SALE AND PURCHASE AGREEMENT
Exhibit
10.16
This
SALE
AND PURCHASE AGREEMENT (this "Agreement") made as of December 20, 2007 by and
among Tianshi International Investment Group Co., Ltd., a company formed under
the laws of The British Virgin Islands ("Seller"), Tianshi International
Holdings Group Limited, a company formed under the laws of The British Virgin
Islands (“Buyer”), Tianjin Tianshi Biological Development Co., Ltd., a
Sino-Foreign joint venture formed under the laws of the People’s Republic of
China., (“Biological”) and Tianjin Tianshi Biological Engineering Co., Ltd., a
Chinese-funded enterprise formed under the laws of the People’s Republic of
China (“Engineering”).
WITNESSETH:
WHEREAS,
the Seller is the owner of all of the registered share capital of Tianjin Tiens
Life Resources Co., Ltd., a wholly foreign-owned enterprise formed under the
laws of P. R. C., (the "Company"); and
WHEREAS,
the Seller desire to sell to the Buyer all of the outstanding registered share
capital of the Company (the "Sale") and the Buyer desires to purchase from
Seller at the Closing all of the then outstanding registered share capital
of
the Company, in each case upon the terms and subject to the conditions set
forth
in this Agreement; and
WHEREAS,
Engineering is an Affiliate of Seller and Biological is a subsidiary of Buyer
and the parties wish to cancel certain liabilities that Engineering has to
Biological in partial payment of the Purchase Price (as defined in Article
1.3
hererof); and
WHEREAS,
the respective Boards of Directors of the Seller, the Buyer, Engineering and
Biological have each approved the terms of this Agreement and the transactions
contemplated hereby.
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties, intending legally to be bound, agree as
follows:
Article
1. Purchase and Sale.
1.1
General. At the Closing (as defined in Article 1.4 hereof), and subject to
the
terms and conditions of this Agreement, Seller agrees to, sell, assign, convey
and deliver to the Buyer, and the Buyer agrees to purchase, acquire and accept
from the Buyer, all of the registered share capital of the Company (the
"Shares").
1.2
Delivery of the Shares. At the Closing, and subject to the terms and conditions
of this Agreement Seller and Buyer shall each execute and deliver the Registered
Share Capital Transfer Agreement as set forth in Annex 1 and the Amendment
of
the Articles of Association of Tianjin Tiens Life Resources Co., Ltd. as set
forth in Annex 2 and such other instruments as shall reasonably may be required
to transfer to the Buyer all right, title and interest in and to the Shares,
free and clear of any security interests, pledges, liens, charges, encumbrances,
adverse claims, restrictions or defects in title.
1.3
Purchase Price; Payment. (a) The consideration for the sale of the Shares shall
be the aggregate of Renminbi Four Hundred Seventy-Four Million Six Hundred
Seventy-Four Thousand Four Hundred Fifteen (RMB 474,674,415), (the "Purchase
Price"). The Purchase Price shall be paid by the Buyer as set forth in Section
1.3 (b) below.
(b)
At
the Closing, and subject to the terms and conditions of this Agreement, the
Buyer shall pay the Purchase Price as follows:
| (i) |
Renminbi
Two Hundred Eleven Million Two Hundred Fifty Thousand Four Hundred
Eleven
(RMB 211,250,411) by cancellation of the
Loan,
|
1
| (ii) |
Renminbi
One Hundred Twenty Two Million Three Hundred Thirty Four Thousand
Fifty
Four (RMB 122,334,054) by cancellation of “other receivables” in the same
amount owed to Biological by Engineering,
and
|
| (iii) |
Renminbi
One Hundred Forty Million Eighty Nine Thousand Nine Hundred Fifty
(RMB
141,089,950) by wire transfer in immediately available funds to an
account
to be designated by Seller.
|
Confirmation
of the cancellation of the liabilities in (i) and (ii) above shall be given
in
writing at the Closing by Biological.
1.4
Closing and Closing Date. Unless this Agreement shall have been terminated
and
the transactions herein contemplated shall have been terminated pursuant to
Section 10.1 hereof, the closing (the "Closing") of the transactions herein
contemplated shall take place on the following the day of satisfaction or waiver
of the conditions set forth in Articles 5 and 6 hereof, other than those that
are satisfied on the Closing Date, or at such other time and date as the Seller
and the Buyer shall agree (such time and date being referred to herein as the
"Closing Date"), at the offices of the Buyer. At the Closing, each of the
parties hereto shall take, or cause to be taken, all such actions and deliver,
or cause to be delivered, all such documents, instruments, certificates and
other items as may be required under this Agreement or otherwise, in order
to
perform or fulfill all covenants and agreements on its part to be performed
at
or prior to the Closing Date.
1.5
Taking of Necessary Action; Further Action. Each of the parties shall use its
respective reasonable best efforts to take all such action as may be necessary
or appropriate in order to effectuate the Closing as promptly as possible.
After
the Closing, Buyer shall cause the Registered Share Capital Transfer Agreement
to be filed with the appropriate Governmental Authority. If, on or at any time
after the Closing Date, any further reasonable action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Buyer with full
right, title and possession to all assets, property, rights, privileges, and
powers of the Company, the Seller shall take, and shall ensure that the officers
of the Company are fully authorized to take, and shall take, all such lawful
and
necessary action.
Article
2. Representations and Warranties Relating to the Seller.
The
Seller represents and warrants to the Buyer as follows:
2.1
Organization and Standing. (a) The Seller is a company or a corporation duly
incorporated, validly existing, and in good standing under the laws of the
jurisdiction of its organization, and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to conduct
its
business as it is now being conducted.
(b)
The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the People’s Republic of China and has all requisite
corporate power and authority to own, lease and operate its properties and
assets and to conduct its business as it is now being conducted.
(c)
The
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, association, or other business entity. The Company
is
not a participant in any joint venture, partnership, or similar
arrangement.
2.2
Binding Agreement. The Seller has all requisite corporate power and authority
to
enter into this Agreement, to execute and deliver this Agreement, to carry
out
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Seller and the
consummation by the Seller of its obligations hereunder have been duly and
validly authorized by all necessary corporate and stockholder action on the
part
of the Seller. This Agreement has been duly executed and delivered on behalf
of
the Seller and, assuming the due authorization, execution and delivery by the
other parties hereto, constitutes a legal, valid and binding obligation of
each
of the Seller enforceable in accordance with its terms.
2.3
Absence of Violations or Required Consents. Except as set forth in Section
2.3
of the Disclosure Schedule and, in the case of clauses (b), (c) and (d), except
for such violations, breaches, defaults, consents, approvals, authorizations,
orders, actions, registrations, filings, declarations, notifications and
Encumbrances that would not reasonably be expected to have a Material Adverse
Effect or materially impair or delay the consummation of the transactions
contemplated hereby, the execution, delivery and performance by the Seller
of
this Agreement do not and will not (a) violate or result in the breach or
default of any provision of the Seller’s or Company’s articles of association,
(b) violate any Law or Governmental Order applicable to either Seller or the
Company or any of their respective properties or assets, (c) except for the
Required Consents, require any consent, approval, authorization or other order
of, action by, registration or filing with or declaration or notification to
any
Governmental Authority or any other Person or (d) result in any violation or
breach of, constitute a default (or event which with the giving of notice,
or
lapse of time or both, would become a default) under, require any consent under,
or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of any
Encumbrance on the Seller' or the Company’s respective assets, or result in the
imposition or acceleration of any payment, time of payment, vesting or increase
in the amount of compensation or benefit payable, pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license or permit,
or franchise to which either Seller or the Company is a party or by which their
respective assets are bound.
2
2.4
Ownership of Registered Share Capital. (a) Seller is the owner of all of the
registered share capital of the Company.
(b)
Other
than this Agreement, there are no outstanding options, warrants or other rights
of any kind relating to the sale, issuance or voting of any shares of capital
stock or other ownership interests in any of the Company.
(c)
Upon
the consummation of the Sale at the Closing as contemplated by this Agreement,
the Seller will deliver to the Buyer good title to the Shares free and clear
of
any security interests, pledges, liens, charges, encumbrances, adverse claims,
restrictions or defects in title.
2.5
Financial Information. The Seller has furnished to the Buyer the unaudited
balance sheet of the Company (the "Balance Sheet") as of October 31, 2007.
The
Balance Sheet has been prepared in accordance with Chinese Generally Accepted
Accounting Principles and
fairly
presents the financial condition of the Company as of such date. Since its
formation, the Company has had no operations other than engaging in certain
activities relating to its organization, and the acquisition of rights to,
and
construction of buildings on, the Real Property.
2.6
Absence
of Undisclosed Liabilities. The Company has no liability or obligation (whether
direct or indirect, known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due, and whether in contract, tort, strict liability or otherwise) which
are not accurately reflected or provided for in the Balance Sheet, other than
(i) liabilities or obligations incurred in the ordinary course of its business
subsequent to the date of the Balance Sheet, and (ii) other liabilities or
obligations incurred subsequent to the date of the Balance Sheet which are
not
required under Chinese Generally Accepted Accounting Principles to be reflected
therein, in each case which liabilities or obligations, individually and in
the
aggregate, would not have a Material Adverse Effect.
2.7
Title
to Assets; Related Matters. The Company owns certain land use rights (together
with all related easements, rights-of-way and other possessory interests in
real
estate, and all buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures, systems, equipment and
items of personal property attached or appurtenant thereto, the “Real Property”)
as disclosed in Section 2.7 of the Disclosure Schedule. Except for Permitted
Exceptions or as disclosed in Section 2.7 of the Disclosure Schedule and except
for such matters that would not reasonably be expected to have a Material
Adverse Effect, (i) the Company has good, valid and marketable title to, or,
in
the case of leased or subleased assets or other possessory interests, valid
and
subsisting leasehold or other possessory interests in, or otherwise have the
right to use, all of the assets of the Company, free and clear of all
Encumbrances and (ii) to the knowledge of the Seller, there are no contractual
or legal restrictions to which either Seller or the Company is a party or by
which the Real Property is otherwise bound that preclude or restrict the
Company’s ability to use the Real Property for the purposes for which it is
currently being used.
2.8
Absence of Certain Changes, Events and Conditions. Since October 31, 2007,
except as otherwise provided in or contemplated by this Agreement or as
disclosed in Section 2.8 of the Disclosure Schedule except for such matters
that, individually or in the aggregate, would not reasonably be expected to
have
a Material Adverse Effect:
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(a)
other
than in the ordinary course of business consistent with past practice, neither
Seller nor the Company has sold, transferred, leased, subleased, licensed,
encumbered or otherwise disposed of any assets of the Company, other than
transfers of cash;
(b)
neither Seller nor the Company has suffered any casualty loss or damage with
respect to any assets of the Company;
(c)
there
has not been any Material Adverse Effect;
(d)
neither Seller nor the Company has entered into any agreement, contract,
commitment or arrangement to do any of the foregoing.
2.9
Litigation. Except as disclosed in Section 2.9 of the Disclosure Schedule and
except for such matters that would not reasonably be expected to have a Material
Adverse Effect, as of the date hereof, there are no Actions against either
Seller or the Company pending, or, to the knowledge of the Seller, threatened
to
be brought by or before any Governmental Authority, in each case with respect
to
the Company.
2.10
Material Contracts. Section 2.10 of the Disclosure Schedule sets forth all
Material Contracts. Except as set forth in Section 2.10 of the Disclosure
Schedule and except for such matters which would not reasonably be expected
to
have a Material Adverse Effect, (i) each agreement, contract, policy, plan,
mortgage, understanding, arrangement or commitment of the Company that is
intended to be binding upon the parties thereto is legal, valid and binding
on
the Company and, to the knowledge of the Seller, the other parties thereto,
enforceable in accordance with the terms thereof, (ii) the Company is not in
default under any such agreement, contract, policy, plan, mortgage,
understanding, arrangement or commitment and (iii) to the knowledge of the
Seller, no other party to any such agreement, contract, policy, plan, mortgage,
understanding, arrangement or commitment has breached or is in default
thereunder. Seller has given true and correct fully executed copies of each
Material Contract to Buyer.
2.11
Permits and Licenses; Compliance with Law. Except as disclosed in Section 2.11
of the Disclosure Schedule and except for such matters that would not reasonably
be expected to have a Material Adverse Effect, (i) the Company currently hold
all the permits, licenses, authorizations, certificates, exemptions and
approvals of Governmental Authorities or other Persons including necessary
for
the current operation and the conduct of its business (collectively, "Permits"),
and all Permits are in full force and effect, (ii) neither Seller nor the
Company has received any written notice from any Governmental Authority
revoking, canceling, rescinding, materially modifying or refusing to renew
any
Permit and (iii) the Seller and the Company are in compliance with the
requirements of all Permits.
2.12
Taxes. Except as disclosed in Section 2.12 of the Disclosure Schedule and except
for such matters that would not reasonably be expected to have a Material
Adverse Effect, all Tax Returns required by applicable Law to be filed by the
Company have been timely filed. Such Tax Returns are true and correct in all
material respects.
2.13
Employees; Employee, Heath and Safety Matters. The Company has no employees
and
has not had any employees since its formation.
2.14
Compliance with Laws. The Company is not in violation of, has not violated,
and
to the best of Seller’s knowledge, is neither under investigation with respect
to nor has been threatened to be charged with or given notice of any violation
or alleged violation of any Law or Governmental Order, nor is there any
reasonable basis for any such charge.
2.15
Affiliates. Other than Seller, the Company is not controlled by any Person
and
the Company is not in control of any other Person. Schedule 2.18 lists each
contract, arrangement, or understanding to which the Company and Seller or
any
Affiliate of Seller is a party.
4
2.1.6
Environmental Laws. The Company has complied in all material respects with
all
Laws of any governmental entity relating to pollution or the protection of
the
environment or human health or hazardous materials (“Environmental Laws”), and
there is not and there has not been at any time any notice, demand, request
for
information, complaint, order, investigation, or review pending or, to the
best
knowledge of Seller, threatened by any governmental entity with respect to
any
alleged violation by the Company of any Environmental Law. The Company has
not
been requested by any Governmental Authority to pay any sum of money, or
otherwise aid or take any action or refrain from taking actions, to xxxxx or
remediate any environmental occurrence or condition.
2.1.7
Finders’ Fees. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
the
Company, Seller or any of their Affiliates who might be entitled to any fee
or
commission from Buyer or any of its Affiliates upon consummation of the
transactions contemplated by this Agreement.
Article
3. Representations and Warranties Relating to Engineering.
Engineering
represents and warrants to the Buyer as follows:
3.1
Organization and Standing. (a) Engineering is a company or a corporation duly
incorporated, validly existing, and in good standing under the laws of the
jurisdiction of its organization, and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to conduct
its
business as it is now being conducted.
3.2
Binding Agreement. Engineering has all requisite corporate power and authority
to enter into this Agreement, to execute and deliver this Agreement, to carry
out its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Engineering and the
consummation by Engineering of its obligations hereunder have been duly and
validly authorized by all necessary corporate and stockholder action on the
part
of Engineering. This Agreement has been duly executed and delivered on behalf
of
Engineering and, assuming the due authorization, execution and delivery by
the
other parties hereto, constitutes a legal, valid and binding obligation of
each
of Engineering enforceable in accordance with its terms.
3.3
Absence of Violations or Required Consents. Except for such violations,
breaches, defaults, consents, approvals, authorizations, orders, actions,
registrations, filings, declarations, notifications and Encumbrances that would
not reasonably be expected to materially impair or delay its obligations hereby,
the execution, delivery and performance by Engineering of this Agreement do
not
and will not (a) violate or result in the breach or default of any provision
of
Engineering’s articles of association, (b) violate any Law or Governmental Order
applicable to Engineering or any of its properties or assets, or (c) require
any
consent, approval, authorization or other order of, action by, registration
or
filing with or declaration or notification to any Governmental Authority or
any
other Person.
Article
4. Representations and Warranties of the Buyer.
The
Buyer
represents and warrants to the Seller as follows:
4.1
Organization and Standing. The Buyer is a corporation duly incorporated, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and assets and to conduct its business as it is
now
being conducted.
4.2
Binding Agreement. The Buyer has all requisite corporate power and authority
to
enter into this Agreement, to execute and deliver this Agreement, to carry
out
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Buyer and the
consummation by the Buyer of its obligations hereunder have been duly and
validly authorized by all necessary corporate and stockholder action on the
part
of the Buyer. This Agreement has been duly executed and delivered on behalf
of
the Buyer and, assuming the due authorization, execution and delivery by the
other parties hereto, constitutes a legal, valid and binding obligation of
the
Buyer enforceable in accordance with its terms.
Article
5. Covenants and Agreements.
5
5.1
Conduct of the Business Prior to Closing; Access. The Seller covenants as
follows:
(a)
Between the date hereof and the Closing Date, except as contemplated by this
Agreement, except as described in either Section 2 or Section 5.1 of the
Disclosure Schedule, the Seller will cause the Company to be operated in the
ordinary course of business consistent with past practice and will not
permit:
(i)
any
of the assets of the Company to be subjected to any Encumbrance, other than
Permitted Exceptions, that will not be released at or prior to the Closing
Date;
(ii)
other than, in each case, in the ordinary course of business consistent with
past practice, any assets of the Company to be sold, transferred, leased,
subleased, licensed, encumbered or otherwise disposed of (including, without
limitation, sales, transfers, leases, subleases, licenses or dispositions of
material assets to Seller or any of its subsidiaries other than the Company),
other than the sale of obsolete Equipment and transfers of cash;
(iii)
any
material Action, Indebtedness or any other claims or rights related to the
Company to be compromised, settled or otherwise adjusted, or any waiver or
release relating thereto to be granted other than in the ordinary course of
business;
(iv)
any
new agreement, contract, commitment or arrangement, or any amendments or
modifications to any existing such agreement, contract, commitment or
arrangement, to be entered into with the Company that is material to the Company
or that will continue in effect after the Closing Date and not be terminable
by
the Company on not more than 60 days' written notice without payment of premium
or penalty;
(v)
any
Indebtedness to be created, incurred, assumed or guaranteed by any Company
that
cannot be prepaid or terminated without payment of premium or penalty, except
for borrowings under existing credit agreements (or replacements therefor on
substantially the same terms) or the creation of trade payables;
(b)
Pending the Closing Date, the Seller shall:
(1)
Ensure that the Buyer and its representatives are given reasonable access during
normal business hours to all of the properties, books and records of the Company
and that the Buyer and its representatives are furnished with such information
concerning the Company as the Buyer may reasonably require, including such
access and cooperation as may be necessary to allow the Buyer and its
representatives to:
(A)
identify those contracts and Permits that require third party consent to the
transactions contemplated hereby, those that expire prior to or soon after
the
Closing and those that may require special documentation at the
Closing;
(B)
make
appropriate arrangements for the continuation of ongoing maintenance,
construction and plant upgrade activities of the Company after the
Closing;
(2)
Make
available for the Buyer all other routine management and statistical reports
of
the Company;
(3)
From
time to time, furnish to the Buyer such additional information (financial or
otherwise) concerning the Company as the Buyer may reasonably
request;
(4)
Except for disputes in good faith, honor and comply in all material respects
with the terms and conditions contained in all contracts to which the Company
is
a party or by which it is bound.
(5)
Use
reasonable efforts to obtain all consents or other actions legally required
in
connection with the execution, delivery and performance by Seller or Engineering
of this Agreement and the instruments of transfer contemplated hereby and the
consummation by Seller and Engineering of the transactions contemplated
hereby.
6
5.2
Post-Closing Covenants. After the Closing, the Seller shall timely deliver
all
financial statements of the Company, including certifications by appropriate
public accountants thereto, for periods before or ending on the Closing, as
reasonably required by Buyer or its parent company, Tiens Biotech Group (USA),
Inc. (the “Public Company”), pursuant to the Securities Act of 1933, as amended,
the Exchange Act of 1934, as amended, and any other Laws applicable to the
Public Company and the rules of any exchanges on which the Public Company is
listed.
Article
6. Conditions to Obligations of the Buyer.
The
obligations of the Buyer to consummate the transactions contemplated by this
Agreement are, at its option, subject to satisfaction of each of the following
conditions:
6.1
Representations and Warranties. The representations and warranties of the Seller
contained herein (other than the Special Representations) shall be true and
correct in all material respects (other than those representations and
warranties that are qualified by Material Adverse Effect, which shall be true
and correct in all respects) at and as of the Closing Date as though each such
representation and warranty were made at and as of such time, other than such
representations and warranties as are made as of a specific date, in each case
except for changes that are expressly contemplated by this Agreement, and except
for such failures to be true and correct that (without regard to materiality
concepts therein once such failure is established) would not, individually
or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
6.2
Performance by the Seller. All of the covenants and agreements to be complied
with and performed by the Seller on or before the Closing Date shall have been
complied with or performed in all material respects.
6.3
Certificate. The Seller shall have delivered to the Buyer a certificate, dated
as of the Closing Date, executed on behalf of the Seller by its duly authorized
officer to the effect of Sections 6.1 and 6.2.
6.4
No
Material Events. Since the date hereof, there shall have been (i) no material
damage, destruction or loss to the Real Property or other material assets of
the
Company, regardless of insurance coverage, and (ii) no other Material Adverse
Effect.
6.5
No
Material Adverse Change. There shall have been no material adverse change in
the
financial condition, business, operations or assets of the Company at the
Closing as compared with the date hereof.
6.6
Due
Diligence. Buyer has completed to its satisfaction its business, technical,
legal, tax and accounting due diligence of the Company.
6.7
Consents. All consents or other actions legally required in connection with
the
execution, delivery and performance by Seller or Engineering of this Agreement
and the instruments of transfer contemplated hereby and the consummation by
Seller and Engineering of the transactions contemplated hereby shall have been
obtained and shall be in full force and effect.
Article
7. Conditions to Obligations of the Seller. The obligations of the Seller to
consummate the transactions contemplated by this Agreement are, at its option,
subject to satisfaction of each of the following conditions:
7.1
Representations and Warranties. The representations and warranties of the Buyer
contained herein shall be true and correct in all material respects (other
than
those representations and warranties that are qualified by Material Adverse
Effect, which shall be true and correct in all respects) at and as of the
Closing Date as though each such representation and warranty were made at and
as
of such time, other than such representations and warranties as are made as
of a
specific date, in each case except for changes that are expressly contemplated
by this Agreement, and except for such failures to be true and correct that
(without regard to materiality concepts therein once such failure is
established) would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of the Buyer to consummate
the
transactions contemplated hereby.
7
7.2
Performance by the Buyer. All of the covenants and agreements to be complied
with and performed by the Buyer on or prior to the Closing Date shall have
been
complied with or performed in all material respects.
7.3
Certificate. The Buyer shall have delivered to the Seller a certificate, dated
as of the Closing Date, executed on behalf of the Buyer by its duly authorized
officer to the effect of Sections 7.1 and 7.2.
Article
8. Indemnification.
8.1
Indemnification by the Seller. Subject in all respects to the provisions of
this
Article 8, the Seller hereby agree to indemnify and hold harmless the Buyer
and
its officers, directors, employees, agents and representatives after the Closing
Date from and against any Claims and Damages incurred by them arising out of
or
resulting from any breach, inaccuracy or nonfulfillment or alleged breach,
inaccuracy or nonfulfillment on the part of the Seller of (i) any representation
or warranty made by the Seller in Article 2 hereof or in any certificate
delivered pursuant to this Agreement or (ii) any covenant or agreement made
by
the Seller in this Agreement.
8.2
Indemnification by the Buyer. Subject in all respects to the provisions of
this
Article 8, the Buyer hereby agrees, and shall cause the Company to indemnify
and
hold harmless the Seller and its respective Affiliates, officers, directors,
employees, agents and representatives after the Closing Date from and against
any Claims and Damages incurred by them arising out of or resulting from any
breach, inaccuracy or nonfulfillment or alleged breach, inaccuracy or
nonfulfillment on the part of the Buyer of (i) any representation or warranty
made by the Buyer in Article 3 hereof or in any certificate delivered pursuant
to this Agreement (ii) any covenant or agreement made by the Buyer in this
Agreement, (iii) the violation of any Laws by the Company prior to the Closing,
or (iv) the failure to pay any Taxes incurred prior to the Closing to any
Governmental Authority or to file any Tax Return with any Governmental
Authority.
8.3
Limitations on Indemnification Claims and Liability. The respective
representations and warranties of the Seller and the Buyer set forth in this
Agreement or in any certificate delivered pursuant to this Agreement, and the
opportunity to make a claim for indemnification, or otherwise be indemnified
or
held harmless, under this Article 8 with respect thereto or with respect to
(i)
any covenant or agreement relating to any action required by this Agreement
to
be taken prior to or at the Closing or (ii) any Liability Claim shall survive
until, and expire with, and be terminated and extinguished upon, the date that
is 18 months after the Closing Date, except that any Liability or Claim with
respect to Sections 2.11, 2.12, 2.14, 2.15 or 2.16 shall survive until, and
expire with, and be terminated and extinguished upon the 90th day after the
applicable statue of limitations with respect to the matters thereto, and any
Liability or Claim with respect to Sections 2.1, 2.2, or 2.4 shall survive
indefinitely.
(d)
Notwithstanding anything to the contrary in this Agreement, the indemnifications
in Sections 8.1 and 8.2 hereof will be the sole and exclusive remedies available
to the Buyer or the Seller, or any of their respective Affiliates, officers,
directors, employees, agents or representatives, after the Closing for breaches
of any representations or warranties in this Agreement, or any certificate
delivered pursuant to this Agreement, or any covenants or agreements contained
in this Agreement or otherwise in connection with this Agreement. Any claim
for
indemnification must be made as provided in Sections 8.5 hereof.
8.5
Notice of Claims. Upon obtaining actual knowledge of any Claim or Damage which
has given rise to, or could reasonably give rise to, a claim for indemnification
hereunder, the party seeking indemnification (the "Indemnified Party") shall,
as
promptly as reasonably practicable (but in no event later than 30 days)
following the date the Indemnified Party has obtained such knowledge, give
written notice (a "Notice of Claim") of such claim to the party or parties
from
which indemnification is or will be sought under this Article 8 (the
"Indemnifying Party"). The Indemnified Party shall furnish to the Indemnifying
Party in good faith and in reasonable detail such information as the Indemnified
Party may have with respect to such indemnification claim (including copies
of
any summons, complaint or other pleading which may have been served on it and
any written claim, demand, invoice, billing or other document evidencing or
asserting the same). No failure or delay by the Indemnified Party in the
performance of the foregoing shall reduce or otherwise affect the obligation
of
the Indemnifying Party to indemnify and hold the Indemnified Party harmless,
except to the extent that such failure or delay shall have materially adversely
affected the Indemnifying Party's ability to defend against, settle or satisfy
any liability, damage, loss, claim or demand for which such Indemnified Party
is
entitled to indemnification hereunder. For purposes of this Section 8.5, (i)
a
Notice of Claim given in good faith must include to the extent then practicable
a good faith estimate of the amount of the claim and (ii) a Notice of Claim
shall be deemed to have been given as of the date the Probable Liabilities
List
is agreed upon or otherwise determined with respect to Liability Claims.
Notwithstanding anything to the contrary in this Agreement, no identification
of
any party as an "Indemnifying Party" for purposes of any of the provisions
of
this Agreement shall constitute any acknowledgment by such party that it is
liable to any Person under this Article 10.
8
8.6
Payment of Indemnification. All payments of indemnification under this Article
8
shall be payable in cash in RMB.
8.7
Guarantee by Engineering. Engineering shall guarantee the payment of the
indemnification obligations of Seller to pursuant to this Article
8.
8.8
Adjustment to Purchase Price. Seller and Buyer agree to treat any indemnity
payment made pursuant to this Article 8 as an adjustment to the Purchase Price
for all purposes, including federal, state, local and foreign income Tax
purposes.
Article
9. Definitions.
Unless
otherwise stated in this Agreement, the following capitalized terms have the
following meanings:
Action
means any action, suit, claim, arbitration, or proceeding or investigation
(of
which the Seller or the Buyer, as the case may be, have knowledge) commenced
by
or pending before any Governmental Authority.
Agreement
or this Agreement means this Purchase Agreement dated as of the date first
above
written (including the Annexes and Exhibits hereto and the Disclosure Schedule)
and all amendments hereto made in accordance with the provisions of Section
10.4
hereof.
Buyer
has
the meaning specified in the introductory paragraph to this
Agreement.
Claims
and Damages means, except as otherwise expressly provided in this Agreement,
any
and all losses, claims, demands, liabilities, obligations, actions, suits,
orders, statutory or regulatory compliance requirements, or proceedings asserted
by any Person (including, without limitation, Governmental Authorities), and
all
damages, costs, expenses, assessments, judgments, recoveries and deficiencies,
including, to the extent required pursuant to Article 8, reasonable attorneys'
fees and costs, incurred by or awarded against a party to the extent indemnified
in accordance with Article 8 hereof, but shall not include any consequential
special, multiple, punitive or exemplary damages, except to the extent such
damages have been recovered by a third party and are the subject of a third
party claim for which indemnification is available under the express terms
of
Article 8 hereof.
Closing
has the meaning set forth in Section 1.4 hereof.
Closing
Date has the meaning set forth in Section 1.4 hereof.
Disclosure
Schedule means the Disclosure Schedule, dated as of the date hereof, delivered
to the Buyer by the Seller in connection with this Agreement.
Encumbrance
means any security interest, pledge, mortgage, lien (including, without
limitation, tax liens), charge, encumbrance, easement, adverse claim,
preferential arrangement, restriction or defect in title that adversely affects
the use of the property in the manner it is being used prior to the Closing
Date
or the value of the property as measured in the context of the current uses
thereof.
Environmental
Laws has the meaning set forth in Section 2.16 hereof.
9
Equipment
means all of the tangible personal property, machinery, equipment, vehicles,
rolling stock, furniture, and fixtures of the Company in which the Company
has
an interest, by ownership or lease, together with any replacements thereof,
or
additions thereto made in the ordinary course of business between the date
hereof and the Closing Date.
Governmental
Authority means any People’s Republic of China government authority or local
government or any foreign government, any governmental, regulator legislative,
executive or administrative authority, agency or commission or any court,
tribunal, or judicial body.
Indebtedness
means obligations with regard to borrowed money and leases classified or
accounted for as capital or financing leases on financial statements, but shall
expressly not include either accounts payable or accrued liabilities that are
incurred in the ordinary course of business or obligations under operating
leases classified or accounted for as such on financial statements.
Indemnified
Party has the meaning set forth in Section 8.5 hereof.
Indemnifying
Party has the meaning set forth in Section 8.5 hereof.
Law
means
any federal, state, local or foreign statute, law, ordinance, regulation, rule,
code, order or other requirement or rule of law.
Liability
Claim has the meaning set forth in Section 8.3 hereof.
Loan
means the Loan between Biological and Engineering, dated September 27, 2007
in
the principal amount of Renminbi Two Hundred Million (RMB
200,000,000).
Material
Adverse Effect means any circumstance, change in, or effect on the Company
that
has a material adverse effect on the business, results of operations or
financial condition of the Company taken as a whole; provided, however, that
Material Adverse Effect shall not include adverse effects relating to or
resulting from (or, in the case of effects that have not yet occurred,
reasonably likely to result from) (i) the execution of this Agreement or the
announcement of agreement among the parties with respect to the transactions
contemplated by this Agreement, (ii) general economic or industry conditions
that have a similar effect on other participants in the industry or (ii)
regional economic or industry conditions that have a similar effect on other
participants in the industry in such region.
Material
Contracts means the written agreements, contracts, policies, plans, mortgages,
understandings, arrangements or commitments primarily relating to the Company
to
which the Company is a party or by which any of the assets of the Company are
bound as described below:
(i)
any
agreement or contract providing for payments by the Company to any Person in
excess of $1,000,000 per year commencing on the date hereof;
(ii)
any
employment agreement or consulting agreement or similar contract providing
for
payments to any Person in excess of $50,000 per year commencing on the date
hereof;
(iii)
any
retention or severance agreement or contract with respect to any officer of
the
Company who is to be employed by the Company following the Closing
Date;
(iv)
any
lease of Equipment or Real Property or license with respect to Intellectual
Property (other than licenses granted in connection with the purchase of
equipment or other assets) by the Company from another Person providing for
payments to another Person in excess of $1,000,000 per year;
(v)
any
lease of Equipment or Real Property or license with respect to Intellectual
Property (other than licenses granted in connection with the purchase of
equipment or other assets) by the Company
to another Person providing for payments to the Seller or the Company in excess
of $1,000,000 per year commencing on the date hereof;
(vi)
any
joint venture, partnership or similar agreement or contract of the
Company;
10
(vii)
any
agreement or contract under which any Company, or Seller in connection with
the
Company’s business, has borrowed or loaned any money in excess of $1,000,000 or
issued or received any note, bond, indenture or other evidence of indebtedness
in excess of $1,000,000 or directly or indirectly guaranteed indebtedness,
liabilities or obligations of others in an amount in excess of
$1,000,000;
Permits
has the meaning set forth in Section 2.10 hereof.
Permitted
Exceptions means each of the following:
(a)
mortgages, security interests or other Encumbrances described in Section 2.6
of
the Disclosure Schedule;
(b)
liens
for taxes, assessments and governmental charges or levies not yet due and
payable or the validity of which is being contested in good faith by appropriate
proceedings;
(c)
Encumbrances imposed by law, such as materialmen's, mechanics', carriers',
workmen's and repairmen's liens and other similar liens, arising in the ordinary
course of business;
(d)
survey exceptions, rights of way, easements, reciprocal easement agreements
and
other Encumbrances on title to real property that do not, individually or in
the
aggregate, materially adversely affect the use of such property in the conduct
of the Company’s business as it is being conducted prior to the Closing
Date;
(f)
zoning laws and other land use restrictions that do not materially detract
from
the value or impair the use of the property subject thereto;
(g)
security interests in favor of suppliers of goods for which payment has not
been
made in the ordinary course of business consistent with past
practice;
Public
Company has the meaning set forth in Section 5.2 hereof.
Purchase
Price has the meaning set forth in Section 1.3 hereof.
Real
Property has the meaning set forth in Section 2.7 hereof.
Required
Consents means any consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to laws, rules,
regulations, practices and orders of any state or local or foreign regulatory
bodies.
Sale
has
the meaning set forth in the recitals hereto.
Seller
has the meaning set forth in the introductory paragraph to this
Agreement.
Shares
has the meaning set forth in Section 1.1 hereof.
Tax
or
Taxes means any and all taxes, fees, withholdings, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amount d imposed with respect
thereto) imposed by any government or taxing authority, including, without
limitation, taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth, taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added or gains taxes, license,
registration and documentation fees, and customs duties, tariffs and similar
charges.
Article
10. Miscellaneous Provisions.
10.1
Termination Rights. This Agreement may be terminated by:
11
(a)
Seller and Buyer by mutual consent;
(b)
Seller if the Closing shall not have been consummated on or before the date
which is the earlier of (i) five days after the satisfaction of the condition
in
Section 6 (or the following business day if such date is not a business day),
or
(ii) sixty (60) days after the date hereof (the “Cut-off Date”), unless the
failure of the Closing to occur by such date shall be due to the failure of
Seller to perform or observe its covenants and agreements set forth
herein;
(c)
Buyer
if the Closing shall not have been consummated on or before the date which
is
the earlier of (i) five days after the satisfaction of the condition in Section
7 (or the following business day if such date is not a business day), or (ii)
the Cut-off Date, unless the failure of the Closing to occur by such date shall
be due to the failure of Buyer to perform or observe its covenants and
agreements set forth herein;
10.2
Effect of Termination. If this Agreement is terminated pursuant to Section
10.1,
all rights and obligations of the parties hereto under this Agreement shall
terminate and no party shall have any liability to the other party, except
for
obligations of the parties hereto in this Article 10, which shall survive the
termination of this Agreement, and except that nothing herein will relieve
any
party from liability for any breach, occurring prior to such termination, of
any
agreement or covenant (but not any representation or warranty) contained
herein.
10.3
Notices. Any notice, demand, claim, notice of claim, request or communication
required or permitted to be given under the provisions of this Agreement shall
be in writing and shall be deemed to have been duly given (i) upon delivery
if
delivered in person, (ii) on the date of mailing if mailed by registered or
certified mail, postage prepaid and return receipt requested, (iii) on the
date
of delivery to a national overnight courier service, or (iv) upon transmission
by facsimile (if such transmission is confirmed by the addressee) if delivered
through such services to the following addresses, or to such other address
as
any party may request by notifying in writing all of the other parties to this
Agreement in accordance with this Section 10.3.
|
Seller:
|
Tianshi
International Investment Group Co., Ltd.
|
|
|
Room
2402-03, 24/F.,
New York Life Tower, Windsor House
|
||
|
000
Xxxxxxxxxx Xxxx,
Xxxxxxxx Xxx, Xxxx Xxxx
|
||
|
Attention:
Xxxxxxx
Xx
|
||
|
Buyer:
|
Tianshi
International Holdings Group Limited
|
|
|
00xx
Xxxxx Xx. 000 Xxxxxx Xxxx Xxxx Xxxx
|
||
|
Attention:
Xxxxxxx
Xx
|
||
|
Biological:
|
Tianjin
Tianshi Biological Development Co., Ltd., a Sino-Foreign joint
venture
|
|
|
Xx.
0 Xxxxxxxx Xxxx, Xxxxxx Xxxxxxxxxx Xxxx Xxxxxxx, XXX
000000
|
||
|
Attention:
Xxxxx
Xx
|
||
|
Engineering:
|
Tianjin
Tianshi Biological Engineering Co., Ltd.
|
|
|
Xx.
0 Xxxxxxxx Xxxx, Xxxxxx Xxxxxxxxxx Xxxx Xxxxxxx. XXX
000000
|
||
|
Attention:
Xxxxx
Xx
|
Any
such
notice shall be deemed to have been received on the date of personal delivery,
the date set forth on the Postal Service return receipt, or the date of delivery
shown on the records of the overnight courier, as applicable.
10.4
Benefit and Assignment. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. There shall be no assignment of any interest under this Agreement
by
any party except that the Buyer may assign its rights hereunder to any wholly
owned subsidiary of the Buyer; provided, however, that no such assignment shall
relieve the assignor of its obligations under this Agreement. Nothing herein,
express or implied, is intended to or shall confer upon any other Person any
legal or equitable right, benefit or remedy of any nature whatsoever under
or by
reason of this Agreement.
12
10.5
Amendment. This Agreement may not be amended or modified except by an instrument
in writing signed by, or on behalf of, the Seller and the Buyer.
10.6
Dispute Resolution. This Agreement shall be governed by, and construed in
accordance with, Hong Kong law. Any dispute, controversy or claim arising out
of
or relating to this Agreement shall be settled by arbitration in accordance
with
the UNCITRAL Arbitration Rules as at present in force and as may be amended.
The
arbitration body shall be Hong Kong International Arbitration Centre ("HKIAC").
The place of arbitration shall be in Hong Kong at HKIAC. There shall be a panel
of three arbitrators. The language to be used in the arbitral proceedings shall
be English.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
| TIANSHI INTERNATIONAL INVESTMENT GROUP CO., LTD | ||
| |
|
[COMPANY
SEAL AFFIXED]
|
| By: | /s/ Xxxxxxx Xx | |
|
Name: Xxxxxxx Xx |
||
| Title: President | ||
| TIANSHI INTERNATIONAL HOLDINGS GROUP LIMITED. | ||
| |
|
[COMPANY
SEAL AFFIXED]
|
| By: | /s/ Xxxxxxx Xx | |
|
Name: Xxxxxxx Xx |
||
| Title: President | ||
| TIANJIN TIANSHI BIOLOGICAL DEVELOPMENT CO., LTD. | ||
| |
|
[COMPANY
SEAL AFFIXED]
|
| By: | /s/ Xxxxx Xx | |
|
Name: Xxxxx Xx |
||
| Title: Legal Representative | ||
| TIANJIN TIANSHI BIOLOGICAL ENGINEERING CO., LTD | ||
| |
|
[COMPANY
SEAL AFFIXED]
|
| By: | /s/ Xxxxx Xx | |
|
Name: Xxxxx Xx |
||
| Title: Legal Representative | ||
13
