greenscape (including deferred taxes) in respect of or attributable to all
periods ending on or before the Closing Date have been or will be fully paid,
deposited or adequately provided for on the books and financial statements
of
Greenscape or are being contested in good faith by appropriate proceedings;
(iii) no issues have been raised (or are currently pending) by any taxing
authority in connection with any of the returns and reports referred to in
clause (i) which might be determined adversely to Greenscape; (iv)
Greenscape has not given or requested to give waivers or extensions of any
statute of limitations with respect to the payment of taxes; and (v) no tax
liens which have not been satisfied or discharged by payment or concession
by
the relevant taxing authority or as to which sufficient reserves have not been
established on the books and financial statements of Greenscape are in force
as
of the date hereof.
(k)Licenses
and Permits. Greenscape
possesses or will possess prior to the Closing all material
franchises, permits, licenses and any similar governmental authority necessary
for the conduct of its business as now being conducted (“Licenses
and Permits”)
necessary
to own and operate its business, which necessary Licenses and Permits are
described or are as set forth on Schedule 4(k)
hereto.
Each
of
the Licenses and Permits is in full force and effect. Greenscape is not in
default in any respect under any of its Licenses and Permits and has not
received any notice relating to the suspension, revocation or modification
of
any such Licenses and Permits and has no knowledge of any event or occurrence
or
act or omission on the part of Greenscape for the period from the date of this
Agreement until the date of the Closing that would or should serve as sufficient
notice to Greenscape, or that would or should serve as sufficient grounds,
for
the suspension, revocation or modification of any such Licenses and Permits.
The
execution of this Agreement and the execution and implementation of the
transactions contemplated herein do not adversely affect the Licenses and
Permits held by Greenscape.
(l) Legal
Compliance.
The
conduct and operations of Greenscape is in compliance with each law (including
rules and regulations thereunder) of any national, provincial, territorial,
local or foreign government, or any governmental entity, which (i) affects
or
relates to this Agreement or the transactions contemplated hereby; or (ii)
is
applicable to Greenscape or its business.
(m) Governmental
and Third Party Consents. Except
as
set forth on Schedule
4(m),
Greenscape has secured or will secure as of the Closing, all approvals,
orders, or authorizations of, or has made or will make all registrations,
qualifications, designations, declarations, or filings with, any governmental
authority on the part of Greenscape required in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated in this Agreement, except any such items which may
or
must be obtained or filed subsequent to the Closing.
(n) Full
Disclosure.
Greenscape has
provided Buyer with all the information that Buyer has requested in connection
with deciding whether to consummate the transactions contemplated hereunder,
all
such information being true, accurate and complete in all material respects
and
not misleading in any material respect. The representations and warranties
contained in this Agreement and any other related agreements, certificates
and
other documents made or delivered in connection herewith do not contain any
untrue statement of material fact or omit to state any material fact necessary
to make the statements contained therein or herein, in view of the circumstances
under which they were made, not misleading.
(o) Foreign
Corrupt Practices. Greenscape
is in full compliance with, and will continue to comply with, the FCPA.
5. Representations
and Warranties of the Shareholders.
Except
as set forth in the Disclosure Schedule delivered in connection herewith, each
Shareholder, individually, and not jointly and severally, hereby represents
and warrants to Buyer as of the date hereof and at and as of the Closing as
follows:
(a) Ownership
of Shares.
Shareholder is the legal owner and holder of that number of shares of
Greenscape’s Stock set forth next to its name on Exhibit
A,
which
in the aggregate constitute one hundred percent (100%) of Greenscape’s issued
and outstanding common shares. Upon registering of Buyer as the new owner of
the
Shares of Greenscape in Greenscape’s register of members, Buyer will have good
title to such Shares, free and clear of all liens, security interests, pledges,
equities and claims of any kind, voting trusts, stockholder agreements and
other
encumbrances.
(b) Power
and Authority.
This
Agreement constitutes a legal, valid and binding obligation of the Shareholder,
enforceable against such Shareholder in accordance with the terms hereof.
(c) Litigation.
Except
as set forth on Schedule
5(c),
there
is no action, suit, proceeding, dispute, litigation, claim, complaint or
investigation by or before any court, tribunal or government body or arbitrator
pending or to the best of the Shareholder’s knowledge, threatened against the
Shareholder which challenges, would challenge or interferes with the actions
required to be taken pursuant to this Agreement.
(d) Buyer’s
Stock.
(i)
Each
Shareholder acknowledges that Buyer’s Stock are speculative and involve a high
degree of risk, including among many other risks that the Buyer’s Stock will be
restricted as elsewhere described in this Agreement and will not be transferable
unless first registered under the Securities Act, or pursuant to an exemption
from the Act’s registration requirements.
(ii) Each
Shareholder acknowledges and agrees that they have had an opportunity to ask
questions of and receive answers from Buyer regarding its history, structure,
results of operations, financial condition and plan of operation and the terms
and conditions of the issuance of Buyer’s Stock.
(iii) Each
Shareholder,
acting
with the assistance of counsel and other professional advisers, possess such
knowledge and experience in financial, tax and business matters as to enable
them to utilize the information made available by Buyer, to evaluate the merits
and risks of acquiring Buyer’s Stock and to make an informed investment decision
with respect thereto.
(iv) The
Shareholder was not solicited by Buyer or anyone on Buyer’s behalf to enter into
any transaction whatever, by any form of general solicitation or general
advertising, as those terms are defined in Regulation D.
(e)
Restricted
Securities.
Each of
the Shareholder understands that it will acquire securities under this Agreement
that are characterized as “restricted securities” under the United States
federal securities laws and with limitations imposed by Regulation D. Therefore,
each of the Shareholder understands that sales of such securities may only
be
sold in the United States, either privately or publicly, pursuant to applicable
securities laws and rules and regulations thereunder, including without
limitation or exemptions from registration, or pursuant to an effective
registration statement.
(f)
Legends.
It is
understood that the certificates evidencing the Buyer’s Stock may bear the
legend set forth below in this section. Each of the Shareholder hereby consents
to the inclusion of such legend on certificates of securities they receive
hereunder and for the placement of stop orders against the transfer of such
securities, which may be enforced by each of the Shareholder by instruction
to
its transfer agent or recourse to appropriate judicial authorities to prevent
the registration of any transfer not in accordance with the provisions of this
Agreement and the legend set forth below.
|
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE MORTGAGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR
AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT REGISTRATION
IS
NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
|
(e) Accredited
Investors.
Each of
the Shareholders is an “accredited investor” within the meaning of Rule 501
under the Securities Act.
(f) Foreign
Corrupt Practices. To
the
extent applicable, each of the Shareholders is in full compliance with and
will
continue to comply with the FCPA.
(g) Legal
Compliance.
The
Shareholders are in compliance with each law (including rules and regulations
thereunder) of any national, provincial, territorial, local or foreign
government, or any governmental entity, which (i) affects or relates to this
Agreement or to the transactions contemplated hereby; (ii) is applicable to
the
ownership of the Shares or (iii) will be applicable to the Buyer’s Stock.
6. Representations
and Warranties of Shine and Buyer.
Except
as set forth in the reports, schedules, forms, statements and other documents
filed by Shine with the SEC and publicly available prior to the date of this
Agreement (the “Filed
Shine SEC Documents”)
or in
Buyer’s Disclosure Schedule delivered in connection herewith, Shine and Buyer
hereby jointly and severally represent and warrant to Greenscape, the
Shareholders and the Company as of the date hereof and at and as of the Closing
as follows:
(a) Corporate
Organization, Authority and Capital Structure.
(i)
Shine
(i)
is a corporation duly organized, validly existing, authorized to exercise all
of
its powers, rights and privileges, and is in good standing in Delaware; (ii)
has
the power and authority to own and operate its properties and to carry on its
business as now conducted; and (iii) is qualified to do business in all
jurisdictions in which such qualification is required.
(ii)
Buyer
(i)
is a company duly organized, validly existing, authorized to exercise all of
its
powers, rights and privileges, and is in good standing in the British Virgin
Islands; (ii) has the power and authority to own and operate its properties
and
to carry on its business as now conducted; and (iii) is qualified to do business
in all jurisdictions in which such qualification is required.
(b) Corporate
Capital Structure.
(i) The
authorized capital stock of Shine consists of 89,000,000 shares of common stock,
par value $0.0001 per share and 1,000,000 shares of preferred stock, par value
$0.0001 per share. As of the date hereof, (i) 8,758,333 shares of common stock
are issued and outstanding, and (ii) 15,146,666 shares of common stock are
reserved for issuance upon the exercise of outstanding options and warrants
to
purchase Shine’s common stock. No shares of preferred stock are issued and
outstanding. Except as set forth above, no shares of capital stock or other
voting securities of Shine were issued, reserved for issuance or outstanding.
All outstanding shares of the capital stock of Shine are, and all such shares
that may be issued prior to the date hereof will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any right of first refusal, preemptive right or any
similar right under any provision of the General Corporation Law of the State
of
Delaware or the Certificate of Incorporation, bylaw and other charter document
of Shine.
(ii) The
authorized capital stock of Buyer consists of 150,000,000 common shares, with
no
par value. One (1) common shares are issued and outstanding. All outstanding
shares of the capital stock of Buyer are, and all such shares that may be issued
prior to the date hereof will be when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to or issued in violation of any
right of first refusal, preemptive right or any similar right under any
provision of the BVI International Business Companies Act, or the Memorandum
and
Articles of Association.
(c) Transactions
with Affiliates.
No
director, key employee of Shine and Buyer, spouse, parent, sibling, child or
other relative or family member of any such director or key employee, and no
entity controlled by any of the foregoing, has (i) any agreement, understanding,
proposed transaction with, indebtedness owing to, commitments to make loans
or
to extend or guarantee credit from Buyer other than in the ordinary course
of
business; or (ii) any direct or indirect ownership interest in any Affiliate
of
Buyer or in any firm or corporation that competes with Buyer or with Greenscape
or Company.
(d) No
Conflict With Other Instruments.
The
execution, delivery and performance of this Agreement and related agreements
will not result in any material violation of, be in conflict with, or constitute
a breach or default under, with or without the passage of time or the giving
of
notice: (i) any provision of Shine’s or Buyer’s organizational documents; (ii)
any
law,
statute, regulation, order, judgment or decree or any instrument, contract
or
other agreement to which Shine or Buyer is a party or by which it (or any of
its
properties or assets) is subject or bound;
(iii)
any material contract, obligation or commitment to which Shine or Buyer is
a
party or by which either of them is bound; (iv) result
in
the creation of, or give any party the right to create, any lien, charge,
option, security interest or other encumbrance upon the Assets; (vi) terminate
or modify, or give any third party the right to terminate or modify, the
provisions or terms of any contract to which Shine or Buyer is a party; or
(iv) result in any suspension, revocation, impairment, forfeiture or
non-renewal of any permit, license, qualification, authorization or approval
applicable to Buyer.
(e) Changes.
Since
the date of the Shine Financial Statements as defined in Section 6(k) and prior
to Closing, there has not been and will not have been:
(i) Any
change in the assets, liabilities, financial condition, or operations of Buyer,
except changes in the ordinary course of business which have not been, either
in
any case or in the aggregate, materially adverse;
(ii) Any
damage, destruction, or loss, whether or not covered by insurance, materially
and adversely affecting the properties or business of Buyer;
(iii) Any
waiver or compromise by the Company of a valuable right or of any debt owed
to
it;
(iv) Any
loans
made by Shine or Buyer to their employees, officers or directors other than
travel or like advances made in the ordinary course of business not in excess
of
$2,000;
(v) Any
declaration or payment of any dividend or other distribution by Shine or Buyer
or any repurchase or redemption of Shine’s or Buyer’s capital
stock;
(vi) Any
cancellation of any material purchase order or contract or any write-off as
uncollectible of $2,500 or greater; or
(vii) Any
material deterioration or any other event or condition of any character which
has materially and adversely affected Shine’s or Buyer’s business or
prospects.
(f) No
Undisclosed Material Liabilities. Neither
Shine nor Buyer has any material liabilities, whether known or unknown,
absolute, accrued, contingent or otherwise, other than are reflected on the
Shine Financial Statements.
(g) Litigation.
As of
the Closing, there is no claim, action, lawsuit, proceeding or investigation
pending or threatened in writing against Shine and Buyer (or to the knowledge
of
Shine and Buyer, against any of its officers) or any basis therefor known to
Shine or Buyer, including, without limitation, that questions the validity
of
this Agreement or the right of Shine and Buyer to enter into this Agreement.
There is no judgment, decree or order of any court or tribunal or any
arbitration or governmental authority in effect against Shine or Buyer or any
of
its properties and Assets, and neither Shine nor Buyer is in default with
respect to any such judgment, decree or order to which Shine or Buyer is a
party
or by which either of them is bound. There is no action, suit, proceeding or
investigation by Shine or the Buyer currently pending or threatened or which
Shine or Buyer presently intends to initiate.
(h) Taxes,
Tax Returns and Audits.
Shine
and Buyer have
filed
on a timely basis (taking into account any extensions received from the relevant
taxing authorities): (i) all returns and reports pertaining to all taxes that
are or were required to be filed by it with the appropriate taxing authorities
in all jurisdictions in which such returns and reports are or were required
to
be filed, and all such returns and reports are true, correct and complete in
all
material respects; (ii) all taxes that are due from or may be asserted against
Shine or Buyer (including deferred taxes) in respect of or attributable to
all
periods ending on or before the Closing Date have been or will be fully paid,
deposited or adequately provided for on the books and financial statements
of
Shine or Buyer or are being contested in good faith by appropriate proceedings;
(iii) no issues have been raised (or are currently pending) by any taxing
authority in connection with any of the returns and reports referred to in
clause (i) which might be determined adversely to Shine or Buyer;
(iv) neither Shine nor Buyer has given or been requested to give waivers or
extensions of any statute of limitations with respect to the payment of taxes;
and (v) no tax liens which have not been satisfied or discharged by payment
or
concession by the relevant taxing authority or as to which sufficient reserves
have not been established on the books and financial statements of Shine or
Buyer are in force as of the date hereof or will be at and as of the date of
the
Closing.
(i) Legal
Compliance.
Except
as otherwise set forth in the Disclosure Schedule, to Shine’s and Buyer’s
knowledge, the conduct and operations of their respective businesses has been
and will be in substantial compliance with each law (including rules and
regulations thereunder) of any federal, state, local or foreign government,
or
any governmental entity, which (i) affects or relates to this Agreement or
the
transactions contemplated hereby; or (ii) is applicable to Shine and Buyer
or
their respective businesses, except for any violation of or default under a
law
referred to in clause (ii) above which reasonably may be expected not to have
a
material adverse effect on the assets, business financial condition or results
of operations of Shine or Buyer.
(j) Full
Disclosure.
Shine
and Buyer have
provided the Company with all the information that the Sellers have requested
in
connection with deciding whether to consummate the transactions contemplated
hereunder, all such information being true, accurate and complete in all
material respects and not misleading in any material respect. The
representations and warranties contained in this Agreement and any other related
agreements, certificates and other documents made or delivered in connection
herewith do not contain any untrue statement of material fact or omit to state
any material fact necessary to make the statements contained therein or herein,
in view of the circumstances under which they were made, not misleading.
(k) Shine
Financial Statements. The
audited consolidated financial statements for the periods ended December 31,
2006 and 2007, of Shine included in Shine’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2007, as applicable, fairly present in
conformity with U.S. GAAP applied on a consistent basis the financial position
and assets and liabilities of Shine as of the dates thereof and Shine’s results
of operations and cash flows for the periods then ended (subject, in the case
of
any unaudited interim financial statement, to normal, recurring year-end
adjustments which were not or are not expected to be material in amount) and
the
balance sheet of Shine as at December 31, 2007, that is included in such
financial statements is referred to herein as the “Shine
Financial Statements.”
(l) SEC
Reports.
(i) Shine
has
delivered to the Sellers, or there have been available by public means, (a)
the
Shine Financial Statements, (b) Shine’s S-1 Registration Statement (the
“Registration
Statement”),
filed
with the SEC as of September 20, 2005, Registration No. 333-127093 relating
to
its initial public offering of securities and (c) all other reports filed by
Shine under the Securities and Exchange Act (the “Exchange
Act”)
(all
of such reports, together with any amendments thereto and documents incorporated
by reference therein, are referred to herein as the “SEC Reports”).
(ii) As
of its
filing date or, if applicable, its effective date, the Shine Financial
Statements, Registration Statement and each SEC Report complied in all material
respects with the requirements of the laws applicable to Shine, including the
Securities Act and the Exchange Act.
(iii) The
Registration Statement and each SEC Report, as of its respective filing dates
and as of its effective date, did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were
made, not misleading. Shine has filed all reports under the Exchange Act that
were required to be filed as of the date hereof, and Shine and, to the extent
applicable, Buyer, will have filed all such reports required to have been filed
under the Exchange Act through the Closing, and Shine has otherwise materially
complied with, and Shine and Buyer will comply and maintain compliance with
all
requirements of the Securities Act and the Exchange Act up to the date of the
Closing.
(m) Maintenance
of OTCBB Listing.
At all
times prior to the Closing and listing of Buyer’s shares of stock on the Nasdaq
Stock Exchange, Shine shall maintain its listing on the OTCBB and comply with
all applicable requirements of such exchange.
(n) Deposit
of Warrant Proceeds.
Buyer
shall either deposit, or instruct the holders of the Warrants to deposit, the
proceeds of the exercise of the Warrants into an account held by, or in the
name
of, Continental Stock Transfer & Trust Company.
7. Buyer’s
Conditions Precedent to Closing.
All of
the obligations of Buyer under this Agreement are subject to the fulfillment
at
or before the Closing of each of the following conditions, any of which may
be
waived in writing by Buyer:
(a) Representations
and Warranties.
The
representations and warranties of the Company and Sellers contained herein
shall
be true and correct on and as of the Closing with the same effect as if made
on
and as of the Closing.
(b) Performance.
The
Company and Sellers shall have performed or fulfilled all of their respective
agreements, obligations and conditions contained herein, including, but not
limited to, the execution of the documents set forth in Section 2(a) of this
Agreement and the transfer of one hundred percent (100%) of the Shares and
shall
have obtained all consents, waivers and approvals necessary to transfer the
Shares and for Buyer to operate the business.
(c) Compliance
Certificate.
Greenscape shall have delivered to Buyer a certificate dated as of the Closing
signed by the Company certifying that the conditions set forth in Sections
7(a),
7(b) and 7(n) have been satisfied.
(d) Employment
Agreements.
As of
the Closing, Greenscape shall have entered into Employment Agreements with
each
member of the Management Team.
(e) Buyer’s
Investigation.
Buyer’s
satisfaction with the results of Buyer’s due diligence investigation including
the business of Seller, the financial statements and financial books and records
and assets of the Company and the Company’s employees.
(f) Approvals
with the MOFCOM and Other Agencies.
To the
extent required by the laws of the PRC, sufficient and complete application
for the registration of the transactions contemplated herein shall be submitted
with the MOFCOM and any other governmental agency prior to the
Closing.
(g)
Approvals
and Consents.
The
approval of Buyer and Buyer’s professional advisors of all contracts,
instruments and other documents arising out of or delivered pursuant to this
Agreement and any agreement pending or continuing as of the Closing between
the
Company and third parties.
(h) Good
Standing Certificate.
Greenscape shall have delivered to Buyer or its legal counsel at or before
the
Closing a certified copy of a good standing certificate of Greenscape issued
by
the authorities of the British Virgin Islands dated not more than one week
prior
to the Closing.
(i) Legal
Opinions.
The
Company and Greenscape shall have delivered to Buyer the BVI Legal Opinion
and
PRC Legal Opinion.
(j) Continuation
of Key Agreements.
The
Buyer shall have determined, to its reasonable satisfaction, that all exclusive
dealerships, distributorships, representation agreements, lease agreements
and
other material agreements of the Company currently in effect, including any
to which the Company is not a party but which are for the benefit of the
Company, will continue in effect following the Closing on substantially the
same
terms as are presently extended to the Company.
(k) Real
Property Leases.
The
Company shall have maintained in good standing the terms of Real Property
Leases.
(l) No
Material Deterioration.
There
shall have been no material deterioration in the business, financial condition
or operating results of Greenscape or the Company.
(m) No
Pending Litigation.
Except
as set forth in the Disclosure Schedule, no action, suit or proceeding shall
be
instituted, pending or threatened which relates to this Agreement or the
transactions contemplated hereby that, if decided unfavorably, would adversely
affect either the right of Buyer to own and operate Greenscape and the Company
or the value of Greenscape and the Company. Any action, suit or proceeding
with
an actual or potential claim of $100,000 or more or an estimated cost to defend
of $100,000 or more shall be deemed to be “material.”
(n) Business
Licenses.
The
Company shall have received and maintained all business licenses, permits and
governmental approvals necessary to operate the business of the Company after
the Closing.
(o) Completion
of Redemption.
Greenscape shall have completed the redemption of one hundred percent (100%)
of
its outstanding Series B and D Preferred Stock.
(p) Post-Closing
Capitalization.
At and
immediately after the Closing, the authorized capitalization and the number
of
issued and outstanding shares of the capital stock of the Company and Greenscape
on a fully-diluted basis, shall be as set forth in Disclosure Schedules.
(q) Stockholders
Approval.
Shine
shall have received the approval of its stockholders, as required by its Fourth
Amended and Restated Certificate of Incorporation, Article Fifth of Exhibit
A
attached thereto, Memorandum and Articles of Association, and Bylaws, of this
Agreement, the ancillary documents and the transactions contemplated herein.
(r) No
Conversion.
Less
than twenty percent (20%) of the shares of Shine held by public shareholders
shall exercise their right to convert such shares into cash, as provided in
its
Fourth Amended and Restated Certificate of Incorporation, Article Fifth of
Exhibit A attached thereto.
(s)
Appointment
of Directors.
Buyer
and Greenscape shall have agreed upon nominees to the Board of Directors of
Buyer acceptable to Buyer and such nominees shall have been appointed to the
Board of Directors of Buyer effective upon the Closing.
(t) Limitation
on Total Debt.
Greenscape and the Company’s Total Debt as of the Test Date shall not exceed an
amount equal to 128.8% of the Total Debt indicated on the First Quarter Balance
Sheet except with the express prior written consent of Buyer as set out in
Paragraph 1(d) above.
8. Conditions
Precedent to Closing of Sellers.
The
obligations of the Sellers under this Agreement are subject to the
fulfillment at or before the Closing of each of the following conditions, any
of
which may be waived in writing by the Company:
(a) Representations
and Warranties.
The
representations and warranties of Shine and Buyer contained in this Agreement
shall be true and correct on and as of the Closing with the same effect as
though said representations and warranties had been made on and as of the
Closing.
(b) Approval
of Contracts.
The
approval of Sellers’ professional advisors of all contracts, instruments and
other documents arising out of or delivered pursuant to this
Agreement.
(c) Performance.
Shine
and Buyer shall have performed or fulfilled all agreements, obligations and
conditions contained herein and shall have obtained all consents, waivers and
approvals necessary to transfer the Stock Consideration to Buyer.
(d)
No Material Deterioration.
There
shall have been no material deterioration in the business or financial condition
of Shine or Buyer.
(e) SEC
Reports/Proxy Statement.
Shine
shall have timely filed all reports and other documents required to be filed
by
Shine under the U.S. federal securities laws through the Closing Date, including
filing the proxy statement/registration statement required to solicit the
approval of Shine’s stockholders for this Agreement and the transactions
contemplated hereby. Provided, however, Greenscape and the Company will use
reasonable commercial efforts to provide any information in their possession
which in the opinion of Buyer or its legal counsel is required to be included
in
the Proxy/Registration Statement.
(f) OTCBB
Quotation.
Shine
or its successor shall have maintained its status as a company whose common
stock is quoted on the Over-the-Counter Bulletin Board, and no reason shall
exist as to why such status shall not continue immediately following the
Closing, except that Shine shall have made reasonable commercial efforts to
obtain approval for a listing on the Nasdaq stock market to take effect
immediately or as soon as practicable following the Closing.
(g)
Redomestication
Merger.
Shine
shall have completed the merger with and into Buyer with Buyer as the survivor
under the laws of the British Virgin Islands, and Buyer will be a company
registered under the Exchange Act (“Redomestication
Merger”).
9. Covenants
for the Period Preceding Closing.
(a)
Covenants
of Greenscape and the Company
(i) Business
Operation.
Notwithstanding
anything to the contrary in this Agreement, except as otherwise permitted by
this Agreement or with the written consent of Shine, Buyer or the appropriate
government officials in the PRC, as the case may be, from the date of this
Agreement and at all times up to and including the Closing Date, Greenscape
and
the Company shall comply with, the following restrictions and
requirements:
A.
carry on
its business prudently in the usual and ordinary course consistent with past
practice and, subject to the compliance with applicable laws, use its best
efforts to preserve its relationships with customers, suppliers and other third
parties having business dealings Greenscape or the Company;
B.
not
amend, alter or repeal, whether by merger, reclassification or otherwise, any
provision of its memorandum or articles of association, and other by-laws or
equivalent constitutional documents, in a manner that is inconsistent with
the
provisions and intentions of this Agreement;
C. not
increase, reduce, consolidate, sub-divide or cancel its authorized capital
or
total investment or issued capital or registered capital, except as contemplated
in this Agreement;
D. not
change its name or the name under which it carries on business;
E. not
change its jurisdiction of incorporation;
F. not
pass
any resolution which would result in its winding up, liquidation or entering
into administration or receivership;
G. not
change its nature or scope (including the geographical scope) of the business
or
not commence or carry on any type of business not ancillary or deviating from
its existing business; not consolidate or merge with any other business, which
is not part of its existing business of as at the date of this
Agreement;
H. not
offer, sell or issue, or enter into any agreement to issue, any instrument
providing for the offer, sale or issuance (contingent or otherwise) of any
shares or convertible securities, or any equity securities of Greenscape or
the
Company;
I. subject
to Section 1(d), not increase the number of shares available for grant or
issuance under any share option plan or other share incentive plan or
arrangement or make any amendment to or terminate any such plan or
arrangement;
J. not
make
any investment or incur any commitment other than in the ordinary course of
business;
K.
not
sell, dispose of or transfer any of its assets, business or shares;
L.
Subject
to Section 1(d), not borrow any monies or create any encumbrance (other than
a
lien arising by operation of law) over the whole or any part of its undertaking,
property or assets;
M. not
enter
into any contract or expenditure the value of which exceeds US$150,000 without
the prior written consent of Buyer other than in the ordinary course of business
and on arm’s length terms;
N.
not make
any loan or advance or give any credit (except trade credit to customers in
the
ordinary course of business); not give any guarantee or indemnity for or
otherwise secure the liabilities or obligations of any Person,
except
that Greenscape may do so for the Company;
O.
not
amend, alter, terminate any material contract; and
P. not
agree
in writing or otherwise to take any of the foregoing actions.
(ii) Full
Access.
Prior
to the Closing, the Company and Greenscape shall permit Shine and the Buyer
and
their representatives to have full access (at all reasonable times, and in
a
manner so as not to interfere with the normal business operations of the
Company) to all premises, properties, financial and accounting records,
contracts, other records and documents, and personnel, of or pertaining to
the
Company. Shine, Buyer and their representatives (i) shall treat and hold as
confidential any Confidential Information (as defined below); (ii) shall not
use
any of the Confidential Information except in connection with this Agreement;
and (iii) if this Agreement is terminated for any reason whatsoever, shall
return to the Company the Confidential Information (and all copies) thereof
which are in its possession. For purposes of this Agreement, “Confidential
Information”
means
any information of Greenscape or the Company that is furnished to Shine or
the
Buyer by Greenscape or the Company in connection with this Agreement; provided,
however, that it shall not include any information (i) which, at the time of
disclosure, is available publicly; (ii) which, after disclosure to Shine or
Buyer, becomes available publicly through no fault of Shine or the Buyer; or
(iii) which Shine or the Buyer knew prior to disclosure.
(iii) Exclusivity.
Unless
the transaction has been terminated by mutual agreement of the Parties hereto,
from and after the date hereof until Closing or August 31, 2008, the Company
shall not directly or indirectly (i) encourage, solicit, initiate, engage or
participate in discussions or negotiations with any person or entity (other
than
Buyer) concerning any merger, consolidation, sale of material assets, or other
business combination involving the Company or any division of the Company,
or to
sell the Shares; or (ii) provide any non-public information to any prospective
acquirers (other than Buyer).
(iv) Interim
Financial Information. From
the date of this Agreement until the Closing, Greenscape and the Company shall
provide to Shine a copy of the monthly internal management reports of financial
operations of the Company. The above interim financial information shall be
delivered to Shine no later than twenty-five (25) days after the end of
each calendar month. The Company shall prepare such financial information in
good faith.
(v) Proxy
Information. As
a condition to Shine’s calling and holding the Stockholder Meeting, the Company
will furnish to Shine such information as is reasonably required by Shine for
the preparation of the Proxy Statement/Registration Statement in accordance
with
the requirements of SEC, including full and accurate descriptions of the
Company’s business, material agreements affecting the Company and Greenscape,
and the Greenscape Financial Statements, including any interim statements that
are required under SEC rules to be included in such materials. (collectively,
“Proxy
Information”).
The
Proxy Information will not contain any untrue statement of a material fact
or
omit to state a material fact necessary in order to make the statements in
the
Proxy Information not misleading at the time of distribution by Shine and at
the
Closing, and the Company agrees to notify Shine promptly of any material changes
to Proxy Information previously provided to Shine.
(vi)
Employment
Agreement.
The
members of the Management Team shall sign Employment Agreements in the form
attached hereto as Exhibit
F.
(vii) Regulatory
Approvals of the PRC. Greenscape
and the Company shall use their best efforts to accomplish as soon as possible
the following: (i) submit applications for approval of this Agreement to
the applicable government authority of the PRC whose approval is required,
if
any; (ii) obtain the appropriate licenses and permits, if any; (iii)
deliver
the Amended and Restated Articles of Association of the Company reflecting
the
transfer of the Shares within reasonable time; and (iv) any application and
registration of the Company trademarks with competent government
authority.
(viii) Redemption
of Stock.
Prior
to the Closing, Greenscape will redeem all outstanding Series B and Series
D
preferred stock at a price of one dollar (US$1) per share.
(b) Covenants
of Shine and Buyer.
(i) Stockholder
Meeting. Shine
shall cause a meeting of its stockholders (the ”Stockholder Meeting”)
to be
duly called and held as soon as reasonably practicable for the purpose of voting
on the adoption of this Agreement, as required by Shine’s certificate of
incorporation. The directors of Shine shall recommend to its stockholders that
they vote in favor of the adoption of such matters. In connection with such
meeting, Shine (i) will file with the SEC as promptly as practicable a
proxy statement meeting the requirements of the Exchange Act (“Proxy
Statement”)
and
all other proxy materials for such meeting; (ii) upon receipt of approval from
SEC, will mail to its stockholders the Proxy Statement and other proxy
materials; (iii) will use its best efforts to obtain the necessary approvals
by
its stockholders as set forth in Section 7(q) and 7(r); and (iv) will
otherwise comply with all legal requirements applicable to such
meeting.
(ii) Trust
Fund. On
or before the Closing, Shine shall procure the liquidation of the Trust Account
pursuant to the Trust Agreement. The Company, Greenscape and Sellers each hereby
waive all claims of any nature whatsoever against this trust account prior
to
the Closing.
(iii)
Redomestication
Merger.
Prior
to the Closing, subject to its stockholders’ approval, Shine shall merge with
and into Buyer and buyer will become the reporting company under the Exchange
Act.
(iv) Board
Matters.
As
promptly as possible following the date hereof, Shine shall take all actions
necessary to ensure that the board of directors of Buyer following Closing
(the
“Board”)
shall
consist of seven (7) directors. Sellers may appoint up to four (4) members,
at
least two of whom shall comply with the requirements for an independent director
as specified by the Nasdaq rules and regulations. Shine may appoint one member,
and Shine and Chardan Capital, LLC shall jointly appoint two (2) members to
the
Board, at least two of which three shall comply with the requirement for an
independent director as specified by the Nasdaq rules and regulations. In the
event that fewer than seven (7) directors are appointed, there will, in all
cases, be a majority of independent directors (“Independent
Directors”).
For a
period of three (3) years from the Closing, Buyer shall not, without first
obtaining the approval of at least a majority of the Independent Directors:
A. consummate
a sale, transfer or other disposition of all or substantially all of Buyer’s
assets;
B. consummate
a merger or consolidation of Buyer with or into another entity (except a merger
or consolidation in which the holders of capital stock of Buyer immediately
prior to merger or consolidation continue to hold at least 50% of the voting
power of the capital stock of Buyer or the surviving or acquiring entity in
relatively the same proportions);
C. transfer
in one transaction or a series of related transactions, to a person or group
of
affiliated persons of Buyer’s securities if, after such closing, such person or
group of affiliated persons would hold 50% or more of the outstanding voting
stock of Buyer;
D. a
liquidation, dissolution, or winding up of Buyer;
E.
authorize
or issue, or obligate itself to issue, any equity securities (including any
security convertible into or exercisable for any such equity interest) for
value
under the fair market value of such securities as set by the stock exchange
listing the company’s securities;
F. redeem,
purchase or otherwise acquire (or pay into or set aside for a sinking fund
for
such purpose) any equity security of Buyer for value higher than the fair market
value of such securities as set by the stock exchange listing the company’s
securities; or
G. incur
indebtedness in excess of two hundred and fifty thousand dollars ($250,000)
which is outside the normal course of Buyer’s business.
(v)
NASDAQ
Listing Application.
The
Buyer shall, as soon as practicable after filing the initial prospectus/proxy
materials, submit and use reasonable commercial efforts to prosecute an
application for listing of its stock and warrants on the Nasdaq Stock Market,
with the intention, subject to meeting the minimum requirement of 300
shareholders, of having a listing approval prior to the Closing.
(vi) Stock
Option Plan.
The
Buyer shall adopt a 2008 employee stock option plan (the “Plan”)
and
reserve 5,500,000 (five million and five hundred thousand) common shares for
issuance under the Plan.
(c) Covenants
of the Parties.
(i) Best
Efforts.
Each of
the parties shall use its best efforts, to the extent commercially reasonable,
to take all action and to do all things necessary, proper or advisable including
but not limited to obtaining all such waivers, permits, consents, approvals
or
other authorizations from third parties and governmental entities, as may be
necessary or desirable in connection with the transactions contemplated by
this
Agreement.
(ii) Fulfillment
of Conditions. From
the date hereof to the Closing Date, each of Shine, Buyer, Greenscape and the
Company shall use its best efforts to fulfill the conditions specified in this
Agreement to the extent that the fulfillment of such conditions is within its
control. The foregoing obligation includes (i) the execution and delivery
of documents necessary or desirable to consummate the transactions contemplated
hereby; and (ii) taking or refraining from such actions as may be necessary
to fulfill such conditions (including conducting the business of Greenscape,
the
Company, Shine or Buyer in such manner that on the Closing Date the
representations and warranties of Greenscape, the Company, Shine and Buyer
contained herein shall be accurate as though then made).
(iv) Public
Announcements. From
the date of this Agreement until Closing or termination, Shine, Buyer,
Greenscape and the Company shall cooperate in good faith to jointly prepare
all
press releases and public announcements pertaining to this Agreement and the
transactions governed by it, and none of the foregoing shall issue or otherwise
make any public announcement or communication pertaining to this Agreement
or
the transaction without the prior consent of Shine, except as required by any
legal requirement or by the rules and regulations of, or pursuant to any
agreement of a stock exchange or trading system. If any party determines with
the advice of counsel that it is required to make this Agreement and the terms
of the transaction public or otherwise issue a press release or make public
disclosure with respect thereto, it shall at a reasonable time before making
any
public disclosure, consult with the other party regarding such disclosure,
seek
such confidential treatment for such terms or portions of this Agreement or
the
transaction as may be reasonably requested by the other party and disclose
only
such information as is legally compelled to be disclosed. This provision will
not apply to communications by any party to its counsel, accountants and other
professional advisors.
10. Covenants
for the Period Post-Closing.
(a) Post-Closing
Assurances. The
Company, Greenscape and Buyer, from time to time after the Closing, at the
request of either party will take such other actions and execute and deliver
such other documents, certifications and further assurances as the Company
may
reasonably require in order to manage and operate the Company including, but
not
limited to executing such certificates as may be reasonably requested by
accountants in connection with any audit of the Shine Financial Statements
through the Closing Date.
(b) Injunctive
Relief. If
the Company breaches, or threatens to breach, any of the provisions of this
Agreement, Buyer shall have the right and remedy to have the provisions of
this
Section 10 specifically enforced by any governmental authority, it being
acknowledged and agreed by the Company that any such breach or threatened breach
will cause irreparable injury to Buyer and that money damages will not provide
an adequate remedy.
(c) Licenses
and Permits.
The
Company shall use its best efforts to procure the renewal and/or continuation
of
proper licenses, permits and any similar governmental approvals necessary for
the lawful conduct of its business as now being conducted.
11. Indemnification.
(a) Indemnification
by the Company, Shareholders and Greenscape.
Sellers
shall, jointly and severally, indemnify Shine and Buyer in respect of, and
hold
Shine and Buyer harmless against, any and all debts, obligations and other
liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether known or unknown, or due or to become due or otherwise), monetary
damages, fines, fees, penalties, interest obligations, deficiencies, losses
and
expenses (including without limitation attorneys fees and litigation costs)
incurred or suffered by Shine and Buyer, arising out of or in connection
with:
(i) any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of the Company, Greenscape or Shareholders, or any of them, contained
in this Agreement; and
(ii) any
liability of any nature whatsoever, including any unpaid taxes, which is not
reflected in the Financial Statements or the Disclosure Schedule.
(b) Indemnification
by Shine and Buyer.
Shine
and Buyer shall Indemnify Sellers in respect of, and hold them harmless against,
any and all debts, obligations or other liabilities, monetary damages, fines,
fees or penalty interest obligations, deficiencies, losses and expenses
(including without limitation attorneys fees and litigation costs) incurred
or
suffered by Sellers arising out of:
(i) any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of Shine or Buyer, or either of them, contained in this Agreement;
and
(ii) any
liability of any nature whatsoever, including any unpaid taxes, which is not
reflected in the Shine Financial Statements or the Disclosure.
Notwithstanding
anything to the contrary herein, no indemnification shall be required to the
extent that aggregate liability of Shine and Buyer exceeds $250,000.
(c) Survival.
The
representations, warranties, covenants and agreements of Shine, Buyer, the
Company, Greenscape and the Shareholders as set forth in this Agreement shall
survive the closing and consummation of the transactions contemplated hereby
for
a period of three (3) years from the Closing Date, except with respect to
indemnification for tax liability which shall survive for the applicable statute
of limitations and shall not be affected by any examination made for or on
behalf of the Company or the knowledge of the Company. If a notice is given
before expiration of such periods, then (notwithstanding the expiration of
such
time period) the representation, warranty, covenant or agreement applicable
to
such claim shall survive until, but only for purposes of, the resolution of
such
claims.
(d) Adjustment
to Purchase Consideration; Setoff. Any
indemnification payments made pursuant to this Section 11 shall be deemed to
be
an adjustment to the Consideration. To the extent that the Company, Greenscape
and Shareholders are obligated to indemnify Shine or Buyer under the provisions
of this Section 11 for damages reduced to a monetary amount, Shine or Buyer
shall have the right to adjust any amount due and owing or to be due and owing
under any agreement with the Company, Greenscape or Shareholder, whether under
this Agreement or any other agreement between any of the Sellers and any of
Shine or Buyer’s affiliates, subsidiaries or controlled persons or entities. To
the extent that Shine or Buyer is obligated to indemnify the Company, Greenscape
and the Shareholders after Closing under the provisions of this Section 11
for
damages reduced to a monetary amount, the Company, Greenscape and Shareholders
after Closing shall have the right to decrease any amount due and owing or
to be
due and owing under any agreement with Shine or Buyer, whether under this
Agreement or any other agreement between any of the Sellers and any of Shine
or
Buyer’s affiliates, subsidiaries or controlled persons or entities
12.
Miscellaneous.
(a) Entire
Agreement; Successors and Assigns.
This
Agreement constitutes the entire agreement between the Parties relative to
the
subject matter hereof. Any previous agreements between the parties are
superseded by this Agreement. Subject to any exceptions specifically set forth
in this Agreement, the terms and conditions of this Agreement shall inure to
the
benefit of and be binding upon the respective executors, administrators, heirs,
successors and assigns of the parties.
(b)
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware.
(c)
Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
(d)
Headings.
The
headings of the Sections of this Agreement are for convenience and shall not
by
themselves determine the interpretation of this Agreement.
(e)
Notices.
Any
notice required or permitted hereunder shall be given in writing and shall
be
conclusively deemed effectively given upon (i) personal delivery, or (ii) three
(3) days after deposit with a reputable overnight mail carrier such as DHL
World
wide or Federal Express, postage prepaid, addressed as set forth on the
signature page or at such other address as the Parties may designate by ten
(10)
days’ advance written notice to the applicable Party; or (iii) the next day if
sent via electronic mail to the address last designated by the
recipient.
(f)
Amendment
of Agreement.
Except
as expressly provided herein, neither this Agreement nor any term hereof may
be
amended, waived, discharged or terminated other than by written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought. No amendment to this Agreement after the
Closing shall be effective unless in addition to the requirements set forth
in
this Section, the parties obtain the written consent of the director(s)
currently serving Buyer who continue to serve after the Closing.
(g)
Expenses.
Each
party hereto shall bear its own expenses in connection with the transactions
contemplated by this Agreement.
(h)
Parties
in Interest.
Nothing
in this Agreement, whether express or implied, is intended to confer any rights
or remedies under or by reason of this Agreement on any persons other than
the
Parties, nor is anything in this Agreement intended to relieve or discharge
the
obligation or liability of any third persons to any Party, nor shall any
provision give any third persons any right of subrogation or action over against
any party to this Agreement.
(i) Dispute
Resolution.
The
parties shall initially attempt to resolve any dispute, controversy or claim
arising out of or relating to this Agreement, or the interpretation, breach,
termination or validity hereof, through consultation conducted in good faith.
Such consultation shall begin immediately after one Party has delivered to
the
other Party a written request for such consultation. If within 30 days following
the date on which such notice is given the dispute has not been resolved, a
Party hereto may file legal action in the United States Federal Court, Northern
District of California, which shall be the exclusive jurisdiction and venue
for
any dispute arising hereunder. All Parties hereby consent to the jurisdiction
of
such court.
(j) No
Claim Against Trust Fund. It
is understood by Sellers that in the event of any breach of this Agreement
by
Shine or Buyer, that they will not make any claim against the amount of the
funds held in Shine’s trust fund established at the time of Shine’s initial
public offering.
(k) Force
Majeure.
(i) “Force Majeure”
shall
mean any event or condition not within the reasonable control of a Party, which
prevents in whole or in material part the performance by such Party of its
obligations hereunder or which renders the performance of such obligations
so
difficult or costly as to make such performance commercially unreasonable.
Without limiting the foregoing, the following shall constitute events or
conditions of Force Majeure: riots, war, prolonged shortage of energy supplies,
epidemics, fire, flood, hurricane, typhoon, earthquake, lightning and
explosion.
(ii)
Upon
giving notice to the other Party, a Party affected by an event of Force Majeure
shall be released without any liability on its part from the performance of
its
obligations under this Agreement, except for the obligation to pay any amounts
due and owing hereunder, but only to the extent and only for the period that
its
performance of such obligations is prevented by the event of Force Majeure.
Such
notice shall be made via cable or telex or fax and shall include a description
of the nature of the event of Force Majeure, and its cause and possible
consequences. The Party claiming Force Majeure shall promptly notify the other
Party of the termination of such event.
(iii)
Should
the period of Force Majeure continue for more than six (6) consecutive months,
either Party may terminate this Agreement without liability to the other Party,
except for payments due to such date, upon giving written notice to the other
Party.
(l) Language. This
official language of this Agreement shall be English and a version in any other
language shall not be used in the interpretation hereof.
(m) Confidentiality.
The
terms
of this Agreement shall not be disclosed to any third party without the prior
written consent of Parties to this Agreement,
unless
required by appropriate court or agency order.
[Signature
Page to Follow]
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the day and year first above
written.
SHINE:
|
a
Delaware corporation
|
|
|
By:
|
|
|
Name:
|
XXXXX
XX XXXX
|
|
Its:
|
CEO
|
BUYER:
|
GREEN
CHINA RESOURCES, INC.,
|
|
|
a
company incorporated under the laws of the British Virgin
Islands
|
|
|
By:
|
|
|
Name:
|
XXXXX
XX CHEN
|
|
Its:
|
DIRECTOR
|
Address:
381
Xxxx
Xxx Xxxxx Xxxx
Xxxxx
00,
Xxxxxxx Xxxxx
Xxxxxxxx
000000
People’s
Republic of China
GREENSCAPE:
|
CHINA
GREENSCAPE CO. LTD.
|
|
|
a
company incorporated under the laws of the British Virgin
Islands
|
|
|
By:
|
|
|
Name:
|
NG
XXX XXX
|
|
Its:
|
DIRECTOR
|
Address:
Sunshine
Science & Technology Building
Xinqiao
Town, Jiangyin City
Jiangsu
214426
People’s
Republic of China
COMPANY:
|
JIANGSU
SUNSHINE ZOOLOGY AND FORESTRY DEVELOPMENT CO., LTD.
|
|
|
a
limited liability company organized under the laws of the
PRC
|
|
|
By:
|
|
|
Name:
|
ZHU
ZHENGHONG
|
|
Title:
|
GENERAL
MANAGER
|
Address:
Sunshine
Science & Technology Building
Xinqiao
Town, Jiangyin City
Jiangsu
214426
People’s
Republic of China
SHAREHOLDERS:
|
LUCMINTON
CO., LTD
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
Address:
|
|
|
KELELL
INC.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
Address:
|
|
|
COWAY
ASIA PACIFIC LIMITED
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
Address:
|
|
|
MAX
SEA GROUP LIMITED
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
Address:
|
|
