SHARE EXCHANGE AGREEMENT
AGREEMENT dated as of December 19, 2006 by and between Gold Standard,
Inc., a Utah corporation (hereinafter referred to as "GOLS"), and the
individuals identified on the signature page as the Shareholders of Changan
International Limited, a corporation organized under the laws of the Hong Kong
Special Administrative Region (hereinafter referred to as the "Changan
Shareholders"). The Changan Shareholders (collectively) and GOLS are
sometimes referred to collectively herein as the "Parties," and each is
sometimes referred to individually as the "Party."
WHEREAS, Changan International Limited ("Changan") owns sixty-one
percent (61%) of the issued and outstanding capital stock of Xxxxxx Xxxxxx
Environment Protection Material, Inc., a corporation organized under the laws
of the People's Republic of China ("Hongbo"); and
WHEREAS, the Changan Shareholders own all of the issued and outstanding
capital stock of Changan; and
WHEREAS, the Changan Shareholders desire to transfer the capital stock
of Changan to GOLS and GOLS desires to acquire such shares in exchange for
certain shares of GOLS common stock.
NOW, THEREFORE, it is agreed:
1. DEFINITIONS.
As used herein, the following terms shall have the meanings set forth
below:
a. "Applicable Law" means any domestic or foreign law, statute,
regulation, rule, policy, guideline or ordinance applicable
to the businesses or corporate existence of GOLS, Changan or
Hongbo.
b. "GAAP" means generally accepted accounting principles in the
United States of America as promulgated by the American
Institute of Certified Public Accountants and the Financial
Accounting Standards Board or any successor institutes
concerning the treatment of any accounting matter.
c. "Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, claim,
encumbrance, royalty interest, any other adverse claim of
any kind in respect of such property or asset, or any other
restrictions or limitations of any nature whatsoever.
d. "Material Adverse Effect" with respect to any entity or
group of entities means any event, change or effect that has
or would have a materially adverse effect on the financial
condition, business or results of operations of such entity
or group of entities, taken as a whole.
e. "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means:
(i) any income, alternative or add-on minimum tax, gross
receipts tax, sales tax, use tax, ad valorem tax, transfer tax,
franchise tax, profits tax, license tax, withholding tax, payroll
tax, employment tax, excise tax, severance tax, stamp tax,
occupation tax, property tax, environmental or windfall profit tax,
custom, duty or other tax, impost, levy, governmental fee or other
like assessment or charge of any kind whatsoever together with any
interest or any penalty, addition to tax or additional amount
imposed with respect thereto by any governmental or Tax authority
responsible for the imposition of any such tax (domestic or
foreign), and
(ii) any liability for the payment of any amounts of the
type described in clause (i) above as a result of being a member of
an affiliated, consolidated, combined or unitary group for any
Taxable period, and
(iii) any liability for the payment of any amounts of the
type described in clauses (i) or (ii) above as a result of any
express or implied obligation to indemnify any other person.
f. "Tax Return" means any return, declaration, form, claim for
refund or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including
any amendment thereof.
2. SHARE EXCHANGE.
a. On the Closing Date (defined herein), the Changan
Shareholders shall transfer and assign to GOLS all of the issued and
outstanding capital stock of Changan. The Changan Shareholders represent and
warrant that upon delivery to GOLS of documents suitable to transfer the
capital stock of a Hong Kong corporation, all right, title and interest in
said shares will be transferred to GOLS free of Liens, claims and
encumbrances.
b. On the Closing Date, GOLS shall issue to the Changan
Shareholders a total of sixty million (60,000,000) shares of common stock.
The shares shall be issued in proportion to the relative interests of the
Changan Shareholders in Changan, as set forth on Schedule 2 b hereto. No
fractional shares will be issued; in lieu thereof, the number of shares to
each Changan Shareholder will be rounded to the next whole share. GOLS
warrants that the common stock, when so issued, will be duly authorized, fully
paid and non-assessable.
c. The parties intend that the exchange of shares described
above shall qualify as a tax-free exchange under Section 351 of the United
States Internal Revenue Code. The parties further intend that the issuance of
the common stock by GOLS to the Changan Shareholders shall be exempt from the
provisions of Section 5 of the Securities Act of 1933 (the "Securities Act")
pursuant to Section 4(2) of said Securities Act and Regulation S of the United
States Securities and Exchange Commission (the "SEC").
3. CLOSING.
The Closing of the transactions contemplated by this Agreement
("Closing") shall take place at the offices of Xxxxxx Xxxxxx, counsel for
Changan, on the first business day after the conditions precedent set forth
in Section 7 hereof have been satisfied, but in no event later than December
29, 2006 (the "Closing Date").
4. WARRANTIES AND REPRESENTATIONS OF CHANGAN SHAREHOLDERS In
order to induce GOLS to enter into this Agreement and to complete the
transaction contemplated hereby, the Changan Shareholders warrant and
represent to GOLS that:
a. Organization and Standing - Changan. Changan is a
corporation duly organized, validly existing and in good standing under the
laws of the Hong Kong Special Administrative Region and has full power and
authority to carry on its business as now conducted.
b. Capitalization - Changan. Changan's registered capital
stock consists of ten thousand (10,000) Hong Kong Dollars, all of which is
issued and outstanding (the "Changan Shares"). Other than the Changan Shares
owned by the Changan Shareholders, there are no voting or equity securities
authorized or issued, nor any authorized or issued securities convertible into
equity securities, and no outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which Changan or any of the Changan
Shareholders is bound, calling for the issuance of any additional equity
securities of Changan. All of the Changan Shares have been duly authorized
and validly issued and are fully paid and non-assessable and were not issued
in violation of any preemptive rights or any Applicable Law.
c. Valid Transfer of Changan Shares. By the transfer of the
Changan Shares to GOLS pursuant to this Agreement, GOLS will acquire good
title to 100% of the capital stock of Changan, free and clear of all Liens,
encumbrances and restrictions of any nature whatsoever, except by reason of
the fact that the Changan Shares will not have been registered under the
Securities Act, or any applicable state securities laws.
d. Business Operations and Liabilities Changan. Changan has
conducted no business operations other than the acquisition of ownership of
the capital stock of Hongbo.
e. Organization and Standing Hongbo. Hongbo is a corporation
duly organized, validly existing and in good standing under the laws of the
People's Republic of China. Hongbo has all of the government licenses and
permits necessary to carry on its business as now conducted, to own and
operate its assets, properties and business, and to carry out the transactions
contemplated by this Agreement.
f. Capitalization - Hongbo. Changan is the owner of sixty-one
percent (61%) of the registered capital of Hongbo, free and clear of all
Liens, encumbrances and restrictions whatsoever. There are no warrants,
calls, options, rights, commitments or agreements by which Hongbo or Changan
are bound, calling for the issuance of any additional equity securities of
Hongbo. All of the outstanding shares of Hongbo have been duly authorized and
validly issued and are fully paid and non-assessable and were not issued in
violation of any preemptive rights or any applicable securities laws.
g. Financial Statements. The Changan Shareholders have
delivered to GOLS (i) the financial statements of Hongbo for the period ending
September 30, 2006 and for the years ended December 31, 2005 and 2004 (all
three documents being the "Hongbo Financial Statements") and (ii) the
financial statements of Changan for the period from inception to September 30,
2006 (the "Changan Financial Statements"). The Hongbo Financial Statements
and the Changan Financial Statements have been prepared in accordance with
U.S. GAAP and present fairly in all material respects the financial condition
of Hongbo and Changan as of the dates thereof. The financial statements of
Hongbo for the years ended December 31, 2005 and 2004 and the Changan
Financial Statements have been reported on by an independent accountant
registered with the PCAOB.
h. Absence Of Certain Changes Or Events. Except as set forth
on Schedule 4i, to the knowledge of any of the Changan Shareholders, since
September 30, 2006:
(i) there has not been (i) any change that has had or would have
a Material Adverse Effect on the business, operations, properties, assets, or
condition of Hongbo or (ii) any damage, destruction, or loss to Hongbo
(whether or not covered by insurance) materially and adversely affecting the
business, operations, properties, assets, or condition of Hongbo;
(ii) Hongbo has not (i) declared or made, or agreed to declare or
make, any payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to purchase or
redeem, any outstanding capital stock; (ii) waived any rights of value which
in the aggregate are extraordinary or material considering the business of
Hongbo; or (iii) made any material change in its method of management,
operation, or accounting;
(iii) to the knowledge of any of the Changan Shareholder, Hongbo has
not become subject to any law or regulation which has had or would in the
future be substantially likely to have a Material Adverse Effect on Hongbo.
i. Ownership of Assets. Except as specifically identified in
the Hongbo Financial Statements, Hongbo has good, marketable title, without
any Liens or encumbrances of any nature whatever, to all of the following, if
any: its assets, properties and rights of every type and description,
including, without limitation, all cash on hand and in banks, certificates of
deposit, stocks, bonds, and other securities, good will, customer lists, its
corporate name and all variants thereof, trademarks and trade names,
copyrights and interests thereunder, licenses and registrations, pending
licenses and permits and applications therefor, inventions, processes,
know-how, trade secrets, real estate and interests therein and improvements
thereto, machinery, equipment, vehicles, notes and accounts receivable,
fixtures, rights under agreements and leases, franchises, all rights and
claims under insurance policies and other contracts of whatever nature, rights
in funds of whatever nature, books and records and all other property and
rights of every kind and nature owned or held by Hongbo as of this date.
Except in the ordinary course of its business, Hongbo has not disposed of any
such asset since September 30, 2006.
j. Governmental Consent. No consent, waiver, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other non-U.S., U.S., state, county,
local or other foreign governmental authority, instrumentality, agency or
commission is required by or with respect to Changan or Hongbo in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
k. Taxes. Each of Changan and Hongbo has filed all tax returns
that it is required to file with all governmental agencies, wherever situate,
and has paid or accrued for payment all taxes as shown on such returns except
for taxes being contested in good faith. There is no material claim for taxes
that is a Lien against the property of Changan or Hongbo other than Liens for
taxes not yet due and payable.
l. Pending Actions. There are no material legal actions,
lawsuits, proceedings or investigations pending or threatened, against or
affecting Changan, Hongbo, or against Hongbo's Officers or Directors or the
Changan Shareholders that arose out of their operation of Hongbo. Neither
Changan, Hongbo, nor any of the Changan Shareholders is subject to any order,
writ, judgment, injunction, decree, determination or award of any court,
arbitrator or administrative, governmental or regulatory authority or body
which would be likely to have a Material Adverse Effect on the business of
Hongbo or Changan.
m. No Debt Owed to Changan Shareholders. Neither Changan nor
Hongbo owes any money, securities, or property to the Changan Shareholders or
any family members of the Changan Shareholders or to any company controlled by
or under common control with any such persons, directly or indirectly.
n. Intellectual Property And Intangible Assets. To the
knowledge of the Changan Shareholders, Hongbo has full legal right, title and
interest in and to all of the intellectual property utilized in the operation
of its business. Hongbo has not received any written notice that the rights
of any other person are violated by the use by Hongbo of the intellectual
property. None of the intellectual property has ever been declared invalid or
unenforceable, or is the subject of any pending or, to the knowledge of the
Changan Shareholders, threatened action for opposition, cancellation,
declaration, infringement, or invalidity, unenforceability or misappropriation
or like claim, action or proceeding.
o. Validity of the Agreement. This Agreement has been duly
executed by the Changan Shareholders, and constitutes the valid and binding
obligation of each of the Changan Shareholders, enforceable in accordance with
its terms except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws relating to or effecting
generally the enforcement of creditors' rights. The execution and delivery of
this Agreement and the carrying out of its purposes will not result in the
breach of any of the terms or conditions of, or constitute a default under or
violate, the Articles of Association of either Changan or Hongbo, or any
material agreement or undertaking, oral or written, to which Changan or Hongbo
or any of the Changan Shareholders is a party or is bound or may be affected
by, nor will such execution, delivery and carrying out violate any order,
writ, injunction, decree, law, rule or regulation of any court, regulatory
agency or other governmental body; and the business now conducted by Hongbo
can continue to be so conducted after completion of the transaction
contemplated hereby.
p. Compliance with Laws. Hongbo's operations have been
conducted in all material respects in accordance with all applicable statutes,
laws, rules and regulations. Hongbo is not in violation of any law, ordinance
or regulation of the People's Republic of China or of any other jurisdiction.
Hongbo holds all the environmental, health and safety and other permits,
licenses, authorizations, certificates and approvals of governmental
authorities necessary or proper for the current use, occupancy or operation of
its business, all of which are now in full force and effect.
q. Finders. Other than Xxxxx & Associates, the Changan
Shareholders have not employed or utilized any finder in connection with this
transaction, and the execution of this Agreement and the carrying out of its
purposes will not give any individual or firm other than Xxxxx & Associates a
valid legal claim to a finder fee.
r. Regulatory History. None of the Changan Shareholders, nor
any officer, director or control person of Changan or of Hongbo, nor Changan
or Hongbo themselves is or has been the subject of an action or proceeding
commenced by the SEC or by the securities regulatory authorities of any
jurisdiction. Neither is any of the aforesaid bound by any injunction or
other order of a court or government agency that prescribes the individual
from carrying on any business or trade.
s. Access to Information. In connection with his decision to
accept the common stock of GOLS as consideration in this transaction, each of
the Changan Shareholders has been provided any information concerning GOLS
that he requested and has been afforded the opportunity to speak with the
Chief Executive Officer of GOLS regarding the business and financial condition
of GOLS. Each of the Changan Shareholders is sophisticated in business
affairs and able to appreciate the information presented to him and to
evaluate the investment decision he is making.
5. WARRANTIES AND REPRESENTATIONS OF GOLS . In order to induce the
Changan Shareholders to enter into this Agreement and to complete the
transactions contemplated hereby, GOLS warrants and represents to the Changan
Shareholders that:
a. Organization and Standing. GOLS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Utah and
has full power and authority to carry on its business as now conducted. GOLS
is qualified to do business as a foreign corporation in every other state in
which it operates to the extent required by the laws of such states. The
copies of the Articles of Incorporation and Bylaws of GOLS previously
delivered to the Changan Shareholders are true and complete as of the date
hereof.
b. Capitalization. GOLS' entire authorized capital stock consists of
100,000,000 shares of common stock, par value $0.001 per share. At the
Closing, prior to the issuance of shares to the Changan Shareholders, there
will be 1,307,366 shares of GOLS common stock issued and outstanding. At the
Closing, there will be no other voting or equity securities outstanding, and
no outstanding subscriptions, warrants, calls, options, rights, commitments or
agreements by which GOLS is bound, calling for the issuance of any additional
shares of common stock or preferred stock or any other voting or equity
security.
c. Corporate Records. All of GOLS' books and records, including,
without limitation, its books of account, corporate records, minute book,
stock certificate books and other records are up-to-date, complete and reflect
accurately and fairly the conduct of its business in all material respects
since its date of incorporation to the extent previously delivered to the
Changan Shareholders.
d. Significant Agreements. At the Closing, GOLS will not be bound by
any contract, agreement, lease, commitment, guarantee or arrangement of any
kind.
e. Taxes. GOLS has filed all tax returns that it is required to file
with all governmental agencies, wherever situate, and has paid or accrued for
payment all taxes as shown on such returns except for taxes being contested in
good faith. There is no material claim for taxes that is a Lien against the
property of GOLS other than Liens for taxes not yet due and payable.
f. Pending Actions. There are no legal actions, lawsuits,
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting GOLS or against GOLS' current or former
Officers or Directors that arose out of their operation of GOLS. GOLS is not
subject to any order, writ, judgment, injunction, decree, determination or
award of any court, arbitrator or administrative, governmental or regulatory
authority or body.
g. Validity of the Agreement. All corporate and other proceedings
required to be taken by GOLS in order to enter into and to carry out this
Agreement have been duly and properly taken. This Agreement has been duly
executed by GOLS, and constitutes a valid and binding obligation of GOLS,
enforceable against it in accordance with its terms except to the extent
limited by applicable bankruptcy reorganization, insolvency, moratorium or
other laws relating to or effecting generally the enforcement of creditors'
rights. The execution and delivery of this Agreement and the carrying out of
its purposes will not result in the breach of any of the terms or conditions
of, or constitute a default under or violate, GOLS' Articles of Incorporation
or Bylaws, or any agreement, lease, mortgage, bond, indenture, license or
other document or undertaking, oral or written, to which GOLS is a party or is
bound or may be affected, nor will such execution, delivery and carrying out
violate any order, writ, injunction, decree, law, rule or regulation of any
court, regulatory agency or other governmental body.
h. Trading Status. GOLS' common stock is listed for quotation on the
OTC Bulletin Board, with the symbol "GOLS." To the knowledge of GOLS, GOLS has
not been threatened and is not subject to removal of its common stock from the
OTC Bulletin Board.
i. SEC Status. The common stock of GOLS is registered pursuant to
Section 12(g) of the Securities and Exchange Act of 1934. GOLS has filed all
reports required by the applicable regulations of the SEC. All of the filings
by GOLS under the Exchange Act within the past four years were true, correct
and complete in all material respects when filed, were not misleading and did
not omit to state any material fact which was necessary to make the statements
contained in such public filings not misleading in any material respect.
j. Compliance with Laws. GOLS' operations have been conducted in all
material respects in accordance with all applicable statutes, laws, rules and
regulations. GOLS is not in violation of any Applicable Law.
k. Finders. Other than Xxxxx & Associates, GOLS has not employed or
utilized any finder in connection with this transaction, and the execution of
this Agreement and the carrying out of its purposes will not give any
individual or firm other than Xxxxx & Associates a valid legal claim to a
finder fee.
6. PARTIES' COVENANTS
a. Tax-Free Exchange. The Parties intend that the transactions
contemplated by this Agreement qualify as a tax-free exchange under Section
351 of the United States Internal Revenue Code. The Parties will take the
position for all purposes that the said transactions qualify under said
Section 351.
b. Announcement. Prior to the Closing, no Party hereto nor Changan
or Hongbo shall issue any press release or otherwise make any public statement
with respect to this Agreement or the transactions contemplated hereby without
the prior consent of the other Party (which consent shall not be unreasonably
withheld), except as may be required by applicable law or securities
regulation. The Parties will, to the extent practicable, consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any such press release or other public statements with respect
to this Agreement and the transactions contemplated hereby whether or not
required by Applicable Law. Upon execution of this Agreement, GOLS shall
issue a press release, which shall be approved by the Changan Shareholders.
c. Access to Information
(i) Inspection by Changan. Prior to the Closing, GOLS will make
available for inspection by Changan, during normal business hours, all
of GOLS' records (including tax records), books of account, premises,
contracts and all other documents in GOLS' possession or control that
are reasonably requested by Changan to inspect and examine the business
and affairs of GOLS. GOLS will cause its managerial employees and
regular independent accountants to be available upon reasonable advance
notice to answer questions of Changan concerning the business and
affairs of GOLS. Changan will treat and hold as confidential any
information it receives from GOLS in the course of the reviews
contemplated by this Section 6c(i). No examination by Changan will,
however, constitute a waiver or relinquishment by the Changan
Shareholders of their rights to rely on GOLS' covenants, representations
and warranties made herein or pursuant hereto.
(ii) Inspection by GOLS. Prior to the Closing, the Changan
Shareholders will cause Changan and Hongbo to make available for
inspection by GOLS, during normal business hours and in a manner so as
not to interfere with normal business operations, all of Changan's and
Hongbo's records (including tax records), books of account, premises,
contracts and all other documents in Changan's or Hongbo's possession or
control that are reasonably requested by GOLS to inspect and examine the
business and affairs of Hongbo and Changan. The Changan Shareholders
will cause the managerial employees of Changan and Hongbo and their
regular independent accountants to be available upon reasonable advance
notice to answer questions of GOLS concerning the business and affairs
of Hongbo and Changan. GOLS will treat and hold as confidential any
information it receives from Hongbo and Changan in the course of the
reviews contemplated by this Section 6c(ii). No examination by GOLS
will, however, constitute a waiver or relinquishment by GOLS of its
rights to rely on the Changan Shareholders' covenants, representations
and warranties made herein or pursuant hereto.
d. Payment of Finder's Fee. The Changan Shareholders will pay and
deliver to Xxxxx & Associates upon consummation of the Closing a finder's fee
in the amount of $45,000, subject to the terms and conditions of the finder's
agreement between Xxxxx & Associates and GOLS.
e. No Reverse Split. The Changan Shareholders agree that, for a
period of one year following the Closing, they will not authorize or vote in
favor of a reverse split or a combination of the common stock of GOLS. In
addition, if any of them serve as members of the Board of Directors of GOLS,
they will not during that one year period vote to authorize a reverse split or
combination. In the event of a reverse split effected during that one year
period, any pre-Closing GOLS shareholder who has not sold the GOLS shares of
common stock owned at Closing will be issued additional shares as liquidated
damages and not as a penalty in an amount sufficient to increase the common
stock shareholdings of any such shareholder to an amount equal to what any
such shareholder would have had had there not be such a reverse split, by
reason of the inability to value the effect that the reverse split would have
on the common stock holdings of any such shareholder. The right of a pre-
Closing GOLS shareholder to obtain the remedy of additional shares provided in
this Section will terminate unless the pre-Closing GOLS shareholder sends a
demand for the additional shares to the executive offices of GOLS within
thirty days after GOLS mails a notice of the reverse split to its record and
beneficial shareholders.
7. CONDITIONS PRECEDENT TO CLOSING
a. Conditions Precedent to the Parties' Obligations. The
obligations of the Parties as provided herein shall be subject to each of the
following conditions precedent, unless waived in writing by both GOLS and the
Changan Shareholders:
(i) Consents, Approvals. GOLS shall have obtained all necessary
consents and approvals of its board of directors, and the
Parties shall have obtained all consents, approvals and
authorizations required under their respective charter
documents, and all material consents, including any material
consents and waivers by the Parties' respective lenders and
other third-parties, if necessary, to the consummation of
the transactions contemplated by this Agreement.
(ii) Indemnity Agreement. The Parties, Xxxxx X. Xxxxx, President
of GOLS ("Xxxxx") and Xxxxxxx Xxxxxxxxxx, counsel to GOLS
("Escrow Agent"), shall have entered into an indemnity
agreement in the form set forth in Schedule 7a (the
"Indemnity Agreement") whereunder (A) the Changan
Shareholders will deliver the sum of $500,000 to the Escrow
Agent to be utilized by the Escrow Agent to pay certain
liabilities of GOLS that exist on the Closing Date, and (B)
Xxxxx will agree for a period of one year to indemnify and
hold harmless GOLS from all liabilities existing on the
Closing Date that are not satisfied by the funds held in
escrow pursuant to the Indemnity Agreement, and (C) the
balance of the escrowed funds will be paid to Xxxxx after
satisfaction of all liabilities, in consideration of Xxxxx'x
surrender of certain warrants and his undertaking to
indemnify GOLS.
b. Conditions Precedent to Obligations of Changan Shareholders.
The obligations of the Changan Shareholders under this Agreement shall be and
are subject to fulfillment, prior to or at the Closing, of each of the
following conditions:
(i) Representations and Warranties. GOLS' representations and
warranties contained herein shall be true and correct on the
Closing Date, as if such representations and warranties had
been made on and as of the Closing Date, and the President
and the Chief Financial Officer of GOLS shall each have
delivered to the Changan Shareholders a certification to
such effect.
(ii) Performance. GOLS shall have performed or complied with all
agreements, terms and conditions required by this Agreement
to be performed or complied with by it prior to or at the
time of the Closing.
(iii) Material Changes. Since the date of this Agreement, GOLS
shall not have suffered a Material Adverse Effect and,
without limiting the generality of the foregoing, there
shall be no pending litigation to which GOLS or Xxxxx is a
party which is reasonably likely to have a Material Adverse
Effect on GOLS.
(iv) SEC Filing. Based on information provided by the Changan
Shareholders, GOLS shall have filed with the SEC an
information statement compliant with SEC Rule 14f-1, and
shall have mailed the information statement to its
shareholders of record at least ten days before the Closing
Date, and shall not have received any comments thereon from
the SEC.
(v) Trading Status. GOLS' common stock will be listed for
trading on the OTC Bulletin Board, and bid and asked
quotations shall be posted as of the Closing Date.
(vi) Due Diligence. The Changan Shareholders shall have
completed to their own satisfaction due diligence with
respect to GOLS, except that this shall cease to be a
condition precedent unless on or prior to December 15, 2006,
the Changan Shareholders shall have delivered a written
notice stating that they are not satisfied with the results
of their due diligence.
(vii) Financial and Tax Condition; Annual Report on Form 10-KSB.
GOLS shall have delivered to the Changan Shareholders the
financial statements of GOLS for the year ended October 31,
2006 with a report by the independent registered public
accountant for GOLS as well as any information requested by
the Changan Shareholders for the purpose of completing the
Annual Report on Form 10-KSB for the year ending October 31,
2006; and GOLS shall have filed all applicable income tax
returns with respect to fiscal year 2006 and shall have paid
any taxes due thereon.
(viii) Outstanding Shares. There shall be 1,307,366 shares
of GOLS common stock issued and outstanding; and there shall
be no other voting or equity securities outstanding, and,
except for the commitments made by GOLS to the Changan
Shareholders under this Agreement, there shall be no
outstanding subscriptions, warrants, calls, options, rights,
commitments or agreements by which GOLS is bound calling for
the issuance of any additional shares of common stock or any
other voting or equity security. Without limiting the
generality of the foregoing, the warrants granted to
Messieurs Xxxxxx, Franke, Smith, Xxxxxxx and Stones on
January 30, 2004 shall be surrendered for cancellation or
otherwise terminated prior to the Closing.
(ix) No Contracts. GOLS will not be bound by any contract,
agreement, lease, commitment, guarantee or arrangement of
any kind except for the Indemnity Agreement and, without
limiting the generality of the foregoing, GOLS shall not be
bound by (A) any employment agreement, including the
Employment Agreement between GOLS and Xxxxx that was
extended on January 30, 2004 or (B) any obligation to FCMI
Financial Corporation arising from such corporation's
investment in GOLS.
(x) Election of Directors. The GOLS Directors shall have
elected to the Board of GOLS, effective as of the Closing,
such persons as the Changan Shareholders shall designate;
and at the Closing, the prior members of the GOLS Board of
Directors shall resign.
(xi) Documents Satisfactory. All documents and instruments to be
delivered pursuant to this Agreement shall be reasonably
satisfactory in substance and form to the Changan
Shareholders and their counsel, and the Changan Shareholders
and their counsel shall have received all such counterpart
originals (or certified or other copies) of such documents
as they may reasonably request.
c. Conditions Precedent to Obligations of GOLS. The
obligations of the GOLS under this Agreement shall be and are subject to
fulfillment, prior to or at the Closing, of each of the following conditions:
(i) Representations and Warranties. The representations and
warranties of the Changan Shareholders contained herein
shall be true and correct on the Closing Date, as if such
representations and warranties had been made on and as of
the Closing Date, and the President and Chief Financial
Officer of Changan shall each have delivered to GOLS a
certification to such effect.
(ii) Performance. The Changan Shareholders shall have performed
or complied with all agreements, terms and conditions
required by this Agreement to be performed or complied with
by them prior to or at the time of the Closing.
(iii) Material Changes. Since the date of this Agreement, neither
Changan nor Hongbo shall not have suffered a Material
Adverse Effect and, without limiting the generality of the
foregoing, there shall be no pending litigation to which any
of Changan, Hongbo or the Changan Shareholders is a party
that is reasonably likely to have a Material Adverse Effect
on Changan or Hongbo.
(iv) Due Diligence. GOLS shall have completed to its own
satisfaction due diligence with respect to Changan and
Hongbo, except that this shall cease to be a condition
precedent unless on or prior to December 15, 2006, GOLS
shall have delivered a written notice stating that it is not
satisfied with the results of its due diligence.
(v) SEC Filings. The Changan Shareholders shall have delivered
to GOLS, at least fourteen days prior to the Closing, the
information required to be included in the Rule 14f-1
information statement referred to in Section 7b (iv) of this
Agreement.
(vi) Documents Satisfactory. All documents and instruments to be
delivered pursuant to this Agreement shall be reasonably
satisfactory in substance and form to GOLS and its counsel,
and GOLS and its counsel shall have received all such
counterpart originals (or certified or other copies) of such
documents as they may reasonably request.
8. DELIVERIES AT CLOSING
a. At the Closing, the Parties, Xxxxx and the Escrow Agent shall
execute and exchange the Indemnity Agreement, and the Changan
Shareholders shall deliver the sum of $500,000 to the Escrow
Agent, by certified check or wire transfer, to be held and
disbursed in accordance with the provisions of the Indemnity
Agreement.
b. At the Closing, the Changan Shareholders shall deliver to GOLS the
following:
(i) Documents sufficient to effect a transfer to GOLS of
the outstanding shares of Changan.
(ii) The Certification of the President and Chief Financial
Officer of Changan described in Section 7c(i) hereof.
c. At the Closing, GOLS shall deliver to the Changan Shareholders the
following:
(i) Certificates for sixty million (60,000,000) shares of
GOLS common stock in the names and individual
quantities specified on Schedule 2b hereto.
(ii) The Certifications of the President and Chief
Financial Officer of GOLS described in Section 7b(i)
hereof.
(iii) A certification signed by the Secretary of GOLS
attesting to the adoption and continuing effectiveness
of resolutions of the GOLS Board of Directors (A)
amending the Bylaws of GOLS to opt out of the Utah
Control Share Acquisition Act, (B) ratifying and
approving this Agreement, and (C) electing the
nominees of the Changan Shareholders to serve as the
sole members of the GOLS Board of Directors effective
on the completion of the Closing.
(iv) The resignations of all of the officers and directors
of GOLS effective on the completion of the Closing.
(v) A written waiver by FCMI Financial Corporation of any
executory obligation of GOLS arising from the
investment by FCMI Financial Corporation in GOLS;
(vi) a written acknowledgement of Xxxxx as to the
termination of the Employment Agreement between Xxxxx
and GOLS referred to in Section 7b(ix), above.
(vii) All books and records of GOLS.
9. TERMINATION
This Agreement may be terminated at any time before or at
Closing, by:
a. The mutual agreement of the Parties;
b. GOLS, upon notice delivered on or before December 15, 2006,
stating that it is not satisfied with its review and investigation
of Changan's or Hongbo's business;
c. the Changan Shareholders, upon notice delivered on or before
December 15, 2006, stating that they are not satisfied with their
review and investigation or GOLS' business;
d. Any Party if the Closing has not occurred by December 29, 2006,
unless that party caused the failure to close by its failure to
satisfy the covenants herein;
e. Any Party if any legal proceeding shall have been instituted or
shall be imminently threatening to delay, restrain or prevent the
consummation of this Agreement or any material component thereof;
f. Without any action on the part of the Parties if required by
Applicable Law.
Upon termination of this Agreement for any reason, in accordance with
the terms and conditions set forth in this paragraph, each Party shall bear
all costs and expenses as each Party has incurred and no party shall be liable
to the other for such costs and expenses, and all Confidential Information (as
defined in the Letter of Intent between the Parties dated December 5, 2006)
obtained by each Party from the other shall be promptly returned or destroyed,
with such destruction certified to the satisfaction of the Party whose
information was disclosed.
10. RESTRICTION ON RESALE
The GOLS Common Shares to be issued by GOLS to the Changan Shareholders
hereunder at the Closing will not be registered under the Securities Act, or
the securities laws of any state, and cannot be transferred, hypothecated,
sold or otherwise disposed of within the United States of America until: (i)
a registration statement with respect to such securities is declared effective
under the Securities Act, or (ii) GOLS receives an opinion of counsel for the
stockholders, reasonably satisfactory to counsel for GOLS, that an exemption
from the registration requirements of the Securities Act is available.
The certificates representing the shares which are being issued to the
Changan Shareholders pursuant to this Agreement shall contain a legend
substantially as follows:
"THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED
EFFECTIVE UNDER SUCH ACT, OR GOLD STANDARD, INC. RECEIVES AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO GOLD STANDARD, INC. THAT AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE."
11. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Utah,
without giving effect to the principles of conflicts of laws thereof, as
applied to agreements entered into and to be performed in such state.
12. ASSIGNMENT; BINDING EFFECT
This Agreement, including both its obligations and benefits, shall
inure to the benefit of, and be binding on the respective heirs and successors
of the parties and on their respective permitted assignees and transferees.
This Agreement may not be assigned or transferred in whole or in part by any
party without the prior written consent of the other parties, which consent
shall not be unreasonably withheld or delayed.
13. NOTICES
All notices and other communications under this Agreement shall be
in writing and shall be deemed to have been given or made as follows:
a. If sent by facsimile transmission, when transmitted to the fax
numbers noted below and receipt is confirmed by the fax machine; or
b. If personally delivered, when delivered.
All notices and other communications under this Agreement shall be sent
or delivered as follows:
If to the Changan Shareholders, to:
Name Xxxx Xxxxxxx
Address 8 Haping Fu Road
Harbin, Heilongjiang
P.R. China
Fax Number 00-000-00000000
with a copy to (which shall not constitute notice):
Xxxxxx Xxxxxx, Esq.
00 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to GOLS, to:
Xxxxx X. Xxxxx
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxxx Xxxxxxxxxx, Esq.
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Each Party may change its address by written notice in accordance with this
Section.
14. COVENANT OF COOPERATION
Each Party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
Party may reasonably request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
15. ENTIRE AGREEMENT
This Agreement (including the documents and instruments referred
to in this Agreement) contains the entire understanding of the Parties with
respect to the subject matter contained in this Agreement, and supersedes and
cancels all prior agreements, negotiations, correspondence, undertakings and
communications of the Parties, oral or written, respecting such subject matter
including the Letter of Intent made by GOLS and the Changan Shareholders dated
December 5, 2006.
16. COUNTERPARTS
This Agreement may be executed in multiple facsimile or original
counterparts. Each of the counterparts shall be deemed an original, and
together they shall constitute one and the same binding Agreement, with one
counterpart being delivered to each Party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands as of
the date and year written on the first page.
GOLD STANDARD, INC.
By: /s/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, President
CHANGAN SHAREHOLDERS:
/s/Li Xxxxxx
Xx Guomin
/s/Su Ning
Su Ning
/s/Xxxx Xxxxxxx
Xxxx Xxxxxxx
Schedules to Agreement
Schedule 2b Names of Changan Shareholders & Allocation of Gold Standard,
Inc. Shares to be Issued
Schedule 7a Form of Indemnity Agreement
SHARE EXCHANGE AGREEMENT
Gold Standard, Inc. and Changan International Limited
Schedule 2b Changan Shareholders
GOLS Shares
Name Percentage to be Issued
Li Guomin 29% 17,400,000
Su Ning 10% 6,000,000
Xxxx Xxxxxxx 61% 36,600,000
