SECURITIES PURCHASE AND SHAREHOLDERS AGREEMENT
THIS
SECURITIES PURCHASE AND SHAREHOLDERS AGREEMENT (this “Agreement”) is made and
entered into as of April 20, 2007,
by
and between
Shaanxi Xindongxin Medicine Limited Company
(the
“Company”), a Chinese corporation having its registered address at
Apartment B-2402, Oujin Garden Community, #34
Keji Road, ▇▇▇▇▇ District, Xi’an Shaanxi Province P.R.China.
Its
legal representative is ▇▇▇▇▇▇▇
▇▇▇ ,
Chinese
nationalityô
and
▇▇▇▇▇▇▇
Court Industries Inc. (“Purchaser”),
a America
corporation,
having its registered address at
▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇ .
Its
legal representative is ▇▇▇▇
▇▇ , Norway
nationality.
For
good
and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto agree as follows:
1.
Agreement
to Sell and Purchase.æPurchaser
has agreed to
subscribe 1
million
shares of the Company, to take
100
%
of the
equity interest in the Company for a purchase price of US$178,089
.
The
Company has agreed to sell the
1
million
Shares
to Purchaser for US$178,089
.
The
Company has agreed with Purchaser to undertake certain obligations and covenants
during such time as Purchaser owns the Shares.
2.
Delivery and Paymentæthe
Company shall submit documents to obtain the Business License of Foreign
Investor Enterprise (FIE) and register with necessary governmental departments
and Purchaser shall deliver to the Company, by wire transfer, US$178,089
within
fourteen (14) days whenever the Business License of FIE is
obtained.
3.
Due
Diligence: Purchaser’s obligation to close the transactions contemplated hereby
shall be subject to Purchaser having completed to its satisfaction its due
diligence investigation of the Company on or before Jan 31, 2007 subject that
the Company provides necessary documents as required by the Purchaser on or
before Jan 15, 2007.
1
4.
Representations and Warranties of the Company: The Company hereby jointly and
severally represents and warrants to Purchaser as follows:
4.1
Organization, Good Standing and Qualification: The Company is a corporation
duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. The Company has the corporate power and authority
to own and operate its properties and assets, to execute and deliver
this
Agreement.
4.2
Capitalization;
Voting Rights:
(a)
The
total shares of the Company is 1 million, ▇▇▇▇▇▇▇ ▇▇▇ holds 51%, Gen Chen holds
49%.
(b)
There
are no outstanding options, warrants, proxy or stockholder agreements, or
arrangements or agreements of any kind for the purchase or acquisition from
the
Company of any of its securities.
4.3
Financial Statements: The Company has delivered to Purchaser a balance sheet
and
income statement at and as of Sep. 30, 2006 and has also delivered the
audited financial report of the first three quarter of 2006. Said financial
statements (a) accurately reflect the transactions set forth in the books
and records of the Company; (b) were prepared in accordance with the
Accounting Standard for Enterprise of the Peoples Republic of China;
(c) fairly present the Company’s financial condition and the results of
operations as of the relevant dates thereof and for the periods covered thereby;
(d) contain and reflect all necessary adjustments and accruals for a fair
presentation of the Company’s financial condition and the results of its
operations for the periods covered by said financial statements;
(e) contain and reflect adequate provisions for all reasonably anticipated
liabilities for all taxes with respect to the period then ended and all prior
periods; and (f) with respect to contracts and commitments for the sale of
goods or the provision of services by the Company, contain and reflect adequate
reserves for all reasonably anticipated material losses and costs and expenses
in excess of expected receipts. The Company’s financial statements described
above do not contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2
4.4
Liabilities: The Company has no material contingent liabilities, except current
liabilities incurred in the ordinary course of business. The financial
statements provided by the Company are true and complete.
4.5
Changes: Since September 30, 2006, there has not been:
(a) Any
change in the business, assets, liabilities, condition (financial or otherwise),
properties, operations or prospects of the Company, which individually or in
the
aggregate has had or could reasonably be expected to have a material adverse
effect on the business or financial condition of the Company (a “Material
Adverse Effect);
(b) Any
resignation or termination of any officer, key employee or group of employees
of
the Company.
(c) Any
material change, except in the ordinary course of business, in the contingent
obligations of the Company by way of guaranty, endorsement, indemnity, warranty
or otherwise;
(d) Any
damage, destruction or loss, whether or not covered by insurance, which has
had,
or could reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect;
(e) Any
waiver by the Company of a valuable right or of a material debt owed to
it;
(f) Any
direct or indirect material loans made by the Company to any stockholder,
employee, officer or director of the Company, other than advances made in the
ordinary course of business;
(g) Any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder; of the Company;
(h) Any
declaration of or payment of any dividend or other distribution of the assets
of
the Company;
(i) Any
debt,
obligation or liability incurred, assumed or guaranteed by the Company, except
those for immaterial amounts and for current liabilities incurred in the
ordinary course of business;
(j) Any
other
event or condition of any character that, either individually or in the
aggregate, has had, or could reasonably be expected to have, individually or
in
the aggregate, a Material Adverse Effect.
3
4.6
Agreements
with Related Parties: There are no agreements from the Company with or
obligations of the Company to, officers, directors, managers, stockholders,
members, partners or employees of the Company or their respective affiliates
other than:
(a)
for
payment of salary for services rendered;
(b)
reimbursement for reasonable expenses incurred on behalf of the Company;
and
(c)
obligations
listed in the Company’s financial statements.
None
of
the officers, directors or, to the best of the Company’s knowledge, key
employees or stockholders of the Company are indebted to the
Company.
4.7
Litigation:
There is no action, suit, proceeding or investigation pending or, to the
Company’s knowledge, currently threatened against the Company that prevents the
Company from entering into this Agreement, or from consummating the transactions
contemplated hereby or thereby, or which has had, or could reasonably be
expected to have, a Material Adverse Effect, or any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis
to
assert any of the foregoing. The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court
or
government agency or instrumentality. There is no action, suit, proceeding
or
investigation by the Company currently pending or which the Company intends
to
initiate.
Otherwise, all action, suit, proceeding, investigation pending or arbitral
proceeding for any disputes or litigations and all pre-transaction liabilities
in connection with the Company shall be borne and solved by the Company except
the Purchaser. And all these shall not be damaged to the Purchaser and shall
not
affect the business operation of the Company.
4.8
Tax
Returns and Payments: The Company has timely filed all tax returns required
to
be filed by it. All taxes shown to be due and payable on such returns, any
assessments imposed, and all other taxes due and payable by the Company on
or
before the Closing, have been paid or will be paid prior to the time they become
delinquent. No any penalty to the Company from the tax office of the government
since the Company was incorporated.
4
4.9
Compliance
with Laws; Permits: The Company is not in violation of any applicable statute,
rule, regulation, order or restriction of any domestic or foreign government
or
any instrumentality or agency thereof in respect of the conduct of its business
or the ownership of its properties which has had, or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect. The
Company has all material franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it, the
lack
of which could, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
4.10
Environmental and Safety Laws: The Company is not, and has never been, in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
4.11
Insurance: The Company has general and necessary commercial insurance, which
are
customary for companies similarly situated to the Company in the same or similar
business.
4.12
Employee and Labor Matters: The Company has complied with all applicable PRC
laws and regulations relating to the employment of its employees, including
without limitation laws and regulations pertaining to welfare funds, housing
funds, social benefits, medical benefits, insurance, retirement benefits,
pensions or the like.
4.13
Full
Disclosure: Documents provided as described in the List of Legal Due Diligence,
nor any other document delivered by the Company to Purchaser or its attorneys
or
agents in connection herewith or therewith or with the transactions contemplated
hereby or thereby, contain any untrue statement of a material fact nor omit
to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances in which they are made, not
misleading.
5. Penalties
of Non-payment
The
Purchaser agrees to pay the penalty US$ f zero point zero two percent (0.02%)
of
unpaid amount per day in case it does not wire the payment on time as in Article
2 of the Contract.
6. Arbitration
5
6.1 If
any
dispute with regard to the Agreement is not resolved through friendly
consultation, either Party may submit the dispute to the China International
Economic and Trade Arbitration Commission (CIETAC) for arbitration which shall
be conducted in accordance with the Commission’s arbitration rules in effect at
the time of application for the arbitration.
6.2 The
Parties hereto agree that any arbitral award shall
be
final
and binding to the Parties.
7.
Miscellaneous
7.1Governing
Law: The formation, validity, interpretation,
implementation,
modification, termination, and settlement of disputes respecting this Agreement
shall be governed by the laws of the People’s Republic of China.
7.2 Amendment
and Waiver: This Agreement may be amended or modified only upon the written
consent of the parties hereto.
7.3 Facsimile
Signatures; Counterparts: This Agreement may be executed by facsimile signatures
and in any number of counterparts, each of which shall be an original, but
all
of which together shall constitute one instrument.
7.4 Language.
This Agreement shall be executed in four original Chinese copies and four
original English copies. Both language versions shall be equally authentic
and
shall be given equal weight.
This
Agreement will not be effective unless the Resolution of Shareholders’ Meeting
of the Company is made in favor of this acquisition.
The
CompanyæShaanxi
Xindongxin Medicine Limited Company
Legal
Representativeæ
Dateæ
6
Purchaseræ
▇▇▇▇▇▇▇
Court Industries Inc.
Legal
RepresentativeæYu,
Jing
Dateæ
7