Stock Purchase Agreement STOCK PURCHASE AGREEMENT
EXHIBIT
1.1
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”) is made
and entered into as of this 15th day of
November,
2007.
BY
AND
AMONG
Tank
Sports Inc., a corporation duly organized and existing under the laws of
California (“USA”), with its registered address at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇ USA(the
“Purchaser”);
and,
Each
of
the company and individuals on Schedule A attached hereto (collectively, the
“Sellers”, and each individually, a
“Seller”);
Witnesseth
Whereas,
Sellers own all of the issued and outstanding shares
of capital stock of People’s Motor International Company
Limited (the “Company”), a limited company
duly organized and existing under the laws of British Virgin Island (“BVI”) with
its registered address at ▇.▇. ▇▇▇ ▇▇▇. Offshore Incorporation Centre Road
Town,
Tortola, British Virgin Island;
Whereas,
each Seller desires to sell to
Purchaser, and Purchaser
desires to purchase from each Seller, certain of the
shares owned by each Seller such that
Purchaser shall acquire in the
aggregate from all of
the Sellers total of the 10,500,000 shares subject to
the terms and conditions contained herein; and
Whereas,
Sellers have authorized and caused the
Company to enter into a set
of preliminary agreements
with Purchaser, including Letter of Intent (dated
September 24, 2007) with its Amendment(dated September 27, 2007), and Custodial
Operation Agreement (dated September 27, 2007) with its Amendment (dated
September 27, 2007), specifically for the transaction contemplated
herein.
NOW,
THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein, the parties agree as follows:
ARTICLE
I
Sale
And Purchase Of Shares
1.01
Sale and Purchase
On
the
Closing Date (as defined in Article XII), each
Seller shall sell, assign,
transfer and deliver to
Purchaser, and Purchaser
shall purchase, accept and acquire from each Seller,
all of each Seller’s right, title and interest in and
to the number of shares opposite each such Seller’s
name as set forth on Schedule A attached hereto (“Purchased
Shares”), the aggregate of such Purchased
Shares being total issued and outstanding shares in the
Company.
1.02 Consideration
for Purchase
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(a)
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As
Purchaser’s consideration for purchase and
acquisition from each Seller’s such
Purchased Shares,
Purchaser shall transfer the number of common
shares of its issued shares, which shares are restricted and
control securities pursuant to Rule 144 in the Securities Exchange
Act of
1934 (as amended) (“SEC”) and are quoted on the NASDAQ OTC Bulletin Board,
opposite each such Seller’s name as set forth
on Schedule B attached hereto, the aggregate of such shares being
4,000,000 (“Consideration Shares”) subject to
terms and conditions herein. Purchaser shall
apply for permission from authorities to transfer to Sellers
sixty percent (60%) of the Consideration
Shares namely 2,400,000 shares after the Closing
Date. The remaining forty percent (40%) of the
Consideration Shares, namely 1,600,000 shares,
shall be transferred to Sellers on the one
hundred and eightieth (180th)
day
following the Closing Date. The
number of Consideration Shares transferred to
each Seller shall be as described opposite to
each Seller on Schedule B attached hereto.
Purchaser shall make
Sellers officially, legally the holders of
Consideration
Shares.
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| (b) |
Together
with the Consideration Shares set forth herein,
as Purchaser’s consideration for purchase and
acquisition from each Seller’s such
Purchased Shares,
Purchaser, on the Closing
Date, shall grant each Seller a
warrant (“Warrant”) to purchase the number
of common shares of its issued shares, which shares are restricted
and
control securities pursuant to Rule 144 in SEC and are quoted on
the NASDQ
OTC Bulletin Board, which number is opposite each such
Seller’s name as set forth on Schedule C
attached hereto and the number of such shares in aggregate being
1,500,000, at an exercise price of US$0.64 per share, subject to
all terms
and conditions contained on Schedule
C.
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1.03
Effective Time of Purchased Shares
Transfer
The
parties agree that all right, title and interest in and to the
Purchased Shares, including without limitation voting
rights, rights to obtain dividends and other distributions, and rights to
dispose and/or transfer the Purchased Shares in the
future, shall be transferred to Purchaser upon the
Closing Date, notwithstanding the
requisition by law
or otherwise to obtain certain approvals or to complete certain filings or
registrations from or with competent governmental agencies in connection with
said transfer, which approvals or filings or registrations shall be performed
by
Sellers with Purchaser’s
assistance within fifteen (15) days after the Closing
Date and be obtained promptly.
The
parties agree that, Purchaser shall apply for approval
within 3 working days upon Closing Date, to make all
right, title and interest in and to the Consideration
Shares, including without limitation voting rights, rights to
obtain dividends and other distributions, and rights to dispose and/or transfer
the Consideration Shares in the future, be transferred
to Sellers upon the Closing
Date, notwithstanding the requisition by law or otherwise to
obtain certain approvals or to complete certain filings or registrations from
or
with competent governmental agencies in connection with said
transfer.
1.04
Stamp Duty and Share Transfer Taxes
All
applicable stamp duty and share transfer taxes and other income taxes, if any,
arising by reason of the transfer of the Purchased
Shares and/or Consideration Shares shall
be borne by Purchaser and/or
Sellers oppositely according
to the law or
regulations.
ARTICLE
II
Assets
and Debts
2.01
Assets
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(a)
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Sellers,
jointly and severally, hereby agree, all of the assets owned by the
Company and its
Affiliates(as defined below) as specified on
Schedule D attached hereto (“Assets”), shall remain its ownership
status and condition, or in the event owned by any of
Sellers, shall be transferred to
Purchaser on the Closing
Date.
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(b)
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Sellers,
jointly and severally, present and warrant to
Purchaser that until and to the
Closing Date, Sellers,
the Company and its
Affiliates didn’t, nor
Sellers cause the
Company or its
Affiliates to, sell, assign, encumber, devise,
grant any interest in or otherwise dispose of or otherwise transfer,
or
contract to sell, assign, encumber, devise, grant any interest in
or
otherwise dispose of or otherwise transfer, any of the assets, nor
mortgage, pledge or subject any of the assets to any
Burden(as defined below); unless otherwise
directed by the Letter of Intent and Custodial Operation Agreement,
together with their Amendments.
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(c)
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Sellers,
jointly and severally, present and warrant to
Purchaser that he/they did not negotiate with
anyone other than Purchaser for, or participate
with anyone other than Purchaser in, the
acquisition of any direct or indirect interest in all or any of the
assets.
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“Affiliate”
shall mean any person or entity that, directly or indirectly, controls, is
controlled by or is under direct or indirect common control with, the
Company. The term control (including its use in the
terms “controlled by” and “under direct or indirect common control with”) shall
mean the ownership, directly or indirectly, of more than fifty percent (50%)
of
the voting securities of such person or entity. A list of such
Affiliate of the Company is
attached hereto as Schedule E.
“Burden”
shall mean any and all pledges, mortgagee, liens, charges, encumbrances,
security interests, claims, demands, duties or other title defects of any kind,
conditional sales and/or other types of title retention arrangements, pledges,
privileges, options (except as provided in this
Agreement), subordination(s) to any right or claim of
any person(s) or entity(s), or any other restrictions including any restriction
as to transfer or as to use or possession thereof, whether perfected or
otherwise, except those in favor of
Purchaser.
2.02
Debts
Purchaser
agree that other than the debt (“Debts”) as described
on Schedule F attached hereto, which shall be born by the
Company and its Affiliates,
unless which was set forth on Schedule F, shall be born by
Sellers. Should any claim on products liability
arise
after Closing Date, the
Company and its Affiliates
would bear the deduction make by insurance agency according to the
policy. Purchaser agrees that,
Sellers will not be regarded
as having breached Clause
3.11 if, (i) there would be any debts of the Company
and it Affiliates that do not forth on Schedule F,
and; (ii) amounts of those debts do not exceed RMB ￥800,000.00.
ARTICLE
III
Representations
And Warranties Of Sellers
Sellers,
jointly and severally, hereby represent and warrant to
Purchaser that hereunder, each of which is material to
and is being relied upon by Purchaser:
3.01
Organization and Standing of the
Company and its
Affiliates
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(a)
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The
Company and its
Affiliates are organized, validly existing and
in good standing under the laws of respective jurisdiction. The
Company and it’s
Affiliates have all requisite power and
authority to own, lease, hold and operate their assets and properties
and
to conduct their business as and where they owned, leased, held,
operated
and/or conducted, as the case may be, and to hold all franchises,
licenses
and permits necessary or required
therefore.
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(b)
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The
Company and its
Affiliates are duly qualified to do business and
are in good standing in all jurisdictions in which they operate their
business or own or lease property. Set forth on Schedule
E is a true and complete list of all jurisdictions (foreign and
domestic) in which the Company and its
Affiliates are licensed or qualified to do
business and each jurisdiction where the Company
and its Affiliates do business and/or own or
lease real and/or personal
property.
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3.02
Authority
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(a)
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Each
Seller has all requisite power, capacity and
authority to execute, deliver and perform this
Agreement and the documents and agreements
furnished hereunder. Sellers represent and
warrant to Purchaser that the sale of the
Purchased Shares to
Purchaser are not prohibited or impeded by the
Articles of Association of the Company or all
applicable laws.
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(b)
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The
execution and delivery of this Agreement and the
documents or agreements furnished or caused to be furnished hereunder
by
Sellers, and the performance by
Sellers of the transactions contemplated herein
have been duly authorized by all necessary action on the part of
each such
Seller, and no further action on the part of
any
Seller is or will be necessary to make this
Agreement and such other documents or agreements
valid and binding on such parties and enforceable against such parties
in
accordance with its terms. Each Seller’s
execution, delivery and performance of this
Agreement and such documents, and the
consummation of the transactions contemplated herein and therein,
do not
and will not, with the passage of time, the giving of notice or
otherwise:-
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(i)
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result
in a violation or breach of any provision of or constitute a default
under
the Articles of Association of the Company or
any other of the Company’s charter documents, or
of any resolution of the shareholders of the
Company, or any other corporate or shareholder
obligation;
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(ii)
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conflict
with, violate or result in a breach, acceleration or termination
of any
provision or constitute a default under any term or provision of
any
Burden, shareholder agreement, indenture, loan
agreement, promissory note, credit agreement, security agreement,
lease,
license, deed of trust, order, arbitration award, judgment, decree,
rule,
regulation, law, contract, instrument or other agreement to which
any of
Sellers or the Company (or its
Affiliates) is a party or by which any of
Sellers or the Company
(or its Affiliates) is otherwise subject or
bound; or
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(iii)
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violate
of conflict with any other restrictions of any kind or nature nor
result
in the creation of any Burden on the
Purchased Shares and/or the assets of the
Company and its
Affiliates nor the loss of any license or
contractual right with respect to the operations of the
Company and its
Affiliates.
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3.03
Capitalization of the Company and its
Affiliates.
The
authorized capital and shares of the Company and its
Affiliates as described unless
otherwise stipulated in
Schedule E are fully paid up, issued and outstanding. There are no other
shares of the Company and its
Affiliates issued or outstanding.
Each of the
Purchased Shares and the issued shares of the
Affiliates have been duly authorized
and are validly
issued, fully paid and non-assessable, and are owned beneficially and of record
by the Sellers or the beneficiary as set forth in
Schedule A. On the Closing Date,
upon completion of the sale and transfer of the Purchased
Shares from each Seller to
Purchaser in accordance
with this
Agreement, Purchaser shall
be the sole legal and beneficial owner of the Purchased
Shares, free and clear of any and all
Burdens of any kind or nature. There are
no
outstanding obligations, options, warrants, puts, calls, rights to subscribe,
agreements or other commitments or rights of any kind or nature whatsoever
to
purchase any securities of the Company or its
Affiliates, nor are there any
outstanding securities
of the Company or its
Affiliates which are convertible
into or exchangeable
for any shares of the Company. The
Company or its Affiliates
does not have any obligation of any kind or nature whatsoever to issue any
additional shares or other securities. Neither the
Company, its Affiliates nor
any Seller has agreed to issue, purchase, sell, grant
any interest in or transfer any securities of the
Company or its Affiliates to
any person or entity other than to Purchaser
hereunder. There are no shareholder agreements, close corporation agreements
or
similar agreements which affect the rights or obligations of the shareholders
of
the Company and its
Affiliates.
3.04
Financial Statements
The
financial statements of the Company and the
Affiliates till September 30,
2007, (the
"Financial Report"), are attached as Schedule
G. The Financial Report (i) has been
prepared in accordance with generally accepted accounting principles in
respective jurisdiction, consistently applied, (ii) fairly present (as such
concept is used in audited financial statements) the financial condition of
the
Company and the Affiliates
as of the dates thereof and the results of operations for the periods then
ended, and (iii) are true and complete. The books of account and other financial
records of the Company and its
Affiliates have been maintained
in accordance with
sound business practices. There are no other documents which are necessary
to
fully understand the financial statements of the
Company and its Affiliates
or make them not misleading.
3.05
Title to and Condition of Real Property.
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(a)
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A
list of the real property owned by the Company
or its Affiliates and the relevant Real Property
Ownership Certificates are set out unless otherwise stipulated in
Schedule I. The Company or the
Affiliates has obtained Land Use Rights
Certificates, each of which has been duly issued in the name of the
Company or the
Affiliates, with respect to each of the parcels
of land listed on Schedule I(collectively, the
“Land”), under which the
Company or the
Affiliates has the unconditional and
unrestricted right to the exclusive use of the
Land for a period of fifty (50) years (without
any obligation
on the part of the Company or the
Affiliates to make any further payments for such
use) for purposes of carrying out the activities of its business
and all
related purposes(collectively, the “Land Use
Right”). The Land Use Right will
not be adversely affected by the consummation of the transactions
contemplated hereby, and will continue after the Closing Date
with the same force and effect and under the same terms
and
conditions as existed prior to the date hereof. The
Company or the
Affiliates has obtained Ownership Certificates,
each of which has been duly issued in the name of the
Company or the
Affiliates, with respect to each of the
buildings listed on Schedule I(collectively, the
“Buildings”), under which the
Company or the
Affiliates has the unconditional and
unrestricted right to the exclusive use of the
Buildings for a period of fifty (50) years
(without any obligation on the part of the
Company or the
Affiliates to make any further payments for such
use, excluding tear and wear) for purposes of carrying out the activities
of its business and all related purposes(collectively, the
“Ownership of Buildings”). The
Ownership of Buildings will not be adversely
affected by the consummation of the transactions contemplated hereby,
and
will continue after the Closing Date with the
same force and effect and under the same terms and conditions as
existed
prior to the date hereof.
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| (b)
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An
accurate and complete description of all leases entered into by the
Company or the
Affiliates (“Leases”)
that currently exist for the lease of any real property by the
Company or the
Affiliates, whether as landlord or tenant
(“Leased Real Property”) are set forth in
Schedule J. With respect to such Leases
and Leased Real
Property:
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(i)
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all
Leases are in writing and are duly executed
and,
none have been modified, amended, sublet or
assigned;
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(ii)
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the
rental set forth in each such Lease is the
actual rental being paid, and there are no separate agreements or
understandings with respect to the
same;
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(iii)
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there
is no default by the Company or the
Affiliates or, to the best of each
Seller’s knowledge, any other party which
affects the Leased Real
Property;
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(iv)
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all
surety bonds, insurance, security and other deposits required by
such
Leases have been made and have not been refunded
or returned, or their forfeiture claimed, in whole or in part, by
any
lessor; and
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(v)
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where
the Company or the
Affiliates is the lessee, all leasehold
improvements are in good operating or working condition and repair,
after
taking into account ordinary wear and tear, and are adequate for
the
operation of the business of the Company or the
Affiliates as presently
conducted.
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| (c) |
The
Land, Buildings and the Leased Real
Property shall sometimes be referred to hereinafter
collectively as the “Real Property”. With
respect to the Real Property, including all
leasehold improvements (unless otherwise directed in Schedule I and
Schedule J):
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(i)
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there
is no condemnation or eminent domain proceeding of any kind pending
or, to
the best of each Seller's knowledge, threatened
against any of the Real
Property;
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(ii)
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the
Real Property is occupied under valid and
current certificates of occupancy, governmental authorizations or
the
like, and the transactions contemplated by this
Agreement will not require the issuance of any
new or amended permits or governmental
authorizations;
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(iii)
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the
Real Property does not violate, and all
improvements are constructed in compliance with, all applicable laws,
and
the Company or the
Affiliates has obtained all required licenses,
permits and approvals required to possess and operate its Real
Property and conduct its business as it is presently being
conducted;
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| (iv) |
there
are no outstanding variances or special use permits affecting the
Real Property or its
uses;
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(v)
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no
notice of a violation of any laws, or of any covenant, condition,
easement
or restriction affecting the Real Property or
relating to its use or occupancy, has been given, nor is any
Seller aware of any such
violation;
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(vi)
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no
portion of the Real Property is located within a
special flood plain or restricted use area as designated by any government
authority;
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(vii)
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the
Real Property has and will have as of the
Closing Date adequate water supply, storm and
sanitary sewage facilities, telephone, gas, electricity, fire protection,
means of ingress and egress to and from public highways and other
required
public utilities;
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(viii)
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to
the best of each Seller’s knowledge there are no
improvements made or contemplated to be made by any public or private
authority, the costs of which are to be assessed as special taxes
or
charges against the Real Property, and there are
no present assessments with regard
thereto;
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| (ix)
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all
improvements made by the Company or the
Affiliates constituting the Real
Property are without structural defects, were constructed in
conformity with all plans and specifications and applicable laws,
are
located entirely within the boundary lines of the Real
Property, and do not encroach upon any street or land of
others; and
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(x)
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the
Real Property either (A) is freely accessible
directly from all public streets on which it abuts, or (B) uses adjoining
private land to access the same in accordance with valid public easements.
No Seller has any knowledge of any condition
which would result in the termination of such
access.
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3.06 Title
to, Use and Condition of Certain Personal Property.
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(a)
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Schedule
K sets forth a list of all machinery, equipment, furniture, fixtures,
tooling, dies, leasehold improvements and all other tangible personal
property (“Machinery and
Equipment”) owned and/or used
by the Company or the
Affiliates.
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(b)
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Unless
otherwise directed in Schedule P, (i)The
Company or the
Affiliates owns and possesses all right, title
and interest in and to all of its Machinery and
Equipment. (ii)The Company or the
Affiliates has all licenses, permits, approvals,
orders, certificates, and other authorizations as are necessary in
order
to enable it to use, operate or handle its Machinery and
Equipment as it is currently being used, operated or
handled; and (iii) the Machinery and Equipment
is free and clear of any and all Burden, except
those in favor of
Purchaser.
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| (c)
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The
Company or the
Affiliates owns and/or leases all of the assets,
whether real or personal property, necessary to carry on the operations
of
its respective business as the same is presently conducted and has
been
conducted during the twelve (12) month period immediately preceding
the
Closing Date.
All of the Machinery and Equipment owned by the
Company or the
Affiliates has been maintained in good operating
condition and is in a state of good maintenance and repair, usable
in the
ordinary course of business. The Company or the
Affiliates enjoys peaceful and quiet possession
of its Machinery and Equipment and, where
applicable, has the corresponding titles, invoices or other documentation
supporting ownership and the corresponding importation documentation
evidencing its legal presence in all
jurisdictions.
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3.07 Proprietary
Rights.
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(a)
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(i)
Schedule M lists all Chinese and foreign patents, patent
applications, marks, symbols, trade names, trademarks, service marks,
copyrights, copyright applications, logos, permits, licenses and
sublicenses (and agreements in respect thereof or applications therefor)
owned by the Company or the
Affiliates and/or used in the operations of the
business of the Company or the
Affiliates (collectively,
the “Scheduled Proprietary
Rights”). The
term “Proprietary Rights”
shall mean the Scheduled Proprietary Rights and
all inventions, formulas (patented and unpatented), trade secrets,
technical know-how, methods, operations, franchises, software processes
(patented and unpatented) and process instructions, patent, trademark
and
copyright histories, laboratory notebooks and all other proprietary
rights, documents, information and records, including, but not limited
to,
all filings, registrations, or issuances of any of the foregoing
with or
by any federal, provincial, state, local or foreign regulatory,
administrative or governmental office or offices, and all federal,
provincial, state and common law rights protecting such in China
and
throughout the world, owned by the Company or
the Affiliates and/or used in the operations of
the business of the Company or the
Affiliates; (ii) Schedule M lists all
licenses and agreements under which the Company
or the Affiliates has given the right to use any
of the Proprietary Rights to any third party;
and (iii) Schedule M lists all licenses and agreements under which
the Company or the
Affiliates has the right to use any third
party’s similar type of property in connection with the
business.
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(b)
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No
proceedings have been instituted, are pending or, to the best of
each
Seller’s knowledge, threatened which challenge
the validity of the ownership or use by the
Company or the
Affiliates of the Proprietary
Rights or any third party’s similar type of
property.
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(c)
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No
Seller has any knowledge of the infringing
use
of any Proprietary Rights or the infringement of
any of such companies respective Proprietary
Rights by any other person. Neither the
Company or the
Affiliates nor any Seller
has received any notice of conflict with the asserted
rights
of others with respect to the Proprietary Rights
or any third party’s similar type of property. The
Company or the
Affiliates owns exclusively all formulas and
technical know-how necessary to manufacture all products manufactured
and/or sold by the Company or the
Affiliates at any time during the past three (3)
years.
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(d)
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The
Company or the
Affiliates is the sole and exclusive owner, free
and clear of all Burdens, of all right, title
and interest in and to the Proprietary Rights as
regards its business in the manner presently used. The
Company or the
Affiliates has the full right and authority to
use the Proprietary Rights and the use thereof
by the Company or the
Affiliates does not infringe any third party's
intellectual property rights; the Company or the
Affiliates does not (and will not) owe any
royalty or other payments to any third party in connection with the
use of
any of the Proprietary
Rights.
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(e)
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The
Company or the
Affiliates has not given any indemnification
against and/or has agreed to defend claims for infringement with
respect
to its Proprietary Rights as to any equipment,
materials, products,
services or supplies which the Company or the
Affiliates produces, uses, licenses and/or
sells.
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(f)
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The
Company or the
Affiliates has not sold, assigned or
transferred, or entered into any agreement or any other arrangement
within
the past five (5) years, to and/or with any other person, corporation,
firm or entity, for the ownership and/or use of proprietary rights
or any
similar rights owned and/or used (or previously owned and/or used)
by any
other person, corporation, firm or
entity.
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3.08 Contracts
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(a)
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Schedule
N, to the best knowledge of each seller,
sets forth a list of all licenses, contracts, documents, agreements
and
other commitments (whether written or oral) relating to or in any
way
connected with the Company or the
Affiliates’ operation of its
business(collectively, “Contracts”), except the
oral and/or written leases for real and/or personal property with
respect
to the same as discribed in Schdule
J.
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(b)
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All
Contracts are valid, subsisting and enforceable
in accordance with their terms and in full force and effect. Neither
any
Seller, the Company or
the Affiliates has violated or breached any
provision of, any of the Contracts. Neither the
Company or the
Affiliates nor, to the best of each
Seller's knowledge, is any third party in
default (nor is any such default alleged to exist) in any respect
under
the terms of any of the Contracts. There exists
no event or condition which, with the giving of notice, the lapse
of time,
or both, would become a default under any
Contracts. To the best of each
Seller’s knowledge, there is no event,
happening, set of circumstances, threat or fact which would lead
such
Seller to believe that any party to any of
the
Contracts will terminate its contractual
relationship with the Company or its
Affiliates. Each of the
Contracts were entered into by the
Company or the
Affiliates in the ordinary course of its
business and Neither the Company nor its
Affiliates has waived, or agreed to waive, any
right or rights under any of the same. None of the
Company or the
Affiliates’ interests under any of their
Contracts are encumbered or subject to any term,
condition or restriction except as stated in the applicable
Contract or as provided by
law.
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3.09 Compliance
with Laws.
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(a)
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The
Company and the
Affiliates have complied with and are in
compliance with all laws, ordinances, regulations, rules, codes,
executive
orders, orders, judicial and/or administrative decisions, license
requirements or other requirements, including without limitation,
any
building, land use, zoning, fire or environmental laws or codes applicable
to its business, the products manufactured and sold thereby, the
services
provided thereby, the assets owned and leased by the
Company or the
Affiliates, and/or any combination of such
activities. To the best of each Seller’s
knowledge, there is no pending or threatened investigation by any
governmental or quasi-governmental body or agency with regard to
the
operations of the Company or the
Affiliates’
business.
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| (b) |
The
Company and the
Affiliates are and have always been: (i) duly
licensed, possessing all franchises, easements, permits, licenses,
approvals and other authorizations for their respective business
(collectively, “Permits”) required by all
applicable laws in their respective jurisdiction, that are necessary
to
permit them to engage in their business and to own and operate their
assets in all applicable jurisdictions; and (ii) in compliance with
all
Permits. All such Permits are listed on
Schedule O and are valid, in full force and effect and not subject
to challenge. All reports, informational returns and updates which
the
Company (including its
Affiliates ) is required to file under any
applicable law, rule, regulation or order with regard to the foregoing
have been filed in a timely manner and all fees relating to the same
have
been paid. The Company or its
Affiliates has not
breached any provision of, is not in default in any respect under
the
terms of, nor has the Company or its
Affiliates engaged in any activity which would
cause revocation or suspension of any of its
Permits. No action, proceeding or investigation
contemplating the revocation or suspension of any
Permit is pending, threatened or likely to
be
instituted. To the best of each Seller’s
knowledge, there is no reason why any Permit
would not be renewed. The transfer of the Purchased
Shares as contemplated herein will not affect the validity
or enforceability of Permits,
Contracts or other rights and
entitlements.
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8
3.10
Litigation
Except
as
set forth on Schedule P, there are no administrative, governmental or judicial
(satisfied and/or unsatisfied) suits, claims, actions, arbitrations, proceedings
or investigations, pending or threatened, (a) which could relate to or affect
the Company or the
Affiliates, or (b) against any
Seller or the Company or the
Affiliates
for the purposes of challenging, enjoining
or preventing the execution or delivery of this
Agreement, the performance of the terms and conditions
hereof or the consummation of the transactions contemplated hereby. No
Seller is aware of any basis upon which any such suit,
claim, action, arbitration, proceeding or investigation could be brought or
initiated. The Company or the
Affiliates is not bound by, subject
to or in default
under any order, judgment, award, writ, injunction or other ruling of any court,
administrative or governmental authority.
3.11 Other
Liability
Except
as
set forth in this Agreement or in any of the Schedules
attached hereto, there are no liabilities, claims, lawsuits or events which
could be the basis of a claim or lawsuit, loss, damage, deficiency,
indebtedness, responsibility or other obligation of any nature or kind
whatsoever, whether known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise
and whether due or to become due. Except for instruments endorsed for collection
in the ordinary course of business, the Company or its
Affiliates is not liable under,
a party to or an
endorser, guarantor, surety, co-▇▇▇▇▇▇, co-maker or indemnitor of any contract,
agreement, commitment or obligation of any person, corporation, firm or
entity.
3.12 Taxes
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(a)
|
Unless
otherwise directed in Schedule D-1-2, the
Company has: (i) timely filed, on or prior to
the ClosingDate, all
Taxes (as defined below) returns, reports,
schedules, documents and declarations requires to be filed by any
jurisdiction to which the Company or its
Affiliates is or has been subject; (ii) timely
paid in full all Taxes due and all
Taxes claimed to be due by each such
jurisdiction; (iii) made timely withholdings and timely payments
of any
Taxes required to be deducted and withheld
from
the wages or other amounts paid to employees of the
Company and its
Affiliates or to others on or prior to the
Closing Date; and (iv) fully accrued in their
respective financial statements all Taxes, for
any periods, not yet due. All Tax
returns, schedules and declarations filed by the
Company and its
Affiliates correctly reflect, in all respects,
the matters required to be reported therein including, where appropriate,
income, expense, deductions, credits, loss carryovers and Taxes due,
and
such returns, schedules and declarations have not been amended. There
are
no controversies or claims, pending or otherwise, that have been
asserted
against the Company or its
Affiliates that any Seller has a reasonable
basis to anticipate will be asserted against the
Company or its
Affiliates or which would result in
Burdens on any of the assets of the
Company or its
Affiliates and/or the Purchased
Shares or that would result in any claim against
Purchaser, the Company
or its Affiliates, with regard to
Taxes.
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9
| (b) |
There
are no outstanding agreements or waivers extending the statutory
period of
limitations applicable to any Taxes return of
the Company and its Affiliates
for any period. No any taxing authority has audited any tax
return of report filed by the Company or its
Affiliates for any taxable period beginning
after September 30th,
2007. No
Seller has any knowledge that an audit of the
Company or its
Affiliates’ tax returns is in progress and no
Seller has any reason to believe that any other
audit is contemplated. Sellers have provided
true, correct and complete copies pf the Company
or its Affiliates’ Tax returns for each taxable
period beginning on and after January 1st,
2005.
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(c)
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Tax
and Taxes mean income taxes (whether federal,
provincial, state, local or foreign of other taxes on or measured
by
income, gross receipts, profits or occupations), franchise taxes,
excise
taxes, employment taxes, unemployment taxes, compulsory profit sharing
distributions, payroll taxes, employee taxes, employer taxes, sales
and
use taxes, personal property taxes(including any liability for personal
property taxes accruing, arising or in any way resulting from or
determined with respect to or in any way relating to or referenced
by any
period prior to the Closing Date), transfer
taxes, ad valorem taxes, value added taxes, taxes levied on assets,
per
capita taxes, head taxes, taxes arising as result of the transfer
of the
Purchased Shares or otherwise by virtue of the
consummation of the transactions contemplated in this
Agreement, and any other tax or taxes imposed,
whether or not assessed, by any federal, provincial, state, municipal,
local or other governmental agency, foreign or domestic, including
assessments in the nature or taxes, as well as interest an penalties
on
any of the foregoing, of the Company or its
Affiliates, whether arising before, on or after
the Closing
Date.
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3.13
Labor Relations
The
persons employed by the Company and its
Affiliates on the Closing
Date hereof (collectively, the
“Employees”) are solely and exclusively those
indicated in the payrolls and records of each of the
Company and its Affiliates.
The Employees are listed by duties, relevant
employment category and remuneration on Schedule Q. The
Employees have been duly remunerated for all services
performed by them in the course of their working relationship with the
Company and its Affiliates
and such remuneration is in compliance with the provisions of all applicable
laws and contracts (including any collective labor agreements). The
Company or its Affiliates
has established sufficient provisions on their respective current financial
statements to cover the relative payments owed to each of their respective
employees and any remuneration or rights which have accrued but which are not
yet payable. With respect to the remuneration paid to the
Employees, all contributions have been made relating
to compulsory health insurance and social security and the relevant amounts
have
been duly paid, as provided under applicable law. The
Company or its Affiliates is
in full compliance with all Laws and applicable labor collective agreements
respecting employment and employment practices, terms and conditions of
employment, pay equity and wages and hours, and laws and regulations concerning
health and safety in the workplace. There is no, unless otherwise directed
in
Schedule H, labor strike, dispute, slowdown or stoppage actually pending,
involving or threatened against the Company or its
Affiliates. No employment complaint
or grievance
exists on the date hereof as regards any Employee. All
vacation pay, bonuses, commissions and other employee benefit payments are
reflected and have been accrued respectively in the books and records of the
Company and its Affiliates.
No payments of salary, pension, bonuses or other remuneration of any nature
have
been made or authorized since September 30th, 2007,
to any
officers, directors, former directors, shareholders or employees of the
Company and its Affiliates
or to any person or entity not dealing at arm’s length with any of the
foregoing, except in the ordinary course of business and at regular rates.
The
terms of employment applicable and actually applied to the
Employees are solely those provided by the applicable
law and by the provisions of the applicable collective labor agreement. No
special terms of employment exist, of a collective or individual nature, which
provide for the regulation of the relationship with the Employees or with any
of
them in a manner other than that of the provisions referred to herein. No
pension scheme arrangements have been put in place other than those required
by
provisions of law. The duties actually performed by each of the
Employees correspond to the relevant category
specified in respect of that Employee in Schedule
Q, except as otherwise provided on such Schedule. No disputes or claims
for
remuneration adjustments or of any other kind by any
Employee, or by the relevant trade unions, are pending
and no situation exists which may give rise to any such disputes or claims
in
the future. No person having had or now having a business relationship with
the
Company and its Affiliates
has any right to assert a claim based on the subordinated nature of such
relationship.
10
3.14
Distributors. Sales Representatives and Agents
Attached
hereto as Schedule R is a complete and accurate list of all distributors,
sales representatives, agents, and business finders used by the
Company and its Affiliates.
Neither the Company nor its
Affiliates is in breach of any
such distribution,
sales representative, agency or business finder agreements. Neither the
Company nor its Affiliates
has duplicated the award of exclusive rights to different persons or entities
within the same territory. The relationships between the
Company(including its
Affiliates) and its distributors,
sales
representatives, agents, and business finders have been established and
conducted in such a way that no such person is entitled to claim that he/she
is
an employee of the Company or its
Affiliates.
3.15
Inventory
All
items
of the Company and its
Affiliates’ inventories of raw
materials, work in
process, finished goods, packaging materials and supplies, point of sale
supplies, color cards, brochures, printed materials, signs and displays are
in
good condition and of a quality usable and salable in the ordinary course of
business, unless otherwise directed in Schedule D-1-9 and Schedule D-2-3.
Both Parties agree the details of inventory shall be determined by counting
on
September 30th,
2007.
3.16
Warehouses
Schedule
S sets forth a complete, correct and segregated list by company, of all
warehouses and other locations, other than the Leased Real
Property, at which any assets of the
Company and its Affiliates
are situated, together with a description of the assets at such
location.
3.17 Bankruptcy
No
proceedings, whether voluntary or involuntary, are pending or threatened against
the Company, its Affiliates
or any Seller, nor is the
Company, its Affiliates
or
any Seller contemplating any such proceedings, under
the bankruptcy laws and/or receivership or similar laws of China or of any
other
country or jurisdiction.
3.18
Satisfactory Relationships
The
Company and its Affiliates’
relationships with
customers, vendors, suppliers, employees, governmental
authorities, health care organizations and others with whom the
Company or its
Affiliates has dealings are satisfactory
and have not suffered any adverse deterioration since September 30th, 2007.
To the best
of each Seller’s knowledge, there is no proposed or
contemplated termination or other changes in such satisfactory relationships.
The Company or its
Affiliates is not required, in
the ordinary course of
its business, to provide any bonding or any other financial security
arrangements in connection with any transactions with any customers or
suppliers.
3.19
Subsidiaries and Equity Investments.
The
Company or its Affiliates
has no subsidiaries, or any direct or indirect beneficial or equity interest,
or
debt convertible into any equity interest, in any entity, corporation or
otherwise other than set forth in Schedule D. The
Company has no obligation or right of any kind
or
nature whatsoever to purchase any shares, securities or any other form of
investment or interest in any entity, corporation or otherwise.
11
3.20
Representations and Warranties
Each
of
the representations and warranties of Sellers set
forth in this Article III, each of which is material to and is being relied
upon
by Purchaser, shall be true and correct as of the
Closing Date.
3.21
Disclosure
no
representations or warranties of Sellers contained in
this Agreement, and no statements contained herein or
in any schedule, agreement, document, instrument or communication furnished
to
Purchaser pursuant hereto, contains any untrue statement of fact, or omits
to
state a fact which is necessary in order to make the statements contained herein
or therein in light of the circumstances under which they were made not
misleading. There is no fact to the best of Sellers’ knowledge to
Sellers which is not disclosed herein or which could adversely
affect the operations, properties or financial condition of the
Company.
ARTICLE
IV
Representations
And Warranties Of Purchaser
Purchaser
hereby represents and warrants to Sellers that
hereunder, each of which is material to and is being relied upon by
Sellers:-
4.01
Organization, Good Standing and Authority of Purchase
Purchaser
is a company duly organized, validly existing and in good standing under the
law
of USA and has full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this
Agreement have been authorized by
Purchaser, which authorization
constitutes all
necessary corporate action on the part of Purchaser to
execution, delivery and performance of this Agreement.
This Agreement, and all documents required to be
executed and delivered by Purchaser hereunder,
constitute legal, valid and binding obligation of
Purchaser enforceable in accordance with their
terms.
4.02
No Conflict
Purchaser
represents and warrants that neither the execution and delivery of this
Agreement, nor its performance hereto does or
will:-
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(a)
|
violate,
conflict with or constitute a default under any provision of its
constitutional documents (if any) or applicable
law;
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|
|
(b)
|
conflict
with or result in a breach of any agreement to which
Purchaser is a party or by which its properties
are bound other than such covenants and agreements with respect to
which
failure to perform would not have a material adverse effect on the
transactions contemplated by this
Agreement;
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|
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(c)
|
violate
any judgment, order, injunction, decree or award of any court,
administrative agency or governmental body against, or binding upon,
Purchaser or its properties;
or
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|
|
(d)
|
constitute
a violation by Purchaser of any law or
regulation applicable to it or its
properties.
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4.03
No Broker or Finder
No
broker, finder or agent has acted directly or indirectly for
Purchaser in connection with this
Agreement or with the transactions
contemplated by
this Agreement.
4.04
Representations and Warranties
Each
of
the representations and warranties of Purchaser set
forth in this Article IV, each of which is material to and is being relied
upon
by Sellers, shall be true and correct as of the
Closing Date.
12
ARTICLE
V
Survival
Of Presentations And Warranties
5.01
Survival of Representations and Warranties of
Sellers
Unless
otherwise indicated herein, the covenants, representations and warranties of
Sellers contained in this
Agreement and any agreement,
instrument, certificate
or other document executed or delivered pursuant hereto or thereto shall survive
by one (1) year upon the Completion of the transactions contemplated
hereby.
5.02
Survival of Representations and Warranties of
Purchaser
Unless
otherwise indicated herein, the covenants, representations and warranties of
Purchaser contained in this
Agreement and any agreement,
instrument, certificate
or other document executed or delivered pursuant hereto or thereto shall survive
by one (1) year upon the Completion of the transactions contemplated
hereby.
5.03
Interruption Due to Notice of Claim
For
the
purpose of this Article V, Purchaser and
Sellers agree that each representation
and warranty,
and the covenants contained in this Agreement will
continue to survive beyond the relevant terms indicated under Section 5.01
and
5.02 abovementioned, until the relevant claim of indemnity has been resolved
as
provided for in this Agreement.
ARTICLE
VI
Covenants
6.01
Further Assurance
Notwithstanding
the Completion, if Purchaser considers or is advised
that any further assignment conveyance, consents or other documents are
necessary or desirable to vest, perfect, confirm or record in Purchaser title
to
the Purchased Shares or to aid in the prosecution, defense or enforcement of
any
rights arising from the sale and transfer or the Purchased
Shares including all interests rights pertaining to such
Purchased Shares, each Seller
shall
execute and deliver promptly to
Purchaser any and all deeds, assignments, power of
attorney, consents or other documents and do all things requested by Purchaser
to vest, perfect or confirm title to the Purchased
Shares in Purchaser or to convey such
other rights as provided herein or to otherwise carry out the intent of this
Agreement.
Notwithstanding
the Completion, if Sellers considers or is advised
that any further assignment conveyance, consents or other documents are
necessary or desirable to vest, perfect, confirm or record in
Sellers title to the Consideration
Shares or to aid in the prosecution, defense or enforcement of any
rights arising from the sale and transfer or the Consideration
Shares including all interests rights pertaining to such
Consideration Shares,
Purchaser shall
execute and deliver promptly to
Sellers any and all deeds, assignments, power of
attorney, consents or other documents and do all things requested by
Sellers to vest, perfect or confirm title to the
Consideration Shares in
Sellers
or to convey such other rights as provided
herein or to otherwise carry out the intent of this
Agreement.
6.02
No Public Announcements
Except
as
otherwise mandatorily required under any applicable laws, regulations or rules
issued by any government, public body or authority, regulatory
authority or stock exchange authority having jurisdiction on either party,
none
of the parties to this Agreement nor any subsidiary
and affiliate thereof shall make any public announcement relating to the
transactions contemplated by this Agreement, without
the prior consent of the other party.
6.03
Confidentiality
Upon
execution of this Agreement and for an indefinite term
thereinafter, Sellers shall keep confidential and
shall not disclose to any person, company, corporation, firm or entity any
information, documents and/or materials relating to the
Company or the content of this
Agreement, except to the extent
disclosure of any such
information is required by laws, authorized by
Purchaser or reasonably occurs in connection with
dispute over the terms of this Agreement.
6.04
Supplemental Disclosure
Sellers
will immediately notify Purchaser of any event or
circumstance which (a) makes it necessary to correct any representation and
warranty in Article III which has been rendered inaccurate thereby, or (b)
arises hereafter and which, had it existed on or prior to the date hereof,
would
have resulted in an inaccuracy in a representation and warranty in Article
III.
13
ARTICLE
VII
Sellers’s
Obligations
7.01
Accuracy of Representations and Warranties
All
representations and warranties made by Sellers in this
Agreement shall be true and
correct in all respects on
and as of Signing, and Sellers shall have performed or
complied in all respects with all covenants, agreements and conditions contained
in this Agreement which are required to be performed
or complied with. But the Investment Sellers (as
defined in Schedule A) only take the obligations under Clause 3.02
hereof.
7.02
Transfer of Title
Sellers
shall execute and deliver this Agreement and such
other documents required to be executed and delivered by
Sellers pursuant to this
Agreement in order to give effect
to the transaction
contemplated hereby or to vest in Purchaser good and
valid title in and to the Purchased Shares and confer
on Purchaser all such other rights or powers
incidental or in relation to the Purchased Shares,
including without limitation voting rights, rights to obtain dividends and
other
distributions, and rights to dispose and/or transfer the Purchased
Shares in the future. Sellers shall sign
and deliver to Purchaser such other documents
necessary in order to properly register Purchaser as
owner of the Purchased Shares.
ARTICLE
VIII
Purchaser’s
Obligations
8.01
Accuracy of Representations and Warranties
All
representations and warranties made by Purchaser in
this Agreement shall be true and correct in all
respects on and as of Signing, and Purchaser shall
have performed or complied in all respects with all covenants, agreements and
conditions contained in this Agreement which are
required to be performed or complied with.
8.02
Further Assurances
Purchaser
shall cooperate or cause the Company to cooperate with
Sellers and shall execute
and deliver or cause the
Company to execute and deliver to
Sellers such other instruments
and documents and take
such other actions as may be reasonably requested by
Sellers in order to carry out, evidence and confirm
the rights and the intended purpose of this
Agreement.
8.03
Promise not to sell the Land Use Right and Ownership of
Buildings
Purchaser
promises not to sell the Land Use Right and/or
Ownership of Buildings, also not to result
in the same
case as if the Land Use Right and/or
Ownership of Buildings had been sold, within
three (3)
years upon the Closing Date or before the
Company is listed in AMEX,
NASDAQ, NYSE or other major
Security Exchanges, unless the deputy of Sellers
consents.
Each
Seller shall jointly nominate a deputy upon the
Closing Date for reason of here
above.
ARTICLE
IX
Conditions
Precedent To Obligations Of Purchaser
The
obligation of Purchaser to consummate the transaction
contemplated by this Agreement shall be subject to
Sellers’ satisfaction, or written
waiver by
Purchaser, on or prior to the Closing
Date, of each of the following conditions:-
9.01
Accuracy of Representations and Warranties and Performance of
Obligations
All
representations and warranties made by Sellers in this
Agreement and in any other document
of
Sellers delivered pursuant hereto shall be true and
correct in all respects on and as of the Closing Date,
and Sellers shall have performed or complied in all
respects with all covenants, agreements and conditions contained in this
Agreement on its part required to be performed of
complied with at or prior to Closing Date, and
Purchaser shall have received
a certificate signed by
each such Sellers to the foregoing
effect.
14
9.02 Transfer of Title in and to the
Purchased Shares
Sellers
shall execute such instrument of transfer, each bearing the requisite stamp
duty
in relation to the sale of the Purchased Shares, such
transfer to be in favor of Purchaser, and take such
other action as determined by Purchaser to transfer to
Purchaser good and marketable
title in and to the
Purchased Shares and to properly change the relevant
register in the shareholder’s book of the Company or
any other documents.
9.03
No Contrary Judgment
The
Completion shall not violate any order, decree or judgment of any court or
governmental body having competent jurisdiction and no claim, action, suit,
proceeding or investigation shall have been commenced, be pending or threatened
which questions the validity of this Agreement or of
any action taken or to be taken to consummate the transaction contemplated
hereby or which is likely to materially and adversely affect the value of the
Company, the Affiliates or
the Purchased Shares.
ARTICLE
X
Conditions
Precedent To Obligations Of Sellers
The
obligation of Sellers to consummate the transaction
contemplated by this Agreement shall be subject to
Purchaser’s satisfaction, or
written waiver by
Seller, on or prior to the Closing
Date, of each of the following conditions:-
10.01
Accuracy of Representations and Warranties and Performance of
Obligations
All
representations and warranties made by Purchaser in
this Agreement and in any other document of
Purchaser delivered pursuant
hereto shall be true and
correct in all respects on and as of the Closing Date,
and Purchaser shall have performed or complied in all
respects with all covenants, agreements and conditions contained in
this Agreement on its part required to be performed of
complied with at or prior to the Closing Date, and
Sellers shall have received
a certificate signed by an
officer of Purchaser to the foregoing
effect.
10.02
Consents
All
authorizations, permits, consents, or approval of any and all governmental
regulatory authorities and other third parties required to be obtained by
Purchaser or which are necessary to consummate the
transaction contemplated in this Agreement shall have
been obtained and shall be in full force and effect.
10.03
No Contrary Judgment
The
Consideration Shares transactions shall not violate
any order, deed of judgment, of any court or governmental body having competent
jurisdiction and no claim, action, suit, proceeding of investigation shall
have
been commenced, be pending or threatened which questions the validity of this
Agreement or of any action taken or to be taken to
consummate the transactions contemplated hereby.
10.04
Resolutions
Purchaser
shall deliver copies, certified by the Secretary or Assistant Secretary of
Purchaser, of resolutions of
Purchaser’ board of directors
authorizing the
execution, delivery and performance of this Agreement
and all other agreements, documents and instruments relating hereto and the
consummation of the transactions contemplated in this
Agreement, which certification shall recite that such
resolutions have not bee subsequently amended, modified or rescinded and are
in
full force and effect.
ARTICLE
XI
Indemnification
11.01
Sellers’s Indemnification
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11.01.1
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Sellers
agrees to indemnify, defend and hold Purchaser,
its directors, officers, employees, subsidiaries, affiliates and
the
successors and assigns, of any of the foregoing (“Purchaser’s
Indemnitees”) harmless from and against any and all claims,
liabilities, obligations, demands, damages, losses, costs, expenses
(including reasonable attorneys’ fees and expenses), fines, penalties,
judgments and amounts paid in settlement, imposed on, asserted against
or
incurred by Purchaser’s Indemnitees
(collectively, “Purchaser’s Losses”) and which
arise out of, in connection with, result from or are incident to
any of
the following:-
any
misrepresentation or breach of any representation, warranty, covenant,
obligation or agreement of Sellers under this
Agreement or in any Schedule, document or
agreement furnished or to be furnished by
Sellers under this
Agreement;
and
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15
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(a)
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any
claims, demands, suits, investigations, proceedings or actions by
any
third party containing or relating to allegations that, if true,
would
constitute a breach of, or misstatement in, any one of the representations
and warranties of
Purchaser.
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| 11.01.2 |
Both
parties understand and acknowledge that any liability, debt,
responsibility or duty with respect to the Purchased
Shares before the transfer, whether actual or contingent,
having occurred or possible to occur in the future, shall be born
by
Sellers notwithstanding that
Sellers have transferred to
Purchaser all its titles, interests and rights
to and in the Purchased Shares. In the event
that, after the Purchased Shares transfer,
Purchaser is claimed by any party or is required
by law to incur any liability, debt, responsibility or duty in connection
with the Purchased Shares or the
Company, Sellers shall
indemnify, hold Purchaser harmless or cause the
Company to indemnify, hold
Purchaser harmless from and against all such
liability, debt, responsibility or duty. But such indemnify will
not
exceed the value of 40% of Consideration Shares
and 40% of Options (both are US$ 0.64 per
share).
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11.02
Purchaser’s Indemnification
Purchaser
agrees to indemnify, defend and hold Sellers harmless
from and against any and all claims, liabilities, obligations, demands, damages,
losses, costs, expenses (including reasonable attorneys’ fees and expenses),
fines, penalties, judgments and amounts paid in settlement, imposed on, asserted
against or incurred by Sellers and which arise out of,
in connection with, result from or are incident to any misrepresentation or
breach of any representation, warranty, covenant, obligation or agreement of
Purchaser in this Agreement
or in any document or agreement furnished or to be furnished by
Purchaser under this
Agreement.
11.03
Claim for Indemnification
Any
party
seeking indemnification under the provisions of this
Agreement, within sixty (60) days of the time it
discovers that it has a claim against another party or promptly upon receipt
of
written notice of any claim or the service of a summons or other initial legal
process upon it in any action instituted against it which relates to this
Agreement, shall give written notice of such claim, or
the commencement of such action, to the party from whom indemnification will
be
sought hereunder.
ARTICLE
XII
Completion/Closing
Date
This
Agreement will go into effect upon the signing of both
Parties, the signing date will be Closing Date.
(“Completion”). The parties will in good faith use all
reasonable efforts to achieve the
Completion
ARTICLE
XIII
Termination
This
Agreement may be terminated and upon such termination
the SPA contemplated herein shall be abandoned at any time within one hundred
and eighty (180) days upon Closing Date under any one
of the following circumstances:-
|
(a)
|
by
mutual written consent of the parties
hereto;
|
|
(b)
|
by
Purchaser or Sellers,
if the other fails to satisfy and/ or perform the conditions precedent
set
forth in Article IX and X;
|
|
(c)
|
by
Purchaser or Sellers,
if any court of competent jurisdiction or any governmental body or
agency
shall have issued an order, decree or ruling, or taken any other
action,
restraining, enjoining or otherwise prohibiting the consummation
of the
transaction contemplated by this
Agreement;
|
|
(d)
|
by
Purchaser, if, as a result of
Purchaser’s investigation of the
Company or the Purchased
Shares, the same are deemed to be frustration of the
Agreement;
|
|
(e)
|
by
Purchaser or Sellers if, in the
case of Purchaser, there has been a material
misrepresentation or breach of warranty in the representation and
warranties of Sellers made under this
Agreement or if, in the case of
Sellers, there has been a material
misrepresentation or breach of warranty in the representation and
warranties of Purchaser made under this
Agreement.
|
16
STOCK
PURCHASE AGREEMENT
Any
termination pursuant to this Article XIII will not affect the obligations of
the
parties under Article XIV (Expenses) or Section 6.03 (Confidentiality), and
will
be without prejudice to either party’s legal rights and remedies available to
such party by reason of the other party’s breach of this
Agreement occurring prior to such termination.
Notwithstanding anything in this Agreement to the
contrary, if Purchaser: (i) has complied with all of
the conditions contained in Article X; (ii) has notified any of
Sellers of its intention to consummate the
transactions contemplated under this Agreement, and
(iii) is ready and able to transfer the Consideration
Shares to Sellers if the transaction
hereunder is not consummated due to the refusal of Sellers to perform any of
its
obligations under this Agreement,
Purchaser will be entitled to
specifically enforce the
terms of this Agreement in a court of competent
jurisdiction, it being acknowledged that monetary damages available to
Purchaser in such case cannot be adequately determined
at law. If the Sellers has transferred the
Purchased Shares to
Purchaser
if the transaction hereunder is not
consummated due to the refusal of Purchaser to perform
any of its obligations under this Agreement,
Sellers will be entitled to
specifically enforce the
terms of this Agreement in a court of competent
jurisdiction, it being acknowledged that monetary damages available to
Sellers in such case cannot be adequately determined
at law.
ARTICLE
X IV
Expenses
The
attorney fee and accountant fee shall be born by
Purchaser and Sellers in
half. Purchaser agrees that the portion bore by
Sellers may be paid by the
Company. In reason of this approach,
Sellers shall make sure such
payment will match the
Article of Associations of the Company.
ARTICLE
XV
Arbitration
Proceeding
Any
dispute arising out of or in connection with this
Agreement, including those relating to the
interpretation, application or termination for whatever reason of this
Agreement, which is not settled amicably within
forty-five (45) days by Sellers and
Purchaser, at either party’s request shall be
submitted for final determination by arbitration in accordance with the CIETAC
Arbitration Rules as at present in force and as may be amended from time to
time. The place of arbitration shall be in Shanghai at China International
Economic and Trade Arbitration Committee (CIETAC) Shanghai Branch. Any such
arbitration shall be administered by CIETAC in accordance with CIETAC Procedures
for Arbitration in force at the date of this contract including such additions
to the CIETAC Arbitration Rules as are therein contained. The arbitration panel
shall consist of three (3) arbitrators. Two arbitrators shall be appointed,
one
by Sellers and one by
Purchaser. The party requesting
arbitration shall,
simultaneously with such request, appoint one arbitrator and shall notify the
other of such appointment together with the arbitrator’s acceptance. Within ten
(10) business days of the receipt of such notice, the other party shall appoint
the second arbitrator and shall notify the requesting party of such appointment
together with the arbitrator’s acceptance. The third arbitrator, who shall act
as Chairman of the arbitration panel, shall be appointed by the other two
arbitrators within the following ten (10) business days. In the event either
party fails to appoint an arbitrator or in the event no agreement is reached
between the two arbitrators as to the appointment of the third arbitrator in
accordance with the foregoing provisions, such arbitrator or arbitrators shall
be appointed, upon application by the interested party, by the CIETAC in
Shanghai. The award of the arbitrators shall be final and binding upon the
parties and shall not be subject to any appeal or challenge whatsoever. Each
party hereby designates its respective address, as set forth in Section 16.01
hereof, as its respective domicile at which service of process may be made
in
any arbitration, legal action or proceeding arising hereunder. Each party shall
bear its own costs and expenses related to the arbitration unless otherwise
determined by the CIETAC in its arbitration award, and each party shall bear
equally the costs and expenses of the arbitrators.
ARTICLE
X VI
Miscellaneous
16.01
Notices
Any
notices, requests, claims, demands, instructions and other communications to
be
given hereunder to any party shall be in writing and delivered in person, sent
either by hand delivery, by international courier, or by facsimile transmission
with confirmation of such transmission, to the following addresses (or at such
other address or number as specified in writing by the other party pursuant
hereto):-
|
If
to Sellers
|
▇▇▇▇▇▇
▇▇▇▇
No.
666, West ▇▇▇▇ ▇▇▇▇ Road, ▇▇▇▇ ▇▇▇▇ Industry Zone, Pu Dong District,
Shanghai, P.R.C.
|
|
If
to Purchaser
|
Jing
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇,
|
|
▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
|
|
16.02
Amendments
This
Agreement may be amended only upon the mutual written
consent of the parties hereto.
17
STOCK
PURCHASE AGREEMENT
16.03
Duplicates, Originals Counterparts
This
Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
16.04
Entire Agreement
This
Agreement, including the Schedules hereto, constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings between the
parties. There are no representations, warranties, undertakings or agreements
between the parties with respect to the subject matter of this
Agreement except as set forth herein.
16.05
Non-Assignability
None
of
the parties hereto may assign its rights, interests, obligations or liabilities
under this Agreement or delegate its duties without
the prior written consent of the other party.
16.06
Headings
The
headings contained in this Agreement are for
convenience of reference only and shall not affect the interpretation of
this Agreement.
16.07
Governing Law
This
Agreement shall be governed and construed in
accordance with the laws of People’s Republic of China.
16.08
Remedies
No
remedy
conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition
to
every remedy given under this Agreement or now or
subsequently existing, at law or in equity, by statute or otherwise. The
election of any one or more remedies by Purchaser or
Sellers will not constitute
a waiver of the right to
pursue other available remedies.
16.09
Severability
In
the
event any term or provision of this Agreement shall be
deemed to be illegal, invalid or unenforceable for any reason, such illegality,
invalidity or unenforceability will not affect any other term or provision
of
this Agreement and the parties shall endeavor to
replace the invalid or null and void provision(s) with such which correspond
best to the intentions of the parties hereto.
16.10
Language
This
Agreement shall be written in English and Chinese,
both versions shall be equally authentic. In case of any discrepancy between
the
two versions, the Chinese version shall prevail.
***************************************************************************
18
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date hereinbefore stated.
Purchaser:
|
Tank
Sports Inc.
By:
/s/ Jing ▇▇▇▇ ▇▇▇▇
Title:
CEO
|
Seller:
|
(Each
Seller who entrusted ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ to sign this Agreement are listed
in
Schedule A)
By:
/s/ ▇▇▇▇▇▇ ▇▇▇▇
Title:
Executive Director
|
|
|
/s/ ▇▇▇▇▇▇
▇▇▇▇
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇
|
|
/s/
▇▇▇▇ ▇▇▇▇ Sang
|
|
19
SCHEDULES
|
A
|
Sellers
|
1.01
|
|
B
|
Total
PMI Shares Holder by Seller
|
1.02(a)
|
|
C
|
Consideration
Shares & Transfer Sechedule
|
1.02(b)
|
|
D
|
List
of the Assets
|
2.02(a)
|
|
E
|
Affiliates
|
3.01(b);
3.03; 3.04
|
|
F
|
List
of Debts
|
2.02(b)
|
|
G
|
Finance
Statement
|
1.02(a);
3.04
|
|
H
|
Due
Diligence Report
|
1.02(a)
|
|
I
|
List
of Real Estates
|
3.05(a)
|
|
J
|
List
of Leasing
|
3.05(b)
|
|
K
|
List
of Machines and Equipment
|
3.06
|
|
M
|
List
of Proprietary Rights
|
3.07(a)
|
|
N
|
Contracts
|
3.08
|
|
O
|
Certificates
|
3.09(b)
|
|
P
|
Litigations
|
3.10
|
|
Q
|
List
of Employees
|
3.13
|
|
R
|
Distributors,
Sales and Agents
|
3.14
|
|
S
|
Warehouses
|
3.16
|
|
T
|
Others
|
3.11
|
▇▇
▇▇▇▇▇▇▇▇
▇,▇,▇ (Combined)
|
Name
of Seller
 |
PMI
Shares Owned and to be transferred by Seller
|
Total
Number of Consideration Shares/Warrants Received
|
Number
of Shares to be Transferred to Seller within 45 days after the Closing
Date
|
Number
of Shares to be Transferred to Seller on the 180th date following
the
Closing Date
|
|
Shareholder
&
Management
|
||||
|
▇▇▇▇▇▇
▇▇▇▇
|
1,441,610
|
549,185/205,944
|
32,9511
|
219,674
|
|
▇▇▇▇▇▇▇
▇▇▇▇
|
756,558
|
288,212/108,080
|
172,927
|
115,285
|
|
▇▇▇▇▇▇
▇▇▇▇
|
247,040
|
94,110/35,291
|
56,466
|
37,644
|
|
Shareholder
& Investor
|
||||
|
Asia
Star IT Fund LP
|
585,868
|
223,188/83,696
|
133,913
|
89,275
|
|
Kilin
To
|
19,529
|
7,440/2,790
|
4,464
|
2,976
|
|
▇▇▇▇▇
▇▇▇▇
|
465
|
177/66
|
106
|
71
|
|
▇▇▇
▇▇▇▇
|
1,255
|
478/179
|
287
|
191
|
|
Chong
Family Trust
|
465
|
177/66
|
106
|
71
|
|
▇▇▇▇
▇▇▇
|
930
|
354/133
|
212
|
142
|
|
Shareholder
& Non-Management
|
||||
|
▇▇▇▇▇▇▇
▇▇▇▇
|
465
|
177/66
|
106
|
71
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇
|
2,325
|
886/332
|
532
|
354
|
|
▇▇▇
▇▇▇▇▇
|
288,7500
|
1,100,000/412,500
|
660,000
|
440,000
|
|
▇▇▇▇▇▇▇▇▇
Mou
|
900,000
|
342,857/128,571
|
205,714
|
137,143
|
|
Inspirational
Wisdom Ltd
|
1,500,000
|
571,429/214,286
|
342,857
|
228,572
|
|
▇▇▇
▇▇▇▇▇ Chi
|
448,612
|
170,900/64,088
|
102,540
|
68,360
|
|
▇▇▇▇
▇▇▇▇ Che
|
1,497,378
|
570,430/213,912
|
342,258
|
228,172
|
|
Cheng
▇▇▇ ▇▇▇▇▇
|
52,500
|
20,000/7,500
|
12,000
|
8,000
|
|
Smartman
Enterprises Ltd
|
157,500
|
60,000/22,500
|
36,000
|
24,000
|
|
Total
|
10,500,000
|
4,000,000/1,500,000
|
2,400,000
|
1,600,000
|
21