SHARE EXCHANGE AGREEMENT AMONG FREZER, INC., BEFUT INTERNATIONAL CO. LIMITED AND BEFUT CORPORATION FOR THE EXCHANGE OF CAPITAL STOCK OF FREZER, INC. AND BEFUT CORPORATION DATED AS OF MARCH 13, 2009
AMONG
BEFUT
INTERNATIONAL CO. LIMITED
AND
BEFUT
CORPORATION
FOR
THE EXCHANGE OF
CAPITAL
STOCK
OF
FREZER,
INC. AND BEFUT CORPORATION
DATED
AS OF MARCH 13, 2009
1
This SHARE EXCHANGE AGREEMENT, dated as
of March 13, 2009 (the “Agreement”) by and among Frezer, Inc., a Nevada
corporation (the “Company”), BEFUT Corporation,
a Nevada corporation (“Befut
Nevada”), and Befut International Co. Limited, a company incorporated
under the laws of the British Virgin Islands (“Befut BVI”).
WITNESSETH:
WHEREAS, Befut BVI owns 100%
of the issued and outstanding shares of Common Stock of Befut Nevada (the "Befut Nevada
Shares");
WHEREAS, Befut Nevada owns
2,176,170 shares of Common Stock, $0.001 par value, of the Company (“Company Shares”);
WHEREAS, each of the Company,
Befut BVI and Befut Nevada believes it is in its best interests for the Company
to issue to Befut BVI an aggregate of 120,899,170 Company Shares in exchange for
(a) all of the outstanding equity interests in Befut Nevada, including, without
limitation, all of the Befut Nevada Shares and (b) the cancellation of 2,176,170
Company Shares owned by Befut Nevada, upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, it is the intention
of the parties that: (i) said exchange of shares shall qualify as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended (the “Code”);
and (ii) said exchange shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as amended and
in effect on the date of this Agreement (the “Securities
Act”).
NOW, THEREFORE, in
consideration of the mutual terms, conditions and other agreements set forth
herein, the parties hereto hereby agree as follows:
ARTICLE
I
EXCHANGE
OF COMPANY SHARES FOR BEFUT NEVADA SHARES
Section
1.1 Agreement to Exchange
Company Shares for Befut Nevada Shares and Cancellation of Company Shares Held
by Befut Nevada. On the Closing Date (as hereinafter defined)
and subject to the terms and conditions set forth in this Agreement, Befut BVI
shall sell, assign, transfer, convey and deliver all of the equity interests in
Befut Nevada, including, without limitation, all of the outstanding Befut Nevada
Shares, to the Company, and the Company shall accept such equity interest in
Befut Nevada from the Befut BVI in exchange for the issuance to Befut BVI of
120,899,170 newly issued Company Shares. In addition, (i) simultaneously with
said exchange, Befut Nevada shall relinquish all right, title and interest to
all of the 2,176,170 Company Shares held by Befut Nevada and all of such Company
Shares shall immediately be cancelled; and (ii) in connection with the Company’s
financing of $500,000 to be consummated immediately after the share exchange
herein, pursuant to which the Company shall issue notes convertible to a total
of 3,130,871 shares of Common Stock at the option of the note holders within one
year (including the one year anniversary) from the Closing Date, Befut BVI shall
relinquish all right, title and interest to 3,130,871 Company Shares held by
Befut BVI and such Company Shares shall immediately be cancelled upon the
consummation of the financing.
2
Section
1.2 Capitalization. On
the Closing Date, immediately before the transactions to be consummated pursuant
to this Agreement, the Company shall have authorized (a) 200,000,000 shares of
Common Stock, $.001 par value per share, of which 4,267,000 shares shall be
issued and outstanding, all of which are duly authorized, validly issued and
fully paid and 2,176,170 of which shall be held by Befut Nevada; and (b)
10,000,000 shares of Preferred Stock, $.001 par value per share, of which no
shares are issued or outstanding.
Section
1.3 Closing. The
closing of the exchange to be made pursuant to this Agreement (the "Closing")
shall take place at 10:00 a.m. E.S.T. on the day when the conditions to closing
set forth in Articles V and VI have been satisfied or waived, or at such other
time and date as the parties hereto shall agree in writing but no later than
March 13, 2009 (the "Closing Date"), at the offices of Guzov Ofsink, LLC, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. At the Closing, (a) the Company shall deliver to Befut
BVI a stock certificate or stock certificates representing an aggregate of
120,899,170 Company Shares, (b) Befut BVI shall deliver to the Company a stock
certificate or stock certificates representing all of the outstanding Befut
Nevada Shares, duly endorsed in blank for transfer or accompanied by appropriate
stock powers duly executed in blank and (c) Befut Nevada shall deliver to the
Company a stock certificate or stock certificates representing an aggregate of
2,176,170 Company Shares duly endorsed in blank for transfer or accompanied by
appropriate stock powers duly executed in blank so that all of such shares may
be cancelled.
1.4 Tax Treatment. The
exchange described herein is intended to comply with Section 368(a)(1)(B) of the
Code, and all applicable regulations thereunder. In order to ensure compliance
with said provisions, the parties agree to take whatever steps may be necessary,
including, but not limited to, the amendment of this Agreement.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF BEFUT BVI AND BEFUT NEVADA
Each of Befut BVI and Befut Nevada
hereby, jointly and severally, represents, warrants and agrees as
follows:
Section
2.1 Corporate
Organization
(a) Befut
Nevada is a corporation duly organized, validly existing and in good standing
under the laws of Nevada, and has all requisite corporate power and authority to
own its properties and assets and to conduct its business and is duly qualified
to do business in good standing in each jurisdiction in which the nature of the
business conducted by Befut Nevada or the ownership or leasing of its properties
makes such qualification and being in good standing necessary, except where the
failure to be so qualified and in good standing will not have a material adverse
effect on the business, operations, properties, assets, condition or results of
operation of (a "Befut Nevada
Material Adverse Effect");
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(b) Copies
of the Articles of Incorporation and By-laws of Befut Nevada, with all
amendments thereto to the date hereof, have been furnished to the Company, and
such copies are accurate and complete as of the date hereof. The
minute books of Befut Nevada are current as required by law, contain the minutes
of all meetings of the Board of Directors and shareholders of Befut Nevada from
its date of incorporation to the date of this Agreement, and adequately reflect
all material actions taken by the Board of Directors and shareholders of Befut
Nevada.
(c) Befut
BVI is a corporation duly organized, validly existing and in good standing under
the laws of the British Virgin Islands, and has all requisite corporate power
and authority to own its properties and assets and to conduct its business and
is duly qualified to do business in good standing in each jurisdiction in which
the nature of the business conducted by Befut BVI or the ownership or leasing of
its properties makes such qualification and being in good standing necessary,
except where the failure to be so qualified and in good standing will not have a
material adverse effect on the business, operations, properties, assets,
condition or results of operation of (a "Befut BVI Material Adverse
Effect");
(d) Copies
of the Memorandum of Association and Articles of Association of Befut BVI, with
all amendments thereto to the date hereof, have been furnished to the Company,
and such copies are accurate and complete as of the date hereof. The
minute books of Befut BVI are current as required by law, contain the minutes of
all meetings of the Board of Directors and shareholders of Befut BVI from its
date of incorporation to the date of this Agreement, and adequately reflect all
material actions taken by the Board of Directors and shareholders of Befut
BVI.
Section 2.2 Capitalization of Befut
Nevada and Befut BVI. The authorized capital stock of Befut
Nevada consists of 50,000,000 shares of Common Stock, par value $.001 per share,
of which 28,756,134 shares are issued and outstanding, all of which are duly
authorized, validly issued and fully paid and held by Befut BVI. The authorized
capital stock of Befut BVI consists of 50,000 shares, par value US$1.00 per
share, of which 11,500 shares are issued and outstanding, all of which are duly
authorized, validly issued and fully paid. All of the Befut Nevada Shares to be
transferred to the Company pursuant to this Agreement have been duly authorized
and will be validly issued, fully paid and non-assessable and no personal
liability will attach to the ownership thereof and in each instance, have been
issued in accordance with the registration requirements of applicable securities
laws or an exemption therefrom. As of the date of this Agreement
there are no outstanding options, warrants, agreements, commitments, conversion
rights, preemptive rights or other rights to subscribe for, purchase or
otherwise acquire any shares of capital stock or any un-issued or treasury
shares of capital stock of either Befut Nevada or Befut BVI. As of the date of
this Agreement, Befut Nevada owns all of the issued and outstanding equity or
voting interests in Hongkong BEFUT Co., Limited, which owns all of the equity
interests in Befut Electric (Dalian) Co., Ltd. (the “WFOE”). The WFOE has
exclusive business relationship with Dalian Befut Wire and Cable Manufacturing
Co., Ltd (“Dalian
Befut”). Dalian Befut is duly organized, validly existing and
in good standing under the laws of the Peoples’ Republic of China (“PRC”) and
has all requisite corporate power and authority to own its properties and assets
and to conduct its business as now conducted and is duly qualified to do
business, is in good standing in each jurisdiction wherein the nature of the
business conducted by Dalian Befut or the ownership or leasing of its properties
makes such qualification and being in good standing necessary, except where the
failure to be so qualified and in good standing will not have a material adverse
effect on the business, operations, properties, assets, condition or results of
operation of Dalian Befut (a "Dalian Befut Material Adverse
Effect")
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Section
2.3 Subsidiaries and Equity
Investments. Except as set forth in Schedule 2.3, neither Befut Nevada
nor Befut BVI has any subsidiaries or holds any equity interest in any
corporation, partnership, joint venture or other entity.
Section
2.4 Authorization and Validity
of Agreements. Each of Befut Nevada and Befut BVI has all
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated hereby
and upon the execution and delivery by the Company and the Company’s performance
of its obligations herein, will constitute, a legal, valid and binding
obligation of Befut Nevada and Befut BVI. The execution and delivery
of this Agreement by each of Befut Nevada and Befut BVI and the consummation by
them of the transactions contemplated hereby have been duly authorized by all
necessary corporate action of Befut Nevada and Befut BVI, and no other corporate
proceedings on the part of Befut Nevada and Befut BVI are necessary to authorize
this Agreement or to consummate the transactions contemplated
hereby.
Section 2.5 No Conflict or
Violation. (a) The execution, delivery and performance of this
Agreement by Befut Nevada do not and will not violate or conflict with any
provision of Befut Nevada’s Articles of Incorporation or By-laws, and does not
and will not violate any provision of law, or any order, judgment or decree of
any court or other governmental or regulatory authority, nor violate or result
in a breach of or constitute (with due notice or lapse of time or both) a
default under, or give to any other entity any right of termination, amendment,
acceleration or cancellation of, any contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
Befut Nevada is a party or by which it is bound or to which any of
its properties or assets is subject, nor will it result in the
creation or imposition of any lien, charge or encumbrance of any kind whatsoever
upon any of the properties or assets of Befut Nevada, nor will it result in the
cancellation, modification, revocation or suspension of any of the licenses,
franchises, permits to which Befut Nevada is bound.
5
(b) The
execution, delivery and performance of this Agreement by Befut BVI do not and
will not violate or conflict with any provision of Befut BVI’s Memorandum of
Association and Articles of Association and does not and will not violate any
provision of law, or any order, judgment or decree of any court or other
governmental or regulatory authority, nor violate or result in a breach of or
constitute (with due notice or lapse of time or both) a default under, or give
to any other entity any right of termination, amendment, acceleration or
cancellation of, any contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which Befut BVI
is a party or by which it is bound or to which any of its properties
or assets is subject, nor will it result in the creation or imposition of any
lien, charge or encumbrance of any kind whatsoever upon any of the properties or
assets of Befut BVI, nor will it result in the cancellation, modification,
revocation or suspension of any of the licenses, franchises, permits to which
Befut BVI is bound.
Section
2.6 Consents and
Approvals. No consent, waiver, authorization or approval of
any governmental or regulatory authority, domestic or foreign, or of any other
person, firm or corporation, is required in connection with the execution and
delivery of this Agreement by either Befut Nevada or Befut BVI or the
performance by either Befut Nevada or Befut BVI of its obligations
hereunder.
Section
2.7 Absence of Certain Changes
or Events.
(a) Since
its inception:
(i) and
as of the date of this Agreement, Befut Nevada does not know or
have reason to know of any event, condition, circumstance or
prospective development which threatens or may threaten to have a material
adverse effect on the assets, properties, operations, prospects, net income or
financial condition of Befut Nevada;
(ii)
there has not been any declaration, setting aside or payment of dividends or
distributions with respect to shares of capital stock of Befut Nevada;
and
(iii)
there has not been an increase in the compensation payable or to become payable
to any director or officer of Befut Nevada.
(b) Since
its inception:
(i) and
as of the date of this Agreement, Befut BVI does not know or
have reason to know of any event, condition, circumstance or
prospective development which threatens or may threaten to have a material
adverse effect on the assets, properties, operations, prospects, net income or
financial condition of Befut BVI;
(ii)
there has not been any declaration, setting aside or payment of dividends or
distributions with respect to shares of capital stock of Befut BVI;
and
(iii)
there has not been an increase in the compensation payable or to become payable
to any director or officer of Befut BVI.
Section
2.8 Disclosure. This
Agreement and any certificate attached hereto or delivered in accordance with
the terms hereby by or on behalf of either Befut Nevada or Befut BVI in
connection with the transactions contemplated by this Agreement, when taken
together, do not contain any untrue statement of a material fact or omit any
material fact necessary in order to make the statements contained herein and/or
therein not misleading.
6
Section
2.9 Litigation. There
is no action, suit, proceeding or investigation pending or threatened against
either Befut Nevada or Befut BVI or any of their respective subsidiaries and
Dalian Befut that may affect the validity of this Agreement or the right of
either Befut Nevada or Befut BVI to enter into this Agreement or to consummate
the transactions contemplated hereby.
Section
2.10 [Reserved.]
Section
2.11 Investment
Representations. (a) The Company Shares to be issued to Befut
BVI will be acquired by Befut BVI hereunder solely for the account of Befut BVI,
for investment, and not with a view to the resale or distribution thereof. Befut
BVI understands and is able to bear any economic risks associated with such
investment in the Company Shares. Befut BVI has had full access to all the
information it considers necessary or appropriate to make an informed investment
decision with respect to the Company Shares to be acquired under this
Agreement. Befut BVI further has had an opportunity to ask questions
and receive answers from the Company’s directors regarding the Company and to
obtain additional information (to the extent the Company’s directors possessed
such information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to Befut BVI or to
which Befut BVI had access. Befut BVI is at the time of the offer and execution
of this Agreement domiciled and resident outside the United States (a “Non-U.S.
Shareholder”).
Section
2.12 Tax Returns, Payments and
Elections. Each of Befut Nevada and Befut BVI has timely filed all tax
returns, statements, reports, declarations and other forms and documents and
has, to date, paid all taxes due.
Section
2.13 Survival. Each
of the representations and warranties set forth in this Article II shall be
deemed represented and made by Befut Nevada and Befut BVI at the Closing as if
made at such time and shall survive the Closing for a period terminating on the
second anniversary of the date of this Agreement.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents, warrants and agrees as follows:
Section
3.1 Corporate
Organization.
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the state of Nevada and has all requisite corporate power and
authority to own its properties and assets and to conduct its business as now
conducted and is duly qualified to do business, is in good standing in each
jurisdiction wherein the nature of the business conducted by the Company or the
ownership or leasing of its properties makes such qualification and being in
good standing necessary, except where the failure to be so qualified and in good
standing will not have a material adverse effect on the business, operations,
properties, assets, condition or results of operation of the Company (a "Company Material Adverse
Effect").
7
(b) Copies
of the Certificate of Incorporation and By-laws of the Company, with all
amendments thereto to the date hereof, have been furnished to each of Befut
Nevada and Befut BVI, and such copies are accurate and complete as of the date
hereof. The minute books of the Company are current as required by
law, contain the minutes of all meetings of the Board of Directors and
shareholders of the Company, and adequately reflect all material actions taken
by the Board of Directors, shareholders of the Company.
Section
3.2 Capitalization of the
Company. On the Closing Date, immediately before the
transactions to be consummated pursuant to this Agreement, the Company shall
have authorized 200,000,000 Company Shares, of which an aggregate of 4,267,000
will be issued and outstanding. There are no outstanding options, warrants,
agreements, commitments, conversion rights, preemptive rights or other rights to
subscribe for, purchase or otherwise acquire any shares of capital stock or
other equity or voting interest or any unissued or treasury shares of capital
stock of the Company, except for as set forth on Schedule 3.2. As of
the date hereof and on the Closing Date, all of the 2,176,170 Company Shares
owned by Befut Nevada are owned free and clear of any liens, claims or
encumbrances and Befut Nevada has, and on the Closing Date will have, the right
to transfer to the Company for cancellation all of such 2,176,170 Company Shares
without the consent of any other person or entity.
Section
3.3. Authorization and Validity
of Agreements. The Company has all corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. Befut Nevada, which is the holder of more than a
majority of the outstanding Company Shares, has approved this Agreement on
behalf of the Company and no other stockholder approvals are required to
consummate the transactions contemplated hereby. No other proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby.
Section
3.4 No Conflict or
Violation. The execution, delivery and performance of this
Agreement by the Company does not and will not violate or conflict with any
provision of the constituent documents of the Company, and does not and will not
violate any provision of law, or any order, judgment or decree of any court or
other governmental or regulatory authority, nor violate, result in a breach of
or constitute (with due notice or lapse of time or both) a default under or give
to any other entity any right of termination, amendment, acceleration or
cancellation of any contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which the Company
is a party or by which it is bound or to which any of its properties or assets
is subject, nor result in the creation or imposition of any lien, charge or
encumbrance of any kind whatsoever upon any of the properties or assets of the
Company, nor result in the cancellation, modification, revocation or suspension
of any of the licenses, franchises, permits to which the Company is
bound.
8
Section
3.5 Investment
Representations. The Befut Nevada Shares will be acquired hereunder
solely for the account of the Company, for investment, and not with a view to
the resale or distribution thereof. The Company understands and is able to bear
any economic risks associated with such investment in the Befut Nevada Shares.
The Company has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the Befut
Nevada Shares to be acquired under this Agreement. The Company
further has had an opportunity to ask questions and receive answers from Befut
Nevada’s directors regarding Befut Nevada’s and to obtain additional information
(to the extent Befut Nevada’s directors possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify any
information furnished to the Company or to which the Company had
access.
Section
3.6 Brokers’ Fees. The Company has no
liability to pay any fees or commissions or other consideration to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.
Section
3.7 Disclosure. This
Agreement, the schedules hereto and any certificate attached hereto or delivered
in accordance with the terms hereby by or on behalf of the Company in connection
with the transactions contemplated by this Agreement, when taken together, do
not contain any untrue statement of a material fact or omit any material fact
necessary in order to make the statements contained herein and/or therein not
misleading.
Section 3.8 Survival. Each
of the representations and warranties set forth in this Article III shall be
deemed represented and made by the Company at the Closing as if made at such
time and shall survive the Closing for a period terminating on the second
anniversary of the date of this Agreement.
ARTICLE
IV
COVENANTS
Section
4.1 Certain Changes and Conduct
of Business.
(a) From and after the date of this
Agreement and until the Closing Date, each of Befut Nevada and Befut BVI shall,
and shall cause Dalian Befut to, conduct its business solely in the ordinary
course consistent with past practices and, in a manner consistent with all of
its representations, warranties or covenants, and without the prior written
consent of the Company will not, and will prohibit Dalian Befut to, except as
required or permitted pursuant to the terms hereof:
(i) make
any material change in the conduct of its businesses and/or operations or enter
into any transaction other than in the ordinary course of business consistent
with past practices;
9
(ii) make
any change in its Articles of Incorporation or By-laws or memorandum of
Association and Articles of Association; issue any additional shares of capital
stock or equity securities or grant any option, warrant or right to acquire any
capital stock or equity securities or issue any security convertible into or
exchangeable for its capital stock or alter in any material term of any of its
outstanding securities or make any change in its outstanding shares of capital
stock or its capitalization, whether by reason of a reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, stock dividend or otherwise;
(iii) A. incur,
assume or guarantee any indebtedness for borrowed money, issue any notes, bonds,
debentures or other corporate securities or grant any option, warrant or right
to purchase any thereof, except pursuant to transactions in the ordinary course
of business consistent with past practices; or
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B.
|
issue
any securities convertible or exchangeable for debt or equity securities
of its capital stock;
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(iv) make
any sale, assignment, transfer, abandonment or other conveyance of any of its
assets or any part thereof, except pursuant to transactions in the ordinary
course of business consistent with past practice;
(v)
subject any of its assets, or any part thereof, to any lien or suffer such to be
imposed other than such liens as may arise in the ordinary course of business
consistent with past practices by operation of law which will not have a Befut
Nevada Material Adverse Effect or Befut BVI Material Adverse
Effect;
(vi)
acquire any assets, raw materials or properties, or enter into any other
transaction, other than in the ordinary course of business consistent with past
practices;
(vii)
enter into any new (or amend any existing) employee benefit plan, program or
arrangement or any new (or amend any existing) employment, severance or
consulting agreement, grant any general increase in the compensation of officers
or employees (including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) or grant any increase in the
compensation payable or to become payable to any employee, except in accordance
with pre-existing contractual provisions or consistent with past
practices;
10
(viii)
make or commit to make any material capital expenditures;
(ix) pay,
loan or advance any amount to, or sell, transfer or lease any properties or
assets to, or enter into any agreement or arrangement with, any of its
affiliates;
(x)
guarantee any indebtedness for borrowed money or any other obligation of any
other person;
(xi) fail
to keep in full force and effect insurance comparable in amount and scope to
coverage maintained by it (or on behalf of it) on the date hereof;
(xii)
take any other action that would cause any of the representations and warranties
made by it in this Agreement not to remain true and correct in all material
aspect;
(xiii)
make any material loan, advance or capital contribution to or investment in any
person;
(xiv)
make any material change in any method of accounting or accounting principle,
method, estimate or practice;
(xv)
settle, release or forgive any claim or litigation or waive any right;
or
(xvi)
commit itself to do any of the foregoing.
(b) From
and after the date of this Agreement and until the Closing Date, the Company
will:
(i) continue
to maintain, in all material respects, its properties in accordance with present
practices in a condition suitable for its current use;
(ii)
file, when due or required, federal, state, foreign and other tax returns and
other reports required to be filed and pay when due all taxes, assessments, fees
and other charges lawfully levied or assessed against it, unless the validity
thereof is contested in good faith and by appropriate proceedings diligently
conducted;
(iii)
continue to conduct its business in the ordinary course consistent with past
practices;
(iv) keep
its books of account, records and files in the ordinary course and in accordance
with existing practices; and
11
(v)
continue to maintain existing business relationships.
(c) From
and after the date of this Agreement and until the Closing Date, the Company
will not:
(i) make
any material change in the conduct of its businesses and/or operations or enter
into any transaction other than in the ordinary course of business consistent
with past practices;
(ii) make
any change in its Articles of Incorporation, Bylaws or other governing
documents; issue any additional shares of capital stock or equity securities or
grant any option, warrant or right to acquire any capital stock or equity
securities or issue any security convertible into or exchangeable for its
capital stock or alter in any material term of any of its outstanding securities
or make any change in its outstanding shares of capital stock or its
capitalization, whether by reason of a reclassification, recapitalization, stock
split or combination, exchange or readjustment of shares, stock dividend or
otherwise;
(iii) A. incur,
assume or guarantee any indebtedness for borrowed money, issue any notes, bonds,
debentures or other corporate securities or grant any option, warrant or right
to purchase any thereof, except pursuant to transactions in the ordinary course
of business consistent with past practices; or
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B.
|
issue
any securities convertible or exchangeable for debt or equity securities
of the Company;
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(iv) make
any sale, assignment, transfer, abandonment or other conveyance of any of its
assets or any part thereof, except pursuant to transactions in the ordinary
course of business consistent with past practice;
(v)
subject any of its assets, or any part thereof, to any lien or suffer such to be
imposed other than such liens as may arise in the ordinary course of business
consistent with past practices by operation of law which will not have a Company
Material Adverse Effect;
(vi)
acquire any assets, raw materials or properties, or enter into any other
transaction, other than in the ordinary course of business consistent with past
practices;
(vii)
enter into any new (or amend any existing) employee benefit plan, program or
arrangement or any new (or amend any existing) employment, severance or
consulting agreement, grant any general increase in the compensation of officers
or employees (including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) or grant any increase in the
compensation payable or to become payable to any employee, except in accordance
with pre-existing contractual provisions or consistent with past
practices;
12
(viii)
make or commit to make any material capital expenditures;
(ix) pay,
loan or advance any amount to, or sell, transfer or lease any properties or
assets to, or enter into any agreement or arrangement with, any of its
affiliates;
(x)
guarantee any indebtedness for borrowed money or any other obligation of any
other person;
(xi) fail
to keep in full force and effect insurance comparable in amount and scope to
coverage maintained by it (or on behalf of it) on the date hereof;
(xii)
take any other action that would cause any of the representations and warranties
made by it in this Agreement not to remain true and correct in all material
aspect;
(xiii)
make any material loan, advance or capital contribution to or investment in any
person;
(xiv) make
any material change in any method of accounting or accounting principle, method,
estimate or practice;
(xv)
settle, release or forgive any claim or litigation or waive any right;
or
(xvi)
commit itself to do any of the foregoing.
Section
4.2 Access to Properties and
Records. The Company shall afford the accountants, counsel and
authorized representatives of each of befut Nevada and Befut BVI, and each of
Befut Nevada and Befut BVI shall afford to the Company’s accountants, counsel
and authorized representatives full access during normal business hours
throughout the period prior to the Closing Date (or the earlier termination of
this Agreement) to all of such parties’ properties, books, contracts,
commitments and records and, during such period, shall furnish promptly to the
requesting party all other information concerning the other party's business,
properties and personnel as the requesting party may reasonably request,
provided that no investigation or receipt of information pursuant to this
Section 4.2 shall affect any representation or warranty of or the conditions to
the obligations of any party.
13
Section
4.3 Negotiations. From
and after the date hereof until the earlier of the Closing or the termination of
this Agreement, no party to this Agreement nor its officers or directors
(subject to such director's fiduciary duties) nor anyone acting on behalf of any
party or other persons shall, directly or indirectly, encourage, solicit, engage
in discussions or negotiations with, or provide any information to, any person,
firm, or other entity or group concerning any merger, sale of substantial
assets, purchase or sale of shares of capital stock or similar transaction
involving any party. A party shall promptly communicate to any other
party any inquiries or communications concerning any such transaction which they
may receive or of which they may become aware of.
Section
4.4 Consents and
Approvals. The parties shall:
(a) use
their reasonable commercial efforts to obtain all necessary consents, waivers,
authorizations and approvals of all governmental and regulatory authorities,
domestic and foreign, and of all other persons, firms or corporations required
in connection with the execution, delivery and performance by them of this
Agreement; and
(b)
diligently assist and cooperate with each party in preparing and filing all
documents required to be submitted by a party to any governmental or regulatory
authority, domestic or foreign, in connection with such transactions and in
obtaining any governmental consents, waivers, authorizations or approvals which
may be required to be obtained connection in with such
transactions.
Section
4.5 Public
Announcement. Unless otherwise required by applicable law, the
parties hereto shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement and shall
not issue any such press release or make any such public statement prior to such
consultation.
Section
4.6 Stock
Issuance. From and after the date of this Agreement until the
Closing Date, none of the parties shall issue any additional shares of its
capital stock.
ARTICLE
V
CONDITIONS
TO OBLIGATIONS OF THE COMPANY
The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of the
following conditions, any one or more of which may be waived by the Company in
its sole discretion:
Section
5.1 Representations and
Warranties of Befut Nevada and Befut BVI. All representations and
warranties made by Befut Nevada and Befut BVI in this Agreement shall be true
and correct on and as of the Closing Date as if again made by Befut Nevada and
Befut BVI as of such date.
Section
5.2 Agreements and
Covenants. Each of Befut Nevada and Befut BVI shall have
performed and complied in all material respects to all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Closing Date.
14
Section
5.3 Consents and
Approvals. Consents, waivers, authorizations and approvals of
any governmental or regulatory authority, domestic or foreign, and of any other
person, firm or corporation, required in connection with the execution, delivery
and performance of this Agreement shall be in full force and effect on the
Closing Date.
Section
5.4 No Violation of
Orders. No preliminary or permanent injunction or other order
issued by any court or governmental or regulatory authority, domestic or
foreign, nor any statute, rule, regulation, decree or executive order
promulgated or enacted by any government or governmental or regulatory
authority, which declares this Agreement invalid in any respect or prevents the
consummation of the transactions contemplated hereby, or which materially and
adversely affects the assets, properties, operations, prospects, net income or
financial condition of either Befut Nevada, Befut BVI or Dalian Befut shall be
in effect; and no action or proceeding before any court or governmental or
regulatory authority, domestic or foreign, shall have been instituted or
threatened by any government or governmental or regulatory authority, domestic
or foreign, or by any other person, or entity which seeks to prevent or delay
the consummation of the transactions contemplated by this Agreement or which
challenges the validity or enforceability of this Agreement.
Section
5.5 Other Closing
Documents. The Company shall have received such other
certificates, instruments and documents in confirmation of the representations
and warranties of Befut Nevada and Befut BVI or in furtherance of the
transactions contemplated by this Agreement as the Company or its counsel may
reasonably request.
Section
5.6 Additional Funding.
The Company shall have entered into formal agreement for a financing of $500,000
in the aggregate from third party investor(s) to further the business objectives
of Dalian Befut, which financing may close immediately after Closing
Date.
ARTICLE
VI
CONDITIONS
TO OBLIGATIONS OF BEFUT NEVADA AND BEFUT BVI
The
obligations of Befut Nevada and Befut BVI to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by both of them in their sole discretion:
Section
6.1 Representations and
Warranties of the Company. All representations and warranties
made by the Company in this Agreement shall be true and correct on and as of the
Closing Date as if again made by it on and as of such date.
Section
6.2 Agreements and
Covenants. The Company shall have performed and complied in
all material respects to all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Closing
Date.
15
Section
6.3 Consents and
Approvals. All consents, waivers, authorizations and approvals
of any governmental or regulatory authority, domestic or foreign, and of any
other person, firm or corporation, required in connection with the execution,
delivery and performance of this Agreement, shall have been duly obtained and
shall be in full force and effect on the Closing Date.
Section
6.4 No Violation of
Orders. No preliminary or permanent injunction or other order
issued by any court or other governmental or regulatory authority, domestic or
foreign, nor any statute, rule, regulation, decree or executive order
promulgated or enacted by any government or governmental or regulatory
authority, domestic or foreign, that declares this Agreement invalid or
unenforceable in any respect or which prevents the consummation of the
transactions contemplated hereby, or which materially and adversely affects the
assets, properties, operations, prospects, net income or financial condition of
the Company, taken as a whole, shall be in effect; and no action or proceeding
before any court or government or regulatory authority, domestic or foreign,
shall have been instituted or threatened by any government or governmental or
regulatory authority, domestic or foreign, or by any other person, or entity
which seeks to prevent or delay the consummation of the transactions
contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement.
Section
6.5. Other Closing
Documents. Befut Nevada and Befut BVI shall have received such
other certificates, instruments and documents in confirmation of the
representations and warranties of the Company or in furtherance of the
transactions contemplated by this Agreement as Befut Nevada and Befut BVI or
their counsel may reasonably request.
ARTICLE
VII
TERMINATION
AND ABANDONMENT
SECTION
7.1 Methods of
Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time before the
Closing:
(a) By
the mutual written consent of the parties;
(b) By
either or both of Befut Nevada and Befut BVI, upon a material breach of any
representation, warranty, covenant or agreement on the part of the Company
set forth in this Agreement, or if any representation or warranty of
the Company shall become untrue, in either case such that any of the conditions
set forth in Article VI hereof would not be satisfied (a "Company Breach"), and such
breach shall, if capable of cure, has not been cured within ten (10) days after
receipt by the party in breach of a notice from the non-breaching party setting
forth in detail the nature of such breach;
16
(c) By
the Company, upon a material breach of any representation, warranty, covenant or
agreement on the part of either or both of Befut Nevada or Befut BVI set forth
in this Agreement, or, if any representation or warranty of Befut Nevada and/or
Befut BVI shall become untrue, in either case such that any of the conditions
set forth in Article V hereof would not be satisfied (a "Befut Breach"), and such
breach shall, if capable of cure, not have been cured within ten (10) days after
receipt by the party in breach of a written notice from the non-breaching party
setting forth in detail the nature of such breach.;
(d) By
any party, if the Closing shall not have consummated before ninety (90) days
after the date hereof; provided, however, that this Agreement may be extended by
written notice of either the Company, on one hand, and either or both of Befut
Nevada or Befut BVI, on the other hand, if the Closing shall not have been
consummated as a result of the other party or parties having failed to receive
all required regulatory approvals or consents with respect to this transaction
or as the result of the entering of an order as described in this Agreement; and
further provided, however, that the right to terminate this Agreement under this
Section 7.1(d) shall not be available to any party whose failure to fulfill any
obligations under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before this date.
(e) By
any party if a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action (which order, decree or ruling the parties hereto
shall use its best efforts to lift), which permanently restrains, enjoins or
otherwise prohibits the transactions contemplated by this
Agreement.
Section
7.2 Procedure Upon
Termination. In the event of termination and abandonment of
this Agreement pursuant to Section 7.1, written notice thereof shall forthwith
be given to the other parties and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned, without further
action. If this Agreement is terminated as provided herein, no party
to this Agreement shall have any liability or further obligation to any other
party to this Agreement; provided, however, that no termination of this
Agreement pursuant to this Article VII shall relieve any party of liability for
a breach of any provision of this Agreement occurring before such
termination.
ARTICLE
VIII
POST-CLOSING
AGREEMENTS
Section
8.1 Consistency in
Reporting. Each party hereto agrees that if the
characterization of any transaction contemplated in this Agreement or any
ancillary or collateral transaction is challenged, each party hereto will
testify, affirm and ratify that the characterization contemplated in such
agreement was the characterization intended by the party; provided, however,
that nothing herein shall be construed as giving rise to any obligation if the
reporting position is determined to be incorrect by final decision of a court of
competent jurisdiction.
17
Section
8.2. Cancellation of Company
Shares.
(a)
Simultaneously with said exchange, Befut Nevada shall relinquish all right,
title and interest to all of the 2,176,170 Company Shares held by Befut Nevada
and all of such Company Shares shall immediately be cancelled; and
(b) In
connection with the Company’s financing of $500,000 to be consummated
immediately after the share exchange herein, pursuant to which the Company shall
issue notes convertible to a total of 3,130,871 shares of Common Stock at the
option of the note holders within one year (including the one year anniversary)
from the Closing Date, Befut BVI shall relinquish all right, title and interest
to 3,130,871 Company Shares held by Befut BVI and such Company Shares shall
immediately be cancelled upon the consummation of the financing.
ARTICLE
IX
MISCELLANEOUS
PROVISIONS
Section
9.1 Survival of
Provisions. The respective representations, warranties,
covenants and agreements of each of the parties to this Agreement (except
covenants and agreements which are expressly required to be performed and are
performed in full on or before the Closing Date) shall survive the Closing Date
and the consummation of the transactions contemplated by this Agreement, subject
to Sections 2.13, 3.8 and 9.1. In the event of a breach of any of such
representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach available to it under the provisions of this
Agreement or otherwise, whether at law or in equity, regardless of any
disclosure to, or investigation made by or on behalf of such party on or before
the Closing Date.
Section
9.2 Publicity. No
party shall cause the publication of any press release or other announcement
with respect to this Agreement or the transactions contemplated hereby without
the consent of the other parties, unless a press release or announcement is
required by law. If any such announcement or other disclosure is
required by law, the disclosing party agrees to give the non-disclosing parties
prior notice and an opportunity to comment on the proposed
disclosure.
Section
9.3 Successors and
Assigns. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective successors and assigns;
provided, however, that no party shall assign or delegate any of the obligations
created under this Agreement without the prior written consent of the other
parties.
Section
9.4 Fees and
Expenses. Except as otherwise expressly provided in this
Agreement, all legal and other fees, costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such fees, costs or expenses.
18
Section
9.5 Notices. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been given or made if in writing and
delivered personally or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following
addresses:
If to the
Company, to:
▇▇. ▇▇-▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Liaoning
Province, PRC, 116011
Attn:
▇▇▇▇▇▇ ▇▇▇
Telephone:
▇▇▇▇-▇▇▇▇▇▇▇▇
with a
copy to:
Guzov Ofsink, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to
either Befut Nevada or Befut BVI, to:
▇▇. ▇▇-▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
Liaoning
Province, PRC, 116011
Attn:
▇▇▇▇▇▇ ▇▇▇
Telephone:
▇▇▇▇-▇▇▇▇▇▇▇▇
or to
such other persons or at such other addresses as shall be furnished by any party
by like notice to the others, and such notice or communication shall be deemed
to have been given or made as of the date so delivered or mailed. No change in
any of such addresses shall be effective insofar as notices under this Section
9.5 are concerned unless such changed address is located in the United States of
America and notice of such change shall have been given to such other party
hereto as provided in this Section 9.5
Section
9.6 Entire
Agreement. This Agreement, together with the exhibits hereto,
represents the entire agreement and understanding of the parties with reference
to the transactions set forth herein and no representations or warranties have
been made in connection with this Agreement other than those expressly set forth
herein or in the exhibits, certificates and other documents delivered in
accordance herewith. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and
agreements between the parties relating to the subject matter of this Agreement
and all prior drafts of this Agreement, all of which are merged into this
Agreement. No prior drafts of this Agreement and no words or phrases
from any such prior drafts shall be admissible into evidence in any action or
suit involving this Agreement.
19
Section
9.7 Severability. This
Agreement shall be deemed severable, and the invalidity or unenforceability of
any term or provision hereof shall not affect the validity or enforceability of
this Agreement or of any other term or provision hereof. Furthermore,
in lieu of any such invalid or unenforceable term or provision, the parties
hereto intend that there shall be added as a part of this Agreement a provision
as similar in terms to such invalid or unenforceable provision as may be
possible so as to be valid and enforceable.
Section
9.8 Titles and
Headings. The Article and Section headings contained in this
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or of any term or provision
hereof.
Section
9.9 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original and all of which together shall be considered one and the
same agreement.
Section
9.10 Convenience of Forum;
Consent to Jurisdiction. The parties to this Agreement, acting
for themselves and for their respective successors and assigns, without regard
to domicile, citizenship or residence, hereby expressly and irrevocably elect as
the sole judicial forum for the adjudication of any matters arising under or in
connection with this Agreement, and consent and subject themselves to the
jurisdiction of, the courts of the State of New York located in County of New
York, and/or the United States District Court for the Southern District of New
York, in respect of any matter arising under this Agreement. Service of process,
notices and demands of such courts may be made upon any party to this Agreement
by personal service at any place where it may be found or giving notice to such
party as provided in Section 9.5.
Section
9.11 Enforcement of the
Agreement. The parties hereto agree that irreparable damage
would occur if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereto, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section
9.12 Governing
Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law provisions thereof.
20
Section
9.13 Amendments and
Waivers. No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by all of the parties hereto. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above written.
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By:
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Name:
▇▇▇▇▇▇ ▇▇▇
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Title:
President and Chief Executive Officer
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BEFUT
CORPORATION
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By:
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Name:
▇▇▇▇▇▇ ▇▇▇
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Title:
President and Chief Executive Officer
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BEFUT
INTERNATIONAL CO. LIMITED
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By:
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Name:
▇▇▇▇▇▇ ▇▇▇
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Title:
Director
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22