Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") made this 30th day of September
2008 by and among Navstar Media Holdins, Inc., a Nevada corporation ("Parent"),
Rodobo International, Inc, a Nevada corporation ("Merger Sub") wholly owned by
the Parent , and Mega Profit Limited. ("Company") a Cayman Islands
("CAYMANCayman") limited liability corporation, and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, the sole
shareholders of the Company ("Sellers").
R E C I T A L S
A. The respective Boards of Directors of Parent and the Company have
determined that an acquisition of the Company by Merger Sub and then the merger
of Merger Sub with and into the Parent (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement, would be fair and in the
best interests of their respective shareholders, and such Boards of Directors
have approved such Merger, pursuant to which shares of Common Stock of the
Company ("Company Common Stock") issued and outstanding immediately prior to the
Effective Time of the Merger (as defined in Section 1.03) and all securities
convertible or exchangeable into Company Common Stock will be exchanged
(including by reservation for future issuances) will be exchanged for the right
to receive 97% of Common Stock of Parent ("Parent Common Stock") other than
Dissenting Shares (as defined in Section 2.01(d)). B. Parent, Merger Sub and the
Company desire to make certain representations, warranties, covenants and
agreements in connection with the Merger and also to prescribe various
conditions to the Merger. C. For federal income tax purposes, the parties intend
that the Merger shall qualify as reorganization under the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I:
THE MERGER AND MERGER CONSIDERATION
1.01 The Merger and Consideration. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Nevada Corporations Code
(the "Nevada Statutes"), Merger Sub shall acquire the Company and then shall be
merged with and into the Parent at the Effective Time of the Merger. The Company
will become a wholly owned subsidiary of the Parent upon which the Merger Sub
shall no long exist, and Parent's name will change to Merger Sub's name,
pursuant to section 92A. 180 of the Nevada Statutes. In consideration of the its
acquisition of the Company by the Merger Sub and the Merger, the Merger Sub
shall issue to Sellers and their designees, 10 shares of the common stock of the
Merger Sub which shall be converted into approximately 37,000,000 shares of
common stock prior to and approximately 973,685 post a reverse stock split to be
done in conjunction of the merger and 12,976,316 shares of convertible preferred
stock which shall convert into 12,976,316 shares of the common stock of the
Parent after the completion of the Merger so that eventually the Sellers and
their designees shall own 93% of common stock of the Parent outstanding post the
completion of the Merger. The parent shall conduct an amendment to its charter
to increase the authorized shares to allow such conversion of preferred stock
into common stock. In addition, prior or at the same time of the completion of
the Merger, the Parent shall conduct a reverse stock split of approximately 38
for 1 or another appropriate number to reduced the total number of shares
outstanding immediately prior to the Merger to approximately 1,050,000 shares
outstanding immediately prior to the Merger.
1.02 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.01 and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") will take place at 10:00
a.m. on the business day after satisfaction of the conditions set forth in
Article VI (or as soon as practicable thereafter following satisfaction or
waiver of the conditions set forth in Article VI) (the "Closing Date"), at the
offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in New York., unless another date, time or place is
agreed to in writing by the parties hereto.
1.03 Effective Time of Merger. As soon as practicable following the satisfaction
or waiver of the conditions set forth in Article VI, the parties shall file
articles of merger (the "Articles of Merger") executed in accordance with the
relevant provisions of the Nevada Statutes and shall make all other filings or
recordings required under Nevada Statutes. The Merger shall become effective at
such time as the Articles of Merger are duly filed with the Secretary of State
of Nevada or at such other time as is permissible in accordance with Nevada
Statutes and as Parent and the Company shall agree should be specified in the
Articles of Merger (the time the Merger becomes effective being the "Effective
Time of the Merger"). Parent shall use reasonable efforts to have the Closing
Date and the Effective Time of the Merger to be the same day.
1.04 Effects of the Merger. The Merger shall have the effects set forth in the
applicable provisions of the Nevada Statutes.
1.05 Articles of Incorporation; Bylaws; Purposes.
(a) The Certificate of Incorporation of the Parent in effect immediately
prior to the Effective Time of the Merger shall be the Certificate of
Incorporation of the Parent until thereafter changed or amended as provided
therein or by applicable law.
(b) The Bylaws of the Parent in effect at the Effective Time of the Merger
shall be the Bylaws of the Parent until thereafter changed or amended as
provided therein or by applicable law.
(c) The purposes of the Parent and the total number of its authorized
capital stock shall be as set forth in the Certificate of Incorporation of the
Parent in effect immediately prior to the Effective Time of the Merger until
such time as such purposes and such number may be amended as provided in the
Certificate of Incorporation of the Parent and by applicable law.
1.06 Directors. The directors of the Company at the Effective Time of the Merger
shall be the directors of the Parent, and its subsidiary, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
1.07 Officers. The officers of the Company at the Effective Time of the Merger
shall be the officers of the Parent and its subsidiary, until the earlier
of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
1.08 Stock Split. Immediately following the execution of this Agreement, Parent
shall take all actions required to affect a thirty-seven and four tenth-for
one reverse split (37.4:1) of the outstanding Common Stock of Parent, so
that after such split and redemption there will be approximately issued and
outstanding 465,817 shares of common stock.
ARTICLE II:
EFFECT OF THE MERGER
ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.01 Effect on Capital Stock. As of the Effective Time of the Merger, by virtue
of the Merger and without any action on the part of the holders of shares of
Company Common Stock or any shares of capital stock of Merger Sub:
(a) Common Stock of Merger Sub. Each share of common stock of Merger Sub
issued and outstanding immediately prior to the Effective Time of the Merger
shall be converted into one share of Common Stock of the Parent and shall be the
issued and outstanding capital stock of the Parent.
(b) Cancellation of Parent-Owned Merger Sub Common Stock. Each share of
Common Stock of the Merger Sub that is owned by Parent shall automatically be
cancelled and retired and shall cease to exist, and no Parent Common Stock or
other consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Except as otherwise provided
herein, each issued and outstanding share of Company Common Stock shall be
converted into fully paid and nonassessable shares of Parent Common Stock in
accordance with the Exchange Ratio described in Section 2.02 and common shares
of Parent Common Stock shall be deposited by the Parent with the Exchange Agent
further to Section 2.04(a) herein and shall be known as the "Merger
Consideration."
(d) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger held by a holder (if any) who has the
right to demand payment for and an appraisal of such shares as provided under
British Virgin Islands law, if applicable, ("Dissenting Shares") shall not be
converted into a right to receive Merger Consideration unless such holder fails
to perfect or otherwise loses such holder's right to such payment or appraisal,
if any. If, after the Effective Time of the Merger, such holder fails to perfect
or loses any such right to appraisal, each such share of such holder shall be
treated as a share that had been converted as of the Effective Time of the
Merger into the right to receive Merger Consideration in accordance with this
Section 2.01. The Company shall give prompt notice to Parent of any demands
received by the Company for appraisal of shares of Company Common Stock, and
Parent shall have the right to participate in all negotiations and proceedings
with respect to such demands. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to, or settle or offer
to settle, any such demands.
2.02 Exchange Ratio. The "Exchange Ratio" is as follows: Each share of Company
Stock shall be converted into one share of Parent Common Stock in the Merger, an
Exchange Ratio of 1: 3,700.000 Parent
2.03 Stock Warrants. At the Effective Time of the Merger, there will be no
outstanding warrants to purchase Parent Common Stock.
2.04 Exchange of Certificates.
(a) Exchange of Certificates. As soon as reasonably practicable as of or
after the Effective Time of the Merger, Parent shall issue the Parent Shares,
for the benefit of the holders of shares of Company Common Stock, for exchange
in accordance with this Article II.
(b) Settlement Date. The settlement date as set forth herein shall be such
date which is six months from the Effective Time of the Merger and the date of
the resolution of any Contests further to Section 8.03 herein.
(c) Exchange Procedures. At the Effective Time of the Merger, each holder
of an outstanding certificate or certificates which prior thereto represented
shares of Company Common Stock shall, upon surrender of such certificate or
certificates and acceptance be entitled to a certificate or certificates
representing the number of shares of Parent Common Stock into which the
aggregate number of shares of Company Common Stock previously represented by
such certificate or certificates surrendered shall have been converted pursuant
to this Agreement. The Company shareholders shall accept such certificates upon
compliance with such reasonable terms and conditions to affect an orderly
exchange thereof in accordance with normal exchange practices. All shares of
Company Common Stock shall be surrendered at the Effective Time of the Merger.
After the Effective Time of the Merger, there shall be no further transfer on
the records of the Company or its transfer agent of certificates representing
shares of Company Common Stock. If any certificate for such Parent Common Stock
is to be issued in a name other than that in which the certificate for Company
Common Stock surrendered for exchange is registered, it shall be a condition of
such exchange that the certificate so surrendered shall be properly endorsed,
with signature guaranteed, or otherwise in proper form for transfer and that the
person requesting such exchange shall pay to Parent or its transfer agent any
transfer or other taxes or other costs required by reason of the issuance of
certificates for such Parent Common Stock in a name other than that of the
registered holder of the certificate surrendered, or establish to the
satisfaction of Parent or its transfer agent that all taxes have been paid.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of certificates
representing shares of Company Common Stock in accordance with the terms of this
Article II shall be deemed to have been issued (and paid) in full satisfaction
of all rights pertaining to the shares of Company Common Stock theretofore
represented by such certificates.
(e) No Liability. None of Parent, Merger Sub, or the Company shall be
liable to any person in respect of any shares of Parent Common Stock (or
dividends or distributions with respect thereto) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. All
certificates representing shares of Company Common Stock shall have been
surrendered at the Effective Time of the Merger.
ARTICLE III:
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company. Except as set forth in the
Company Disclosure Schedule delivered by the Company to the Parent at the time
of execution of this Agreement, the Company represents and warrants to Parent
and Merger Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is duly
organized, validly existing and in good standing under the laws of the British
Virgin Islands and has the requisite corporate power and authority to carry on
its business as now being conducted. The Company is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) would
not have a material adverse effect (as defined in Section 10.02) with respect to
the Company.
(b) Subsidiaries. The Company owns 100% of its subsidiaries, Harbin Mega
Profit Enterprise Management and Consultion Co., Ltd., a corporation established
and existing in China, which in turn owns 100% ownership interest in Harbin
Rodobo Dairy Co., which in turn owns 100% ownership interest in Qinggang Mega
profit Agricultural Co., Ltd. in China, (collectively: "Company Subs") formed
respectively under the laws of Cayman Islands and the People's Republic of
China. The Company has no interest in any other company, corporation,
partnership, joint venture or otherwise other than the Company Subs.
(c) Capital Structure. The authorized capital stock of the Company consists
of 20,000 of Company Common Stock. There are 20,000 shares of Common Stock
outstanding, all of which are owned by Sellers. Except as set forth above, no
shares of capital stock or other equity securities of the Company are issued,
reserved for issuance or outstanding. All outstanding shares of capital stock of
the Company are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. There are no outstanding bonds,
debentures, notes or other indebtedness or other securities of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of the Company
may vote. The Company Disclosure Schedule sets forth the outstanding
Capitalization of the Company. Except as set forth above, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company is a
party or by which it is bound obligating the Company to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
other equity or voting securities of the Company or obligating the Company to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. Other than the Company
Stock Options and Company Warrants, if any, there are no outstanding contractual
obligations, commitments, understandings or arrangements of the Company to
repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock of the Company. There are no agreements or arrangements
pursuant to which the Company is or could be required to register shares of
Company Common Stock or other securities under the Securities Act of 1933, as
amended (the "Securities Act") or other agreements or arrangements with or among
any security holders of the Company with respect to securities of the Company.
(d) Authority; Noncontravention. The Company has the requisite corporate
and other power and authority to enter into this Agreement and to consummate the
Merger. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions hereof will not, conflict with, or
result in any breach or violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of or "put" right with respect to any obligation or
to loss of a material benefit under, or result in the creation of any lien upon
any of the properties or assets of the Company under, (i) the Articles of
Incorporation or Bylaws of the Company, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company, its properties or
assets, or (iii) subject to the governmental filings and other matters referred
to in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule, regulation or arbitration award applicable to the Company, its
properties or assets. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any federal, state or
local government or any court, administrative agency or commission or other
governmental authority, agency, domestic or foreign (a "Governmental Entity"),
is required by or with respect to the Company in connection with the execution
and delivery of this Agreement by the Company or the consummation by the Company
of the transactions contemplated hereby, except, with respect to this Agreement,
for the filing of the Articles of Merger with the Secretary of State of Nevada.
(e) Financial Statements (i) The Parent has received a copy of the audited
consolidated financial statements of the Company and Company Subs for the fiscal
year ended December 31, 2007 and 2006 and unaudited financial statements for the
six-months ended June 30, 2008 and 2007 (collectively, the "Financial
Statements"). The Financial Statements fairly present the financial condition of
the Company at the dates indicated and its results of their operations and cash
flows for the periods then ended and, except as indicated therein, reflect all
claims against, debts and liabilities of the Company, fixed or contingent, and
of whatever nature.
(ii) Since June 30, 2008 (the "Balance Sheet Date"), there has been no material
adverse change in the assets or liabilities, or in the business or condition,
financial or otherwise, or in the results of operations or prospects, of the
Company, whether as a result of any legislative or regulatory change, revocation
of any license or rights to do business, fire, explosion, accident, casualty,
labor trouble, flood, drought, riot, storm, condemnation, act of God, public
force or otherwise and no material adverse change in the assets or liabilities,
or in the business or condition, financial or otherwise, or in the results of
operation or prospects, of the Company except in the ordinary course of
business. (iii) Since the Balance Sheet Date, the Company has not suffered any
damage, destruction or loss of physical property (whether or not covered by
insurance) affecting its condition (financial or otherwise) or operations
(present or prospective), nor has the Company issued, sold or otherwise disposed
of, or agreed to issue, sell or otherwise dispose of, any capital stock or any
other security of the Company and has not granted or agreed to grant any option,
warrant or other right to subscribe for or to purchase any capital stock or any
other security of the Company or has incurred or agreed to incur any
indebtedness for borrowed money.
(f) Absence of Certain Changes or Events. Since the Balance Sheet Date, the
Company has conducted its business only in the ordinary course consistent with
past practice, and there is not and has not been: (i) any material adverse
change with respect to the Company; (ii) any condition, event or occurrence
which individually or in the aggregate could reasonably be expected to have a
material adverse effect or give rise to a material adverse change with respect
to the Company; (iii) any event which, if it had taken place following the
execution of this Agreement, would not have been permitted by Section 4.01
without prior consent of Parent; or (iv) any condition, event or occurrence
which could reasonably be expected to prevent, hinder or materially delay the
ability of the Company to consummate the transactions contemplated by this
Agreement.
(g) Litigation; Labor Matters; Compliance with Laws.
(i) There is no suit, action or proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the
Company or any basis for any such suit, action, proceeding or investigation
that, individually or in the aggregate, could reasonably be expected to
have a material adverse effect with respect to the Company or prevent,
hinder or materially delay the ability of the Company to consummate the
transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company having, or which, insofar as reasonably
could be foreseen by the Company, in the future could have, any such
effect.
(ii) The Company is not a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a
labor union or labor organization, nor is it the subject of any proceeding
asserting that it has committed an unfair labor practice or seeking to
compel it to bargain with any labor organization as to wages or conditions
of employment nor is there any strike, work stoppage or other labor dispute
involving it pending or, to its knowledge, threatened, any of which could
have a material adverse effect with respect to the Company.
(iii) The conduct of the business of the Company complies with all
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees
or arbitration awards applicable thereto.
(h) Benefit Plans. The Company is not a party to any collective bargaining
agreement or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical or other plan, arrangement or understanding (whether or not legally
binding) under which the Company currently has an obligation to provide benefits
to any current or former employee, officer or director of the Company
(collectively, "Benefit Plans").
(i) Certain Employee Payments. The Company is not a party to any employment
agreement which could result in the payment to any current, former or future
director or employee of the Company of any money or other property or rights or
accelerate or provide any other rights or benefits to any such employee or
director as a result of the transactions contemplated by this Agreement, whether
or not (i) such payment, acceleration or provision would constitute a "parachute
payment" (within the meaning of Section 280G of the Code), or (ii) some other
subsequent action or event would be required to cause such payment, acceleration
or provision to be triggered.
(j) Tax Returns and Tax Payments. The Company has timely filed all Tax
Returns required to be filed by it, has paid all Taxes shown thereon to be due
and has provided adequate reserves in its financial statements for any Taxes
that have not been paid, whether or not shown as being due on any returns. No
material claim for unpaid Taxes has been made or become a lien against the
property of the Company or is being asserted against the Company, no audit of
any Tax Return of the Company is being conducted by a tax authority, and no
extension of the statute of limitations on the assessment of any Taxes has been
granted by the Company and is currently in effect. As used herein, "taxes" shall
mean all taxes of any kind, including, without limitation, those on or measured
by or referred to as income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium value added, property or windfall profits taxes, customs,
duties or similar fees,, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any governmental authority, domestic or foreign. As used herein, "Tax
Return" shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes.
(k) Environmental Matters. The Company is in compliance with all applicable
Environmental Laws. "Environmental Laws" means all applicable federal, state and
local statutes, rules, regulations, ordinances, orders, decrees and common law
relating in any manner to contamination, pollution or protection of human health
or the environment, and similar state laws.
(l) Material Contract Defaults. The Company is not, or has not received any
notice or has any knowledge that any other party is, in default in any respect
under any Material Contract; and there has not occurred any event that with the
lapse of time or the giving of notice or both would constitute such a material
default. For purposes of this Agreement, a Material Contract means any contract,
agreement or commitment that is effective as of the Closing Date to which the
Company is a party (i) with expected receipts or expenditures in excess of
$100,000, (ii) requiring the Company to indemnify any person, (iii) granting
exclusive rights to any party, (iv) evidencing indebtedness for borrowed or
loaned money in excess of $100,000 or more, including guarantees of such
indebtedness, or (v) which, if breached by the Company in such a manner would
(A) permit any other party to cancel or terminate the same (with or without
notice of passage of time) or (B) provide a basis for any other party to claim
money damages (either individually or in the aggregate with all other such
claims under that contract) from the Company or (C) give rise to a right of
acceleration of any material obligation or loss of any material benefit under
any such contract, agreement or commitment.
(m) Properties. The Company has good, clear and marketable title to all the
tangible properties and tangible assets reflected in the latest balance sheet as
being owned by the Company or acquired after the date thereof which are,
individually or in the aggregate, material to the Company's business (except
properties sold or otherwise disposed of since the date thereof in the ordinary
course of business), free and clear of all material liens.
(n) Trademarks and Related Contracts. To the knowledge of the Company:
(i) As used in this Agreement, the term "Trademarks" means trademarks,
service marks, trade names, Internet domain names, designs, slogans, and general
intangibles of like nature; the term "Trade Secrets" means technology; trade
secrets and other confidential information, know-how, proprietary processes,
formulae, algorithms, models, and methodologies; the term "Intellectual
Property" means patents, copyrights, Trademarks, applications for any of the
foregoing, and Trade Secrets; the term "Company License Agreements" means any
license agreements granting any right to use or practice any rights under any
Intellectual Property (except for such agreements for off-the-shelf products
that are generally available or less than $25,000), and any written settlements
relating to any Intellectual Property, to which the Company is a party or
otherwise bound; and the term "Software" means any and all computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code.
(ii) To the knowledge of the Company, none of the Company's
Intellectual Property or Company License Agreements infringe upon the rights of
any third party that may give rise to a cause of action or claim against the
Company or its successors.
(o) Board Recommendation. The Board of Directors of the Company has
unanimously determined that the terms of the Merger are fair to and in the best
interests of the shareholders of the Company and recommended that the holders of
the shares of Company Common Stock approve the Merger.
(o) Required Company Vote. The affirmative vote of a majority of the shares
of each of the Company Common Stock is the only vote of the holders of any class
or series of the Company's securities necessary to approve the Merger (the
"Company Shareholder Approval").
3.02 Representations and Warranties of Company Subs. Except as set forth in the
Company Disclosure Schedule delivered by the Company to the Parent at the time
of execution of this Agreement, the Company and the Shareholders, jointly and
severally, each represents and warrants to Parent and Merger Sub as follows:
(a) Organization, Standing and Corporate Power. Company Subs are duly
organized, validly existing and in good standing under the laws of the People's
Republic of China and Hong Kong and has the requisite corporate power and
authority to carry on its business as now being conducted. Company Subs are duly
qualified or licensed to do business and are in good standing in each
jurisdiction in which the nature of their business or the ownership or leasing
of their properties makes such qualification or licensing necessary, other than
in such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect (as
defined in Section 10.02) with respect to Company Subs.
(b) Subsidiaries: The Company Subs are 100% owned by the Company and shall
remain wholly owned subsidiaries of the Company following the Sale.
(c) Capital Structure. Except as set forth in the Financial Statements, no
shares of capital stock or other equity securities of Company Subs are issued,
reserved for issuance or outstanding. All outstanding equity ownership interest
in Company Subs are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no outstanding
bonds, debentures, notes or other indebtedness or other securities of Company
Subs having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of
Company Subs may vote. The Company Disclosure Schedule sets forth the
outstanding Capitalization of Company Subs. Except as set forth above, there are
no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Company Subs are a
party or by which they are bound obligating Company Subs to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity or voting securities of Company Subs or obligating Company
Subs to issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking. There are no
outstanding contractual obligations, commitments, understandings or arrangements
of Company Subs to repurchase, redeem or otherwise acquire or make any payment
in respect of any shares of capital stock of Company Subs. There are no
agreements or arrangements pursuant to which Company Subs are or could be
required to register shares of Company Common Stock or other securities under
the Securities Act of 1933, as amended (the "Securities Act") or other
agreements or arrangements with or among any security holders of Company Subs
with respect to securities of Company Subs.
(d) Authority; Noncontravention. Each of the Company Subs has the requisite
corporate and other power and authority to enter into this Agreement and to make
the representations contained herein. This Agreement has been duly executed and
delivered by Company Subs and constitutes a valid and binding obligation of
Company Subs, enforceable against Company Subs in accordance with its terms. The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
hereof will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or result in
the creation of any lien upon any of the properties or assets of Company Subs
under, (i) the Articles of Incorporation or Bylaws of Company Subs, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
Company Subs, its properties or assets, or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to Company Subs, their properties or assets. No consent, approval,
order or authorization of, or registration, declaration or filing with, or
notice to, any federal, state or local government or any court, administrative
agency or commission or other governmental authority, agency, domestic or
foreign (a "Governmental Entity"), is required by or with respect to Company
Subs in connection with the execution and delivery of this Agreement by Company
Subs or the consummation by Company Subs of the transactions contemplated
hereby, except, as set forth in the Company Disclosure Schedule.
(e) Absence of Certain Changes or Events. Since the Balance Sheet Date,
other than the ownership interest transfer to the Company, if applicable, each
of the Company Subs has conducted its business only in the ordinary course
consistent with past practice, and there is not and has not been: (i) any
material adverse change with respect to Company Subs; (ii) any condition, event
or occurrence which individually or in the aggregate could reasonably be
expected to have a material adverse effect or give rise to a material adverse
change with respect to Company Subs; (iii) any event which, if it had taken
place following the execution of this Agreement, would not have been permitted
by Section 4.01 without prior consent of Parent; or (iv) any condition, event or
occurrence which could reasonably be expected to prevent, hinder or materially
delay the ability of Company Subs to consummate the transactions contemplated by
this Agreement.
(f) Litigation; Labor Matters; Compliance with Laws.
(i) There is no suit, action or proceeding or investigation pending
or, to the knowledge of Company Subs, threatened against or affecting Company
Subs or any basis for any such suit, action, proceeding or investigation that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect with respect to Company Subs or prevent, hinder or
materially delay the ability of Company Subs to consummate the transactions
contemplated by this Agreement, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against
Company Subs having, or which, insofar as reasonably could be foreseen by
Company Subs, in the future could have, any such effect.
(ii) None of the Company Subs is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is any the subject of any
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it to bargain with any labor organization as to wages or conditions of
employment nor is there any strike, work stoppage or other labor dispute
involving it pending or, to its knowledge, threatened, any of which could have a
material adverse effect with respect to Company Subs.
(iii) The conduct of the business of Company Subs complies with all
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees or
arbitration awards applicable thereto.
(g) Benefit Plans. None of the Company Subs is a party to any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding (whether or
not legally binding) under which it currently has an obligation to provide
benefits to any current or former employee, officer or director of Company Subs
(collectively, "Benefit Plans").
(h) Certain Employee Payments. None of the Company Subs is a party
to any employment agreement which could result in the payment to any current,
former or future director or employee of Company Subs of any money or other
property or rights or accelerate or provide any other rights or benefits to any
such employee or director as a result of the transactions contemplated by this
Agreement, whether or not
(i) such payment, acceleration or provision would constitute a "parachute
payment" (within the meaning of Section 280G of the Code), or (ii) some other
subsequent action or event would be required to cause such payment, acceleration
or provision to be triggered. (i) Tax Returns and Tax Payments. Each of the
Company Subs has timely filed all Tax Returns required to be filed by it, has
paid all Taxes shown thereon to be due and has provided adequate reserves in its
financial statements for any Taxes that have not been paid, whether or not shown
as being due on any returns. No material claim for unpaid Taxes has been made or
become a lien against the property of Company Subs or is being asserted against
Company Subs, no audit of any Tax Return of Company Subs is being conducted by a
tax authority, and no extension of the statute of limitations on the assessment
of any Taxes has been granted by Company Subs and is currently in effect. As
used herein, "taxes" shall mean all taxes of any kind, including, without
limitation, those on or measured by or referred to as income, gross receipts,
sales, use, ad valorem, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium value added, property
or windfall profits taxes, customs, duties or similar fees,, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any governmental authority,
domestic or foreign. As used herein, "Tax Return" shall mean any return, report
or statement required to be filed with any governmental authority with respect
to Taxes
(j) Environmental Matters. Each of the Company Subs is in material
compliance with all applicable Environmental Laws. "Environmental Laws" means
all applicable federal, state and local statutes, rules, regulations,
ordinances, orders, decrees and common law relating in any manner to
contamination, pollution or protection of human health or the environment, and
similar state laws.
(k) Material Contract Defaults. None of the Company Subs is, nor have they
received any notice or has any knowledge that any other party is, in default in
any respect under any Material Contract; and there has not occurred any event
that with the lapse of time or the giving of notice or both would constitute
such a material default. For purposes of this Agreement, a Material Contract
means any contract, agreement or commitment that is effective as of the Closing
Date to which Company Subs is a party (i) with expected receipts or expenditures
in excess of $100,000, (ii) requiring Company Subs to indemnify any person,
(iii) granting exclusive rights to any party, (iv) evidencing indebtedness for
borrowed or loaned money in excess of $100,000 or more, including guarantees of
such indebtedness, or (v) which, if breached by Company Subs in such a manner
would (A) permit any other party to cancel or terminate the same (with or
without notice of passage of time) or (B) provide a basis for any other party to
claim money damages (either individually or in the aggregate with all other such
claims under that contract) from Company Subs or (C) give rise to a right of
acceleration of any material obligation or loss of any material benefit under
any such contract, agreement or commitment.
(l) Properties. Each of the Company Subs has good, clear and marketable
title to all the tangible properties and tangible assets reflected in the latest
balance sheet as being owned by Company Subs or acquired after the date thereof
which are, individually or in the aggregate, material to Company Subs's business
(except properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all material liens.
(m) Trademarks and Related Contracts. To the knowledge of Company Subs:
(i) As used in this Agreement, the term "Trademarks" means trademarks,
service marks, trade names, Internet domain names, designs, slogans,
and general intangibles of like nature; the term "Trade Secrets" means
technology; trade secrets and other confidential information, know-
how, proprietary processes, formulae, algorithms, models, and
methodologies; the term "Intellectual Property" means patents,
copyrights, Trademarks, applications for any of the foregoing, and
Trade Secrets; the term "Company License Agreements" means any license
agreements granting any right to use or practice any rights under any
Intellectual Property (except for such agreements for off-the-shelf
products that are generally available or less than $25,000), and any
written settlements relating to any Intellectual Property, to which
Company Subs is a party or otherwise bound; and the term "Software"
means any and all computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in
source code or object code.
(ii) To the knowledge of Company Subs, none of Company Subs's Intellectual
Property or Company License Agreements infringe materially upon the
rights of any third party that may give rise to a cause of action or
claim against Company Subs or their successors.
3.03 Representations and Warranties of Parent and Merger Sub. Except as set
forth in the disclosure schedule delivered by Parent to the Company at the time
of execution of this Agreement (the "Parent Disclosure Schedule"), Parent and
Merger Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent, Merger Sub
and the other Parent Subsidiaries (as defined in Section 3.03(b)) is (or at
Closing will be) duly organized, validly existing and in good standing under the
laws of the State of Nevada, as is applicable, and has the requisite corporate
power and authority to carry on its business as now being conducted. Each of
Parent, Merger Sub and the other Parent Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not have a material adverse effect with respect to Parent.
(b) Subsidiaries. The Parent has one subsidiary: Merger Sub, , which is a
Nevada corporation incorporated in September 2008. All the outstanding shares of
capital stock of each such entity which is a corporation have been validly
issued and are fully paid and nonassessable and, except as set forth in the
Parent Disclosure Schedule, are owned (of record and beneficially) by Parent,
free and clear of all Liens. Except for the capital stock of its subsidiaries,
which are corporations, Parent does not own, directly or indirectly, any capital
stock or other ownership interest in any corporation, partnership, business
association, joint venture or other entity.
(c) Capital Structure. As of the date of this Agreement, the authorized
capital stock of Parent consists of 60,000,000 shares of Parent Common Stock,
$0.00 1 par value, and 10,000,000 shares of preferred stock at $0.001 par value,
of which approximately 17,000,000 shares of Parent Common Stock will be issued
and outstanding as of the date of this Agreement and no shares of Parent Common
Stock are issuable upon the exercise of outstanding warrants, convertible notes,
and options and otherwise. Immediately prior to the Closing and after the stock
split to be effected pursuant to section 1.08 of the Agreement, there shall be 1
;3 8 reverse split ofshares of Parent Common Stock $0.001 par value authorized
of which 1,050,000 shares of Parent Common Stock $0.001 par value issued and
outstanding and 0 shares of preferred stock at $0.00 1 par value. Except as set
forth above, no shares of capital stock or other equity securities of Parent are
issued, reserved for issuance or outstanding. All outstanding shares of capital
stock of Parent are, and all shares which may be issued pursuant to this
Agreement will be, when issued, duly authorized, validly issued, fully paid and
nonassessable, not subject to preemptive rights, and issued in compliance with
all applicable state and federal laws concerning the issuance of securities.
There are no outstanding bonds, debentures, notes or other indebtedness or other
securities of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of Parent may vote. Except as set forth above, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Parent or any of
its subsidiaries is a party or by which any of them is bound obligating Parent
or any its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity securities
of Parent or any of its subsidiaries or obligating Parent or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other equity securities of Parent or
any of its subsidiaries or obligating Parent or any of its subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. There are no
outstanding contractual obligations, commitments, understandings or arrangements
of Parent or any of its subsidiaries to repurchase, redeem or otherwise acquire
or make any payment in respect of any shares of capital stock of Parent or any
of its subsidiaries.
(d) Authority; Noncontravention. Parent and subsidiaries have all requisite
corporate authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub
of the transactions contemplated by this Agreement have been (or at Closing will
have been) duly authorized by all necessary corporate action on the part of
Parent and Merger Sub. This Agreement has been duly executed and delivered by
and constitutes a valid and binding obligation of each of Parent and Merger Sub,
enforceable against each such party in accordance with its terms. The execution
and delivery of this agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or result in
the creation of any lien upon any of the properties or assets of Parent or any
of its subsidiaries under, (i) the articles of incorporation or bylaws of Parent
or Merger Sub or the comparable charter or organizational documents of any other
subsidiary of Parent, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent, Merger Sub or any other subsidiary of Parent or
their respective properties or assets, or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to Parent, Merger Sub or any other subsidiary of Parent or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, breaches, violations, defaults, rights, losses or
liens that individually or in the aggregate could not have a material adverse
effect with respect to Parent or could not prevent, hinder or materially delay
the ability of Parent to consummate the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any Governmental Entity is required by
or with respect to Parent, Merger Sub or any other subsidiary of Parent in
connection with the execution and delivery of this Agreement by Parent or Merger
Sub or the consummation by Parent or Merger Sub, as the case may be, of any of
the transactions contemplated by this Agreement, except for the filing of the
Articles of Merger with the Secretaries of State of Nevada, as required, and
such other consents, approvals, orders, authorizations, registrations,
declarations, states.
(e) SEC Documents; Undisclosed Liabilities. Parent has filed all reports,
schedules, forms, statements and other documents as required by the Securities
and Exchange Commission (the "SEC") and Parent has delivered or made available
to the Company all reports, schedules, forms, statements and other documents
filed with the SEC (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "Parent
SEC Documents"). As of their respective dates, the Parent SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Securities Exchange Act of 1934, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
documents, and none of the Parent SEC Documents (including any and all
consolidated financial statements included therein) as of such date contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent revised or superseded by a subsequent filing
with the SEC (a copy of which has been provided to the Company prior to the date
of this Agreement), none of the Parent SEC Documents, to the knowledge of
Parent's management, contains any untrue statement of a material fact or omits
to state any material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The consolidated
financial statements of Parent included in such Parent SEC Documents comply as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited consolidated quarterly statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and the consolidated results of operations and changes in
cash flows for the periods then ended (subject, in the case of unaudited
quarterly statements, to normal year-end audit adjustments as determined by
Parent's independent accountants). Except as set forth in the Parent SEC
Documents, at the date of the most recent audited financial statements of Parent
included in the Parent SEC Documents, neither Parent nor any of its subsidiaries
had, and since such date neither Parent nor any of such subsidiaries has
incurred, any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which, individually or in the aggregate,
could reasonably be expected to have a material adverse effect with respect to
Parent.
(f) Absence of Certain Changes or Events. Except as disclosed in the Parent
SEC Documents, since the date of the most recent financial statements included
in the Parent SEC Documents, Parent has conducted its business only in the
ordinary course consistent with past practice in light of its current business
circumstances, and there is not and has not been: (i) any material adverse
change with respect to Parent; (ii) any condition, event or occurrence which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect or give rise to a material adverse change with respect
to Parent; (iii) any event which, if it had taken place following the execution
of this Agreement, would not have been permitted by Section 4.02 without the
prior consent of the Company; or (iv) any condition, event or occurrence which
could reasonably be expected to prevent, hinder or materially delay the ability
of Parent to consummate the transactions contemplated by this Agreement. (g)
Interim Operations of Merger Sub. The Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has (or will have)
engaged in no other business activities and has (or will have) conducted its
operations only as contemplated hereby.
(h) Litigation; Labor Matters; Compliance with Laws.
(i) There is no suit, action or proceeding or investigation pending
or, to the knowledge of Parent, threatened against or affecting Parent or any
basis for any such suit, action, proceeding or investigation that, individually
or in the aggregate, could reasonably be expected to have a material adverse
effect with respect to Parent or prevent, hinder or materially delay the ability
of Parent to consummate the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against Parent having, or which, insofar as reasonably
could be foreseen by Parent, in the future could have, any such effect.
(ii) Parent is not a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is it the subject of any proceeding asserting that it
has committed an unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages or conditions of employment nor is there any
strike, work stoppage or other labor dispute involving it pending or, to its
knowledge, threatened, any of which could have a material adverse effect with
respect to Parent.
(iii) The conduct of the business of Parent complies with all
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees or
arbitration awards applicable thereto. (i) Benefit Plans. Parent is not a party
to any Benefit Plan under which Parent currently has an obligation to provide
benefits to any current or former employee, officer or director of Parent.
(j) Certain Employee Payments. Parent is not a party to any employment
agreement which could result in the payment to any current, former or future
director or employee of Parent of any money or other property or rights or
accelerate or provide any other rights or benefits to any such employee or
director as a result of the transactions contemplated by this Agreement, whether
or not
(i) such payment, acceleration or provision would constitute a
"parachute payment" (within the meaning of Section 280G of the Code), or
(ii) some other subsequent action or event would be required to cause
such payment, acceleration or provision to be triggered.
(k) Tax Returns and Tax Payments. Parent has timely filed all Tax Returns
required to be filed by it, has paid all Taxes shown thereon to be due and has
provided adequate reserves in its financial statements for any Taxes that have
not been paid, whether or not shown as being due on any returns. No material
claim for unpaid Taxes has been made or become a lien against the property of
Parent or is being asserted against Parent, no audit of any Tax Return of Parent
is being conducted by a tax authority, and no extension of the statute of
limitations on the assessment of any Taxes has been granted by Parent and is
currently in effect.
(l) Environmental Matters. Parent is in material compliance with all
applicable Environmental Laws.
(m) Material Contract Defaults. Parent is not, or has not, received any
notice or has any knowledge that any other party is, in default in any respect
under any Material Contract; and there has not occurred any event that with the
lapse of time or the giving of notice or both would constitute such a material
default. For purposes of this Agreement, a Material Contract means any contract,
agreement or commitment that is effective as of the Closing Date to which Parent
is a party (i) with expected receipts or expenditures in excess of $10,000, (ii)
requiring Parent to indemnify any person, (iii) granting exclusive rights to any
party, (iv) evidencing indebtedness for borrowed or loaned money in excess of
$10,000 or more, including guarantees of such indebtedness, or (v) which, if
breached by Parent in such a manner would (A) permit any other party to cancel
or terminate the same (with or without notice of passage of time) or (B) provide
a basis for any other party to claim money damages (either individually or in
the aggregate with all other such claims under that contract) from Parent or (C)
give rise to a right of acceleration of any material obligation or loss of any
material benefit under any such contract, agreement or commitment.
(m) Properties. Parent has good, clear and marketable title to all the
tangible properties and tangible assets reflected in the latest balance sheet as
being owned by Parent or acquired after the date thereof which are, individually
or in the aggregate, material to Parent's business (except properties sold or
otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all material liens. (n) Trademarks and Related
Contracts. Parent does not hold any Trademarks, Trade Secrets, or Intellectual
Property, and is not party to any license agreements regarding such. (o) Board
Recommendation. The Board of Directors of Parent has unanimously determined that
the terms of the Merger are fair to and in the best interests of the
shareholders of Parent.
ARTICLE IV:
COVENANTS RELATING TO
CONDUCT OF BUSINESS PRIOR TO MERGER
4.01 Conduct of Company and Parent. From the date of this Agreement and until
the Effective Time of the Merger, or until the prior termination of this
Agreement, Company and Parent, shall not, unless mutually agreed to in writing:
(a) engage in any transaction, except in the normal and ordinary course of
business, or create or suffer to exist any Lien or other encumbrance upon any of
their respective assets or which will not be discharged in full prior to the
Effective Time of the Merger;
(b) sell, assign or otherwise transfer any of their assets, or cancel or
compromise any debts or claims relating to their assets, other than for fair
value, in the ordinary course of business, and consistent with past practice;
(c) fail to use reasonable efforts to preserve intact their present
business organizations, keep available the services of their employees and
preserve its material relationships with customers, suppliers, licensors,
licensees, distributors and others, to the end that its good will and ongoing
business not be impaired prior to the Effective Time of the Merger;
(d) except for matters related to complaints by former employees related to
wages, suffer or permit any material adverse change to occur with respect to
Company and Parent or their business or assets; or
(e) Make any material change with respect to their business in accounting
or bookkeeping methods, principles or practices, except as required by GAAP.
ARTICLE V:
ADDITIONAL AGREEMENTS
5.01 Access to Information; Confidentiality.
(a) The Company shall, and shall cause its officers, employees, counsel,
financial advisors and other representatives to, afford to Parent and its
representatives reasonable access during normal business hours during the period
prior to the Effective Time of the Merger to its and to Company Subs'
properties, books, contracts, commitments, personnel and records and, during
such period, the Company shall, and shall cause its and Company Subs' officers,
employees and representatives to, furnish promptly to Parent all information
concerning their respective business, properties, financial condition,
operations and personnel as such other party may from time to time reasonably
request. For the purposes of determining the accuracy of the representations and
warranties of the Parent and Merger Sub set forth herein and compliance by the
Parent and Merger Sub of their respective obligations hereunder, during the
period prior to the Effective Time of the Merger, Parent shall provide the
Company and its representatives with reasonable access during normal business
hours to its and Merger Sub's properties, books, contracts, commitments,
personnel and records as may be necessary to enable the Company to confirm the
accuracy of the representations and warranties of Parent and Merger Sub set
forth herein and compliance by Parent and Merger Sub of their obligations
hereunder, and, during such period, Parent shall, and shall cause its
subsidiaries, officers, employees and representatives to, furnish promptly to
the Company upon its request (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties, financial condition, operations and
personnel as such other party may from time to time reasonably request. Except
as required by law, each of the Company, Merger Sub, and Parent will hold, and
will cause its respective directors, officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information in confidence.
(b) No investigation pursuant to this Section 5.01 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
5.02 Best Efforts. Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement. Parent, Merger Sub and the Company will use their best efforts and
cooperate with one another (i) in promptly determining whether any filings are
required to be made or consents, approvals, waivers, permits or authorizations
are required to be obtained (or, which if not obtained, would result in an event
of default, termination or acceleration of any agreement or any put right under
any agreement) under any applicable law or regulation or from any governmental
authorities or third parties, including parties to loan agreements or other debt
instruments and including such consents, approvals, waivers, permits or
authorizations as may be required to transfer the assets and related liabilities
of the Company to the Merger Sub in promptly making any such filings, in
furnishing information required in connection therewith and in timely seeking to
obtain any such consents, approvals, permits or authorizations and (ii) in
facilitating each other's due diligence investigations. Parent and the Company
shall mutually cooperate in order to facilitate the achievement of the benefits
reasonably anticipated from the Merger.
5.03 Public Announcements. Parent and Merger Sub, on the one hand, and the
Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law or court process. The parties agree that the initial press release or
releases to be issued with respect to the transactions contemplated by this
Agreement shall be mutually agreed upon prior to the issuance thereof.
Notwithstanding the foregoing, Company may disclose the contemplated Merger in
letters to the Company's optionees for purposes of fulfilling the Company's
obligations under the Company Option Plan to the said optionees.
5.04 Expenses. All costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses.
5.05 Directorships. Upon the Effective Time of the Merger, all officers of the
Parent shall resign and Parent shall have taken all action to cause to be
elected to its Board of Directors and its officers to consist of the following:
WANG Yanbinas the Chairman of the Board and CEO, QIAO Xiuzhenas a board director
and CFO.
5.06 No Solicitation. Except as previously agreed to in writing by the other
party, neither Company or Parent shall authorize or permit any of its officers,
directors, agents, representatives, or advisors to (a) solicit, initiate or
encourage or take any action to facilitate the submission of inquiries,
proposals or offers from any person relating to any matter concerning any
merger, consolidation, business combination, recapitalization or similar
transaction involving Company or Parent, respectively, other than the
transaction contemplated by this Agreement or any other transaction the
consummation of which would or could reasonably be expected to impede, interfere
with, prevent or delay the Merger or which would or could be expected to dilute
the benefits to the Company of the transactions contemplated hereby. Company or
Parent will immediately cease and cause to be terminated any existing
activities, discussions and negotiations with any parties conducted heretofore
with respect to any of the foregoing.
ARTICLE VI:
CONDITIONS PRECEDENT
6.01 Conditions to Each Party's Obligation to Effect the Merger. The respective
obligation of each party to effect the Merger is subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) Opinions of Counsel. Execution and delivery of the following: to the
Company, an opinion of counsel from Parent's legal counsel that the terms,
conditions and structure of this Merger satisfy Nevada law.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
(c) No Dissent. Holders of no more than five percent (5%) of the Merger
Sub's Common Stock shall have dissented to the Merger.
6.02 Conditions to Obligations of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger are further subject to the following
conditions:
(a)______Representations and Warranties. The representations and warranties
of the Company and Company Subs set forth in this Agreement shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date. Parent
shall have received a certificate signed on behalf of the Company by the
president of the Company to such effect.
(b) Performance of Obligations of the Company. The Company and Company Subs
shall have performed the obligations required to be performed by them under this
Agreement at or prior to the Closing Date (except for such failures to perform
as have not had or could not reasonably be expected, either individually or in
the aggregate, to have a material adverse effect with respect to the Company or
adversely affect the ability of the Company to consummate the transactions
herein contemplated or perform its obligations hereunder), and Parent shall have
received a certificate signed on behalf of the Company by the president of the
Company to such effect.
(c) Consents, etc. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties as necessary in connection with the transactions
contemplated hereby have been obtained.
(d) No Litigation. There shall not be pending or threatened by any
Governmental Entity any suit, action or proceeding (or by any other person any
suit, action or proceeding which has a reasonable likelihood of success), (i)
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement or seeking to
obtain from Parent or any of its subsidiaries any damages that are material in
relation to Parent and its subsidiaries taken as a whole, (ii) seeking to
prohibit or limit the ownership or operation by the Company, Parent or any of
its subsidiaries of any material portion of the business or assets of the
Company, Parent or any of its subsidiaries, or to dispose of or hold separate
any material portion of the business or assets of the Company, Parent or any of
its subsidiaries, as a result of the Merger or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose limitations on the
ability of Parent or Merger Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock or Common Stock of the
Surviving Corporation, including, without limitation, the right to vote the
Company Common Stock or Common Stock of the Surviving Corporation on all matters
properly presented to the shareholders of the Company or the Surviving
Corporation, respectively, or (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of the Company.
(e) Due Diligence Investigation. Parent shall be satisfied with the results
of its due diligence investigation of the Company and Company Subs in its sole
and absolute discretion.
(f) The Company shall file a Form 8-K with the SEC within four business
days of the Closing Date containing Form 10 information about the combined
Parent and Company and audited financial statements of the Company as required
by Regulation S-K. Such Form 8-K shall be in form and substance acceptable to
Parent and its counsel prior to Closing.
6.03 Conditions to Obligation of the Company. The obligation of the Company to
effect the Merger is further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties of
Parent and Merger Sub set forth in this Agreement shall be true and correct in
all material respects, in each case as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date. The Company shall
have received a certificate signed on behalf of Parent by the president of
Parent to such effect.
(b) Performance of Obligations of Parent and Merger Sub. Parent and Merger
Sub shall have performed the obligations required to be performed by them under
this Agreement at or prior to the Closing Date (except for such failures to
perform as have not had or could not reasonably be expected, either individually
or in the aggregate, to have a material adverse effect with respect to Parent or
adversely affect the ability of Parent to consummate the transactions herein
contemplated or perform its obligations hereunder), and the Company shall have
received a certificate signed on behalf of Parent by the president of Parent to
such effect.
(c) No Litigation. There shall not be pending or threatened any suit,
action or proceeding before any court, Governmental Entity or authority (i)
pertaining to the transactions contemplated by this Agreement or (ii) seeking to
prohibit or limit the ownership or operation by the Company, Parent or any of
its subsidiaries, or to dispose of or hold separate any material portion of the
business or assets of the Company, Parent or of its any subsidiaries.
(d) Consents, etc. Company shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties as necessary in connection with the transactions
contemplated hereby have been obtained.
(e) Filing of Merger Agreement. Parent shall have filed or will promptly
file after the Closing Date in the office of the Secretary of State or other
office of each jurisdiction in which such filings are required for the Merger to
become effective.
(f) Resignations. Parent shall deliver to the Company written resignations
of all of the officers of the Parent and evidence of election of those new
directors and officers as further escribed in Section 5.06 herein.
(g) 8-K. The Post Merger Company shall file a Form 8-K with the SEC within
four days of the closing of the Merger containing audited financial statements
of the Company as required by Regulation S-K.
ARTICLE VII:
TERMINATION, AMENDMENT AND WAIVER
7.01 Termination. This Agreement may be terminated and abandoned at any time
prior to the Effective Time of the Merger:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
(c) by either Parent or the Company if the Merger shall not have been
consummated on or before November 30, 2005 (other than as a result of the
failure of the party seeking to terminate this Agreement to perform its
obligations under this Agreement required to be performed at or prior to the
Effective Time of the Merger); (c) by Parent, if a material adverse change shall
have occurred relative to the Company;
(d) by Parent, if the Company willfully fails to perform in any material
respect any of its material obligations under this Agreement; or (e) by the
Company, if Parent or Merger Sub willfully fails to perform in any material
respect any of their respective obligations under this Agreement.
7.02 Effect of Termination. In the event of termination of this Agreement by
either the Company or Parent as provided in Section 7.01, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Parent, Merger Sub or the Company, other than the provisions of the
last sentence of Section 5.01(a) and this Section 7.02. Nothing contained in
this Section shall relieve any party for any breach of the representations,
warranties, covenants or agreements set forth in this Agreement.
7.03 Amendment. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
7.04 Extension; Waiver. Subject to Section 7.0 1(c), at any time prior to the
Effective Time of the Merger, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement, or (c) waive
compliance with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
7.05 Procedure for Termination, Amendment, Extension or Waiver. A termination of
this Agreement pursuant to Section 7.01, an amendment of this Agreement pursuant
to Section 7.03 or an extension or waiver of this Agreement pursuant to Section
7.04 shall, in order to be effective, require in the case of Parent, Merger Sub
or the Company, action by its Board of Directors.
7.06 Return of Documents. In the event of termination of this Agreement for any
reason, Parent and Company will return to the other party all of the other
party's documents, work papers, and other materials (including copies) relating
to the transactions contemplated in this Agreement, whether obtained before or
after execution of this Agreement. Parent and Company will not use any
information so obtained from the other party for any purpose and will take all
reasonable steps to have such other party's information kept confidential.
ARTICLE VIII:
INDEMNIFICATION AND RELATED MATTERS
8.01 Survival of Representations and Warranties. The representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time of the Merger until the Settlement
Date.
8.02 Indemnification.
(a) Irrespective of any due diligence investigation conducted by Company
with regard to the transactions contemplated hereby, the Parent shall indemnify
and hold the Company and each of its officers and directors (the "Company
Representatives") harmless from and against any and all liabilities,
obligations, damages, losses, deficiencies, costs, penalties, interest and
expenses (collectively, "Losses") arising out of, based upon, attributable to or
resulting from any and all Losses incurred or suffered by the Company or any of
the Company Representatives resulting from or arising out of any breach of a
representation, warranty or covenant made by Parent as set forth herein.
(b) The Company shall indemnify and hold the Parent and each of its
officers and directors (the "Parent Representatives") harmless from and against
any and all liabilities, obligations, damages, losses, deficiencies, costs,
penalties, interest and expenses (collectively, "Losses") arising out of, based
upon, attributable to or resulting from any and all Losses incurred or suffered
by the Parent or any of the Parent Representatives resulting from or arising out
of any breach of a representation, warranty or covenant made by Company as set
forth herein.
8.03 Notice of Indemnification. In the event any proceeding shall be threatened
or instituted or any claim or demand shall be asserted in respect of which
payment may be sought by the Parent or any Parent Representative or by the
Company or any Company Representative, against the other, as the case may be
(each an "Indemnitee"), under the provisions of this Article VIII (an "Indemnity
Claim"), the Indemnitee shall promptly cause written notice of the assertion of
any such Claim of which it has knowledge which is covered by this indemnity to
be forwarded to the Parent Representative, who shall be Crystal ▇▇▇ ▇▇▇, or the
Company. Any notice of an Indemnity Claim by reason of any of the
representations, warranties or covenants contained in this Agreement shall state
specifically the representation, warranty or covenant with respect to which the
Indemnity Claim is made, the facts giving rise to an alleged basis for the
Claim, and the amount of the liability asserted against the Indemnitor by reason
of the Indemnity Claim. Within ten (10) days of the receipt of such written
notice, the Parent Representative or the Company, as the case may be, shall
notify the Indemnitee in writing of its intent to contest the indemnification
obligation (a "Contest") or to accept liability hereunder. If the Parent
Representative or the Company, as the case may be, does not respond within ten
(10) days of the request of such written notice to such written notice, the
Parent Representative or the Company, as the case may be, will be deemed to
accept liability as it relates to the Merger Consideration. In such event, the
Indemnitee will deliver a Notice to the Parent that there is a determination of
liability to this Section 8.03 and the Parent shall be instructed to adjust the
Merger Consideration. In the event of a Contest, within ten (10) days of the
receipt of the written notice thereof, the parties will select arbitrators and
submit the dispute to binding arbitration before the American Arbitration
Association at a venue to be located in New York City. The arbitrators shall be
selected by the mutual agreement of the parties. If the parties can not agree on
the arbitrator, each may select one arbitrator and the two designated
arbitrators shall select the third arbitrator. If the third arbitrator can not
be agreed upon, the American Arbitration Association in New York shall select
the third arbitrator. A decision by the individual arbitrator or a majority
decision by the three arbitrators shall be final and binding upon the parties.
Such arbitration shall follow the rules of the American Arbitration Association
and must be resolved by the arbitrators within thirty (30) days after the matter
is submitted to arbitration. If the arbitration is ruled favorably for Parent so
that there is a determination of a Loss, the Indemnitee will deliver a Notice to
Parent that there is a determination of liability pursuant to this Section 8.03
and the Parent shall adjust the Merger Consideration Deposit accordingly.
ARTICLE IX:
Intentionally left blank and reserved.
ARTICLE X:
GENERAL PROVISIONS
10.01 Notices. All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by facsimile, electronic mail, or overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
if to Parent or Parent Representative, to:
Navstar Media Holdings, Inc.
if to the Company, to:
c/o
Attention:
10.02 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "material adverse change" or "material adverse effect" means, when used
in connection with the Company or Parent, any change or effect that either
individually or in the aggregate with all other such changes or effects is
materially adverse to the business, assets, properties, condition (financial or
otherwise) or results of operations of such party and its subsidiaries taken as
a whole (after giving effect in the case of Parent to the consummation of the
Merger);
(c) "person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity; and
(d) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of Directors or
other governing body (or, if there are no such voting interests, fifty percent
(5 0%) or more of the equity interests of which) is owned directly or indirectly
by such first person.
10.03 Interpretation, When a reference is made in this Agreement to a Section,
Exhibit or Schedule, such reference shall be to a Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
10.04 Entire Agreement; No Third-Party Beneficiaries. This Agreement and the
other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This Agreement
is not intended to confer upon any person other than the parties any rights or
remedies.
10.05 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
10.06 Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
10.07 Enforcement. The parties agree that irreparable damage would occur in the
event that 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 of this Agreement in any court of the United States
located in the State of Nevada, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (a) agrees that it will not attempt to deny or defeat such personal
jurisdiction or venue by motion or other request for leave from any such court,
and (b) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any state court other
than such court.
10.08 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.09 Counterparts. This Agreement may be executed in one or more identical
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more such counterparts shall have been
executed by each of the parties and delivered to the other parties.
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
officers (or representatives in the case of Merger Sub) to execute this
Agreement as of the date first above written.
NAVSTAR MEDIA HOLDINGS INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman and Acting CEO
MERGER SUB
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇ Title: President
Sellers
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Mega Profit Ltd.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer